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EX-10.2 - EX-10.2 - NEXTGEN HEALTHCARE, INC.nxgn-ex102_59.htm
EX-10.1 - EX-10.1 - NEXTGEN HEALTHCARE, INC.nxgn-ex101_33.htm
8-K - 8-K - NEXTGEN HEALTHCARE, INC.nxgn-8k_20190121.htm

Exhibit 99.1

 

 

 

 

FOR IMMEDIATE RELEASE

January 23, 2019

 

NextGen Healthcare, Inc. Reports Fiscal 2019 Third Quarter Results

IRVINE, Calif. – (BUSINESS WIRE) – NextGen Healthcare, Inc. (NASDAQ: NXGN) announced today its fiscal 2019 third quarter ended December 31, 2018 operating results.

 

"We are pleased with our year to date bookings growth of over 20%, our attrition rate ticking down sequentially in the quarter and the progress we have made in terms of new client wins. Our fully integrated solution continues to resonate with both existing and new clients, we continue to improve client satisfaction, and we are managing our expenses and investments effectively.  Based on our progress, we remain confident that we are on track to meet our multi-year growth targets,” commented Rusty Frantz, president and chief executive officer of NextGen Healthcare.

 

Fiscal 2019 Third Quarter Highlights

As a result of the adoption of Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers: Topic 606 (“ASC 606”), the GAAP comparisons below compare fiscal 2019 third quarter results under ASC 606 to the fiscal 2018 third quarter results under the legacy revenue guidance (“ASC 605”). A reconciliation of fiscal 2019 third quarter results from ASC 606 to ASC 605 can be found in the tables at the end of the press release.

 

On a GAAP basis, revenue for the fiscal 2019 third quarter was $130.9 million compared to $131.7 million a year-ago. On a pro forma basis under ASC 605, revenue for the fiscal 2019 third quarter was $130.3 million. 

 

On a GAAP basis, net income for the fiscal 2019 third quarter was $4.8 million, compared with net income of $1.5 million in the fiscal 2018 third quarter. On a pro forma basis under ASC 605, net income for the fiscal 2019 third quarter was $3.8 million.

 

On a GAAP basis, fully diluted net income per share was $0.07 in the fiscal 2019 third quarter compared with earnings per share of $0.02 for the same period a year ago.  On a non-GAAP basis, fully diluted earnings per share for the fiscal 2019 third quarter was $0.20 versus $0.15 reported in the third quarter a year ago. On a pro forma non-GAAP basis, under ASC 605, fully diluted earnings per share for the fiscal 2019 third quarter was $0.18.

 

Fiscal 2019 Financial Outlook

The company’s updated outlook for fiscal 2019 is as follows:

 

Revenue of between $525 million and $535 million, unchanged from the previous range, but with a bias towards the lower end.

 

Non-GAAP EPS of between $0.72 and $0.76, from the previous range of $0.70 to $0.74.

 

 

 


Conference Call Information

NextGen Healthcare will host a conference call to discuss its fiscal 2019 third quarter results on Wednesday, January 23, 2019 at 5:00 PM ET (2:00 PM PT). Shareholders and interested participants may listen to a live broadcast of the conference call by dialing 866-750-8947 or 720-405-1352 for international callers, and referencing participant code 3208647 approximately 15 minutes prior to the call. A live webcast of the conference call will be available on the investor relations section of the company’s web site and an audio file of the call will also be archived for 90 days at investor.nextgen.com. After the conference call, a replay will be available until January 27, 2019 and can be accessed by dialing 800-585-8367 or 404-537-3406 for international callers, and referencing participant code 3208647.

 

About NextGen Healthcare, Inc

NextGen Healthcare is enabling the transformation of ambulatory care by providing a range of software, services, and analytics solutions to medical and dental group practices. The company's portfolio delivers foundational capabilities to empower physician success, enrich the patient care experience, and enable the transition to value-based healthcare. Visit www.nextgen.com for additional information.

 

Media Contact:
NextGen Healthcare
Cynthia Ragland, (949) 255-2600 x75416
cragland@nextgen.com

or

Investor Contact:

Westwicke Partners

Bob East or Asher Dewhurst

Westwicke Partners

443-213-0500

 

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, 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: 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 U.S. tax reform; 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; undetected errors or bugs in software; product liability; changing economic, political or regulatory influences in the health-care industry; changes in product-pricing policies; availability of third-party products and components; competitive pressures including product offerings, pricing and promotional activities; the Company's ability or inability to attract and retain qualified personnel; possible regulation of the Company's


software by the U.S. Food and Drug Administration; changes of accounting estimates and assumptions used to prepare the prior periods' financial statements; disruptions caused by acquisitions of companies, products, or technologies; and general economic conditions. 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, restructuring costs, net securities litigation defense costs and settlement, 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 fiscal year 2019 was 22.0%, compared to 30.5% for fiscal year 2018, which was updated as a result of the enactment of the new tax reform legislation on December 22, 2017. 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, 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.

