Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of outstanding shares of the Registrant’s common stock as of January ~~21, 2020~~25, 2021 was ~~65,701,261~~67,002,554 shares.

	December 31, 2019			March 31, 2019			December 31, 2020			March 31, 2020
ASSETS
Current assets:
Cash and cash equivalents	$	26,790		$	33,079		$	89,523		$	138,012
Restricted cash and cash equivalents		5,696			1,443			4,208			2,307
Accounts receivable, net		79,731			87,459			76,741			80,006
Contract assets		12,488			13,242			17,404			12,529
Inventory		75			120
Income taxes receivable		5,485			3,682			3,397			856
Prepaid expenses and other current assets		23,101			20,826			26,074			26,305
Total current assets		153,366			159,851			217,347			260,015
Equipment and improvements, net		22,004			21,404			15,009			19,836
Capitalized software costs, net		39,678			37,855			41,090			37,004
Operating lease assets		34,424			—			26,268			31,004
Deferred income taxes, net		5,088			6,194			10,662			10,620
Contract assets, net of current		3,427			3,747			2,190			3,007
Intangibles, net		64,394			52,595			40,121			57,809
Goodwill		266,741			218,771			267,212			267,165
Other assets		33,773			32,478			36,000			33,656
Total assets	$	622,895		$	532,895		$	655,899		$	720,116
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	9,411		$	5,432		$	7,817		$	10,521
Contract liabilities		52,905			56,009			48,655			56,786
Accrued compensation and related benefits		25,309			25,663			40,002			23,792
Income taxes payable		—			64			65			148
Operating lease liabilities		10,323			—			12,398			10,619
Other current liabilities		38,931			41,064			51,104			41,352
Total current liabilities		136,879			128,232			160,041			143,218
Deferred compensation		6,198			5,905			6,624			5,300
Line of credit		37,000			11,000			29,000			129,000
Operating lease liabilities, net of current		39,297			—			29,291			38,823
Other noncurrent liabilities		3,765			11,812			5,231			3,281
Total liabilities		223,139			156,949			230,187			319,622
Commitments and contingencies (Note 15)
Commitments and contingencies (Note 16)
Shareholders' equity:
Common stock
$0.01 par value; authorized 100,000 shares; issued and outstanding 65,701 and 64,838 shares at December 31, 2019 and March 31, 2019, respectively		657			648
$0.01 par value; authorized 100,000 shares; issued and outstanding 67,002 and 66,134 shares at December 31, 2020 and March 31, 2020, respectively								670			661
Additional paid-in capital		277,161			264,908			297,711			282,857
Accumulated other comprehensive loss		(1,423	)		(1,231	)		(1,883	)		(2,143	)
Retained earnings		123,361			111,621			129,214			119,119
Total shareholders' equity		399,756			375,946			425,712			400,494
Total liabilities and shareholders' equity	$	622,895		$	532,895		$	655,899		$	720,116

The accompanying notes are an integral part of these condensed consolidated financial statements.

	Three Months Ended December 31,						Nine Months Ended December 31,							Three Months Ended December 31,						Nine Months Ended December 31,
	2019			2018			2019				2018			2020			2019			2020			2019
Revenues:
Recurring	$	124,787		$	117,446		$	364,823			$	353,770		$	128,243		$	124,787		$	373,456		$	364,823
Software, hardware, and other non-recurring		12,953			13,421			39,034				40,618			13,509			12,953			39,177			39,034
Total revenues		137,740			130,867			403,857				394,388			141,752			137,740			412,633			403,857
Cost of revenue:
Recurring		52,197			47,997			153,065				143,322			54,204			52,197			157,539			153,065
Software, hardware, and other non-recurring		6,975			6,576			19,816				20,752			6,800			6,975			18,924			19,816
Amortization of capitalized software costs and acquired intangible assets		8,963			7,098			26,219				20,566			9,320			8,963			29,180			26,219
Total cost of revenue		68,135			61,671			199,100				184,640			70,324			68,135			205,643			199,100
Gross profit		69,605			69,196			204,757				209,748			71,428			69,605			206,990			204,757
Operating expenses:
Selling, general and administrative		42,841			41,304			122,015				120,169			48,972			42,841			131,659			122,015
Research and development costs, net		20,026			20,682			61,866				61,181			18,197			20,026			54,111			61,866
Amortization of acquired intangible assets		964			1,027			2,694				3,316			1,112			964			3,336			2,694
Impairment of assets		1,948			—			4,353				—			2,215			1,948			2,215			4,353
Restructuring costs		546			—			2,428				—			—			546			2,562			2,428
Total operating expenses		66,325			63,013			193,356		��		184,666			70,496			66,325			193,883			193,356
Income from operations		3,280			6,183			11,401				25,082			932			3,280			13,107			11,401
Interest income		30			44			145				113			9			30			27			145
Interest expense		(435	)		(720	)		(1,294	)			(2,219	)		(631	)		(435	)		(2,873	)		(1,294	)
Other income (expense), net		137			(227	)		214				384			(15	)		137			(17	)		214
Income before provision for (benefit of) income taxes		3,012			5,280			10,466				23,360			295			3,012			10,244			10,466
Provision for (benefit of) income taxes		(1,403	)		456			(1,274	)			2,794			(169	)		(1,403	)		149			(1,274	)
Net income	$	4,415		$	4,824		$	11,740			$	20,566		$	464		$	4,415		$	10,095		$	11,740
Other comprehensive income:
Foreign currency translation, net of tax		(103	)		411			(192	)			(881	)		171			(103	)		260			(192	)
Comprehensive income	$	4,312		$	5,235		$	11,548			$	19,685		$	635		$	4,312		$	10,355		$	11,548
Net income per share:
Basic	$	0.07		$	0.07		$	0.18			$	0.32		$	0.01		$	0.07		$	0.15		$	0.18
Diluted	$	0.07		$	0.07		$	0.18			$	0.32		$	0.01		$	0.07		$	0.15		$	0.18
Weighted-average shares outstanding:
Basic		65,493			64,637			65,304				64,308			66,943			65,493			66,644			65,304
Diluted		65,664			64,776			65,516				64,499			67,140			65,664			66,649			65,516

The accompanying notes are an integral part of these condensed consolidated financial statements.

	Three and Nine Months Ended December 31, 2019															Nine Months Ended December 31, 2020
					Additional					Accumulated Other			Total							Additional						Accumulated Other			Total
	Common Stock				Paid-in			Retained		Comprehensive			Shareholders'			Common Stock				Paid-in			Retained			Comprehensive			Shareholders'
	Shares		Amount		Capital			Earnings		Loss			Equity			Shares		Amount		Capital			Earnings			Loss			Equity
Balance, March 31, 2019		64,838		648		264,908			111,621		(1,231	)		375,946
Balance, March 31, 2020																	66,134		661		282,857			119,119			(2,143	)		400,494
Common stock issued under stock plans, net of shares withheld for taxes																	535		6		(1,414	)		—			—			(1,408	)
Stock-based compensation																	—		—		5,393			—			—			5,393
Components of other comprehensive income:
Translation adjustments																	—		—		—			—			(13	)		(13	)
Net income (loss)																	—		—		—			(824	)		—			(824	)
Balance, June 30, 2020																	66,669		667		286,836			118,295			(2,156	)		403,642
Common stock issued under stock plans, net of shares withheld for taxes		545		6		(1,311	)		—		—			(1,305	)		65		—		(45	)								(45	)
Stock-based compensation		—		—		4,891			—		—			4,891							5,437									5,437
Components of other comprehensive income:
Translation adjustments		—		—		—			—		54			54													102			102
Net income		—		—					1,244		—			1,244										10,455						10,455
Balance, June 30, 2019		65,383		654		268,488			112,865		(1,177	)		380,830
Balance, September 30, 2020																	66,734		667		292,228			128,750			(2,054	)		419,591
Common stock issued under stock plans, net of shares withheld for taxes		53		—		44			—		—			44			268		3		(450	)								(447	)
Stock-based compensation		—		—		4,316			—		—			4,316							5,933									5,933
Components of other comprehensive income:
Translation adjustments		—		—		—			—		(143	)		(143	)												171			171
Net income		—		—					6,081		—			6,081										464						464
Balance, September 30, 2019		65,436		654		272,848			118,946		(1,320	)		391,128
Common stock issued under stock plans, net of shares withheld for taxes		265		3		(308	)		—		—			(305	)
Stock-based compensation		—		—		4,621			—		—			4,621
Components of other comprehensive income:
Translation adjustments		—		—		—			—		(103	)		(103	)
Net income		—		—					4,415		—			4,415
Balance, December 31, 2019		65,701		657		277,161			123,361		(1,423	)		399,756
Balance, December 31, 2020																	67,002		670		297,711			129,214			(1,883	)		425,712

	Three and Nine Months Ended December 31, 2018															Nine Months Ended December 31, 2019
					Additional					Accumulated Other			Total							Additional					Accumulated Other			Total
	Common Stock				Paid-in			Retained		Comprehensive			Shareholders'			Common Stock				Paid-in			Retained		Comprehensive			Shareholders'
	Shares		Amount		Capital			Earnings		Loss			Equity			Shares		Amount		Capital			Earnings		Loss			Equity
Balance, March 31, 2018		63,995		640		244,462			78,708		(400	)		323,410
Common stock issued under stock plans, net of shares withheld for taxes		225		2		(204	)		—		—			(202	)
Stock-based compensation		—		—		3,116			—		—			3,116
Cumulative effect adjustment related to the adoption of ASC 606		—		—		—			8,419		—			8,419
Components of other comprehensive income:
Translation adjustments		—		—		—			—		(499	)		(499	)
Net income		—		—		—			2,648		—			2,648
Balance, June 30, 2018		64,220		642		247,374			89,775		(899	)		336,892
Balance, March 31, 2019																	64,838		648		264,908			111,621		(1,231	)		375,946
Common stock issued under stock plans, net of shares withheld for taxes		162		2		2,104			—		—			2,106			545		6		(1,311	)		—		—			(1,305	)
Stock-based compensation		—		—		4,135			—		—			4,135			—		—		4,891			—		—			4,891
Components of other comprehensive income:
Translation adjustments		—		—		—			—		(793	)		(793	)		—		—		—			—		54			54
Net income		—		—		—			13,094		—			13,094			—		—					1,244		—			1,244
Balance, September 30, 2018		64,382		644		253,613			102,869		(1,692	)		355,434
Balance, June 30, 2019																	65,383		654		268,488			112,865		(1,177	)		380,830
Common stock issued under stock plans, net of shares withheld for taxes		322		3		—			—		—			3			53		—		44			—		—			44
Stock-based compensation		—		—		4,698			—		—			4,698			—		—		4,316			—		—			4,316
Components of other comprehensive income:
Translation adjustments		—		—		—			—		411			411			—		—		—			—		(143	)		(143	)
Net income		—		—		—			4,824		—			4,824			—		—					6,081		—			6,081
Balance, December 31, 2018		64,704		647		258,311			107,693		(1,281	)		365,370
Balance, September 30, 2019																	65,436		654		272,848			118,946		(1,320	)		391,128
Common stock issued under stock plans, net of shares withheld for taxes																	265		3		(308	)		—		—			(305	)
Stock-based compensation																	—		—		4,621			—		—			4,621
Components of other comprehensive income:
Translation adjustments																	—		—		—			—		(103	)		(103	)
Net income																	—		—					4,415		—			4,415
Balance, December 31, 2019																	65,701		657		277,161			123,361		(1,423	)		399,756

The accompanying notes are an integral part of these condensed consolidated financial statements.

	Nine Months Ended December 31,						Nine Months Ended December 31,
	2019			2018			2020			2019
Cash flows from operating activities:
Net income	$	11,740		$	20,566		$	10,095		$	11,740
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of capitalized software costs		12,962			7,703			14,828			12,962
Amortization of debt issuance costs		532			532			532			532
Amortization of other intangibles		15,951			16,180			17,688			15,951
Change in fair value of contingent consideration		425			—			75			425
Deferred income taxes		38			22			(42	)		38
Depreciation		6,453			7,721			6,088			6,453
Excess tax benefit from share-based compensation		(46	)		(313	)
Excess tax deficiency (benefit) from share-based compensation								870			(46	)
Impairment of assets		4,353			—			2,215			4,353
Loss on disposal of equipment and improvements		41			194			27			41
Non-cash operating lease costs		6,254			—			5,153			6,254
Provision for bad debts		2,426			2,740			2,044			2,426
Provision for inventory obsolescence		6			8
Restructuring costs, net of amounts paid		257			—			—			257
Share-based compensation		13,828			11,949			16,763			13,828
Changes in assets and liabilities, net of amounts acquired:
Accounts receivable		6,184			242			1,221			6,184
Contract assets		1,081			1,288			(4,058	)		1,081
Inventory		39			43
Accounts payable		2,323			(783	)		(2,795	)		2,323
Contract liabilities		(4,014	)		(7,804	)		(8,131	)		(4,014	)
Accrued compensation and related benefits		(1,159	)		(4,476	)		16,210			(1,159	)
Income taxes		(1,821	)		2,595			(3,494	)		(1,821	)
Deferred compensation		293			(522	)		1,324			293
Operating lease liabilities		(7,142	)		—			(10,043	)		(7,142	)
Other assets and liabilities		(6,633	)		(24,606	)		9,408			(6,588	)
Net cash provided by operating activities		64,371			33,279			75,978			64,371
Cash flows from investing activities:
Additions to capitalized software costs		(14,785	)		(14,853	)		(18,914	)		(14,785	)
Additions to equipment and improvements		(6,951	)		(4,108	)		(1,546	)		(6,951	)
Acquisition related working capital adjustment payments								(206	)		—
Payments for acquisitions, net of cash acquired		(71,605	)		—			—			(71,605	)
Proceeds from over-funded corporate-owned life insurance policies		2,500			—			—			2,500
Net cash used in investing activities		(90,841	)		(18,961	)		(20,666	)		(90,841	)
Cash flows from financing activities:
Proceeds from line of credit		37,000			26,000			50,000			37,000
Repayments on line of credit		(11,000	)		(36,000	)		(150,000	)		(11,000	)
Proceeds from issuance of shares under employee plans		2,076			4,505			1,997			2,076
Payments for taxes related to net share settlement of equity awards		(3,642	)		(2,598	)		(3,897	)		(3,642	)
Net cash provided by (used in) financing activities		24,434			(8,093	)		(101,900	)		24,434
Net increase (decrease) in cash, cash equivalents, and restricted cash		(2,036	)		6,225
Net decrease in cash, cash equivalents, and restricted cash								(46,588	)		(2,036	)
Cash, cash equivalents, and restricted cash at beginning of period		34,522			31,218			140,319			34,522
Cash, cash equivalents, and restricted cash at end of period	$	32,486		$	37,443		$	93,731		$	32,486

Supplemental disclosures of cash flow information:
Cash paid for income taxes	$	2,154		$	966		$	2,896		$	2,154
Cash refunds from income taxes		1,576			442			129			1,576
Cash paid for interest		805			1,385			2,375			805
Cash paid for amounts included in the measurement of operating lease liabilities		8,494			—			11,561			8,494
Operating lease assets obtained in exchange for operating lease liabilities		5,858			—			3,107			5,858
Accrued purchases of equipment and improvements		44			181			91			44

The accompanying notes are an integral part of these condensed consolidated financial statements.

Principles of Consolidation. The condensed consolidated financial statements include the accounts of NextGen Healthcare, Inc. and its wholly-owned subsidiaries (collectively, the “Company”). Each of the terms “we,” “us,” or “our” as used herein refers collectively to the Company, unless otherwise stated. All intercompany accounts and transactions have been eliminated.

Basis of Presentation. The accompanying unaudited condensed consolidated financial statements as of December 31, ~~2019~~2020 and for the three and nine months ended December 31, ~~2019~~2020 have been prepared in accordance with the requirements of Quarterly Report on Form 10-Q and Article 10 of the Securities and Exchange Commission Regulation S-X and therefore do not include all information and notes which would be presented were such condensed consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements presented in our Annual Report on Form 10-K for the fiscal year ended March 31, ~~2019.~~2020. In the opinion of management, the accompanying condensed consolidated financial statements reflect all adjustments which are necessary for a fair statement of the results of operations and cash flows for the periods presented. The results of operations for such interim periods are not necessarily indicative of results of operations to be expected for the full year.

References to amounts in the condensed consolidated financial statement sections are in thousands, except shares and per share data, unless otherwise specified.

