NextGen Healthcare, Inc. Reports Fiscal 2021 Second Quarter Results
Fiscal 2021 Second Quarter Highlights
Revenue for the fiscal 2021 second quarter was
Cash flow from operations was
“We delivered strong Q2 performance across almost every operational metric and showed solid growth in subscription services,” said
Fiscal 2021 Financial Outlook
Based on improved market conditions, the Company is reinstating annual guidance. For fiscal 2021, the Company now expects revenue of between
Conference Call Information
About
We empower the transformation of ambulatory care—partnering with medical, behavioral and oral health providers in their journey to value-based care to make healthcare better for everyone. We go beyond EHR and PM. Our integrated solutions help increase clinical productivity, enrich the patient experience, and ensure healthy financial outcomes. We believe in better. Learn more at nextgen.com, and follow us on Facebook, Twitter, LinkedIn, YouTube and Instagram.
SAFE HARBOR PROVISIONS FOR FORWARD-LOOKING STATEMENTS
This news release may contain forward-looking statements within the meaning of the federal securities laws, including but not limited to, statements regarding future events including but not limited to the COVID-19 pandemic, developments in the healthcare sector and regulatory framework, the Company's future performance, as well as management's expectations, beliefs, intentions, plans, estimates or projections relating to the future (including, without limitation, statements concerning revenue, net income, and earnings per share). Risks and uncertainties exist that may cause the results to differ materially from those set forth in these forward-looking statements. Factors that could cause the anticipated results to differ from those described in the forward-looking statements and additional risks and uncertainties are set forth in Part I, Item A of our most recent Annual Report on Form 10-K and subsequently filed Quarterly Reports on Form 10-Q, including but not limited to: volatility and uncertainty in the global economy and financial markets in light of the evolving COVID-19 pandemic; the volume and timing of systems sales and installations; length of sales cycles and the installation process; the possibility that products will not achieve or sustain market acceptance; seasonal patterns of sales and customer buying behavior; impact of incentive payments under The American Recovery and Reinvestment Act on sales and the ability of the Company to meet continued certification requirements; uncertainties related to the future impact of
USE OF NON-GAAP FINANCIAL MEASURES
This news release contains certain non-GAAP (Generally Accepted Accounting Principles) financial measures, which are provided only as supplemental information. Investors should consider these non-GAAP financial measures only in conjunction with the comparable GAAP financial measures. These non-GAAP measures are not in accordance with or a substitute for
The Company utilizes a normalized non-GAAP tax rate to provide better consistency across the interim reporting periods within a given fiscal year by eliminating the effects of non-recurring and period-specific items, which can vary in size and frequency, and which are not necessarily reflective of the Company’s longer-term operations. The normalized non-GAAP tax rate applied to each quarter of fiscal year 2020 was 22.0%. The normalized non-GAAP tax rate expected to be applied to each quarter of fiscal year 2021 is 20.0%. The determination of this rate is based on the consideration of both historic and projected financial results. The Company may adjust its non-GAAP tax rate as additional information becomes available and in conjunction with any other significant events occur that may materially affect this rate, such as merger and acquisition activity, changes in business outlook, or other changes in expectations regarding tax regulations.
The Company’s future period guidance in this release includes adjustments for items not indicative of the Company’s core operations. Such adjustments are generally expected to be of a nature similar to those adjustments applied to the Company’s historic GAAP financial results in the determination of the Company’s non-GAAP diluted earnings per share. Such adjustments, however, may be affected by changes in ongoing assumptions and judgments as to the items that are excluded in the calculation of non-GAAP adjusted net income and adjusted diluted earnings per share, as described in this release. The exact amount and probable significance of these adjustments, including net acquisition costs, impairment of assets, restructuring costs, net securities litigation defense costs, and other non-run-rate expenses, are not currently determinable without unreasonable efforts, but may be significant. These items cannot be reliably quantified or forecasted due to the combination of their historic and expected variability. It is therefore not practicable to reconcile this non-GAAP guidance to the most comparable GAAP measures.