 

 

 

 

 


 

 

NEXTGEN HEALTHCARE, INC.

CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share data)

(Unaudited)

 

 

Three Months Ended December 31,

 

 

Nine Months Ended December 31,

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Recurring

$

117,446

 

 

$

118,997

 

 

$

353,770

 

 

$

357,616

 

Software, hardware, and other non-recurring

 

13,421

 

 

 

12,718

 

 

 

40,618

 

 

 

37,628

 

Total revenues

 

130,867

 

 

 

131,715

 

 

 

394,388

 

 

 

395,244

 

Cost of revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Recurring

 

47,997

 

 

 

49,347

 

 

 

143,322

 

 

 

145,504

 

Software, hardware, and other non-recurring

 

6,576

 

 

 

6,323

 

 

 

20,752

 

 

 

18,310

 

Amortization of capitalized software costs and acquired intangible assets

 

7,098

 

 

 

5,964

 

 

 

20,566

 

 

 

15,744

 

Total cost of revenue

 

61,671

 

 

 

61,634

 

 

 

184,640

 

 

 

179,558

 

Gross profit

 

69,196

 

 

 

70,081

 

 

 

209,748

 

 

 

215,686

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

41,304

 

 

 

43,563

 

 

 

120,169

 

 

 

127,517

 

Research and development costs, net

 

20,682

 

 

 

20,645

 

 

 

61,181

 

 

 

60,161

 

Amortization of acquired intangible assets

 

1,027

 

 

 

1,956

 

 

 

3,316

 

 

 

6,015

 

Restructuring costs

 

 

 

 

130

 

 

 

 

 

 

130

 

Total operating expenses

 

63,013

 

 

 

66,294

 

 

 

184,666

 

 

 

193,823

 

Income from operations

 

6,183

 

 

 

3,787

 

 

 

25,082

 

 

 

21,863

 

Interest income

 

44

 

 

 

15

 

 

 

113

 

 

 

36

 

Interest expense

 

(720

)

 

 

(733

)

 

 

(2,219

)

 

 

(2,250

)

Other income (expense), net

 

(227

)

 

 

(41

)

 

 

384

 

 

 

(48

)

Income before provision for income taxes

 

5,280

 

 

 

3,028

 

 

 

23,360

 

 

 

19,601

 

Provision for income taxes

 

456

 

 

 

1,487

 

 

 

2,794

 

 

 

6,134

 

Net income

$

4,824

 

 

$

1,541

 

 

$

20,566

 

 

$

13,467

 

Net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

$

0.07

 

 

$

0.02

 

 

$

0.32

 

 

$

0.21

 

Diluted

$

0.07

 

 

$

0.02

 

 

$

0.32

 

 

$

0.21

 

Weighted-average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

64,637

 

 

 

63,706

 

 

 

64,308

 

 

 

63,287

 

Diluted

 

64,776

 

 

 

63,708

 

 

 

64,499

 

 

 

63,296

 

 



NEXTGEN HEALTHCARE, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except per share data)

(Unaudited)

 

 

 

December 31, 2018

 

 

March 31, 2018

 

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

30,054

 

 

$

28,845

 

Restricted cash and cash equivalents

 

 

7,389

 

 

 

2,373

 

Accounts receivable, net

 

 

84,360

 

 

 

84,962

 

Contract assets

 

 

11,281

 

 

 

 

Inventory

 

 

129

 

 

 

180

 

Income taxes receivable

 

 

6,061

 

 

 

8,122

 

Prepaid expenses and other current assets

 

 

18,505

 

 

 

17,180

 

Total current assets

 

 

157,779

 

 

 

141,662

 

Equipment and improvements, net

 

 

23,169

 

 

 

26,795

 

Capitalized software costs, net

 

 

33,468

 

 

 

26,318

 

Deferred income taxes, net

 

 

6,417

 

 

 

9,219

 

Contract assets, net of current

 

 

3,608

 

 

 

 

Intangibles, net

 

 

57,911

 

 

 

74,091

 

Goodwill

 

 

218,771

 

 

 

218,875

 

Other assets

 

 

29,620

 

 

 

18,795

 

Total assets

 

$

530,743

 

 

$

515,755

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

3,611

 

 

$

4,213

 

Contract liabilities

 

 

50,449

 

 

 

54,079

 