~~Significant Accounting Policies~~.Coronavirus Pandemic. In late 2019, the emergence of a novel coronavirus, or COVID-19, was reported and in January 2020, the World Health Organization (“WHO”), declared it a Public Health Emergency of International Concern. In March 2020, the WHO escalated COVID-19 as a pandemic. The extent to which COVID-19 impacts our business and financial results depends on numerous evolving factors including, but not limited to, the magnitude and duration of COVID-19; the impact on our employees; the extent to which it impacts worldwide macroeconomic conditions, including interest rates, employment rates, and health insurance coverage; the speed of the anticipated recovery; and governmental and business reactions to the pandemic. We ~~adopted Accounting Standards Update No.~~ ~~2016-02,~~ ~~Leases (Topic 842), effective on April 1, 2019 using~~assessed certain accounting matters that generally require consideration of forecasted financial information in context with the ~~cumulative-effect adjustment transition method, as described further below. There have been no other material changes~~information reasonably available to ~~our significant accounting policies from those disclosed in our Annual~~the Company and the unknown future impacts of COVID-19 at December 31, 2020 and through the date of this Quarterly Report on Form ~~10-K~~10-Q. The accounting matters assessed included, but were not limited to, our allowances for doubtful accounts and the carrying value of goodwill and other long-lived assets. While there was not a material impact to our consolidated financial statements at and for the ~~fiscal year~~quarter ended ~~March~~December 31, ~~2019.~~2020, our future assessment of the magnitude and duration of COVID-19, as well as other factors could result in material impacts to our consolidated financial statements in future reporting periods.

Share-Based Compensation. The following table summarizes total share-based compensation expense included in the condensed consolidated statements of comprehensive income for the three and nine months ended December 31, ~~2019~~2020 and ~~2018:~~2019:

	Three Months Ended December 31,						Nine Months Ended December 31,						Three Months Ended December 31,						Nine Months Ended December 31,
	2019			2018			2019			2018			2020			2019			2020			2019
Costs and expenses:
Cost of revenue	$	531		$	358		$	1,530		$	939		$	506		$	531		$	1,519		$	1,530
Research and development costs		963			860			2,808			2,196			1,081			963			3,024			2,808
Selling, general and administrative		3,127			3,480			9,490			8,814			4,346			3,127			12,220			9,490
Total share-based compensation		4,621			4,698			13,828			11,949			5,933			4,621			16,763			13,828
Income tax benefit		(1,158	)		(1,180	)		(3,475	)		(2,949	)		(1,433	)		(1,158	)		(4,002	)		(3,475	)
Decrease in net income	$	3,463		$	3,518		$	10,353		$	9,000		$	4,500		$	3,463		$	12,761		$	10,353

Recently Adopted Accounting Pronouncements. Recently adopted accounting pronouncements are discussed below or in the notes, where applicable.

In ~~July 2019,~~August 2018, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") ~~2019-07,~~ Codification Updates to SEC Sections—Amendments to SEC Paragraphs Pursuant to SEC Final Rule Releases No. 33-10532, Disclosure Update and Simplification, and Nos. 33- 10231 and 33-10442, Investment Company Reporting Modernization, and Miscellaneous Updates (SEC Update), to amend SEC paragraphs in the Accounting Standards Codification to reflect the issuance of SEC final rules on Disclosure Update and Simplification and Investment Company Reporting Modernization, and make other updates. ASU 2019-07 was effective upon issuance. The requirements of ASU 2019-07 have been implemented and did not have a ~~material impact on our consolidated financial statements~~.

~~In February 2016, the FASB issued ASU 2016-02,~~ ~~Leases (Topic 842)~~ (“ASU 2016-02”), which was intended to improve financial reporting about leasing transactions. The new guidance requires lessees to recognize on their balance sheets the assets and liabilities for the rights and obligations created by leases and to disclose key information about the leasing arrangements. We have implemented the necessary changes to our policies, processes, and internal controls over financial reporting to meet the requirements under the new guidance related to identifying and measuring right-of-use assets and lease liabilities, including related disclosures.

~~We adopted ASU 2016-02 and its subsequent amendments (together “ASC 842”)~~ ~~using the cumulative-effect adjustment transition method, which is the additional transition method described within ASU 2018-11,~~ ~~Leases (Topic 842): Targeted Improvements, issued by the FASB in July 2018~~, which allowed us to apply the new lease standard as of April 1, 2019, rather than the beginning of the earliest period presented. We elected the package of practical expedients that permitted us to not reassess: (1) whether any expired contracts are or contain leases; (2) the lease classification for any existing or expired leases, and (3) the initial direct costs for our existing leases.

~~Upon adoption of ASC 842, we recognized operating lease right-of-use assets of $38,784, operating lease liabilities of $8,873, and long-term operating lease liabilities of $42,114~~ on our condensed consolidated balance sheet as of April 1, 2019, and corresponding reductions to other current liabilities of $2,342 and other noncurrent liabilities of $9,861 associated with previously recognized deferred rent and remaining lease obligations. There was 0 cumulative-effect adjustment required to retained earnings. The adoption of ASC 842 did not have a significant effect on our condensed consolidated results of operations or cash flows. Comparative information in this Report has not been adjusted and continues to be reported under the previous lease accounting rules. Refer to Note 4 for additional details.

~~Recent Accounting Standards Not Yet Adopted.~~ ~~Recent accounting pronouncements requiring implementation in current or future periods are discussed below or in the notes, where applicable.~~

~~In December 2019, the FASB issued ASU 2019-12,~~ ~~Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes~~, which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. ASU 2019-12 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. Early adoption is permitted, including adoption in an interim period. ASU 2019-12 is effective for us in the first quarter of fiscal 2022. We are currently in the process of evaluating the potential impact of adoption of this updated authoritative guidance on our consolidated financial statements.

~~In August 2018, the FASB issued ASU~~ 2018-15, Intangibles–Goodwill and Other–Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract(“ (“ASU 2018-15”). ASU 2018-15 aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). ASU 2018-15 is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2019. ~~Early~~The adoption ~~is permitted, including adoption in an interim period.~~of ASU 2018-15 ~~is effective for us in the first quarter of fiscal 2021. We are currently in the process of evaluating the potential~~on April 1, 2020 did not have a material impact ~~of adoption of this updated authoritative guidance~~ on our condensed consolidated financial statements.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework–Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”). ASU 2018-13 modifies certain disclosure requirements on fair value measurements in Topic 820, Fair Value ~~Measurement~~.Measurement. ASU 2018-13 is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2019. ~~Early~~The adoption ~~is permitted, including adoption in an interim period.~~of ASU 2018-13 ~~is effective for us in the first quarter of fiscal 2021, and we currently do~~on April 1, 2020 did not ~~expect the adoption of this new standard to~~ have a material impact on our condensed consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04,Intangibles–Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment (“ASU 2017-04”). ASU 2017-04 removes the requirement to compare the implied fair value of goodwill with its carrying amount as part of Step two of the goodwill impairment test. Instead, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value. ASU 2017-04 is effective prospectively for annual and interim periods beginning after December 15, 2019, and early adoption is permitted on goodwill impairment tests performed on testing dates after January 1, 2017. The adoption of ASU 2017-04 ~~is effective for us in the first quarter of fiscal 2021, and we currently do~~on April 1, 2020 did not ~~expect the adoption of this new standard to~~ have a material impact on our condensed consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 provides new guidance regarding the measurement and recognition of credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. ASU 2016-13 is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2019. Early adoption is permitted, including adoption in an interim period. The adoption of ASU 2016-13 using the modified retrospective transition approach on April 1, 2020 did not have a material impact on our condensed consolidated financial statements. Refer to Note 3 for additional details.

Recent Accounting Standards Not Yet Adopted. Recent accounting pronouncements requiring implementation in current or future periods are discussed below or in the notes, where applicable.

In October 2020, the FASB issued ASU 2020-10, Codification Improvements, which clarifies various topics in the Accounting Standards Codification, including the addition of existing disclosure requirements to the relevant disclosure sections. The amendments in ASU 2020-10 do not change GAAP and, therefore, are not expected to result in a significant change in practice. ASU 2020-10 should be applied retrospectively to the beginning of the period that includes the adoption date. ASU 2020-10 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. ASU 2020-10 is effective for us in the first quarter of fiscal ~~2021, and we currently~~2022. We do not expect the adoption of this new standard to have a material impact on our condensed consolidated financial statements.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”). ASU 2020-04 provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments in ASU 2020-04 apply only to contracts, hedging relationships, and other transactions that reference the London Interbank Offered Rate ("LIBOR") or another reference rate expected to be discontinued because of reference rate reform. In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848): Scope (“ASU 2021-01”), which clarifies the application of certain optional expedients and exceptions. Topic 848 may be applied prospectively through December 31, 2022. We are currently evaluating the effect that ASU 2020-04 may have on our contracts that reference LIBOR, such as our amended and restated revolving credit agreement (see Note 10). We have not elected to apply any of the provisions of Topic 848, and we are currently in the process of evaluating the potential impact of adoption of this updated authoritative guidance on our condensed consolidated financial statements.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. ASU 2019-12 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. Early adoption is permitted, including adoption in an interim period. ASU 2019-12 is effective for us in the first quarter of fiscal 2022. We are currently in the process of evaluating the potential impact of adoption of this updated authoritative guidance on our condensed consolidated financial statements.

We do not believe that any other recently issued, but not yet effective accounting standards, if adopted, would have a material impact on our condensed consolidated financial statements.

We generate revenue from sales of licensing rights and subscriptions to our software solutions, hardware and third-party software products, support and maintenance, managed services, ~~(formerly referred to as revenue cycle management and related services),~~ EDI, and other non-recurring services, including implementation, training, and consulting services. Our contracts with customers may include multiple performance obligations that consist of various combinations of our software solutions and related services, which are generally capable of being distinct and accounted for as separate performance obligations.

The total transaction price is allocated to each performance obligation within ~~an arrangement~~a contract based on estimated standalone selling prices. We generally determine standalone selling prices based on the prices charged to customers, except for certain software licenses that are based on the residual approach because their standalone selling prices are highly variable and certain maintenance customers that are based on substantive renewal rates. In instances where standalone selling price is not sufficiently observable, such as RCM services and software licenses included in our RCM arrangements, we estimate standalone selling price utilizing an expected cost plus a margin approach. When standalone selling prices are not observable, significant judgment is required in estimating the standalone selling price for each performance obligation.

Revenue is recognized when control of the promised goods or services is transferred to our customers in an amount that reflects the consideration that we expect to be entitled to in exchange for those goods or services.

We exclude sales tax from the measurement of the transaction price and record revenue net of taxes collected from customers and subsequently remitted to governmental authorities.

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,				Three Months Ended December 31,				Nine Months Ended December 31,
	2019		2018		2019		2018		2020		2019		2020		2019
Recurring revenues:
Subscription services	$	33,163	$	30,035	$	94,718	$	87,618	$	37,958	$	33,163	$	110,185	$	94,718
Support and maintenance		39,936		39,714		118,948		120,556		37,914		39,936		114,537		118,948
Managed services		26,830		24,251		77,730		74,048		27,395		26,830		76,106		77,730
Electronic data interchange and data services		24,858		23,446		73,427		71,548		24,976		24,858		72,628		73,427
Total recurring revenues		124,787		117,446		364,823		353,770		128,243		124,787		373,456		364,823

Software, hardware, and other non-recurring revenues:
Software license and hardware		7,210		9,217		22,563		26,013		7,908		7,210		20,662		22,563
Other non-recurring services		5,743		4,204		16,471		14,605		5,601		5,743		18,515		16,471
Total software, hardware and other non-recurring revenues		12,953		13,421		39,034		40,618		13,509		12,953		39,177		39,034

Total revenues	$	137,740	$	130,867	$	403,857	$	394,388	$	141,752	$	137,740	$	412,633	$	403,857

Recurring revenues ~~consist~~consists of subscription services, support and maintenance, managed services, and EDI and data services. Software, hardware, and other non-recurring revenues ~~consist~~consists of revenue from sales of software ~~licenses~~license and hardware and certain non-recurring services, such as implementation, training, and consulting performed for clients who use our products.

~~Generally, we~~We generally recognize revenue for our most significant performance obligations as follows:

Subscription services. Performance obligations involving subscription services, which include annual libraries, are satisfied over time as the customer simultaneously receives and consumes the benefits of the services throughout the contract period. Our subscription services primarily include our ~~hosting services, which we refer to as managed cloud services and our~~ software-as-a-service (“SaaS”) based offerings, such as our electronic health records and practice management, mobile, patient portal, and population health management solutions. Our ~~managed cloud services represent a single performance obligation to provide cloud hosting services to our customers. Our~~ SaaS-based offerings may include multiple goods and services, such as providing access to our technology-based solutions together with our managed cloud hosting services. These offerings are concurrently delivered with the same pattern of transfer to our customers and are accounted for as a single performance obligation because the technology-based solutions and other goods and services included within our overall SaaS-based offerings are each individually not capable of being distinct as the customer receives benefits based on the combined offering. Our annual libraries primarily consist of providing stand-ready access to certain content, knowledgebase, databases, and SaaS-based educational tools, which are frequently updated to meet the most current standards and requirements, to be utilized in conjunction with our core solutions. We recognize revenue related to these subscription services, including annual libraries, ratably over the respective noncancelable contract term.

Support and maintenance. Performance obligations involving support and maintenance are satisfied over time as the customer simultaneously receives and consumes the benefits of the maintenance services provided. Our support and maintenance services may consist of separate performance obligations, such as unspecified upgrades or enhancements and technical support, which are considered stand-ready in nature and can be offered at various points during the service period. Since the efforts associated with the combined support and maintenance services are rendered concurrently and provided evenly throughout the service period, we consider the series of support and maintenance services to be a single performance obligation. Therefore, we recognize revenue related to these services ratably over the respective noncancelable contract term.

Managed services. Managed services consist primarily of RCM and related services, but also includes our hosting services, which we refer to as managed cloud services, transcription services, patient pay services, and certain other recurring services. Performance obligations associated with RCM services are satisfied over time as the customer simultaneously receives and consumes the benefits of the services executed throughout the contract period. The majority of service fees under our RCM

arrangements are variable consideration contingent upon collections by our clients. We estimate the variable consideration which we expect to be entitled to over the noncancelable contract term associated with our RCM service arrangements. The estimate of variable consideration included in the transaction price typically involves estimating the amounts we will ultimately collect on behalf of our clients and the relative fee we charge that is generally calculated as a percentage of those collections. Inputs to these estimates include, but are not limited to, historical service fees and collections amounts, timing of historical collections relative to the timing of when claims are submitted by our clients to their respective payers, macroeconomic trends, and anticipated changes in the number of providers. Significant judgement is required when estimating the total transaction price based on the variable consideration. We may apply certain constraints when appropriate whereby we include in the transaction price estimated variable consideration only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. Such estimates are assessed at the contract level. RCM and related services may not be rendered evenly over the contract period as the timing of services are based on customer collections, which may vary throughout the service period. We recognize revenue for RCM based on the amount of collections received throughout the contract term as it most closely depicts our efforts to transfer our service obligations to the customer. Our managed cloud services represent a single performance obligation to provide cloud hosting services to our customers and related revenue is recognized ratably over the respective noncancelable contract term. Performance obligations related to the transcription services, patient pay services, and other recurring services are ~~generally~~ satisfied as the corresponding services are provided and revenue is recognized as such services are rendered.

Electronic data interchange and data services. Performance obligations related to EDI and other transaction processing services are satisfied at the point in time the services are rendered. The transfer of control occurs when the transaction processing services are delivered and the customer receives the benefits from the services provided.

Software license and hardware. Software license and hardware are considered point-in-time performance obligations as control is transferred to customers upon the delivery of the software license and hardware. Our software licenses are considered functional licenses, and revenue recognition generally occurs on the date of contract execution as the customer is provided with immediate access to the license. We generally determine the amount of consideration allocated to the software license performance obligation using the residual approach, except for certain RCM arrangements where the amount allocated to the software license performance obligation is determined based on estimated relative standalone selling prices. For hardware, we recognize revenue upon transfer of such hardware or devices to the customer.

Other non-recurring services. Performance obligations related to other non-recurring services, including implementation, training, and consulting services, are generally satisfied as the corresponding services are provided. Once the services have been provided to the customer, the transfer of control has occurred. Therefore, we recognize revenue as such services are rendered.

As of December 31, 2020, the aggregate amount of transaction price related to remaining unsatisfied or partially unsatisfied performance obligations over the respective noncancelable contract term was approximately $518,000, of which we expect to recognize approximately 12% as services are rendered or goods are delivered, 51% over the next 12 months, and the remainder thereafter.

As of December 31, 2019, the aggregate amount of transaction price related to remaining unsatisfied or partially unsatisfied performance obligations over the respective noncancelable contract term was approximately $488,800, of which we expect to recognize approximately 9% as services are rendered or goods are delivered,~~, 46~~% 46% over the next 12 months, and the remainder thereafter.