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CONDENSED CONSOLIDATED STATEMENTS OF INCOME |
||||||||||||||||
(In thousands, except per share data) |
||||||||||||||||
(Unaudited) |
||||||||||||||||
|
Three Months Ended
|
|
|
Six Months Ended
|
|
|||||||||||
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
|||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recurring |
$ |
125,691 |
|
|
$ |
120,589 |
|
|
$ |
245,213 |
|
|
$ |
240,036 |
|
|
Software, hardware, and other non-recurring |
|
14,311 |
|
|
|
13,667 |
|
|
|
25,668 |
|
|
|
26,081 |
|
|
Total revenues |
|
140,002 |
|
|
|
134,256 |
|
|
|
270,881 |
|
|
|
266,117 |
|
|
Cost of revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recurring |
|
52,906 |
|
|
|
50,328 |
|
|
|
103,335 |
|
|
|
100,868 |
|
|
Software, hardware, and other non-recurring |
|
6,083 |
|
|
|
6,563 |
|
|
|
12,124 |
|
|
|
12,841 |
|
|
Amortization of capitalized software costs and acquired intangible assets |
|
9,961 |
|
|
|
8,843 |
|
|
|
19,860 |
|
|
|
17,256 |
|
|
Total cost of revenue |
|
68,950 |
|
|
|
65,734 |
|
|
|
135,319 |
|
|
|
130,965 |
|
|
Gross profit |
|
71,052 |
|
|
|
68,522 |
|
|
|
135,562 |
|
|
|
135,152 |
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative |
|
41,950 |
|
|
|
39,046 |
|
|
|
82,687 |
|
|
|
79,174 |
|
|
Research and development costs, net |
|
17,692 |
|
|
|
19,789 |
|
|
|
35,914 |
|
|
|
41,840 |
|
|
Amortization of acquired intangible assets |
|
1,112 |
|
|
|
865 |
|
|
|
2,224 |
|
|
|
1,730 |
|
|
Impairment of assets |
|
— |
|
|
|
1,916 |
|
|
|
— |
|
|
|
2,405 |
|
|
Restructuring costs |
|
— |
|
|
|
175 |
|
|
|
2,562 |
|
|
|
1,882 |
|
|
Total operating expenses |
|
60,754 |
|
|
|
61,791 |
|
|
|
123,387 |
|
|
|
127,031 |
|
|
Income from operations |
|
10,298 |
|
|
|
6,731 |
|
|
|
12,175 |
|
|
|
8,121 |
|
|
Interest income |
|
12 |
|
|
|
36 |
|
|
|
18 |
|
|
|
115 |
|
|
Interest expense |
|
(1,135 |
) |
|
|
(387 |
) |
|
|
(2,242 |
) |
|
|
(859 |
) |
|
Other income (expense), net |
|
(18 |
) |
|
|
210 |
|
|
|
(2 |
) |
|
|
77 |
|
|
Income before provision for (benefit of) income taxes |
|
9,157 |
|
|
|
6,590 |
|
|
|
9,949 |
|
|
|
7,454 |
|
|
Provision for (benefit of) income taxes |
|
(1,298 |
) |
|
|
509 |
|
|
|
318 |
|
|
|
129 |
|
|
Net income |
$ |
10,455 |
|
|
$ |
6,081 |
|
|
$ |
9,631 |
|
|
$ |
7,325 |
|
|
Net income per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
0.16 |
|
|
$ |
0.09 |
|
|
$ |
0.14 |
|
|
$ |
0.11 |
|
|
Diluted |
$ |
0.16 |
|
|
$ |
0.09 |
|
|
$ |
0.14 |
|
|
$ |
0.11 |
|
|
Weighted-average shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
66,688 |
|
|
|
65,401 |
|
|
|
66,493 |
|
|
|
65,209 |
|
|
Diluted |
66,689 |
65,560 |
66,493 |
65,445 |
|
||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS |
||||||||
(In thousands, except per share data) |
||||||||
(Unaudited) |
||||||||
|
|
|
|
|
|
|
||
ASSETS |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
103,440 |
|
|
$ |
138,012 |
|
Restricted cash and cash equivalents |
|
|
5,405 |
|
|
|
2,307 |
|
Accounts receivable, net |
|
|
75,102 |
|
|
|
80,006 |
|
Contract assets |
|
|
15,714 |
|
|
|
12,529 |
|
Income taxes receivable |
|
|
1,900 |
|
|
|
856 |
|
Prepaid expenses and other current assets |
|
|
23,361 |
|
|
|
26,305 |
|
Total current assets |
|
|
224,922 |
|
|
|
260,015 |
|
Equipment and improvements, net |
|
|
16,720 |
|
|
|
19,836 |
|
Capitalized software costs, net |
|
|
39,234 |
|
|
|
37,004 |
|
Operating lease assets |
|
|
30,804 |
|
|
|
31,004 |
|
Deferred income taxes, net |
|
|
10,647 |
|
|
|
10,620 |