Accrued compensation and related benefits

 

 

24,179

 

 

 

27,910

 

Income taxes payable

 

 

47

 

 

 

73

 

Other current liabilities

 

 

41,610

 

 

 

48,317

 

Total current liabilities

 

 

119,896

 

 

 

134,592

 

Contract liabilities, net of current

 

 

 

 

 

1,173

 

Deferred compensation

 

 

5,564

 

 

 

6,086

 

Line of credit

 

 

27,000

 

 

 

37,000

 

Other noncurrent liabilities

 

 

12,913

 

 

 

13,494

 

Total liabilities

 

 

165,373

 

 

 

192,345

 

Commitments and contingencies

 

 

 

 

 

 

 

 

Shareholders' equity:

 

 

 

 

 

 

 

 

Common stock

 

 

 

 

 

 

 

 

$0.01 par value; authorized 100,000 shares; issued and outstanding 64,704 and 63,995 shares at December 31, 2018 and March 31, 2018, respectively

 

 

647

 

 

 

640

 

Additional paid-in capital

 

 

258,311

 

 

 

244,462

 

Accumulated other comprehensive loss

 

 

(1,281

)

 

 

(400

)

Retained earnings (1)

 

 

107,693

 

 

 

78,708

 

Total shareholders' equity

 

 

365,370

 

 

 

323,410

 

Total liabilities and shareholders' equity

 

$

530,743

 

 

$

515,755

 

 

 

(1)

Includes cumulative effect adjustment related to the adoption of ASC 606.

 



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,

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

Income before provision for income taxes - GAAP

$

5,280

 

 

$

3,028

 

 

$

23,360

 

 

$

19,601

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition costs, net

 

109

 

 

 

387

 

 

 

2,058

 

 

 

1,569

 

Amortization of acquired intangible assets

 

5,315

 

 

 

6,083

 

 

 

16,180

 

 

 

17,351

 

Amortization of deferred debt issuance costs

 

177

 

 

 

269

 

 

 

532

 

 

 

807

 

Restructuring costs

 

 

 

 

130

 

 

 

 

 

 

130

 

Securities litigation defense costs and settlement, net of insurance

 

29

 

 

 

152

 

 

 

(5,407

)

 

 

716

 

Share-based compensation

 

4,698

 

 

 

3,453

 

 

 

11,949

 

 

 

8,585

 

Other non-run-rate expenses*

 

1,340

 

 

 

 

 

 

3,979

 

 

 

263

 

Total adjustments to GAAP income before provision for income taxes:

 

11,668

 

 

 

10,474

 

 

 

29,291

 

 

 

29,421

 

Income before provision for income taxes - Non-GAAP

 

16,948

 

 

 

13,502

 

 

 

52,651

 

 

 

49,022

 

Provision for income taxes

 

3,729

 

 

 

4,118

 

 

 

11,584

 

 

 

14,952

 

Net income - Non-GAAP

$

13,219

 

 

$

9,384

 

 

$

41,067

 

 

$

34,070

 

Diluted net income per share - Non-GAAP

$

0.20

 

 

$

0.15

 

 

$

0.64

 

 

$

0.54

 

Weighted-average shares outstanding (diluted):

 

64,776

 

 

 

63,708

 

 

 

64,499

 

 

 

63,296

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

RECONCILIATION OF NON-GAAP DILUTED EARNINGS PER SHARE UNDER ASC 605

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before provision for income taxes - Non-GAAP

 

16,948

 

 

 

 

 

 

 

52,651

 

 

 

 

 

Adjustments due to adoption of ASC 606

 

(1,610

)

 

 

 

 

 

 

(5,699

)

 

 

 

 

Income before provision for income taxes - Non-GAAP under ASC 605

 

15,338

 

 

 

 

 

 

 

46,952

 

 

 

 

 

Provision for income taxes

 

3,374

 

 

 

 

 

 

 

10,329

 

 

 

 

 

Net income - Non-GAAP under ASC 605

$

11,964

 

 

 

 

 

 

$

36,623

 

 

 

 

 

Diluted net income per share - Non-GAAP under ASC 605

$

0.18

 

 

 

 

 

 

$

0.57

 

 

 

 

 

Weighted-average shares outstanding (diluted):

 

64,776

 

 

 

 

 

 

 

64,499

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

* Other non-run-rate expenses for the three and nine months ended December 31, 2018 consist primarily of severance and other employee-related costs not related to core operations. Other non-run-rate expenses for the nine months ended December 31, 2017 consist primarily of professional services costs not related to core operations.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


We adopted Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers: Topic 606 (“ASC 606”) and all related amendments as of April 1, 2018 using the modified retrospective method for all contracts not completed as of the date of adoption. Results for reporting periods beginning after April 1, 2018 are presented under ASC 606, while prior period comparative information has not been adjusted and continue to be reported under the accounting standards in effect for those prior periods.