Contract balances result from the timing differences between our revenue recognition, invoicing, and cash collections. Such contract balances include accounts receivables, contract assets and liabilities, and other customer deposits and liabilities balances. Accounts ~~receivable includes~~receivables include invoiced amounts where the right to receive payment is unconditional and only subject to the passage of time. Contract assets, consisting of unbilled receivables, include amounts where revenue recognized exceeds the amount invoiced to the customer and the right to payment is not solely subject to the passage of time. Contract assets are generally associated with our sales of software licenses, but may also be associated with other performance obligations such as subscription services, support and maintenance, annual libraries, and professional services, where control has been transferred to our customers but the associated payments are based on future customer collections (in the case of our RCM service arrangements) or based on future milestone payment due dates. In such instances, the revenue recognized may exceed the amount invoiced to the customer and such balances are included in contract assets since our right to receive payment is not unconditional, but rather is conditional upon customer collections or the continued functionality of the software and our ongoing support and maintenance obligations. Contract liabilities consist mainly of fees invoiced or paid by our clients for which the associated services have not been performed and revenues have not been recognized. Contract assets and contract liabilities are reported in a net position on an individual contract basis at the end of each reporting period. Contract assets are classified as current or long-term on our condensed consolidated balance sheets based on the timing of when we expect to complete the related performance obligations and invoice the customer. Contract liabilities are classified as current on our condensed consolidated balance sheets since the revenue recognition associated with the related customer payments and invoicing is expected to occur within the next twelve months. During the three months ended December 31, ~~2019~~2020 and ~~2018,~~2019, we recognized ~~$14,834~~$17,469 and ~~$14,899,~~$14,834, respectively, of revenues that were included in the contract liability balance ator invoiced to customers since the beginning of the corresponding periods. During the nine months ended December 31, ~~2019~~2020 and ~~2018,~~2019, we recognized ~~$50,981~~$57,614 and ~~$50,985,~~$50,981, respectively, of revenues that were included in the contract liability balance ator invoiced to customers since the beginning of the corresponding periods.

We capitalize all incremental costs of obtaining a contract with a customer to the extent that such costs are directly related to a contract and expected to be recoverable. Our sales commissions and related sales incentives are considered incremental costs requiring capitalization. Capitalized contract costs are amortized to expense utilizing a method that is consistent with the transfer of the related goods or services to the customer. The amortization period ranges from less than one year up to five years, based on the period over which the related goods and services are transferred, including consideration of the expected customer renewals and the related useful lives of the products.

Capitalized commissions costs were ~~$23,956~~$27,618 as of December 31, ~~2019,~~2020, of which ~~$6,638~~$8,791 is classified as current and included as prepaid expenses and other current assets and ~~$17,318~~$18,827 is classified as long-term and included within other assets on our condensed consolidated balance sheets, based on the expected timing of expense recognition. During the three months ended December 31, ~~2019~~2020 and ~~2018,~~2019, we recognized ~~$2,187~~$3,069 and ~~$1,414,~~$2,187, respectively, of commissions expense. During the nine months ended December 31, ~~2019~~2020 and ~~2018,~~2019, we recognized ~~$5,640~~$7,946 and ~~$4,278,~~$5,640, respectively, of commissions expense. Commissions expense primarily relate to the amortization of capitalized commissions costs, which is included as a selling, general and administrative expense in the condensed consolidated ~~statement~~statements of net income and comprehensive income.

We adopted ASU 2016-13 using the modified retrospective transition approach, which required the recognition of expected credit losses for our accounts receivable and our contract assets, consisting of unbilled receivables. The adoption of the new guidance did not have a material impact on our condensed consolidated financial statements as the expected credit loss model was not significantly different from our prior policy and methodology for determining the allowance for doubtful accounts. As part of our assessment of the adequacy of the allowance for doubtful accounts, we considered a number of factors including, but not limited to, historical credit loss experience and adjustments for certain asset-specific risk characteristics, such as bankruptcy filings, internal assessments of client credit quality, age of the client receivable balances, review of major third-party credit-rating agencies, and evaluation of external factors such as economic conditions, including the potential impacts of the COVID-19 pandemic, that may affect a client’s ability to pay, or other client-specific factors.

Accounts receivable includes invoiced amounts where the right to receive payment is unconditional and only subject to the passage of time. Allowance for doubtful accounts are reported as a component of accounts receivable as summarized below:

The following table represents the changes in the allowance for doubtful accounts, as of and for the three months ended December 31, 2020:

The following table represents the changes in the allowance for doubtful accounts, as of and for the nine months ended December 31, 2020:

The following tables set forth by level within the fair value hierarchy our financial assets and liabilities that were accounted for at fair value on a recurring basis at December 31, ~~2019~~2020 and March 31, ~~2019:~~2020:

	Balance At		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Unobservable Inputs		Balance At		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Unobservable Inputs
	December 31, 2019		(Level 1)		(Level 2)		(Level 3)		December 31, 2020		(Level 1)		(Level 2)		(Level 3)
ASSETS
Cash and cash equivalents ⁽¹⁾	$	26,790	$	26,790	$	—	$	—	$	89,523	$	89,523	$	0	$	0
Restricted cash and cash equivalents		5,696		5,696		—		—		4,208		4,208		0		0
	$	32,486	$	32,486	$	—	$	—	$	93,731	$	93,731	$	0	$	0
LIABILITIES
Contingent consideration related to acquisitions	$	3,275	$	—	$	—	$	3,275	$	1,975	$	0	$	0	$	1,975
	$	3,275	$	—	$	—	$	3,275	$	1,975	$	0	$	0	$	1,975

	Balance At		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Unobservable Inputs		Balance At		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Unobservable Inputs
	March 31, 2019		(Level 1)		(Level 2)		(Level 3)		March 31, 2020		(Level 1)		(Level 2)		(Level 3)
ASSETS
Cash and cash equivalents ⁽¹⁾	$	33,079	$	33,079	$	—	$	—	$	138,012	$	138,012	$	0	$	0
Restricted cash and cash equivalents		1,443		1,443		—		—		2,307		2,307		0		0
	$	34,522	$	34,522	$	—	$	—	$	140,319	$	140,319	$	0	$	0
LIABILITIES
Contingent consideration related to acquisitions	$	1,000	$	—	$	—	$	1,000	$	1,900	$	0	$	0	$	1,900
	$	1,000	$	—	$	—	$	1,000	$	1,900	$	0	$	0	$	1,900

The following table presents activity in our financial assets and liabilities measured at fair value using significant unobservable inputs (Level 3), as of and for the three months ended December 31, 2020:

The following table presents activity in our financial assets and liabilities measured at fair value using significant unobservable inputs (Level 3), as of and for the nine months ended December 31, 2020:

The contingent consideration ~~liabilities~~liability as of December 31, 2020 and March 31, 2020 relates to the ~~acquisitions~~acquisition of Topaz Information Systems, LLC (see Note 5) and Inforth Technologies. In accordance with the provisions of the potential earnout, as amended, for the acquisition of Inforth Technologies up to an additional $4,000 of cash is payable subject to the achievement of certain bookings targets through March 31, 2020.

The contingent consideration liability for Topaz Information Systems, LLC was $1,875 as of December 31, 2019 and is reflected within other noncurrent liabilities in our condensed consolidated balance sheets. The contingent consideration liability for Inforth Technologies was $1,400 and $1,000 as of December 31, 2019 and March 31, 2019, respectively6) and is reflected within other current liabilities in our condensed consolidated balance sheets. During the three and nine months ended December 31, 2020, we recorded $25 and $75 related to the accretion of the present value discount of the contingent consideration liability.

The categorization of the framework used to measure fair value of the contingent consideration liabilities were considered to be within the Level 3 valuation hierarchy due to the subjective nature of the unobservable inputs used. We assess the fair value of the contingent consideration liabilities on a recurring basis and any adjustments to fair value subsequent to the initial measurement period are reflected in the condensed consolidated statements of net income and comprehensive income. Key assumptions included probability-adjusted achievement estimates of applicable bookings targets that were not observable in the market. During the nine months ended December 31, 2019, we recorded $400 in fair value adjustments to the contingent consideration liability for Inforth Technologies, which is included as a component of selling, general and administrative expense in the condensed consolidated statements of net income and comprehensive income.

We believe that the fair value of other financial assets and liabilities, including accounts receivable, accounts payable, and line of credit, approximate their respective carrying values due to their nominal credit risk.

We have certain assets, including goodwill and other intangible assets, which are measured at fair value on a non-recurring basis and are adjusted to fair value only if an impairment charge is recognized. The categorization of the framework used to measure fair value of the assets is considered to be within the Level 3 valuation hierarchy due to the subjective nature of the unobservable inputs used. ~~During the three and nine months ended December 31, 2019, we recorded certain impairments to our operating lease assets and equipment and improvements (see Note 16).~~

~~We have operating lease agreements for our offices in the United States and India with lease periods expiring between 2020 and 2026. ASC 842 requires the recognition of~~Our leasing arrangements are reflected on the balance sheet as right-of-use assets and liabilities pertaining to the rights and obligations created by the leased assets. ~~We determine whether an arrangement is a lease at inception and classify it as finance or operating.All of our existing material leases are classified as operating leases. Our leases do not contain any residual value guarantees.~~

Right-of-use lease assets and corresponding lease liabilities are recognized at commencement date based on the present value of lease payments over the expected lease term. Since the interest rate implicit in our lease arrangements is not readily determinable, we determine an incremental borrowing rate for each lease based on the approximate interest rate on a collateralized basis with similar remaining terms and payments as of the lease commencement date to determine the present value of future lease payments. Our lease terms may include options to extend or terminate the lease. Currently, it is not reasonably certain that we will exercise those options and therefore, we utilize the initial, noncancelable, lease term to calculate the lease assets and corresponding liabilities for all our leases. We have certain insignificant short-term leases with an initial term of twelve months or less that are not recorded in our condensed consolidated balance sheets. Operating right-of-use lease assets are classified as operating lease assets on our condensed consolidated balance sheets.We determine whether an arrangement is a lease at inception and classify it as finance or operating.All of our existing material leases are classified as operating leases. Our leases do not contain any residual value guarantees.

Our lease agreements generally contain lease and non-lease components. Non-lease components primarily include payments for maintenance and utilities. We have applied the practical expedient to combine fixed payments for non-lease components with our lease payments for all of our leases and account for them together as a single lease component, which increases the amount of our lease assets and corresponding liabilities. Payments under our lease arrangements are primarily fixed, however, certain lease agreements contain variable payments, which are expensed as incurred and not included in the operating lease assets and liabilities.

As part of our response to the COVID-19 pandemic and ongoing cost reduction efforts, we vacated a portion of our Irvine office and the remainder of our San Diego office. In the three months ended December 31, 2020, we recorded impairments of $2,215 to our operating right-of-use assets and certain related fixed assets associated with the vacated locations based on projected sublease rental income and estimated sublease commencement dates.

As part of a business restructuring plan implemented in June 2019, we vacated portions of certain leased locations and recorded impairments of $1,948 and $4,353 in the three and nine months ended December 31, 2019 to our operating right-of-use assets and certain related fixed assets associated with the vacated locations, or portions thereof, in Horsham, St. Louis, Irvine, and Atlanta based on projected sublease rental income and estimated sublease commencement dates.

The above impairment analyses were performed at the asset group level and the impairment charges were estimated by comparing the fair value of each asset group based on the expected cash flows to its respective book value. We determined the discount rate for each asset group based on the approximate interest rate on a collateralized basis with similar remaining terms and payments as of the impairment date. Significant judgment was required to estimate the fair value of each asset group and actual results could vary from the estimates, resulting in potential future adjustments to amounts previously recorded.

Operating lease costs are recognized on a straight-line basis over the lease term and included as a selling, general and administrative expense in the condensed consolidated statements of comprehensive income. Total operating lease costs were ~~$2,624~~$2,568 and ~~$2,026~~$2,624 for the three months ended December 31, ~~2019~~2020 and ~~2018,~~2019, respectively. Total operating lease costs were ~~$7,675~~$7,103 and ~~$6,081~~$7,675 for the nine months ended December 31, 2020 and 2019, ~~and 2018,~~ respectively.

	Three Months Ended			Nine Months Ended			Three Months Ended December 31,						Nine Months Ended December 31,
	December 31, 2019			December 31, 2019			2020			2019			2020			2019
Operating lease costs	$	2,469		$	7,146		$	2,118		$	2,469		$	6,302		$	7,146
Short-term lease costs		17			110			6			17			19			110
Variable lease costs		181			518			568			181			1,154			518
Less: Sublease income		(43	)		(99	)		(124	)		(43	)		(372	)		(99	)
Total operating lease costs	$	2,624		$	7,675		$	2,568		$	2,624		$	7,103		$	7,675

Supplemental cash flow information related to operating leases is summarized as follows:

	Three Months Ended		Nine Months Ended		Three Months Ended December 31,				Nine Months Ended December 31,
	December 31, 2019		December 31, 2019		2020		2019		2020		2019
Cash paid for amounts included in the measurement of operating lease liabilities	$	3,014	$	8,494	$	5,297	$	3,014	$	11,561	$	8,494
Operating lease assets obtained in exchange for operating lease liabilities		534		5,858		—		534		3,107		5,858

We have operating lease agreements for our offices in the United States and India with lease periods expiring between calendar 2020 and 2026. As of December 31, ~~2019,~~2020, our operating leases had a weighted average remaining lease term of ~~4.5~~3.9 years and a weighted average discount rate of 4.0%. Future minimum aggregate lease payments under operating leases as of December 31, ~~2019~~2020 are summarized as follows:

For the year ended March 31,
2020 (remaining three months)	$	3,033
2021		12,176
2021 (remaining three months)				$	5,044
2022		11,562			11,679
2023		10,955			11,063
2024		9,045			9,201
2025					6,807
Thereafter		8,315			1,257
Total future lease payments		55,086			45,051
Less interest		(5,466	)		(3,362	)
Total lease liabilities	$	49,620		$	41,689

~~Future minimum lease payments (including interest) under non-cancelable operating leases as of March 31, 2019 are summarized as follows:~~

As of December 31, 2019, we have entered into an office building lease in Cary, North Carolina as part of our acquisition of Medfusion, Inc. which will commence in February 2020. This lease is not reflected in the table above.

On October 4, 2019, we completed the acquisition of Topaz Information Systems, LLC ("Topaz") pursuant to the Membership Interest Purchase Agreement, dated October 4, 2019. Topaz is based in Phoenix, AZ and provides healthcare solutions to behavioral health and social services organizations that utilize the NextGen platform. Its extensive clinical content and domain expertise has been instrumental in our ability to compete and win. By combining our companies, we ~~will be~~are positioned to provide the platform and domain expertise to deliver integrated and collaborative care in a re-energized behavioral health market. The ~~preliminary~~final purchase price of Topaz is summarized in the table below. The acquisition of Topaz was funded by cash flows from operations.

On December 6, 2019, we completed the acquisition of Medfusion, Inc. (“Medfusion”) pursuant to the Agreement and Plan of Merger, dated November 12, 2019. Headquartered in Cary, North Carolina, Medfusion provides software application services which enable healthcare providers to better serve its patients through enhanced communication. Services are delivered through a standard web browser and typically include features such as appointment scheduling, patient preregistration, prescription renewal, ask a clinician, website development, patient payment, and online bill payment. Medfusion is a portal and patient pay player with a focus on ambulatory services. The ~~preliminary~~final purchase price of Medfusion is summarized in the table below. The acquisition of Medfusion was funded by a combination of borrowings against our revolving credit agreement (see Note 9)10) and cash flows from operations.

On December 17, 2019, we completed the acquisition of OTTO Health, LLC (“OTTO”), pursuant to the Agreement and Plan of Merger, dated December 11, 2019. Based in Boulder, Colorado, OTTO is a telehealth platform that seamlessly integrates into ~~EHR~~electronic health records (“EHR”) systems allowing providers to have video visits with their patients as part of their normal workflows. OTTO partners closely with EHR providers to create a streamlined user experience, while maintaining the ~~EHR/PM~~EHR and practice management system as the single source of truth. The ~~preliminary~~final purchase price of OTTO is summarized in the table below. The acquisition of OTTO was funded by a combination of borrowings against our revolving credit agreement (see Note 9)10) and cash flows from operations.

We accounted for the acquisitions as business combinations using the acquisition method of accounting. ~~The purchase price allocation of the Topaz, Medfusion, and OTTO acquisitions are deemed to be preliminary.~~ The purchase price was allocated to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date. ~~The preliminary fair values of acquired assets and liabilities assumed represent management’s estimate of fair value and are subject~~During the nine months ended December 31, 2020, we recorded a $47 measurement period adjustment to ~~change if additional information, such as changes~~Medfusion goodwill primarily related to ~~deferred taxes and/or~~certain working capital ~~becomes available. We expect to finalize~~adjustments in thepurchase price. The purchase price allocation ~~as soon as practicable within~~of the ~~measurement period, but not later than one year following the acquisition date.~~Topaz, Medfusion, and OTTO acquisitions are considered final.

