NextGen Healthcare Reports Fiscal 2023 Third Quarter Results

1/24/2023

Raises Full Year Revenue Guidance and Reaffirms Earnings

REMOTE-FIRST COMPANY/NEW YORK--(BUSINESS WIRE)--Jan. 24, 2023-- NextGen Healthcare, Inc. (Nasdaq: NXGN), a leading provider of innovative, cloud-based healthcare technology solutions, today announced its operating results for the fiscal third quarter ended December 31, 2022.

Fiscal 2023 Third Quarter Highlights

  • Total revenue was $161.9 million compared to $149.7 million for the same period a year ago, an increase of 8%.
  • Recurring revenue was $148.7 million compared to $134.5 million for the same period a year ago, an increase of 11%.
  • Non-recurring revenue was $13.2 million compared to $15.2 million for the same period a year ago, a decrease of 14%.
  • Bookings, which reflects annual contract value excluding renewals, was $44.8 million and included six deals greater than $1.0 million.
  • Fully diluted net income per share was $0.12 compared to $0.08 for the same period a year ago.
  • On a non-GAAP basis, fully diluted earnings per share was $0.26 compared to $0.24 for the same period a year ago.
  • Issued $275.0 million convertible senior note with concurrent $40 million share repurchase.
  • Acquired TSI Healthcare, a long-standing partner providing purpose-built clinical content and a differentiated service-oriented client experience.

“I’m pleased to report strong execution and solid results for the quarter. The team made great progress across multiple fronts, delivering revenue growth and demonstrating a disciplined approach to capital management,” said David Sides, president and chief executive officer of NextGen Healthcare. “We continue to make investments required for long-term profitability and remain confident in our ability to deliver durable growth in fiscal year 2024 and beyond.”

The company’s revised guidance for fiscal 2023, including the TSI acquisition and the convertible note issuance, is now as follows:

  • Revenue is expected to be in the range of $642 million to $650 million, an increase from prior guidance range of $630 million to $640 million.
  • Adjusted EBITDA is expected to be in the range of $110 million to $115 million, consistent with prior guidance.
  • Non-GAAP earnings per share is expected to be in the range of $0.93 to $0.99, consistent with prior guidance.

Conference Call Information

NextGen Healthcare will host a conference call today at 5:00 p.m. EST to discuss operating results from its fiscal 2023 third quarter. Shareholders and interested participants may listen to a live broadcast of the call by dialing 800-343-4849 or 785-424-1699 for international callers and referencing participant code NXGNQ323 approximately 15 minutes prior to the call. A recording of the live webcast will be available on investor.nextgen.com after the call. It will be archived for 90 days.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including but not limited to statements regarding our fiscal year 2023 outlook, financial and operating results, strategic priorities, growth initiatives and expected capital expenditures. These forward-looking statements are based on the current beliefs, expectations, and assumptions of the Company's management relating to the future (including, without limitation, statements concerning revenue, net income, and earnings per share). The words “positioned,” “proposed,” “potential,” “project,” “expect,” “anticipate,” “intend,” “plan,” “goal,” “seek,” “believe,” “estimate, “strategy,” “expectations,” “future,” “likely,” “may,” “should,” “will,” variations thereof or similar expressions are intended to identify such forward-looking statements.

Risks and uncertainties exist that may cause the results to differ materially from those set forth in these forward-looking statements, including but not limited to: changes in laws and regulations applicable to our business; changes in market conditions and receptivity to our services and offerings; strategic actions, including acquisitions and dispositions and our success in integrating acquired businesses; our ability to maintain and expand our business with existing clients or effectively transition clients to newer products; our ability to attract new partners and successfully capture new opportunities; our ability to develop and grow partner relationships; our ability to attract and retain key employees; our ability to anticipate or respond quickly to market changes, execute our strategy and manage growth; the impact of litigation and governmental and regulatory agency investigations; the impact of governmental and regulatory agency investigations; the development by competitors of new or superior technologies; the timing, cost and success or failure of new product and service introductions, development and product upgrade releases; the impact of the COVID-19 pandemic on our operations and demand for our services; impact of breaches or failures of the Company’s information security measures or unauthorized access to a customer’s data; disruptions caused by acquisitions of companies, products, or technologies; and general economic conditions. Additional discussion of these and other risks, uncertainties and factors affecting our business is contained in our filings with the SEC, including our most recent Annual Report on Form 10-K and subsequently filed Quarterly Reports on Form 10-Q.