The impact of the adoption of ASC 606 on our consolidated statements of net income for the three and nine months ended December 31, 2018, assuming that the previous revenue recognition guidance had been in effect, is summarized as follows:

 

 

 

 

Three Months Ended December 31, 2018

 

 

 

As reported under

 

 

Adjustments due to

 

 

As disclosed under

 

 

 

ASC 606

 

 

adoption of ASC 606

 

 

ASC 605

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

Subscription services

 

$

30,035

 

 

$

(1,557

)

 

$

28,478

 

Support and maintenance

 

 

39,714

 

 

 

(1,620

)

 

 

38,094

 

Managed services

 

 

24,251

 

 

 

2,646

 

 

 

26,897

 

Electronic data interchange and data services

 

 

23,446

 

 

 

(26

)

 

 

23,420

 

Total recurring revenues

 

 

117,446

 

 

 

(557

)

 

 

116,889

 

Software license and hardware

 

 

9,217

 

 

 

(325

)

 

 

8,892

 

Other non-recurring services

 

 

4,204

 

 

 

358

 

 

 

4,562

 

Total software, hardware, and other non-recurring revenues

 

 

13,421

 

 

 

33

 

 

 

13,454

 

Total revenue

 

 

130,867

 

 

 

(524

)

 

 

130,343

 

Total cost of revenue

 

 

61,671

 

 

 

36

 

 

 

61,707

 

Gross profit

 

 

69,196

 

 

 

(560

)

 

 

68,636

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

 

41,304

 

 

 

1,050

 

 

 

42,354

 

Research and development costs, net

 

 

20,682

 

 

 

 

 

 

20,682

 

Amortization of acquired intangibles

 

 

1,027

 

 

 

 

 

 

1,027

 

Total operating expenses

 

 

63,013

 

 

 

1,050

 

 

 

64,063

 

Income from operations

 

 

6,183

 

 

 

(1,610

)

 

 

4,573

 

Interest and other income, net

 

 

(903

)

 

 

 

 

 

(903

)

Income before provision for income taxes

 

 

5,280

 

 

 

(1,610

)

 

 

3,670

 

Provision for income taxes

 

 

456

 

 

 

(553

)

 

 

(97

)

Net income

 

$

4,824

 

 

$

(1,057

)

 

$

3,767

 

 


 

 

Nine Months Ended December 31, 2018

 

 

 

As reported under

 

 

Adjustments due to

 

 

As disclosed under

 

 

 

ASC 606

 

 

adoption of ASC 606

 

 

ASC 605

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

Subscription services

 

$

87,618

 

 

$

(5,509

)

 

$

82,109

 

Support and maintenance

 

 

120,556

 

 

 

(3,789

)

 

 

116,767

 

Managed services

 

 

74,048

 

 

 

8,746

 

 

 

82,794

 

Electronic data interchange and data services

 

 

71,548

 

 

 

(111

)

 

 

71,437

 

Total recurring revenues

 

 

353,770

 

 

 

(663

)

 

 

353,107

 

Software license and hardware

 

 

26,013

 

 

 

(1,168

)

 

 

24,845

 

Other non-recurring services

 

 

14,605

 

 

 

464

 

 

 

15,069

 

Total software, hardware, and other non-recurring revenues

 

 

40,618

 

 

 

(704

)

 

 

39,914

 

Total revenue

 

 

394,388

 

 

 

(1,367

)

 

 

393,021

 

Total cost of revenue

 

 

184,640

 

 

 

130

 

 

 

184,770

 

Gross profit

 

 

209,748

 

 

 

(1,497

)

 

 

208,251

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

 

120,169

 

 

 

4,202

 

 

 

124,371

 

Research and development costs, net

 

 

61,181

 

 

 

 

 

 

61,181

 

Amortization of acquired intangibles

 

 

3,316

 

 

 

 

 

 

3,316

 

Total operating expenses

 

 

184,666

 

 

 

4,202

 

 

 

188,868

 

Income from operations

 

 

25,082

 

 

 

(5,699

)

 

 

19,383

 

Interest and other income, net

 

 

(1,722

)

 

 

 

 

 

(1,722

)

Income before provision for income taxes

 

 

23,360

 

 

 

(5,699

)

 

 

17,661

 

Provision for income taxes

 

 

2,794

 

 

 

(1,550

)

 

 

1,244

 

Net income

 

$

20,566

 

 

$

(4,149

)

 

$

16,417