Goodwill represents the excess of the purchase price over the net identifiable assets acquired and liabilities assumed. Goodwill primarily represents, among other factors, the value of synergies expected to be realized and the assemblage of all assets that enable us to create new client relationships, neither of which qualify as separate amortizable intangible assets. Goodwill arising from the acquisitions of OTTO and Topaz are considered deductible for tax purposes, and goodwill arising from the acquisition of Medfusion is not deductible for tax purposes.

The ~~total preliminary~~final purchase price for the acquisitions of Topaz, Medfusion, and OTTO are summarized as follows:

	Topaz			Medfusion			OTTO
	Preliminary			Preliminary			Preliminary			Topaz			Medfusion			OTTO
	Purchase Price			Purchase Price			Purchase Price			Purchase Price			Purchase Price			Purchase Price
Initial preliminary purchase price	$	8,000		$	43,000		$	22,000
Initial purchase price										$	8,000		$	43,000		$	22,000
Settlement of pre-existing net liabilities		1,671			24			19			1,671			24			19
Fair value of contingent consideration		1,850			—			—			1,850			—			—
Preliminary working capital adjustment		(424	)		(247	)		(59	)
Total preliminary purchase price	$	11,097		$	42,777		$	21,960
Working capital adjustment											(344	)		(148	)		(59	)
Total purchase price										$	11,177		$	42,876		$	21,960

Preliminary fair value of the net tangible assets acquired and liabilities assumed:
Fair value of the net tangible assets acquired and liabilities assumed:
Acquired cash and cash equivalents	$	359		$	204		$	102		$	353		$	204		$	102
Accounts receivable		1,577			968			51			1,528			986			51
Prepaid expense and other assets		139			695			42			139			387			79
Equipment and improvements		194			434			—			194			434			—
Operating lease assets		534			—			—			534			—			—
Accounts payable		(250	)		(1,360	)		(2	)		(224	)		(1,360	)		(2	)
Accrued compensation and related benefits		(155	)		(270	)		(123	)		(155	)		(270	)		(123	)
Contract liabilities		(370	)		(529	)		(11	)		(370	)		(529	)		(11	)
Deferred income tax liability		—			(1,068	)		—			—			(953	)		—
Operating lease liabilities		(240	)		—			—			(240	)		—			—
Operating lease liabilities, net of current		(360	)		—			—			(360	)		—			—
Other liabilities		(98	)		(334	)		(15	)		(102	)		(443	)		(26	)
Total preliminary net tangible assets acquired and liabilities assumed		1,330			(1,260	)		44
Preliminary fair value of identifiable intangible assets acquired:
Total net tangible assets acquired and liabilities assumed											1,297			(1,544	)		70
Fair value of identifiable intangible assets acquired:
Goodwill		5,267			23,187			19,516			5,380			23,570			19,490
Software technology		4,500			13,800			2,400			4,500			13,800			2,400
Customer relationships		—			6,800			—			—			6,800			—
Trademarks		—			250			—
Total preliminary identifiable intangible assets acquired		9,767			44,037			21,916
Total preliminary purchase price	$	11,097		$	42,777		$	21,960
Trade names											—			250			—
Total identifiable intangible assets acquired											9,880			44,420			21,890
Total purchase price										$	11,177		$	42,876		$	21,960

Under the provisions of the Topaz acquisition, we may pay up to an additional $2,000 of cash contingent consideration in the form of an earnout, subject to Topaz achieving certain operational targets through April 2021. The initial fair value of contingent consideration of $1,850 reflects an estimated earnout payment of $2,000 on a present value basis and was estimated based on the weighted probability of achieving the operational targets utilizing assumptions and inputs from Topaz management. As of December 31, ~~2019,~~2020, the fair value of the contingent consideration was ~~$1,875,~~$1,975, which reflects an adjustment of ~~$25~~$125 related to accretion of the present value discount. Additionally, the ~~preliminary~~ purchase price of Topaz includes $1,671 for the settlement of pre-existing liabilities related to pre-acquisition amounts due for products and services previously purchased from us and recognized by Topaz as accounts payable. As a result of the acquisition, these accounts payable balances were effectively settled and accounted for as additional purchase consideration.

The software technology intangible assets acquired from Topaz will be amortized over 6 years.

In connection with the Medfusion acquisition, the acquired software technology intangible assets will be amortized over 6 years, acquired customer relationships intangible assets will be amortized over 10 years, and acquired ~~trademarks~~trade names intangible assets will be amortized over 5 years. The weighted average amortization period for the acquired Medfusion intangible assets is 7.3 years.

The software technology intangible assets acquired from OTTO will be amortized over 7 years.

The revenues, earnings, and pro forma effects of the Topaz, Medfusion, and OTTO acquisitions are not, and would not have been, material to our results of operations, individually and in aggregate, and the disclosure of such information is impracticable as we have already integrated certain aspects of each acquisition within our overall operations and expect for each acquisition to be fully integrated within a short timeframe.

We test goodwill for impairment annually during our first fiscal quarter, referred to as the annual test date. We will also test for impairment between annual test dates if an event occurs or circumstances change that would indicate the carrying amount may be impaired. We have not identified any events or circumstances as of December 31, ~~2019~~2020 that would require an interim goodwill impairment test.

We do not amortize goodwill as it has been determined to have an indefinite useful life. The carrying amount of goodwill as of December 31, ~~2019~~2020 was ~~$266,741, which reflects the acquisitions of Topaz, Medfusion and OTTO (see Note 5).~~$267,212. The carrying amount of goodwill as of March 31, ~~2019~~2020 was ~~$218,771.~~$267,165.

Our definite-lived intangible assets, other than capitalized software development costs, are summarized as follows:

	December 31, 2019
	Customer						Software						December 31, 2020
	Relationships			Trademarks			Technology			Total			Customer Relationships			Trade Names			Software Technology			Total
Gross carrying amount	$	39,200		$	250		$	113,700		$	153,150		$	39,200		$	250		$	91,500		$	130,950
Accumulated amortization		(20,515	)		(4	)		(68,237	)		(88,756	)		(25,250	)		(55	)		(65,524	)		(90,829	)
Net intangible assets	$	18,685		$	246		$	45,463		$	64,394		$	13,950		$	195		$	25,976		$	40,121

				March 31, 2019									March 31, 2020
				Customer			Software						Customer Relationships			Trade Names			Software Technology			Total
				Relationships			Technology			Total
Gross carrying amount				$	54,450		$	94,310		$	148,760		$	39,200		$	250		$	113,700		$	153,150
Accumulated amortization					(39,875	)		(56,290	)		(96,165	)		(21,951	)		(17	)		(73,373	)		(95,341	)
Net intangible assets				$	14,575		$	38,020		$	52,595		$	17,249		$	233		$	40,327		$	57,809

Amortization expense related to customer relationships and ~~trademarks~~trade names recorded as operating expenses in the condensed consolidated statements of net income and comprehensive income was ~~$964~~$1,112 and ~~$1,027~~$964 for the three months ended December 31, ~~2019~~2020 and ~~2018,~~2019, respectively. Amortization expense related to software technology recorded as cost of revenue was ~~$4,681~~$4,344 and ~~$4,288~~$4,681 for the three months ended December 31, ~~2019~~2020 and ~~2018,~~2019, respectively.

Amortization expense related to customer relationships and ~~trademarks~~trade names recorded as operating expenses in the condensed consolidated statements of net income and comprehensive income was ~~$2,694~~$3,336 and ~~$3,316~~$2,694 for the nine months ended December 31, ~~2019~~2020 and ~~2018,~~2019, respectively. Amortization expense related to software technology recorded as cost of revenue was ~~$13,257~~$14,352 and ~~$12,863~~$13,257 for the nine months ended December 31, ~~2019~~2020 and ~~2018,~~2019, respectively.

The following table summarizes the remaining estimated amortization of definite-lived intangible assets as of December 31, ~~2019:~~2020:

	Estimated Remaining Amortization Expense						Estimated Remaining Amortization Expense
	Operating Expense		Cost of Revenue		Total		Operating Expense		Cost of Revenue		Total
For the year ended March 31,
2020 (remaining three months)	$	1,449	$	5,136	$	6,585
2021		4,449		16,661		21,110
2021 (remaining three months)							$	1,112	$	2,310	$	3,422
2022		3,525		8,873		12,398		3,525		8,873		12,398
2023		2,820		5,154		7,974		2,820		5,154		7,974
2024		2,279		3,573		5,852		2,279		3,573		5,852
2025 and beyond		4,409		6,066		10,475
2025								1,846		3,573		5,419
2026 and beyond								2,563		2,493		5,056
Total	$	18,931	$	45,463	$	64,394	$	14,145	$	25,976	$	40,121

	December 31, 2019			March 31, 2019			December 31, 2020			March 31, 2020
Gross carrying amount	$	73,763		$	59,782		$	91,243		$	75,212
Accumulated amortization		(34,085	)		(21,927	)		(50,153	)		(38,208	)
Net capitalized software costs	$	39,678		$	37,855		$	41,090		$	37,004

During the nine months ended December 31, 2020, we retired $2,882 of fully amortized capitalized software costs that are no longer being utilized by our client base.

Amortization expense related to capitalized software costs was ~~$4,282~~$4,975 and ~~$2,811~~$4,282 for the three months ended December 31, ~~2019~~2020 and ~~2018,~~2019, respectively, and is recorded as cost of revenue in the condensed consolidated statements of net income and comprehensive income.

Amortization expense related to capitalized software costs was ~~$12,962~~$14,828 and ~~$7,703~~$12,962 for the nine months ended December 31, ~~2019~~2020 and ~~2018,~~2019, respectively.

The following table presents the remaining estimated amortization of capitalized software costs as of December 31, ~~2019.~~2020. The estimated amortization is comprised of (i) amortization of released products and (ii) the expected amortization for products that are not yet available for sale based on their estimated economic lives and projected general release dates.

For the year ended March 31,
2020 (remaining three months)	$	5,800
2021		19,800
2021 (remaining three months)			$	8,300
2022		9,800		19,800
2023		4,278		9,600
2024				3,390
Total	$	39,678	$	41,090

On March 29, 2018, we entered into a $300,000 amended and restated revolving credit agreement (the “Credit Agreement”) with JPMorgan Chase Bank, N.A., as administrative agent, U.S. Bank National Association, as syndication agent, and certain other agents and lenders. The Credit Agreement replaces our prior $250,000 revolving credit agreement originally entered into on January 4, 2016 (“Original Credit Agreement”). The Credit Agreement provides a subfacility of up to $10,000 for letters of credit and a subfacility of up to $10,000 for swing-line loans and also includes a $100,000 accordion feature that provides us with the ability to obtain up to $400,000 in the aggregate of revolving credit commitments and/or term loans upon satisfaction of certain conditions.

The Credit Agreement matures on March 29, 2023 and the full balance of the revolving loans and all other obligations under the agreement must be paid at that time. In addition, we are required to prepay the revolving loan balance if at any time the aggregate principal amount outstanding under the Credit Agreement exceeds the aggregate commitments thereunder. The Credit Agreement is secured by substantially all of our existing and future property. The revolving loans under the Credit Agreement will be available for letters of credit, permitted acquisitions, working capital and general corporate purposes. We were in compliance with all financial and non-financial covenants under the Credit Agreement as of December 31, ~~2019.~~2020.

As of December 31, ~~2019,~~2020, we had ~~$37,000~~$29,000 in outstanding loans and ~~$263,000~~$271,000 of unused credit under the Credit Agreement. As of March 31, ~~2019,~~2020, we had ~~$11,000~~$129,000 in outstanding loans under the Credit Agreement.

Interest expense related to the Credit Agreement was ~~$253~~$452 and ~~$516~~$253 for the three months ended December 31, ~~2019~~2020 and ~~2018,~~2019, respectively. Amortization of deferred debt issuance costs was $177 and $177 for the three months ended December 31, ~~2019~~2020 and ~~2018,~~2019, respectively.

Interest expense related to the Credit Agreement was ~~$758~~$2,308 and ~~$1,657~~$758 for the nine months ended December 31, ~~2019~~2020 and ~~2018,~~2019, respectively. Amortization of deferred debt issuance costs was $532 and $532 for the nine months ended December 31, ~~2019~~2020 and ~~2018,~~2019, respectively.

~~Accounts receivable includes billed amounts where the right to receive payment is unconditional~~Cash, cash equivalents, and ~~only subject to the passage of time. Undelivered products and services~~restricted cash are ~~included~~summarized as ~~a component of the contract liabilities balance on the accompanying condensed consolidated balance sheets.~~follows:

	December 31, 2019		March 31, 2019		December 31, 2020		March 31, 2020
Prepaid expenses	$	15,591	$	15,548	$	16,145	$	18,025
Capitalized commissions costs		6,638		4,816		8,791		7,053
Other current assets		872		462		1,138		1,227
Prepaid expenses and other current assets	$	23,101	$	20,826	$	26,074	$	26,305

	December 31, 2019			March 31, 2019			December 31, 2020			March 31, 2020
Computer equipment	$	33,423		$	28,923		$	33,493		$	34,756
Internal-use software		17,536			17,084			17,882			17,796
Furniture and fixtures		12,415			11,660			11,540			12,477
Leasehold improvements		15,972			15,150			15,360			13,681
Equipment and improvements, gross		79,346			72,817			78,275			78,710
Accumulated depreciation and amortization		(57,342	)		(51,413	)		(63,266	)		(58,874	)
Equipment and improvements, net	$	22,004		$	21,404		$	15,009		$	19,836

	December 31, 2019		March 31, 2019		December 31, 2020		March 31, 2020
Capitalized commission costs	$	17,318	$	14,781	$	18,827	$	17,537
Deposits		5,884		5,318		5,726		6,074
Debt issuance costs		2,301		2,834		1,591		2,124
Other noncurrent assets		8,270		9,545		9,856		7,921
Other assets	$	33,773	$	32,478	$	36,000	$	33,656

	December 31, 2019		March 31, 2019		December 31, 2020		March 31, 2020
Accrued bonus					$	20,692	$	10,396
Accrued vacation	$	9,246	$	9,893		10,653		10,469
Accrued bonus		11,632		11,598
Accrued commissions		3,410		3,418		4,212		2,087
Accrued payroll		1,021		754
Accrued payroll and other						4,445		840
Accrued compensation and related benefits	$	25,309	$	25,663	$	40,002	$	23,792

	December 31, 2019		March 31, 2019		December 31, 2020		March 31, 2020
Sales returns reserves and other customer liabilities	$	6,575	$	7,838	$	9,267	$	6,395
Accrued employee benefits and withholdings						7,891		3,002
Accrued hosting costs						7,468		4,652
Care services liabilities		5,696		1,443		4,208		2,307
Customer credit balances and deposits		4,071		3,988		4,001		4,260
Accrued hosting costs		2,971		4,674
Accrued self insurance expense		2,823		2,225
Accrued legal expense						2,820		2,119
Accrued outsourcing costs		2,444		2,128		2,112		2,378
Accrued employee benefits and withholdings		2,379		2,426
Accrued EDI expense		2,122		2,037		1,978		3,511
Contingent consideration related to acquisitions		1,400		1,000		1,975		—
Accrued consulting and outside services		1,380		3,874		1,959		2,520
Sales tax payable		1,123		509
Accrued legal expense		1,080		699
Accrued self insurance expense						1,870		2,054
Accrued royalties		719		3,090		982		3,113
Deferred rent and related lease obligations		—		2,196
Accrued taxes payable						726		1,222
Other accrued expenses		4,148		2,937		3,847		3,819
Other current liabilities	$	38,931	$	41,064	$	51,104	$	41,352

Deferred payroll taxes					$	3,817	$	—
Uncertain tax positions						1,203		1,203
Contingent consideration related to acquisitions						—		1,900
Other liabilities						211		178
Other noncurrent liabilities					$	5,231	$	3,281

The benefit of income taxes in the three months ended December 31, ~~2019~~2020 was ~~$1,403 and the provision for~~$169, reflecting an effective tax rate benefit of 57.3%. The benefit of income taxes in the three months ended December 31, ~~2018~~2019 was ~~$456. The~~$1,403, reflecting an effective tax rate benefit ~~was~~of 46.6% ~~for the three months ended December 31, 2019 and the effective tax rate was 8.6% for the three months ended December 31, 2018.~~. The ~~decrease~~increased benefit in the effective tax rate for the three months ended December 31, ~~2019~~2020 compared to the prior year ~~period~~ was primarily due to an increase in the ~~increased net~~tax benefit offor research and development credits whereby the research and development ~~credits,~~credit remained consistent on a gross basis compared to the prior year while annualized estimated pretax book income decreased. This benefit was partially offset by ~~nondeductible stock option related expenses,~~a decrease of various discrete return to provision benefits and higher nondeductible officer’s ~~compensation, and reserves~~compensation.