A significant portion of the Company's quarterly sales of software product licenses and computer hardware is concluded in the last month of a fiscal quarter, generally with a concentration of such revenues earned in the final ten business days of that month. Due to these and other factors, the Company's revenues and operating results are very difficult to forecast. A major portion of the Company's costs and expenses, such as personnel and facilities, are of a fixed nature and, accordingly, a shortfall or decline in quarterly and/or annual revenues typically results in lower profitability or losses. As a result, comparison of the Company's period-to-period financial performance is not necessarily meaningful and should not be relied upon as an indicator of future performance. These forward-looking statements speak only as of the date hereof. The Company undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.

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 U.S. GAAP. Pursuant to the requirements of Regulation G, the Company has provided a reconciliation of non-GAAP financial measures to the most directly comparable financial measure in the accompanying financial tables. Other companies may calculate non-GAAP measures differently than NextGen Healthcare, Inc., which limits comparability between companies. The Company believes that its presentation of non-GAAP diluted earnings per share provides useful supplemental information to investors and management regarding the Company's financial condition and results. The presentation of non-GAAP financial information is not intended to be considered in isolation or as a substitute for, or superior to, financial information prepared and presented in accordance with GAAP.

The Company calculates non-GAAP diluted earnings per share by excluding net acquisition costs, amortization of acquired intangible assets, amortization of deferred debt issuance costs, gain on disposition of Commercial Dental assets, impairment of assets, restructuring costs, shareholder disputes and related costs, net of insurance, which include net securities litigation defense, proxy contest, and related costs, share-based compensation, and other non-run-rate expenses from GAAP income before provision for income taxes.

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 2023 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 calculates free cash flow as total net cash provided by operating activities, net of cash used for the additions of capitalized software costs and equipment and improvements. The Company calculates net debt as line of credit less cash and cash equivalents. The Company calculates non-GAAP adjusted EBITDA by excluding net acquisition costs, amortization of acquired intangible assets, impairment of assets, restructuring costs, shareholder disputes and related costs, net of insurance, which include net securities litigation defense, proxy contest, and related costs, share-based compensation, and other non-run-rate expenses from GAAP income from operations and then adding back amortization of capitalized software costs and depreciation as presented within the condensed consolidated statements of cash flows. Non-GAAP adjusted EBITDA margin is calculated as non-GAAP adjusted EBITDA divided by total revenues. The Company calculates Rule of 40 as annual revenue growth rate plus non-GAAP adjusted EBITDA margin.

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, shareholder disputes and related costs, which include net securities litigation defense, proxy contest, and related 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.

About NextGen Healthcare, Inc.

NextGen Healthcare, Inc. (Nasdaq: NXGN) is a leading provider of innovative healthcare technology solutions. We are reimagining ambulatory healthcare with award-winning solutions that enable high-performing practices to create healthier communities. We partner with medical, behavioral and dental providers in their journey toward whole person health and value-based care. Our highly integrated, intelligent and interoperable solutions go beyond EHR and Practice Management to increase clinical quality and productivity, enrich the patient experience and drive superior financial performance. We are on a quest to achieve better healthcare outcomes for all. Learn more at nextgen.com, and follow us on Facebook, Twitter, LinkedIn, YouTube and Instagram.