|
Contract assets, net of current |
|
|
2,303 |
|
|
|
3,007 |
|
Intangibles, net |
|
|
45,577 |
|
|
|
57,809 |
|
|
|
|
267,212 |
|
|
|
267,165 |
|
Other assets |
|
|
34,993 |
|
|
|
33,656 |
|
Total assets |
|
$ |
672,412 |
|
|
$ |
720,116 |
|
LIABILITIES AND SHAREHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
6,822 |
|
|
$ |
10,521 |
|
Contract liabilities |
|
|
48,442 |
|
|
|
56,786 |
|
Accrued compensation and related benefits |
|
|
32,140 |
|
|
|
23,792 |
|
Income taxes payable |
|
|
50 |
|
|
|
148 |
|
Operating lease liabilities |
|
|
11,061 |
|
|
|
10,619 |
|
Other current liabilities |
|
|
38,887 |
|
|
|
41,352 |
|
Total current liabilities |
|
|
137,402 |
|
|
|
143,218 |
|
Deferred compensation |
|
|
6,140 |
|
|
|
5,300 |
|
Line of credit |
|
|
64,000 |
|
|
|
129,000 |
|
Operating lease liabilities, net of current |
|
|
36,380 |
|
|
|
38,823 |
|
Other noncurrent liabilities |
|
|
8,899 |
|
|
|
3,281 |
|
Total liabilities |
|
|
252,821 |
|
|
|
319,622 |
|
Commitments and contingencies |
|
|
|
|
|
|
|
|
Shareholders' equity: |
|
|
|
|
|
|
|
|
Common stock |
|
|
|
|
|
|
|
|
|
|
|
667 |
|
|
|
661 |
|
Additional paid-in capital |
|
|
292,228 |
|
|
|
282,857 |
|
Accumulated other comprehensive loss |
|
|
(2,054 |
) |
|
|
(2,143 |
) |
Retained earnings |
|
|
128,750 |
|
|
|
119,119 |
|
Total shareholders' equity |
|
|
419,591 |
|
|
|
400,494 |
|
Total liabilities and shareholders' equity |
|
$ |
672,412 |
|
|
$ |
720,116 |
|
|||||||||||||
NON-GAAP FINANCIAL MEASURES |
|||||||||||||
(In thousands, except per share data) |
|||||||||||||
RECONCILIATION OF NON-GAAP DILUTED EARNINGS PER SHARE |
|||||||||||||
|
Three Months Ended
|
|
|
Six Months Ended
|
|
||||||||
|
2020 |
|
2019 |
|
|
2020 |
|
2019 |
|
||||
Income before provision for income taxes - GAAP |
$ |
9,157 |
|
$ |
6,590 |
|
|
$ |
9,949 |
|
$ |
7,454 |
|
Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition costs, net |
|
142 |
|
|
739 |
|
|
|
262 |
|
|
739 |
|
Amortization of acquired intangible assets |
|
5,984 |
|
|
5,152 |
|
|
|
12,232 |
|
|
10,305 |
|
Amortization of deferred debt issuance costs |
|
178 |
|
|
178 |
|
|
|
355 |
|
|
355 |
|
Impairment of assets |
|
— |
|
|
1,916 |
|
|
|
— |
|
|
2,405 |
|
Restructuring costs |
|
— |
|
|
175 |
|
|
|
2,562 |
|
|
1,882 |
|
Securities litigation defense costs and settlement, net of insurance |
|
3,233 |
|
|
339 |
|
|
|
4,259 |
|
|
376 |
|
Share-based compensation |
|
5,437 |
|
|
4,316 |
|
|
|
10,830 |
|
|
9,207 |
|
Other non-run-rate expenses* |
|
1,154 |
|
|
815 |
|
|
|
2,465 |
|
|
905 |
|
Total adjustments to GAAP income before provision for income taxes: |
|
16,128 |
|
|
13,630 |
|
|
|
32,965 |
|
|
26,174 |
|
Income before provision for income taxes - Non-GAAP |
|
25,285 |
|
|
20,220 |
|
|
|
42,914 |
|
|
33,628 |
|
Provision for income taxes |
|
5,057 |
|
|
4,448 |
|
|
|
8,583 |
|
|
7,398 |
|
Net income - Non-GAAP |
$ |
20,228 |
|
$ |
15,772 |
|
|
$ |
34,331 |
|
$ |
26,230 |
|
Diluted net income per share - Non-GAAP |
$ |
0.30 |
|
$ |
0.24 |
|
|
$ |
0.52 |
|
$ |
0.40 |
|
Weighted-average shares outstanding (diluted): |
|
66,689 |
|
|
65,560 |
|
|
|
66,493 |
|
|
65,445 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Other non-run-rate expenses for the three months ended
Other non-run-rate expenses for the three and six months ended |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20201022006130/en/
Media Contact:
O: (949) 237-6083
tstegmaier@nextgen.com
Or
Investor Contact:
(443)213-0500
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