The provision for ~~uncertain tax position. Additionally, due to the difference~~income taxes in the ~~amount of income before taxes, the impact of the rate reconciliation items on the effective tax rate was more significant in the three~~nine months ended December 31, ~~2019.~~

2020 was $149, reflecting an effective tax rate of 1.5%. The benefit of income taxes in the nine months ended December 31, 2019 was $1,274, ~~and the provision for income taxes in the nine months ended December 31, 2018 was $2,794. The~~reflecting an effective tax rate benefit ~~was~~of 12.2% ~~for the nine months ended December 31, 2019 and the effective tax rate was 12.0% for the nine months ended December 31, 2018.~~. The ~~decrease~~increase in the effective tax rate for the nine months ended December 31, ~~2019~~2020 compared to the prior year ~~period~~benefit was primarily due to the ~~increased net benefit~~decrease of ~~the research and development credits and other one-time~~various discrete return to provision benefits, ~~partially~~ offset by an increase of nondeductible stock option related expenses. Additionally, due to the difference in the amount of income before taxes, the impact of the rate reconciliation items on the effective tax rate was more significant in the nine months ended December 31, 2019.expense.

The deferred tax assets and liabilities are presented net in the accompanying condensed consolidated balance sheets as noncurrent. We expect to receive the full benefit of the deferred tax assets recorded, with the exception of certain state credits and state net operating loss carryforwards, for which we have recorded a valuation allowance.

We had unrecognized tax benefits of ~~$3,564~~$4,748 and ~~$2,894~~$4,192 related to various federal, state and local income tax matters as of December 31, ~~2019~~2020 and March 31, ~~2019,~~2020, respectively. The unrecognized benefits consisted of liabilities of ~~$1,658~~$1,103 and ~~$1,680~~$1,203 and reserves against deferred tax assets of ~~$1,906~~$3,645 and ~~$1,218~~$2,989 as of December 31, ~~2019~~2020 and March 31, ~~2019,~~2020, respectively. If recognized, this amount would reduce our effective tax rate.

We are no longer subject to United States federal income tax examinations for tax years before fiscal year ended ~~2015.~~2017. With a few exceptions, we are no longer subject to state or local income tax examinations for tax years before fiscal year ended ~~2014.~~2016. We do not anticipate the total unrecognized tax benefits to significantly change due to the settlement of audits or the expiration of statute of limitations within the next twelve months.

The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) and the Consolidated Appropriations Act, 2021 (“Stimulus Bill”), signed into law on March 27, 2020 and December 27, 2020, respectively, have resulted in significant changes to the U.S. federal corporate tax law. Additionally, several state and foreign jurisdictions have enacted additional legislation and or comply with federal changes. We have considered the applicable tax law changes and recognized the impact in our quarterly income tax provision, as applicable.

The dual presentation of “basic” and “diluted” earnings per share is provided below. Share amounts below are in thousands.

	Three Months Ended December 31,				Nine Months Ended December 31,				Three Months Ended December 31,				Nine Months Ended December 31,
	2019		2018		2019		2018		2020		2019		2020		2019
Earnings per share — Basic:
Net income	$	4,415	$	4,824	$	11,740	$	20,566	$	464	$	4,415	$	10,095	$	11,740
Weighted-average shares outstanding — Basic		65,493		64,637		65,304		64,308		66,943		65,493		66,644		65,304
Net income per common share — Basic	$	0.07	$	0.07	$	0.18	$	0.32	$	0.01	$	0.07	$	0.15	$	0.18

Earnings per share — Diluted:
Net income	$	4,415	$	4,824	$	11,740	$	20,566	$	464	$	4,415	$	10,095	$	11,740
Weighted-average shares outstanding		65,493		64,637		65,304		64,308		66,943		65,493		66,644		65,304
Effect of potentially dilutive securities		171		139		212		191		197		171		5		212
Weighted-average shares outstanding — Diluted		65,664		64,776		65,516		64,499		67,140		65,664		66,649		65,516
Net income per common share — Diluted	$	0.07	$	0.07	$	0.18	$	0.32	$	0.01	$	0.07	$	0.15	$	0.18

The computation of diluted net income per share does not include ~~1,771~~806 and ~~2,532~~1,771 options to acquire shares of common stock for the three months ended December 31, ~~2019~~2020 and December 31, ~~2018,~~2019, respectively, because their inclusion would have an anti-dilutive effect on net income per share.

The computation of diluted net income per share does not include ~~876~~2,585 and ~~1,913~~876 options to acquire shares of common stock for the nine months ended December 31, ~~2019~~2020 and December 31, ~~2018,~~2019, respectively, because their inclusion would have an anti-dilutive effect on net income per share.

In October 2005, our shareholders approved a stock option and incentive plan (the “2005 Plan”) under which 4,800,000 shares of common stock were reserved for the issuance of awards, including incentive stock options and non-qualified stock options, stock appreciation rights, restricted stock, unrestricted stock, restricted stock units, performance shares, performance units (including performance options) and other share-based awards. The 2005 Plan provides that our employees and directors may, at the discretion of the Board of Directors ("Board") or a duly designated compensation committee, be granted certain share-based awards. In the case of option awards granted under the 2005 Plan, the exercise price of each option is determined based on the date of grant and expire no later than 10 years from the date of grant. Awards granted pursuant to the 2005 Plan are subject to the vesting schedule or performance metrics set forth in the agreements pursuant to which they are granted. Upon a change of control of our Company, as such term is defined in the 2005 Plan, awards under the 2005 Plan will fully vest under certain circumstances. The 2005 Plan expired on May 25, 2015. As of December 31, ~~2019,~~2020, there were ~~227,920~~170,720 outstanding options under the 2005 Plan.

In August 2015, our shareholders approved a stock option and incentive plan (the “2015 Plan”) under which 11,500,000 shares of common stock were reserved for the issuance of awards, including incentive stock options and non-qualified stock options, stock appreciation rights, restricted stock awards and restricted stock unit awards, performance stock awards and other share-based awards. In August 2017, our shareholders approved an amendment to our 2015 Equity Incentive Plan, (the “Amended 2015 Plan”), to, among other items, increase the number of shares of common stock reserved for issuance thereunder by 6,000,000, which was further amended in August 2019 as approved by our shareholders, to, among other items, increase the number of shares of common stock reserved for issuance thereunder by an additional 3,575,000. The Amended 2015 Plan provides that our employees and directors may, at the discretion of the Board or a duly designated compensation committee, be granted certain share-based awards. In the case of option awards granted under the Amended 2015 Plan, the exercise price of each option is determined based on the date of grant and expire no later than 10 years from the date of grant. Awards granted pursuant to the Amended 2015 Plan are subject to the vesting schedule or performance metrics set forth in the agreements pursuant to which they are granted. Upon a change of control of our Company, as such term is defined in the Amended 2015 Plan, awards under the Amended 2015 Plan will fully vest under certain circumstances. As of December 31, ~~2019,~~2020, there were ~~2,774,330~~2,683,864 outstanding options, ~~1,990,326~~2,375,654 outstanding shares of restricted stock awards, ~~23,188~~0 outstanding shares of performance stock awards, and ~~8,073,505~~2,183,732 shares available for future grant under the Amended 2015 Plan.

The following table summarizes the stock option transactions during the nine months ended December 31, ~~2019:~~2020:

				Weighted-		Weighted-							Weighted-		Weighted-
				Average		Average		Aggregate					Average		Average		Aggregate
				Exercise		Remaining		Intrinsic					Exercise		Remaining		Intrinsic
Employee Stock Options Summary	Number of			Price		Contractual		Value		Number of			Price		Contractual		Value
	Shares			per Share		Life (years)		(in thousands)		Shares			per Share		Life (years)		(in thousands)
Outstanding, March 31, 2019		3,166,525		$	15.36		5.5	$	7,040
Outstanding, March 31, 2020											3,001,350		$	14.83		4.7	$	—
Exercised		(55,325	)		15.87		4.6	$	138		(53,416	)		16.03		4.5	$	81
Forfeited/Canceled		(74,550	)		23.46		1.7				(47,350	)		18.58		3.9
Expired		(34,400	)		43.04						(46,000	)		29.17
Outstanding, December 31, 2019		3,002,250		$	14.83		4.9	$	5,075
Vested and expected to vest, December 31, 2019		2,799,809		$	14.83		4.9	$	4,767
Exercisable, December 31, 2019		1,781,728		$	14.82		4.6	$	3,217
Outstanding, December 31, 2020											2,854,584		$	14.51		4.0	$	10,804
Vested and expected to vest, December 31, 2020											2,777,042		$	14.49		3.9	$	10,559
Exercisable, December 31, 2020											2,378,995		$	14.38		3.8	$	9,298

Share-based compensation expense related to stock options was $603 and $976 for the three months ended December 31, 2020 and 2019, respectively. Share-based compensation expense related to stock options was $1,962 and $2,925 for the nine months ended December 31, 2020 and 2019, respectively.

Non-vested stock option award activity during the nine months ended December 31, ~~2019~~2020 is summarized as follows:

				Weighted-					Weighted-
				Average					Average
				Grant-Date					Grant-Date
Non-Vested Stock Option Award Summary	Number of			Fair Value		Number of			Fair Value
	Shares			per Share		Shares			per Share
Outstanding, March 31, 2019		1,845,855		$	5.52
Outstanding, March 31, 2020							1,091,672		$	5.67
Vested		(616,283	)		5.34		(589,183	)		5.39
Forfeited/Canceled		(9,050	)		6.45		(26,900	)		6.80
Outstanding, December 31, 2019		1,220,522		$	5.61
Outstanding, December 31, 2020							475,589		$	5.96

As of December 31, ~~2019, $5,093~~2020, $2,048 of total unrecognized compensation costs related to stock options is expected to be recognized over a weighted-average period of ~~1.6~~0.9 years. This amount does not include the cost of new options that may be granted in future periods or any changes in our forfeiture percentage. The total fair value of options vested during the nine months ended December 31, 2020 and 2019 was $3,175 and ~~2018 was~~ $3,290, ~~and $3,335,~~ respectively.

Restricted stock awards activity during the nine months ended December 31, ~~2019~~2020 is summarized as follows:

				Weighted-					Weighted-
				Average					Average
				Grant-Date					Grant-Date
Restricted Stock	Number of			Fair Value		Number of			Fair Value
	Shares			per Share		Shares			per Share
Outstanding, March 31, 2019		1,715,958		$	16.29
Outstanding, March 31, 2020							2,312,780		$	16.74
Granted		1,082,148			17.90		1,183,863			11.78
Vested		(656,590	)		16.45		(921,267	)		16.57
Canceled		(151,190	)		16.92		(199,722	)		15.47
Outstanding, December 31, 2019		1,990,326		$	17.07
Outstanding, December 31, 2020							2,375,654		$	14.44

Share-based compensation expense related to restricted stock awards was ~~$3,364~~$4,203 and ~~$3,168~~$3,364 for the three months ended December 31, ~~2019~~2020 and ~~2018,~~2019, respectively. Share-based compensation expense related to restricted stock awards was ~~$10,373~~$12,392 and ~~$7,921~~$10,373 for the nine months ended December 31, ~~2019~~2020 and ~~2018,~~2019, respectively.

The weighted-average grant date fair value for the restricted stock awards was estimated using the market price of the common stock on the date of grant. The fair value of the restricted stock awards is amortized on a straight-line basis over the vesting period, which is generally between one to three years.

As of December 31, ~~2019, $26,334~~2020, $26,728 of total unrecognized compensation costs related to restricted stock awards is expected to be recognized over a weighted-average period of 1.9 years. This amount does not include the cost of new restricted stock awards that may be granted in future periods.

On December 29, 2016, the Compensation Committee of the Board granted 123,082 performance stock awards to certain executive officers, all of which ~~23,188 shares are currently outstanding.~~have vested as of December 31, 2020. The performance stock awards vest in four equal increments on each of the first four anniversaries of the grant date, subject in each case to the executive officer’s continued service and achievement of certain Company performance goals, including strong Company stock price performance. Share-based compensation expense related to the performance stock awards was ~~$62~~$61 and ~~$185~~$62 for the three ~~and nine~~ months ended December 31, 2020 and 2019, respectively. Share-based compensation expense related to the performance stock awards was ~~$74~~$184 and ~~$215~~$185 for the ~~three and~~ nine months ended December 31, ~~2018,~~2020 and 2019, respectively.

On October 23, 2018, the Compensation Committee of the Board approved 248,140 performance stock unit awards to be granted to certain executives and non-executive members of the executive leadership team, which vest only in the event certain performance goals are achieved and with continuous service through the date the goals are certified. Approximately 34% of the performance stock units are tied to our cumulative 3-year total shareholder return, 33% are tied to our fiscal year 2021 revenue, and 33% are tied to our fiscal year 2021 adjusted earnings per share goals, each as specifically defined in the equity award agreements. The number of shares to be issued may vary between 50% and 200% of the number of performance stock units depending on performance, and no such shares will be issued if threshold performance is not achieved. The weighted-average grant date fair value of the awards related to the cumulative 3-year total shareholder return was $17.84 per share, which was estimated using a Monte Carlo-based valuation model for the awards based on total shareholder ~~return~~return. The fair value of the awards related to the revenue and adjusted earnings per share goals was estimated using a probability-adjusted target achievement rate combined with the market price of the common stock on the date of grant for the ~~awards based on revenue and earnings per share targets.~~ awards. Share-based compensation expense related to the performance stock unit awards tied to the revenue and adjusted earnings per share goals was not significant. Share-based compensation expense related to the performance stock unit awards tied to total shareholder return was $114 for both the three months ended December 31, 2020 and 2019. Share-based compensation expense related to the performance stock unit awards tied to total shareholder return was $343 for both the nine months ended December 31, 2020 and 2019.

On December 26, 2019 and January 27, 2020, the Compensation Committee of the Board approved ~~160,028~~279,587 performance stock unit awards to be granted to certain executives and non-executive members of the executive leadership team, which vest only in the event certain performance goals are achieved and with continuous service through the date the goals are certified. Approximately 80% of the performance stock units are tied to the Company’s fiscal year 2021 revenue goal and 20% are tied to the Company’s fiscal year 2022 revenue goal. Performance stock unit awards funded for fiscal year 2021 and fiscal year 2022 revenue performance will be modified for cumulative 3-year total shareholder return (“TSR”) on the three-year grant anniversary, which is also the cliff vest date. The number of shares to be issued may vary between ~~50%~~42.5% and ~~150%~~172.5% of the number of performance stock units depending on performance, including TSR, and no such shares will be issued if threshold performance is not achieved. The weighted-average grant date fair value of the awards was $16.02 per share, which was estimated using a Monte Carlo-based valuation model for the awards based on total shareholder return and using a probability adjusted achievement rate combined with the market price of the common stock on the date of grant for the awards based on revenue targets. Share-based compensation expense related to the performance stock unit awards was $417 and $1,042 for the three and nine months ended December 31, 2020, respectively.

On October 26, 2020, the Compensation Committee of the Board approved 408,861 performance stock unit awards to be granted to certain executives and non-executive members of the executive leadership team, which vest only in the event certain performance goals are achieved and with continuous service through the date the goals are certified. Approximately 80% of the performance stock units are tied to the Company’s fiscal year 2022 revenue goal and 20% are tied to the Company’s fiscal year 2023 revenue goal. Performance stock unit awards funded for fiscal year 2022 and fiscal year 2023 revenue performance will be modified for cumulative 3-year total shareholder return (“TSR”) on the three-year grant date anniversary, which is also the cliff vest date. The number of shares to be issued may vary between 8.5% and 199.5% of the number of target performance stock units depending on performance, and no such shares will be issued if threshold performance is not achieved. The weighted-average grant date fair value of the awards was $16.25 per share, which was estimated using a Monte Carlo-based valuation model for the awards based on total shareholder return and using a probability adjusted achievement rate combined with the market price of the common stock on the date of grant for the awards based on revenue targets. Share-based compensation expense related to the performance stock unit awards was ~~not significant.~~ $429 for the three months ended December 31, 2020.

On August 11, 2014, our shareholders approved an Employee Share Purchase Plan (the “Purchase Plan”) under which 4,000,000 shares of common stock were reserved for future grant. The Purchase Plan allows eligible employees to purchase shares through payroll deductions of up to 15% of total base salary at a price equal to 90% of the lower of the fair market values of the shares as of the beginning or the end of the corresponding offering period. Any shares purchased under the Purchase Plan are subject to a six-month holding period. Employees are limited to purchasing no more than 1,500 shares on any single purchase date and no more than $25 in total fair market value of shares during any one calendar year. As of December 31, ~~2019,~~2020, we have issued ~~547,444~~722,172 shares under the Purchase Plan and ~~3,452,556~~3,277,828 shares are available for future issuance.