NEXTGEN HEALTHCARE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share data)

(Unaudited)

 

 

Three Months Ended

December 31,

 

 

Nine Months Ended

December 31,

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

Recurring

$

148,720

 

 

$

134,496

 

 

$

431,982

 

 

$

402,486

 

Software, hardware, and other non-recurring

 

13,157

 

 

 

15,225

 

 

 

42,640

 

 

 

42,605

 

Total revenues

 

161,877

 

 

 

149,721

 

 

 

474,622

 

 

 

445,091

 

Cost of revenue:

 

 

 

 

 

 

 

 

 

 

 

Recurring

 

67,047

 

 

 

58,033

 

 

 

194,330

 

 

 

172,312

 

Software, hardware, and other non-recurring

 

11,515

 

 

 

7,978

 

 

 

32,988

 

 

 

23,085

 

Amortization of capitalized software costs and acquired intangible assets

 

6,787

 

 

 

8,193

 

 

 

20,665

 

 

 

24,246

 

Total cost of revenue

 

85,349

 

 

 

74,204

 

 

 

247,983

 

 

 

219,643

 

Gross profit

 

76,528

 

 

 

75,517

 

 

 

226,639

 

 

 

225,448

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

46,177

 

 

 

47,238

 

 

 

140,097

 

 

 

159,615

 

Research and development costs, net

 

19,621

 

 

 

19,390

 

 

 

62,273

 

 

 

57,229

 

Amortization of acquired intangible assets

 

919

 

 

 

881

 

 

 

2,329

 

 

 

2,643

 

Impairment of assets

 

247

 

 

 

—

 

 

 

1,576

 

 

 

1,577

 

Restructuring costs

 

—

 

 

 

—

 

 

 

321

 

 

 

539

 

Total operating expenses

 

66,964

 

 

 

67,509

 

 

 

206,596

 

 

 

221,603

 

Income from operations

 

9,564

 

 

 

8,008

 

 

 

20,043

 

 

 

3,845

 

Interest income

 

1,530

 

 

 

50

 

 

 

1,650

 

 

 

79

 

Interest expense

 

(2,239

)

 

 

(321

)

 

 

(2,894

)

 

 

(958

)

Other income (expense), net

 

(21

)

 

 

(9

)

 

 

10,266

 

 

 

(43

)

Income before provision for income taxes

 

8,834

 

 

 

7,728

 

 

 

29,065

 

 

 

2,923

 

Provision for income taxes

 

1,019

 

 

 

2,535

 

 

 

6,479

 

 

 

1,653

 

Net income

$

7,815

 

 

$

5,193

 

 

$

22,586

 

 

$

1,270

 

Net income per share:

 

 

 

 

 

 

 

 

 

 

 

Basic

$

0.12

 

 

$

0.08

 

 

$

0.34

 

 

$

0.02

 

Diluted

$

0.12

 

 

$

0.08

 

 

$

0.33

 

 

$

0.02

 

Weighted-average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

Basic

 

66,561

 

 

 

67,958

 

 

 

67,317

 

 

 

67,514

 

Diluted

 

67,307

 

 

 

68,167

 

 

 

68,005

 

 

 

67,851

 

NEXTGEN HEALTHCARE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except per share data)

(Unaudited)

 

 

 

December 31, 2022

 

 

March 31, 2022

 

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

241,550

 

 

$

59,829

 

Restricted cash and cash equivalents

 

 

7,920

 

 

 

6,918

 

Accounts receivable, net

 

 

79,419

 

 

 

76,057

 

Contract assets

 

 

19,594

 

 

 

25,157

 

Income taxes receivable

 

 

6,897

 

 

 

6,507

 

Prepaid expenses and other current assets

 

 

34,257

 

 

 

37,102

 

Total current assets

 

 

389,637

 

 

 

211,570

 

Equipment and improvements, net

 

 

7,230

 

 

 

9,120

 

Capitalized software costs, net

 

 

52,603

 

 

 

43,958

 

Operating lease assets

 

 

4,982

 

 

 

11,316

 

Deferred income taxes, net

 

 

19,970

 

 

 

19,259

 

Contract assets, net of current

 

 

4,280

 

 

 

1,910

 

Intangibles, net

 

 

31,563

 

 

 

24,303

 

Goodwill

 

 

321,284

 

 

 

267,212

 

Other assets

 

 

39,474

 

 

 

39,026

 

Total assets

 

$

871,023

 

 

$

627,674

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

14,509

 

 

$

9,125

 

Contract liabilities

 

 

62,592

 

 

 

61,280

 

Accrued compensation and related benefits

 

 

25,818

 

 

 

48,736

 

Income taxes payable

 

 

12

 

 

 

99

 

Operating lease liabilities

 

 

4,312

 

 

 

8,089

 

Other current liabilities

 

 

46,955

 

 

 

53,533

 

Total current liabilities

 

 

154,198

 

 

 

180,862

 

Contract liabilities, net of current

 

 

11,117

 

 

 

—

 

Deferred compensation

 

 

7,569

 

 

 

7,230

 

Convertible senior notes, net, noncurrent

 

 

266,589

 

 

 

—

 

Operating lease liabilities, net of current

 

 

4,992

 

 

 

11,934

 

Other noncurrent liabilities

 

 

8,794

 

 

 

4,570

 

Total liabilities

 

 

453,259

 

 

 

204,596

 

Commitments and contingencies

 

 

 

 

 

 

Shareholders' equity:

 

 

 

 

 

 

Common stock, $0.01 par value; authorized 100,000 shares; 70,888 shares and 69,245 shares issued at December 31, 2022 and March 31, 2022, respectively; 66,039 shares and 67,075 shares outstanding at December 31, 2022 and March 31, 2022, respectively

 

 

709

 

 

 

692

 

Treasury stock, at cost, 4,849 shares and 2,170 shares at December 31, 2022 and March 31, 2022, respectively

 

 

(85,752

)

 

 

(35,874

)

Additional paid-in capital

 

 

351,834

 

 

 

329,917

 

Accumulated other comprehensive loss

 

 

(1,865

)

 

 

(1,909

)

Retained earnings

 

 

152,838

 

 

 

130,252

 

Total shareholders' equity

 

 

417,764

 

 

 

423,078

 

Total liabilities and shareholders' equity

$

871,023

$

627,674

NEXTGEN HEALTHCARE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

Three Months Ended

December 31,

 

 

Nine Months Ended

December 31,

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

 

 

 

Net income

$

7,815

 

 

$

5,193

 

 

$

22,586

 

 

$

1,270

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

 

 

 

 

Amortization of capitalized software costs

 

5,678

 

 

 

5,975

 

 

 

16,403

 

 

 

17,592

 

Amortization of debt issuance costs

 

199

 

 

 

127

 

 

 

453

 

 

 

381

 

Amortization of other intangibles

 

2,026

 

 

 

3,100

 

 

 

6,590

 

 

 

9,298

 

Change in fair value of contingent consideration

 

(100

)

 

 

7

 

 

 

(100

)

 

 

7

 

Deferred income taxes

 

463

 

 

 

6

 

 

 

463

 

 

 

35

 

Depreciation

 

1,195

 

 

 

1,625

 

 

 

3,841

 

 

 

5,406

 

Excess tax deficiency (benefit) from share-based compensation

 

(244

)

 

 

194

 

 

 

(678

)

 

 

834

 

Gain on disposition of Commercial Dental assets

 

—

 

 

 

—

 

 

 

(10,296

)

 

 

—

 

Impairment of assets

 

247

 

 

 

—

 

 

 

1,576

 

 

 

1,577

 

Loss on disposal of equipment and improvements

 

—

 

 

 

—

 

 

 

74

 

 

 

77

 

Loss on foreign currency exchange rates

 

(20

)

 

 

—

 

 

 

(13

)

 

 

—

 

Non-cash operating lease costs

 

510

 

 

 

1,368

 

 

 

2,192

 

 

 

4,455

 

Provision for bad debts

 

500

 

 

 

463

 

 

 

1,100

 

 

 

1,142

 

Share-based compensation

 

9,063

 

 

 

7,050

 

 

 

26,516

 

 

 

18,685

 

Changes in assets and liabilities, net of amounts acquired:

 

 

 

 

 

 

 

 

 

 

 

Accounts receivable

 

(1,098

)

 

 

1,445

 

 

 

(2,625

)

 

 

6,319

 

Contract assets

 

7,191

 

 

 

(3,731

)

 

 

7,189

 

 

 

(4,786

)

Accounts payable

 

964

 

 

 

2,484

 

 

 

4,117

 

 

 

3,592

 

Contract liabilities

 

(6,680

)

 

 

1,373

 

 

 

(4,941

)

 

 

2,016

 

Accrued compensation and related benefits

 