Share-based compensation expense recorded for the employee share purchase plan was $105 ~~and $123~~ for both the three months ended December 31, ~~2019~~2020 and ~~2018,~~2019, respectively. Share-based compensation expense recorded for the employee share purchase plan was ~~$336~~$409 and ~~$355~~$336 for the nine months ended December 31, 2020 and 2019, ~~and 2018,~~ respectively.

We had cash deposits at United States banks and financial institutions which exceeded federally insured limits at December 31, ~~2019.~~2020. We are exposed to credit loss for amounts in excess of insured limits in the event of non-performance by the institutions; however, we do not anticipate non-performance by these institutions.

Our software license agreements include a performance guarantee that our software products will substantially operate as described in the applicable program documentation for a period of 365 days after delivery. To date, we have not incurred any significant costs associated with our performance guarantee or other related warranties and do not expect to incur significant warranty costs in the future. Therefore, no accrual has been made for potential costs associated with these warranties. Certain arrangements also include performance guarantees related to response time, availability for operational use, and other performance-related guarantees. Certain arrangements also include penalties in the form of maintenance credits should the performance of the software fail to meet the performance guarantees. To date, we have not incurred any significant costs associated with these warranties and do not expect to incur significant warranty costs in the future. Therefore, no accrual has been made for potential costs associated with these warranties.

We historically have accepted sales returns under limited circumstances. We estimate expected sales returns and other forms of variable consideration considering our customary business practice and contract-specific facts and circumstances, and we consider such estimated potential returns as variable consideration when allocating the transaction price to the extent it is probable that there will not be a significant reversal of cumulative revenue recognized.

Our standard sales agreements contain an indemnification provision pursuant to which we shall indemnify, hold harmless, and reimburse the indemnified party for losses suffered or incurred by the indemnified party in connection with any United States patent, any copyright or other intellectual property infringement claim by any third-party with respect to our software. As we have not incurred any significant costs to defend lawsuits or settle claims related to these indemnification agreements, we believe that our estimated exposure on these agreements is currently minimal. Accordingly, we have no liabilities recorded for these indemnification obligations.

On October 7, 2013, a complaint was filed against our Company and certain of our officers and directors in the Superior Court of the State of California for the County of Orange, captioned Ahmed D. Hussein v. Sheldon Razin, Steven Plochocki, Quality Systems, Inc. and Does 1-10, inclusive, No. 30-2013-00679600-CU-NP-CJC, by Ahmed Hussein, a former director and significant shareholder of our Company. ~~We filed a~~After the court sustained our demurrer to the initial complaint, ~~which the Court granted on April 10, 2014. An~~Hussein filed an amended complaint ~~was filed~~ on April 25, 2014. The amended complaint generally alleges fraud and deceit, constructive fraud, negligent misrepresentation and breach of fiduciary duty in connection with statements made to our shareholders regarding our financial condition and projected future performance. The amended complaint seeks actual damages, exemplary and punitive damages and costs. ~~We filed a demurrer to the amended complaint. On July 29, 2014, the Court sustained the demurrer with respect to the~~Hussein’s breach of fiduciary duty ~~claim,~~claims were dismissed on demurrer, and ~~overruled the demurrer with respect to the fraud and deceit claims. On August 28, 2014,~~ we filed an answer and ~~also filed a~~ cross-complaint against Hussein, alleging that he breached fiduciary duties owed to the ~~Company, Mr. Razin and Mr. Plochocki. Mr. Razin and Mr. Plochocki have dismissed their claims against Hussein, leaving QSI as~~Company. On September 16, 2015, the ~~sole plaintiff in the cross-complaint. On June 26, 2015, we filed a motion for~~Court granted summary judgment with respect to Hussein’s remaining claims, ~~which~~dismissing all claims against us. The cross-complaint against Hussein went to trial, but the Court granted ~~on September 16, 2015, dismissing all~~judgment in favor of ~~Hussein’s claims against us. On September 23, 2015,~~ Hussein filed an application for reconsideration of the Court's summary judgment order, which the Court denied. Hussein filed a renewed application for reconsideration of the Court’s summary judgment order on August 3, 2017. The Court again denied Hussein’s application. On October 28, 2015, May 9, 2016, and August 5, 2016, Hussein filed a motion for summary judgment, motion for summary adjudication, and motion for judgment on the pleadings, respectively, seeking to dismiss our cross-complaint. The Court denied each motion. Trial on our cross-complaint began June 12, 2017. On July 26, 2017, the Court issued a statement of decision granting Hussein’s motion for judgment on our cross-complaint. Final judgment over Hussein’s claims and our cross-claims was entered on January 9, 2018. Hussein ~~has noticed his appeal of~~appealed the order granting summary judgment over his claims, and we ~~noticed a cross-appeal on~~appealed the court’s ~~statement of~~ decision granting Hussein’s motion for judgment on our cross-complaint. On October 8, 2019, the California State Court of Appeal for the Fourth Appellate District, Division Three, reversed the Superior Court’s grant of summary judgment ~~against~~on Hussein’s affirmative claims and affirmed the trial court’s judgement ~~after a bench trial against~~on the ~~Company on its~~Company’s breach of fiduciary duty claims against Hussein. We petitioned the California Court of Appeal to rehear the matter with respect to Hussein’s affirmative claims. The Court modified its opinion but denied the Company’s rehearing petition on November 7, 2019. We filed a petition for review with the Supreme Court of California on November 18, 2019, which was denied on January 15, 2020. As a result, the case ~~will return~~has returned to the trial court for ~~resolution. A schedule~~resolution of Hussein’s claims against us. Previously scheduled trial dates have been postponed due to the ongoing pandemic, and a new trial date has yet to be set. Separately, Hussein has issued an arbitration demand seeking indemnification for ~~proceedings before~~ the ~~trial court has not yet been established.~~fees he incurred defending against our cross-complaint. At this time, we are unable to estimate the probability or the amount of liability, if any, related to this ~~claim~~.matter.

On September 28, 2017, a complaint was filed against our Company and certain of our current and former officers and directors in the United States District Court for the Central District of California, captioned Kusumam Koshy, derivatively on behalf of Quality Systems Inc. vs. Craig Barbarosh, George H. Bristol, James C. Malone, Peter M. Neupert, Morris Panner, D. Russell Pflueger, Steven T. Plochocki, Sheldon Razin, Lance E. Rosenzweig, Paul A. Holt, and Quality Systems, Inc., No. 8:17-cv-01694, by Kusumam Koshy, a purported shareholder of ours. The complaint alleges breach of fiduciary duties and abuse of control, as well as unjust enrichment and insider selling by individual directors arising out of the allegations described above under the caption “Hussein Litigation” and a related, now-settled, federal securities class action, as well as the Company’s adoption of revised indemnification agreements, and the resignation of certain officers of the Company. The complaint seeks restitution and disgorgement, court costs and attorneys’ fees, and enhanced corporate governance reforms and internal control procedures. On January 12, 2018, Defendants filed a motion to dismiss the derivative complaint. On July 25, 2018, the Court dismissed the complaint with prejudice. On August 24, 2018, the plaintiff filed a notice of appeal to the United States Court of Appeals for the Ninth Circuit. Briefing was completed in May 2019 and a hearing on the appeal was held on December 12, 2019. On December 19, 2019, the Ninth Circuit affirmed the District Court’s dismissal in its entirety. At this time, we are unable to estimate the probability or the amount of liability, if any, related to this claim until plaintiff exhausts her appellate remedies.

Commencing in April 2017, we have received requests for documents and information from the United States Attorney's Office for the District of Vermont and other government agencies in connection with an investigation concerning the ~~certification~~certifications we obtained for our software under the United States Department of Health and Human Services' Electronic Health Record (EHR) Incentive ~~Program.~~Program and our marketing programs for such software. The investigation and requests for information relate to, among other things: (a) payments received by our clients in connection with the EHR Incentive Program, (b) data used to determine objectives and measures under the Meaningful Use (MU) and the Physician Quality Reporting System (PQRS) programs, ~~(b)~~(c) EHR software code used in certifying our software and information, and ~~(c)~~(d) payments provided for the referral of EHR business. We continue to cooperate in this investigation. At this time, we are unable to estimate the probability or the amount of liability, if any, related to this matter. Requests and investigations of this nature may lead to future requests for information and ultimately the assertion of claims or the commencement of legal proceedings against us, as well as other material liabilities. In addition, our responses to these and any future requests require time and effort, which can result in additional cost to us. ~~At this time, we are unable to estimate the probability or the amount of liability, if any, related to this matter.~~ Given the highly-regulated nature of our industry, we may, from time to time, be subject to similar subpoenas, requests for information, or investigations from various government ~~agencies.~~ agencies. It is our practice to respond to such matters in a cooperative, thorough and timely manner.

In ~~June 2019,~~May 2020, we ~~implemented~~announced a ~~business restructuring plan~~decision to execute a reduction in our workforce of less than 3% as ~~part of our continued efforts~~well as other temporary cost reductions in response to ~~preserve and grow~~ the value of the Company through client-focused innovations while reducing our cost structure. As part of the restructuring, we reduced our total workforce by approximately 4% primarily within the research and development function and intend to expand on our research and development resources in India. COVID-19 pandemic. We recorded ~~$546 and $2,428~~$2,562 of restructuring costs, consisting of payroll-related costs, such as severance, outplacement costs, and continuing healthcare coverage, associated with the involuntary separation of employees pursuant to a one-time benefit arrangement, for the nine months ended December 31, 2020 within operating expenses in our condensed consolidated statements of net income and comprehensive income. These amounts were accrued when it was probable that the benefits would be paid, and the amounts were reasonably estimable. The payroll-related costs were substantially paid as of December 31, 2020.

In the three and nine months ended December 31, 2019, ~~respectively, within operating expenses in our condensed consolidated statements~~we recorded $546 and $2,428 of ~~comprehensive income. The~~ restructuring costs, ~~consisted~~respectively, consisting primarily of payroll-related costs, such as severance, outplacement costs, and continuing healthcare coverage, associated with the involuntary separation of employees pursuant to a one-time benefit ~~arrangement. These amounts were accrued when it was probable that the benefits would be~~arrangement, as part of a business restructuring plan implemented in June 2019.

In January 2021, we paid ~~and the amounts were reasonably estimable. As of December 31, 2019,~~ the remaining ~~liability associated with payroll-related costs was $257, which we expect to be substantially paid during~~outstanding balance of $29,000 against the ~~fourth quarter of fiscal 2020.~~

~~In connection with the restructuring plan,~~ ~~we also vacated portions of certain leased locations and recorded impairments of$1,948 and $4,353~~ in the three and nine months ended December 31, 2019, respectively, to our operating right-of-use assets and certain related fixed assets associated with the vacated locations, or portions thereof, in North Canton, San Diego, Horsham, St. Louis, Irvine, and Atlanta, based on projected sublease rental income and estimated sublease commencement dates. ~~We are actively marketing each of these vacated locations for sublease.~~ The impairment analysis was performed at the asset group level and the impairment charge was estimated by comparing the fair value of each asset group based on the expected cash flows to its respective book value. ~~We determined the discount rate for each asset group based on the approximate interest rate on a collateralized basis with similar remaining terms and payments as of the impairment date.~~ Significant judgment was required to estimate the fair value of each asset group and actual results could vary from the estimates, resulting in potential future adjustments to amounts previously recorded.

This Quarterly Report on Form 10-Q ("Report") and certain information incorporated herein by reference contain forward-looking statements within the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. All statements included or incorporated by reference in this Report, other than statements that are purely historical, are forward-looking statements. Words such as “anticipate,” “expect,” “intend,” “plan,” “believe,” “seek,” “estimate,” “will,” “should,” “would,” “could,” “may,” and similar expressions also identify forward-looking statements. These forward-looking statements include, without limitation, discussions of the impact of the COVID-19 pandemic and measures taken in response thereto, as well as our product development plans, business strategies, future operations, financial condition and prospects, developments in and the impacts of government regulation and legislation including, without limitation, The American Recovery and Reinvestment Act, the Patient Protection and Affordable Care Act, and the Medicare Access and CHIP Reauthorization Act of 2015, uncertainties related to the future impact of United States tax reform, and market factors influencing our results. Our expectations, beliefs, objectives, intentions and strategies regarding our future results are not guarantees of future performance and are subject to risks and uncertainties, both foreseen and unforeseen, that could cause actual results to differ materially from results contemplated in our forward-looking statements. These risks and uncertainties include, but are not limited to, our ability to continue to develop new products and increase systems sales in markets characterized by rapid technological evolution, consolidation, and competition from larger, better-capitalized competitors. Many other economic, competitive, governmental and technological factors could affect our ability to achieve our goals, and interested persons are urged to review any risks that may be described in “Item 1A. Risk Factors” as set forth herein and other risk factors appearing in our most recent Annual Report on Form 10-K for the fiscal year ended March 31, ~~2019~~2020 (“Annual Report”), as supplemented by additional risk factors, if any, in our interim filings on our Quarterly Reports on Form 10-Q, as well as in our other public disclosures and filings with the Securities and Exchange Commission ("SEC"). Because of these risk factors, as well as other variables affecting our financial condition and results of operations, past financial performance may not be a reliable indicator of future performance and historical trends should not be used to anticipate results or trends in future periods. We assume no obligation to update any forward-looking statements. You are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of the filing of this Report. Each of the terms “NextGen Healthcare,” “NextGen,” “we,” “us,” “our,” or the “Company” as used throughout this Report refers collectively to NextGen Healthcare, Inc. and its wholly-owned subsidiaries, unless otherwise indicated.

This management's discussion and analysis of financial condition and results of operations ("MD&A") is provided as a supplement to the condensed consolidated financial statements and notes thereto included elsewhere in this Report in order to enhance your understanding of our results of operations and financial condition and should be read in conjunction with, and is qualified in its entirety by, the condensed consolidated financial statements and related notes thereto included elsewhere in this Report. Historical results of operations, percentage margin fluctuations and any trends that may be inferred from the discussion below are not necessarily indicative of the operating results for any future period.

NextGen Healthcare is a leading provider of ~~ambulatory-focused healthcare~~ software and services ~~solutions.~~that empower ambulatory healthcare practices to manage the risk and complexity of delivering care in the rapidly evolving U.S. healthcare system. Our combination of technological breadth, depth and domain expertise makes us a preferred solution provider and trusted advisor for our clients. In ~~pursuit of~~addition to highly configurable core clinical and financial capabilities, our ~~mission to empower the transformation of ambulatory care, we provide innovative technology-based~~portfolio includes tightly integrated solutions that ~~help our~~deliver on ambulatory healthcare imperatives including: population health, care management, patient outreach, telemedicine and nationwide clinical information exchange.

We serve clients ~~succeed while they are managing more complexity~~across all 50 states. Our approximately 100,000 providers deliver care in nearly every medical specialty in a wide variety of practice models including accountable care organizations (“ACOs”), independent physician associations (“IPAs”), managed service organizations (“MSOs”), Veterans Service Organizations (“VSOs”), and ~~assuming greater financial risk.~~

Dental Service Organizations (“DSOs”). Our clients ~~span~~include some of the ~~ambulatory~~largest and most progressive multi-specialty groups in the country. With the recent addition of behavioral health to our strong medical and oral health capabilities, we continue to extend our share not only in Federally Qualified Health Centers (“FQHCs”), but also in the emerging integrated care market from small single specialty practices to larger multi-specialty organizations. We have fully integrated our solutions so that our clients are able to provide their patients with comprehensive services utilizing a single platform. Our highly interoperable platform allows ambulatory practices to thrive especially in complex, heterogeneous healthcare communities where frictionless clinical data exchange is required to coordinate and optimize patient care. market.

NextGen Healthcare has historically enhanced our ~~solutions~~offering through both organic and inorganic activities. In October 2015, we divested our former Hospital Solutions division to focus exclusively on the ambulatory marketplace. In January 2016, we acquired HealthFusion Holdings, Inc. and its cloud-based electronic health record and practice management solution. In April 2017, we acquired Entrada, Inc. and its cloud-based, mobile platform for clinical documentation and collaboration. In August 2017, we acquired EagleDream Health, Inc. and its cloud-based population health analytics solution. In January 2018, we acquired Inforth Technologies for its specialty-focused clinical content. In October 2019, we acquired Topaz Information Systems, LLC ~~("Topaz"~~(“Topaz”) for its behavioral health solutions. In December 2019, we acquired Medfusion, Inc.(“Medfusion”) for its Patient Experience Platform (i.e., patient ~~experience platform~~portal, self-scheduling, and patient pay) capabilities and OTTO Health, LLC (“OTTO”) for its integrated virtual care ~~solutions.~~solutions, notably telemedicine. The integration of these acquired technologies ~~have~~has made NextGen Healthcare’s solutions among the most comprehensive and powerful in the market.