(3,169

)

 

 

7,966

 

 

 

(23,591

)

 

 

(8,355

)

Income taxes

 

(3,112

)

 

 

2,110

 

 

 

822

 

 

 

(7,214

)

Deferred compensation

 

588

 

 

 

396

 

 

 

339

 

 

 

1,051

 

Operating lease liabilities

 

(3,328

)

 

 

(4,702

)

 

 

(7,425

)

 

 

(10,062

)

Other assets and liabilities

 

(16,507

)

 

 

(16,292

)

 

 

(8,615

)

 

 

(6,684

)

Net cash provided by operating activities

 

2,181

 

 

 

16,157

 

 

 

35,977

 

 

 

36,636

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

 

 

 

Additions to capitalized software costs

 

(8,490

)

 

 

(6,124

)

 

 

(26,906

)

 

 

(17,837

)

Additions to equipment and improvements

 

(632

)

 

 

(352

)

 

 

(2,058

)

 

 

(2,037

)

Payments for acquisitions, net of cash acquired

 

(47,451

)

 

 

—

 

 

 

(47,451

)

 

 

—

 

Proceeds from disposition of Commercial Dental assets

 

—

 

 

 

—

 

 

 

11,253

 

 

 

—

 

Net cash used in investing activities

 

(56,573

)

 

 

(6,476

)

 

 

(65,162

)

 

 

(19,874

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

 

 

 

Proceeds from convertible senior notes

 

275,000

 

 

 

—

 

 

 

275,000

 

 

 

—

 

Proceeds from line of credit

 

50,000

 

 

 

—

 

 

 

50,000

 

 

 

—

 

Repayments on line of credit

 

(50,000

)

 

 

—

 

 

 

(50,000

)

 

 

—

 

Payment of debt issuance costs

 

(8,483

)

 

 

—

 

 

 

(8,483

)

 

 

—

 

Payment of contingent consideration related to acquisitions

 

—

 

 

 

(540

)

 

 

—

 

 

 

(540

)

Proceeds from issuance of shares under employee plans

 

2,820

 

 

 

(232

)

 

 

5,395

 

 

 

877

 

Repurchase of common stock

 

(40,000

)

 

 

(35,874

)

 

 

(49,878

)

 

 

(35,874

)

Payments for taxes related to net share settlement of equity awards

 

(3,853

)

 

 

(249

)

 

 

(9,977

)

 

 

(5,450

)

Net cash provided by (used in) financing activities

 

225,484

 

 

 

(36,895

)

 

 

212,057

 

 

 

(40,987

)

Effect of exchange rate changes on cash, cash equivalents, and restricted cash

 

70

 

 

 

—

 

 

 

(149

)

 

 

—

 

Net increase (decrease) in cash, cash equivalents, and restricted cash

 

171,162

 

 

 

(27,214

)

 

 

182,723

 

 

 

(24,225

)

Cash, cash equivalents, and restricted cash at beginning of period

 

78,308

 

 

 

81,564

 

 

 

66,747

 

 

 

78,575

 

Cash, cash equivalents, and restricted cash at end of period

$

249,470

 

 

$

54,350

 

 

$

249,470

 

 

$

54,350

 

NEXTGEN HEALTHCARE, INC.

SUPPLEMENTAL FINANCIAL INFORMATION

(In thousands)

 

The following table presents our revenues disaggregated by our major revenue categories and by occurrence:

 

 

Three Months Ended

December 31,

 

 

Nine Months Ended

December 31,

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Recurring revenues:

 

 

 

 

 

 

 

 

 

 

 

Subscription services

$

45,850

 

 

$

41,158

 

 

$

132,025

 

 

$

120,581

 

Support and maintenance

 

37,382

 

 

 

38,246

 

 

 

114,670

 

 

 

115,736

 

Managed services

 

32,963

 

 

 

27,521

 

 

 

94,663

 

 

 

83,636

 

Transactional and data services

 

32,525

 

 

 

27,571

 

 

 

90,624

 

 

 

82,533

 

Total recurring revenues

 

148,720

 

 

 

134,496

 

 

 

431,982

 

 

 

402,486

 

 

 

 

 

 

 

 

 

 

 

 

 

Software, hardware, and other non-recurring revenues:

 

 

 

 

 

 

 

 

 

 

 

Software license and hardware

 

5,258

 

 

 

8,920

 

 

 

19,373

 

 

 

24,202

 

Other non-recurring services

 

7,899

 

 

 

6,305

 

 

 

23,267

 

 

 

18,403

 

Total software, hardware and other non-recurring revenues

 

13,157

 

 

 

15,225

 

 

 

42,640

 

 

 

42,605

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenues

$

161,877

 

 

$

149,721

 

 

$

474,622

 

 

$

445,091

 

 

 

 

 

 

 

 

 

 

 

 

 

Recurring revenues as a percentage of total revenues

 

91.9

%

 

 

89.8

%

 

 

91.0

%

 

 

90.4

%

NEXTGEN HEALTHCARE, INC.

NON-GAAP FINANCIAL MEASURES

(In thousands, except per share data)

 

RECONCILIATION OF NON-GAAP DILUTED EARNINGS PER SHARE

 

 

Three Months Ended

December 31,

 

 

Nine Months Ended

December 31,

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Income before provision for income taxes – GAAP

$

8,834

 

 

$

7,728

 

 

$

29,065

 

 

$

2,923

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

 

 

 

Acquisition costs, net

 

1,288

 

 

 

—

 

 

 

1,513

 

 

 

—

 

Amortization of acquired intangible assets

 

2,026

 

 

 

3,099

 

 

 

6,590

 

 

 

9,298

 

Amortization of deferred debt issuance costs

 

199

 

 

 

127

 

 

 

453

 

 

 

381

 

Gain on disposition of Commercial Dental assets

 

—

 

 

 

—

 

 

 

(10,296

)

 

 

—

 

Impairment of assets

 

247

 

 

 

—

 

 

 

1,576

 

 

 

1,577

 

Restructuring costs

 

—

 

 

 

—

 

 

 

321

 

 

 

539

 

Shareholder disputes and related costs, net of insurance

 

142

 

 

 

2,224

 

 

 

487

 

 

 

29,216

 

Share-based compensation

 

9,063

 

 

 

7,050

 

 

 

26,516

 

 

 

18,685

 

Other non-run-rate expenses*

 

167

 

 

 

351

 

 

 

779

 

 

 

4,379

 

Total adjustments to GAAP income before provision for income taxes:

 

13,132

 

 

 

12,851

 

 

 

27,939

 

 

 

64,075

 

Income before provision for income taxes - Non-GAAP

 

21,966

 

 

 

20,579

 

 

 

57,004

 

 

 

66,998

 

Provision for income taxes

 

4,393

 

 

 

4,116

 

 

 

11,401

 

 

 

13,400

 

Net income - Non-GAAP

$

17,573

 

 

$

16,463

 

 

$

45,603

 

 

$

53,598

 

Diluted net income per share - Non-GAAP

$

0.26

 

 

$

0.24

 

 

$

0.67

 

 

$

0.79

 

Weighted-average shares outstanding (diluted):

 

67,307

 

 

 

68,167

 

 

 

68,005

 

 

 

67,851

 

 

 

 

 

 

 

 

 

 

 

 

 

* Other non-run-rate expenses for the three months ended December 31, 2022 consist of $167 excess lease-related expense for vacated facilities.

Other non-run-rate expenses for the three months ended December 31, 2021 consist primarily of $312 excess lease-related expense for vacated facilities and other costs and $39 of professional services costs not related to core operations.

Other non-run-rate expenses for the nine months ended December 31, 2022 consist of $629 excess lease-related expense for vacated facilities and $150 of professional services costs not related to core operations.

Other non-run-rate expenses for the nine months ended December 31, 2021 consist primarily of $1,135 excess lease-related expense for vacated facilities, lease termination costs, and other costs, including retention bonuses, related to the restructuring plan and $2,707 of executive transition costs, including severance and other costs related to the departure of the CEO, $498 of incremental costs and penalties primarily due to the cancellation of certain events directly associated with the COVID-19 pandemic, and $39 of professional services costs not related to core operations.