~~The Company~~Our company was incorporated in California in 1974. Previously named Quality Systems, Inc., ~~the Company~~we changed ~~its~~our corporate name to NextGen Healthcare, Inc. in September 2018. Our principal offices are located at 18111 Von Karman Ave., Suite 800, Irvine, California, 92612, and our principal website is www.nextgen.com. We operate on a fiscal year ending on March 31.

Industry Background, Regulatory Environment, and ~~Events in Our Business~~Market Opportunity

We believe that the trends and events described below have contributed to our consolidated results of operations and may continue to impact our future results.

Over the last decade, the ambulatory healthcare market has experienced significant regulatory change, which has driven the need for improved technology to enable practice ~~transformation and technology advancements.~~transformation. Recognizing ~~that~~ it was imperative to digitize the American health system to stem the escalating cost of healthcare and improve the quality of care being delivered, Congress enacted the Health Information Technology for Economic and Clinical Health Act in 2009 (“HITECH Act”). The legislation stimulated healthcare organizations to not only adopt electronic health records, but to use them to collect discrete data that could be used to drive quality care. This standardization supported early ~~pay for reporting~~pay-for-reporting and pay-for-performance programs.

In 2010, the Affordable Care Act (“ACA”) established the roadmap for shifting American healthcare from volume (fee-for-service) to a value-based care (“VBC”) system that rewards improved outcomes at lower costs (fee-for-value). This was followed by the Medicare Access and CHIP Reauthorization Act of 2015 (“MACRA”), bipartisan legislation that further changed the way Medicare rewards clinicians for value vs. volume. Initially focused on government-funded care, the domain of the Centers for Medicare & Medicaid Services (“CMS”), these programs are now firmly established on the commercial insurance side of the industry as well.

VBC created the need for a new category of healthcare information technology (“HIT”) tools that could be used to identify and treat groups of patients, or cohorts, based on risk. Population Health Management (“PHM”) tools support these needs by identifying patient risk, engaging patients, coordinating care, and determining when interventions are needed to improve clinical and financial outcomes. ~~The~~According to estimates from Frost & Sullivan in May 2020, the United States PHM market ~~was estimated at $3.1 billion in 2018 and~~ is expected to ~~more than double~~reach $9.4 billion in total revenue by ~~2022.~~2022, representing a compound annual growth rate (“CAGR”) of 28% from 2017.

Importantly, the introduction of VBC programs was only an element of the broader approach to reducing healthcare expenditure. It was also accompanied by significant reductions in Medicare spending with a projected reduction of ~~$218~~$253 billion in payments by ~~2028,~~2029, as reported by RevCycle ~~Intelligence.~~Intelligence in October 2019. The drive to reduce costs initially led to consolidation in the healthcare system that was followed by a significant shift of care from the inpatient to ~~the outpatient setting as more care is being moved to this~~ lower cost ~~environment.~~outpatient setting. Ambulatory ~~care settings~~surgery centers (ASCs) have become an essential component of comprehensive, low cost distributed care. ~~In 2018,~~According to an October 2019 report from ResearchandMarkets, ASCs continue to perform more than half of all U.S. outpatient ~~volumes reached over 3.5 billion encounters~~surgical procedures and are ~~forecasted~~expected to ~~grow~~see greater volumes as the number of outpatient procedures increases by an estimated 15% by ~~2028, as reported by Becker’s Health IT and CIO Report. The independent physicians’ practices segment~~2028. From 2015 to 2022, the proportion of outpatient cases performed in ASCs is expected to ~~generate more revenue~~increase across most service lines with the largest jump (10%) to occur in spine procedures. Among other factors, consumerism is set to play a major role in driving ASC volume increases, as procedures performed in ASCs cost an average of 58% less than ~~non-affiliated hospitals as it accepts electronic health records integrated PHM programs for better primary and follow-up care, as reported by Frost & Sullivan.~~the same procedure in a hospital outpatient department. The need to sustain revenue has made it extremely important for practices to secure their patient market share, elevating patient loyalty to be a significant determinant of provider success. In addition to being loyal, groups participating in value-based contracts realized that patients also needed to be engaged in their care and interested in improving their own health. The need to attract, retain and engage patients has made patient experience one of the most important aspects of evolving care delivery in the United States. Capturing patient market share and thriving in a market driven by VBC requires both an integrated platform and a full view of the patient population’s clinical and cost data, neither of which could be accomplished without new technologies to collect and analyze multi-sourced patient data. Effectively implemented, these new technologies allow organizations to enhance financial viability while exercising the freedom to join, affiliate, integrate or interoperate in ways that maximize strategic control.

Although the HITECH Act led to the successful adoption of electronic health records, many in the healthcare industry were dissatisfied with the level of exchange of health information between different providers and across different software platforms. With the passing of the MACRA law in 2015, the U.S. Congress declared it a national objective to achieve widespread exchange of health information through interoperable certified EHR technology. Then, in December 2016, the 21st Century Cures Act (“Cures Act”) was passed and signed into law. Among many other policies, the law includes numerous provisions intended to encourage nationwide interoperability.

In March 2020, the HHS Office of the National Coordinator for Health Information Technology (“ONC”) released a final regulation which implements the key interoperability provisions included in the Cures Act. The rule calls on developers of certified EHRs to adopt standardized application programming interfaces (“APIs”) and to meet a list of other new certification and maintenance of certification requirements in order to maintain ~~financial success with shifting reimbursement rules~~approved federal government certification status.

The ONC rule also implements the information blocking provisions of the Cures Act, including identifying reasonable and ~~shrinking reimbursement,~~necessary activities that do not constitute information blocking. Under the Cures Act, HHS has the regulatory authority to investigate and assess civil monetary penalties of up to $1,000,000 against certified health IT developers found to be in violation of “information blocking.”

The new regulations will require significant compliance efforts for healthcare providers, information networks, exchanges, and HIT companies. However, CURES also creates opportunities for improving care delivery and outcomes through increased data exchange between providers, and easier patient access to their own health information. Key to unlocking these benefits is the introduction of new Fast Healthcare Interoperability Resources (“FHIR”) standards. ONC’s goal is for certified HIT companies to

adopt FHIR-based API standards. Meanwhile, CMS is requiring hospitals to provide electronic admission, discharge and transfer notification to other healthcare facilities, providers and designated care team members.

Through the expansion of our NextGen® Share interoperability services platform and API partner marketplace, we ~~believe~~will address the increased demand for ~~managed services, including revenue cycle management (“RCM”) services, hosting, transcription~~moving and ~~scribe services, aligned~~sharing patient data from the EHR easily, quickly and ~~integrated with clinical technology solutions, will increase~~securely. Interoperability improves patient experience and care coordination, enhances patient safety, and reduces costs. We are also expanding resources such as educational webinars, blogs and videos on interoperability to help educate and support healthcare providers.

In recent years, there has been incremental investment to improve the delivery of behavioral healthcare. One of the central drivers of this investment has been the opioid epidemic which claims more than 70,000 lives a year in the ~~coming years.~~United States. The integrated care model previously prevalent mainly in FQHCs, a model which calls for integration of behavioral health and primary care in single care settings, has also gained momentum. Both behavioral health and the integrated care workflows require broad, purpose built, tailored HIT capabilities, many of which are supported by the NextGen platform.

Based on these trends, successful clients must undertake the following imperatives: 1) ensure healthy predictable financial outcomes, 2) provide high quality care at a lower cost in a risk-bearing environment, 3) ensure engaged and loyal patients, and 4) optimize clinician productivity while deploying HIT solutions, 5) support frictionless interoperability.

We ~~strive~~empower the accelerating transformation of ambulatory care by delivering solutions that enable groups to be successful under all models of care, including emerging value-based care in which providers assume risk while minimizing risk. We primarily serve groups that focus on delivering care in ambulatory settings, and do so across diverse practice sizes, specialties, and business constructs. In addition to traditional medical specialties, we participate actively with groups that deliver oral (dental) and behavioral healthcare, and with those that combine these in the ~~trusted partner~~emerging model for integrated care.

Our configurability enables groups to drive commercial advantage with creative workflows for patient access, patient-provider interactions, clinical workflows and care coordination. At the same time, our automation helps drive variability and cost out of the back office by accommodating exacting regulatory, billing and reporting requirements. We embrace both the art and science of delivering healthcare in the transforming U.S. healthcare system.

We believe that the ability to interoperate in a complex, heterogeneous healthcare ecosystem is one of the keys to providing great care and healthy financial outcomes. Because we interoperate with the major stakeholders across the U.S. healthcare system and power many of the nation’s Health Information Exchanges (“HIEs”), we help keep patient data more secure, promote continuity of care, lower the cost of care delivery and perhaps most importantly improve the patient experience.

We recognize that patient experience drives patient engagement and that engaged patients have better outcomes. Consequently, much of our activity over the last few years has been informed by the emergence of the patient as an active, involved consumer. Our solutions help our clients ~~of all sizes, integrating~~create a holistic, personalized care experience that drive loyalty and satisfaction.

We surround our technical solutions with implementation and optimization services and ~~software into~~provide business process outsourcing with managed hosting and revenue cycle management services. With some of our most sophisticated clients, we have been asked to share the breadth of our experience as they shape their strategies. We believe that this sort of engagement, acting as a ~~consolidated solution that enables~~virtual extension of our clients’ leadership teams, is an ~~efficient and effective caregiver and patient experience while driving positive financial outcomes.~~ important step along our journey to becoming a trusted advisor.

As aone of the leading healthcare information technology ~~and services company,~~players in the U.S. ambulatory marketplace, we plan to continue investing in our current capabilities as well as building and/or acquiring new capabilities as we guide our clients through ~~an evolving healthcare marketplace that is transitioning from fee-for-service~~the market’s transformation. We expect to ~~fee-for-value reimbursement models. With approximately 90,000 providers using our solutions, we are enabling care and believe we can truly transform~~continue to empower the ~~delivery~~transformation of care through the following strategic priorities:

In late 2019, the emergence of a novel coronavirus, or COVID-19, was reported and ~~Estimates~~in January 2020, the World Health Organization (“WHO”), declared it a Public Health Emergency of International Concern. In March 2020, the WHO escalated COVID-19 as a pandemic. We proactively responded to the pandemic by creating an executive task force to monitor the COVID-19 situation daily and immediately restricted non-essential travel and migrated to a fully remote workforce while maintaining complete operational effectiveness. Shortly thereafter, and in line with guidance provided by government agencies and international organizations, we restricted travel, mandated a work-from-home policy across our global workforce, and moved in-person client-facing events to virtual ones.

Since the COVID-19 pandemic began, numerous cases and deaths have been reported globally. In addition to the socioeconomic disruption caused by the pandemic, both treatment and suppression measures stressed the very fabric of the U.S. healthcare system in some geographies, exacerbating some of the existing challenges with capacity, balance and reimbursement. Among the measures to slow the spread of the disease and flatten the curve in line with healthcare system capacity was social/physical distancing. The ~~discussion~~need to access care while still social distancing was addressed early on with the limited use of virtual visits and ~~analysis~~was energized when the federal government reduced regulatory barriers and addressed payment parity between virtual and in-person visits. With these tailwinds, telemedicine quickly became regarded as a safer way for patients and providers to engage each other while also relieving economic pressure on the medical practice. We believe that the uptake of telemedicine will transcend COVID-19 and that virtual visits will become a permanent and important change in the way care is delivered. Keeping patients out of the transit system, out of the waiting room and away from other sick patients is simply good medicine.

We also believe that ambulatory practices will emerge from the pandemic with a clearer appreciation of the importance of business continuity and will turn to NextGen more often for managed services. Consequently, we expect to see increased subscription of our ~~condensed~~revenue cycle management services, managed hosting, and our emerging capabilities for managed clinical and administrative services.

Since the mid-March 2020 timing of government orders to shelter in place and restrict non-essential medical services, the COVID-19 pandemic caused declines in patient volume. This negatively impacted our revenue in the fourth quarter of 2020, most notably for purchases of software and hardware. The impact of the disruption also impacted the first half of fiscal 2021 primarily in managed services and EDI, which are volume driven. As the impact of the pandemic and related restrictive measures began to subside late in the fiscal 2021 first half and beyond, we expect that patient volume and thus revenue will return to more normal levels. Based on our overall financial health and the opportunity in front of us, we made some important decisions on how to approach the first two quarters of fiscal 2021, which included executing cost reductions with a primary goal of mitigating COVID-19 based impacts to earnings. Most of these cost reductions were temporary as we believed that preserving our employee base, organizational momentum, and robust capabilities for the near future will be a win for the Company and our shareholders.

Still, the broader implications of the global emergence of COVID-19 on our business, operating results, and overall financial performance remain uncertain and may depend on certain developments, including the duration and spread of the outbreak, impact on our clients and our sales cycles, impact on our partners or employees, and impact on the economic environment and financial markets, all of which are uncertain and cannot be predicted. We are conducting business as usual with certain modifications to employee travel, employee work locations, and marketing events, among other modifications. We have observed other companies taking precautionary and preemptive actions to address COVID-19, and the effects it has had and is expected to have on business and the economy. We expect that our customers and potential customers will continue to take actions to reduce operating expenses and moderate cash flows, including by delaying sales and requesting extended billing and payment terms. We will continue to actively monitor the situation and may take further actions that we determine are in the best interests of our employees, customers, partners, suppliers, and shareholders.

We assessed certain accounting matters that generally require consideration of forecasted financial information in context with the information reasonably available to the Company and the unknown future impacts of COVID-19 at December 31, 2020 and through the date of this Report. The accounting matters assessed included, but were not limited to, our allowances for doubtful accounts and the carrying value of goodwill and other long-lived assets. While there was not a material impact to our consolidated financial statements at and ~~results~~for the quarter ended December 31, 2020, our future assessment of ~~operations is based upon~~the magnitude and duration of COVID-19, as well as other factors could result in material impacts to our ~~condensed~~ consolidated financial statements ~~which have been prepared~~ in accordance with accounting principles generally accepted in the United States of America ("GAAP"). The preparation of these condensed consolidated financial statements requires us to make estimates and judgments that affect our reported amounts of assets, liabilities, revenue and expenses, and related disclosures. We base our assumptions, estimates and judgments on historical experience, current trends, and other factors we believe to be reasonable under the circumstances, and we evaluate these estimates on an ongoing basis. On a regular basis, we review the accounting policies and update our assumptions, estimates, and judgments, as needed, to ensure that our condensed consolidated financial statements are presented fairly and in accordance with GAAP. Actual results could differ materially from our estimates under different assumptions or conditions. To the extent that there are material differences between our estimates and actual results, our financial condition or results of operations will be affected.future reporting periods.

We describe our significant accounting policies in Note 1, “Summary of Significant Accounting Policies,” of our notes to consolidated financial statements included in our Annual Report. We discuss our critical accounting policies and estimates in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” of our Annual Report.

~~We adopted Accounting Standards Update No. 2016-02,~~ ~~Leases (Topic 842)~~ ~~and its subsequent amendments (together “ASC 842”) during the quarter ended June 30, 2019 using the transition approach provided for under ASU No. 2018-11,~~ ~~Leases (Topic 842): Targeted Improvements~~, which allowed us to apply the new lease standard as of April 1, 2019, rather than the beginning of the earliest period presented. ASC 842 supersedes ASC 840 and requires the recognition of leased arrangements on the balance sheet as right-of-use assets and liabilities pertaining to the rights and obligations created by the leased assets. Refer to Note 4, "Leases" of our notes to condensed consolidated financial statements included elsewhere in this Report for additional information regarding our adoption of ASC 842.