 

RECONCILIATION OF FREE CASH FLOW

 

 

Three Months Ended

December 31,

 

 

Nine Months Ended

December 31,

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Net cash provided by operating activities

$

2,181

 

 

$

16,157

 

 

$

35,977

 

 

$

36,636

 

Additions to capitalized software costs

 

(8,490

)

 

 

(6,124

)

 

 

(26,906

)

 

 

(17,837

)

Additions to equipment and improvements

 

(632

)

 

 

(352

)

 

 

(2,058

)

 

 

(2,037

)

Free cash flow

$

(6,941

)

$

9,681

$

7,013

$

16,762

NEXTGEN HEALTHCARE, INC.

NON-GAAP FINANCIAL MEASURES

(In thousands)

 

RECONCILIATION OF ADJUSTED EBITDA

 

 

Three Months Ended

December 31,

 

 

Nine Months Ended

December 31,

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Income from operations – GAAP

$

9,564

 

 

$

8,008

 

 

$

20,043

 

 

$

3,845

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

 

 

 

Acquisition costs, net

 

1,288

 

 

 

—

 

 

 

1,513

 

 

 

—

 

Amortization of acquired intangible assets

 

2,026

 

 

 

3,099

 

 

 

6,590

 

 

 

9,298

 

Impairment of assets

 

247

 

 

 

—

 

 

 

1,576

 

 

 

1,577

 

Restructuring costs

 

—

 

 

 

—

 

 

 

321

 

 

 

539

 

Shareholder disputes and related costs, net of insurance

 

142

 

 

 

2,224

 

 

 

487

 

 

 

29,216

 

Share-based compensation

 

9,063

 

 

 

7,050

 

 

 

26,516

 

 

 

18,685

 

Other non-run-rate expenses*

 

167

 

 

 

351

 

 

 

779

 

 

 

4,379

 

Total adjustments to GAAP income from operations

 

12,933

 

 

 

12,724

 

 

 

37,782

 

 

 

63,694

 

Income from operations - Non-GAAP

 

22,497

 

 

 

20,732

 

 

 

57,825

 

 

 

67,539

 

Amortization of capitalized software costs

 

5,678

 

 

 

5,975

 

 

 

16,403

 

 

 

17,592

 

Depreciation

 

1,195

 

 

 

1,625

 

 

 

3,841

 

 

 

5,406

 

Depreciation and Amortization - Non-GAAP

 

6,873

 

 

 

7,600

 

 

 

20,244

 

 

 

22,998

 

Adjusted EBITDA - Non-GAAP

$

29,370

 

 

$

28,332

 

 

$

78,069

 

 

$

90,537

 

Total revenues

$

161,877

 

 

$

149,721

 

 

$

474,622

 

 

$

445,091

 

Adjusted EBITDA margin - Non-GAAP

 

18.1

%

 

 

18.9

%

 

 

16.4

%

 

 

20.3

%

 

 

 

 

 

 

 

 

 

 

 

 

* Other non-run-rate expenses for the three months ended December 31, 2022 consist of $167 excess lease-related expense for vacated facilities.

Other non-run-rate expenses for the three months ended December 31, 2021 consist primarily of $312 excess lease-related expense for vacated facilities and other costs and $39 of professional services costs not related to core operations.

Other non-run-rate expenses for the nine months ended December 31, 2022 consist of $629 excess lease-related expense for vacated facilities and $150 of professional services costs not related to core operations.

Other non-run-rate expenses for the nine months ended December 31, 2021 consist primarily of $1,135 excess lease-related expense for vacated facilities, lease termination costs, and other costs, including retention bonuses, related to the restructuring plan and $2,707 of executive transition costs, including severance and other costs related to the departure of the CEO, $498 of incremental costs and penalties primarily due to the cancellation of certain events directly associated with the COVID-19 pandemic, and $39 of professional services costs not related to core operations.

 

 

Media Relations Contact
Tami Andrade
(949) 237-6083
tandrade@nextgen.com

Investor Relations Contact
James Hammerschmidt
(949) 237-6112
jhammerschmidt@nextgen.com

Source: NextGen Healthcare, Inc.