~~There have been no other material changes in our significant accounting policies or critical accounting policies and estimates since the fiscal year ended March 31, 2019.~~

The following table sets forth the percentage of revenue represented by each item in our condensed consolidated statements of net income and comprehensive income for the three and nine months ended December 31, ~~2019~~2020 and ~~2018~~2019 (certain percentages below may not sum due to rounding):

	Three Months Ended December 31,						Nine Months Ended December 31,						Three Months Ended December 31,						Nine Months Ended December 31,
	2019			2018			2019			2018			2020			2019			2020			2019
Revenues:
Recurring		90.6	%		89.7	%		90.3	%		89.7	%		90.5	%		90.6	%		90.5	%		90.3	%
Software, hardware, and other non-recurring		9.4			10.3			9.7			10.3			9.5			9.4			9.5			9.7
Total revenues		100.0			100.0			100.0			100.0			100.0			100.0			100.0			100.0
Cost of revenue:
Recurring		37.9			36.7			37.9			36.3			38.2			37.9			38.2			37.9
Software, hardware, and other non-recurring		5.1			5.0			4.9			5.3			4.8			5.1			4.6			4.9
Amortization of capitalized software costs and acquired intangible assets		6.5			5.4			6.5			5.2			6.6			6.5			7.1			6.5
Total cost of revenue		49.5			47.1			49.3			46.8			49.6			49.5			49.8			49.3
Gross profit		50.5			52.9			50.7			53.2			50.4			50.5			50.2			50.7
Operating expenses:
Selling, general and administrative		31.1			31.6			30.2			30.5			34.5			31.1			31.9			30.2
Research and development costs, net		14.5			15.8			15.3			15.5			12.8			14.5			13.1			15.3
Amortization of acquired intangible assets		0.7			0.8			0.7			0.8			0.8			0.7			0.8			0.7
Impairment of assets		1.4			0.0			1.1			0.0			1.6			1.4			0.5			1.1
Restructuring costs		0.4			0.0			0.6			0.0			0.0			0.4			0.6			0.6
Total operating expenses		48.2			48.2			47.9			46.8			49.7			48.2			47.0			47.9
Income from operations		2.4			4.7			2.8			6.4			0.7			2.4			3.2			2.8
Interest income		0.0			0.0			0.0			0.0			0.0			0.0			0.0			0.0
Interest expense		(0.3	)		(0.6	)		(0.3	)		(0.6	)		(0.4	)		(0.3	)		(0.7	)		(0.3	)
Other income (expense), net		0.1			(0.2	)		0.1			0.1			0.0			0.1			0.0			0.1
Income before provision for (benefit of) income taxes		2.2			4.0			2.6			5.9			0.2			2.2			2.5			2.6
Provision for (benefit of) income taxes		(1.0	)		0.3			(0.3	)		0.7			(0.1	)		(1.0	)		0.0			(0.3	)
Net income		3.2	%		3.7	%		2.9	%		5.2	%		0.3	%		3.2	%		2.4	%		2.9	%

The following table presents our disaggregated revenues for the three and nine months ended December 31, ~~2019~~2020 and ~~2018~~2019 (in thousands):

	Three Months Ended December 31,						Nine Months Ended December 31,						Three Months Ended December 31,						Nine Months Ended December 31,
	2019			2018			2019			2018			2020			2019			2020			2019
Recurring revenues:
Subscription services	$	33,163		$	30,035		$	94,718		$	87,618		$	37,958		$	33,163		$	110,185		$	94,718
Support and maintenance		39,936			39,714			118,948			120,556			37,914			39,936			114,537			118,948
Managed services		26,830			24,251			77,730			74,048			27,395			26,830			76,106			77,730
Electronic data interchange and data services		24,858			23,446			73,427			71,548			24,976			24,858			72,628			73,427
Total recurring revenues		124,787			117,446			364,823			353,770			128,243			124,787			373,456			364,823

Software, hardware, and other non-recurring revenues:
Software license and hardware		7,210			9,217			22,563			26,013			7,908			7,210			20,662			22,563
Other non-recurring services		5,743			4,204			16,471			14,605			5,601			5,743			18,515			16,471
Total software, hardware and other non-recurring revenues		12,953			13,421			39,034			40,618			13,509			12,953			39,177			39,034

Total revenues	$	137,740		$	130,867		$	403,857		$	394,388		$	141,752		$	137,740		$	412,633		$	403,857

Recurring revenues as a percentage of total revenues		90.6	%		89.7	%		90.3	%		89.7	%		90.5	%		90.6	%		90.5	%		90.3	%

Consolidated revenue for the three months ended December 31, ~~2019~~2020 increased ~~$6.9~~$4.0 million compared to the prior year period due to a ~~$7.4~~$3.5 million increase in recurring revenues ~~partially offset by~~and a $0.5 million ~~decrease~~increase in software, hardware and other non-recurring revenues. The increase in recurring revenues was due to a $4.8 million increase in subscription services, $0.6 million increase in managed services, and $0.1 increase in EDI and data services, partially offset by a $2.0 million decrease in support and maintenance. The increase in subscription services was primarily due to growth in subscriptions associated with our patient experience and telehealth platforms, including incremental revenues from the acquisitions of Medfusion and OTTO, our NextGen Office cloud-based solutions, mobile solutions, and population health solutions, partially offset by a decrease in core NextGen SaaS solutions. The increase in managed services revenue was primarily due to an increase in hosting services and our patient pay services revenue from our acquisition of Medfusion, partially offset by a decrease in revenue cycle management revenues due to client attrition. Support and maintenance decreased due to client attrition and our transition to a recurring subscription-based model that we announced in May 2020. The increase in non-recurring services revenue was primarily driven by the completion of professional services projects.

Consolidated revenue for the nine months ended December 31, ~~2019~~2020 increased ~~$9.5~~$8.8 million compared to the prior year period due to a ~~$11.1~~$8.6 million increase in recurring revenues ~~partially offset by~~and a ~~$1.6~~$0.2 million ~~decrease~~increase in software, hardware and other non-recurring revenues. The increase in recurring revenues ~~for~~ ~~the three and nine months ended December 31, 2019 compared to the prior year period~~ was primarily driven by a $15.5 million increase in subscription services, ~~revenue related~~partially offset by a $4.4 million decrease in support and maintenance, $1.6 million decrease in managed services, and a $0.8 million decrease in EDI and data services. The increase in subscription services was primarily due to ~~our acquisitions of Topaz and Medfusion during the quarter and higher~~growth in subscriptions associated with our patient experience and telehealth platforms, including incremental revenues from the acquisitions of Medfusion and OTTO, our population health solutions, mobile solutions, connected health and ~~analytics and~~interoperability solutions, NextGen Office cloud-based ~~solutions. Our managed services revenue increased due to higher revenues from both revenue cycle management~~solutions, and ~~managed cloud services. The increase in our EDI and data services revenue was due mostly to growth in the transaction volume.~~core NextGen SaaS solutions. The decrease in support and maintenance ~~revenue for the nine months ended December 31, 2019 compared to 2019~~ was primarily due to ~~higher~~ client ~~attrition.~~attrition and our transition to a recurring subscription-based model. The decrease in managed services was primarily due to client attrition and lower patient volumes directly associated with the COVID-19 pandemic, partially offset by increases in hosting services, and patient pay services related to our acquisition of Medfusion. EDI and data services decreased due to lower patient volumes directly associated with the COVID-19 pandemic. The increase in software, hardware, and other non-recurring services revenues ~~for~~ was due to an increase of $2.1 million in other non-recurring services, partially offset by $1.9 million decrease in software license and hardware revenue. The increase in other non-recurring services revenue was primarily driven by the ~~three~~completion of professional services projects. The decrease in software license and ~~nine months ended December 31, 2019 compared to the prior year period~~ hardware revenue was primarily due to ~~lower software bookings, partially offset by an increase in professional services revenue~~.our transition to a recurring subscription-based model.

Bookings reflect the estimated annual value of our executed contracts, adjusted to include the effect of pre-acquisition bookings, and are believed to provide a broad indicator of the general direction and progress of the business. Total bookings ~~decreased to $30.6~~were $37.5 million and $30.7 million for the three months ended December 31, 2020 and 2019, ~~compared to $32.8 million in the prior year primarily~~respectively. The increase is due to ~~a lower software and professional services bookings, partially offset by~~ higher subscriptions ~~bookings.~~bookings associated with our patient experience and telehealth platforms, higher bookings of revenue cycle management, and higher bookings of non-recurring services.

Total bookings were ~~$98.9~~$94.3 million and ~~$98.0~~$99.9 million for the nine months ended December 31, 2020 and 2019, respectively. The decrease primarily reflects lower bookings of revenue cycle management, partially offset by higher subscriptions bookings associated with our patient experience and ~~2018, respectively.~~telehealth platforms.

The following table presents our consolidated cost of revenue and gross profit for the three and nine months ended December 31, ~~2019~~2020 and ~~2018~~2019 (in thousands):

	Three Months Ended December 31,						Nine Months Ended December 31,						Three Months Ended December 31,						Nine Months Ended December 31,
	2019			2018			2019			2018			2020			2019			2020			2019
Cost of revenue:
Recurring	$	52,197		$	47,997		$	153,065		$	143,322		$	54,204		$	52,197		$	157,539		$	153,065
Software, hardware, and other non-recurring		6,975			6,576			19,816			20,752			6,800			6,975			18,924			19,816
Amortization of capitalized software costs and acquired intangible assets		8,963			7,098			26,219			20,566			9,320			8,963			29,180			26,219
Total cost of revenue	$	68,135		$	61,671		$	199,100		$	184,640		$	70,324		$	68,135		$	205,643		$	199,100

Gross profit	$	69,605		$	69,196		$	204,757		$	209,748		$	71,428		$	69,605		$	206,990		$	204,757
Gross margin %		50.5	%		52.9	%		50.7	%		53.2	%		50.4	%		50.5	%		50.2	%		50.7	%

Cost of revenue consists primarily of compensation expense, including share-based compensation, for personnel that deliver our products and services. Cost of revenue also includes amortization of capitalized software costs and acquired technology, third party consultant and outsourcing costs, costs associated with our EDI business partners and clearinghouses, hosting service costs, third

party software costs and royalties, and other costs directly associated with delivering our products and services. Refer to Note 7,8, "Intangible Assets" and Note 8,9, "Capitalized Software Costs" of our notes to condensed consolidated financial statements included elsewhere in this Report for additional information on current period amortization of capitalized software costs and acquired technology and an estimate of future expected amortization.

As noted above, we announced in May 2020 a move to reduce our perpetual license revenue in favor of recurring subscription revenue, which will impact our gross margin percentages as we will recognize less high-margin perpetual license revenue than we have historically, but ultimately it is expected to produce high-margin recurring revenue. When combined with the incremental amortization of capitalized software costs and acquired intangible assets, it may further reduce our expected gross margin percentage.

Share-based compensation expense included in cost of revenue was $0.5 million ~~and $0.4 million~~ for both the three months ended December 31, 2020 and 2019, ~~and 2018.~~respectively. Share-based compensation expense included in cost of revenue was $1.5 ~~and $0.9~~ million for both the nine months ended December 31, 2020 and 2019, ~~and 2018.~~respectively.

Gross profit for the three months ended December 31, ~~2019~~2020 increased ~~$0.4~~$1.8 million compared to the prior year ~~period~~ due to a ~~$6.9~~$4.0 million increase in revenues as discussed above, offset by a ~~$6.5~~$2.2 million increase in cost of ~~revenue.~~revenue associated with the higher revenues. Our gross margin decreased to ~~50.5%~~50.4% for the three months ended December 31, ~~2019~~2020 compared to ~~52.9%~~50.5% in the prior year.

Gross profit for the nine months ended December 31, ~~2019 decreased $5.0~~2020 increased $2.2 million compared to the prior year period due to a ~~$14.5~~$8.8 million increase in revenues as discussed above, offset by a $6.6 million increase in cost of revenue ~~partially offset by a $9.5 million increase in revenues as discussed above.~~associated with the higher revenues. Our gross margin decreased to ~~50.7%~~50.2% for the nine months ended December 31, ~~2019~~2020 compared to ~~53.2%~~50.7% in the prior year.

The increase in cost of revenue for the three and nine months ended December 31, ~~2019~~2020 compared to the prior year ~~period is~~periods was due to higher cost of subscription services primarily related to higher hosting costs and higher salaries and benefits from increased employee headcount, higher cost of patient pay services related to the acquisition of Medfusion, higher cost of hosting services due to higher sales, higher amortization of acquired intangible assets related to our acquisitions of Topaz, Medfusion, and OTTO, higher amortization of previously capitalized software costs ~~higher third party outsourcing costs~~from the general release of development projects, and ~~personnel costs related to our delivering our managed services,~~ higher ~~hosting services costs, an increase in~~ cost of ~~subscription services associated with higher related subscription services revenues,~~maintenance and ~~an increase in direct EDI costs associated with higher transaction volume,~~support, partially offset by lower ~~personnel~~ costs ~~related~~of revenue cycle management and EDI services due to ~~delivering our support and maintenance services. The decline in gross margin was primarily driven by the higher amortization of previously capitalized software costs.~~lower transactional volume.

The following table presents our ~~consolidated~~ selling, general and administrative expense for the three and nine months ended December 31, ~~2019~~2020 and ~~2018~~2019 (in thousands):

	Three Months Ended December 31,						Nine Months Ended December 31,						Three Months Ended December 31,						Nine Months Ended December 31,
	2019			2018			2019			2018			2020			2019			2020			2019
Selling, general and administrative	$	42,841		$	41,304		$	122,015		$	120,169		$	48,972		$	42,841		$	131,659		$	122,015
Selling, general and administrative, as a percentage of revenue		31.1	%		31.6	%		30.2	%		30.5	%		34.5	%		31.1	%		31.9	%		30.2	%

Selling, general and administrative expense ~~consists~~consist of compensation expense, including share-based compensation, for management and administrative personnel, selling and marketing expense, facilities costs, depreciation, professional service fees, including legal ~~consulting,~~ and accounting services, legal settlements, acquisition and transaction-related costs, and other general corporate and administrative expenses.

Share-based compensation expense included in selling, general and administrative expenses was ~~$3.1~~$4.3 million and ~~$3.5~~$3.1 million for the three months ended December 31, ~~2019~~2020 and ~~2018,~~2019, respectively. Share-based compensation expense included in selling, general and administrative expenses was ~~$9.5~~$12.2 million and ~~$8.8~~$9.5 million for the nine months ended December 31, ~~2019~~2020 and ~~2018,~~2019, respectively. The increase in share-based compensation for the three and nine months ended December 31, ~~2019~~2020 compared to the same prior year periods is due to increased utilization of share-based awards to incentivize our executives and employees. Refer to Note ~~13,~~14, "Share-Based Awards" of our notes to condensed consolidated financial statements included elsewhere in this Report for additional information of our share-based awards and related incentive plans.

Selling, general and administrative expenses increased ~~$1.5~~$6.1 million and $9.6 million for the three and nine months ended December 31, ~~2019~~2020, respectively, compared to the prior year ~~period~~periods. These increases were primarily due to ~~a $1.6 million higher acquisition~~increased legal fees associated with our ongoing shareholder litigation matter, increase in discretionary and annual bonus expense, and other personnel costs, ~~related to acquisitions of Topaz, Medfusion, and OTTO.~~

Selling, general and administrative expenses increased $1.8 million for the nine months ended December 31, 2019 compared to the prior year period due to the $5.7 million net benefit recorded in the prior year from insurance recoveries related to the settlement of the Federal Securities Class Action complaint,partially offset by ~~$2.9 lower employee severance~~decreases in travel and ~~exit costs~~conferences and ~~lower salaries and benefits due to a reduction in employee headcount as a result of our business restructuring plan announced earlier in the year, and a net decrease in all other~~acquisition costs.

The following table presents our consolidated net research and development costs, capitalized software costs, and gross expenditures prior to capitalization, for the three and nine months ended December 31, ~~2019~~2020 and ~~2018~~2019 (in thousands):

	Three Months Ended December 31,						Nine Months Ended December 31,						Three Months Ended December 31,						Nine Months Ended December 31,
	2019			2018			2019			2018			2020			2019			2020			2019
Gross expenditures	$	24,910		$	25,156		$	76,651		$	76,034		$	25,028		$	24,910		$	73,025		$	76,651
Capitalized software costs		(4,884	)		(4,474	)		(14,785	)		(14,853	)		(6,831	)		(4,884	)		(18,914	)		(14,785	)
Research and development costs, net	$	20,026		$	20,682		$	61,866		$	61,181		$	18,197		$	20,026		$	54,111		$	61,866

Research and development costs, as a percentage of revenue		14.5	%		15.8	%		15.3	%		15.5	%		12.8	%		14.5	%		13.1	%		15.3	%
Capitalized software costs as a percentage of gross expenditures		19.6	%		17.8	%		19.3	%		19.5	%		27.3	%		19.6	%		25.9	%		19.3	%

Gross research and development expenditures, including costs expensed and costs capitalized, consist of compensation expense, including share-based compensation for research and development personnel, certain third-party consultant fees, software maintenance costs, and other costs related to new product development and enhancement to our existing products. ~~We intend~~

The healthcare information systems and services industry is characterized by rapid technological change, requiring us to ~~continue to invest heavily~~engage in continuing investments in our research and development ~~expenses as we continue~~ to ~~bring additional functionality~~update, enhance and ~~features~~improve our systems. This includes expansion of our software and service offerings that support pay-for-performance initiatives around accountable care organizations, bringing greater ease of use and intuitiveness to ~~the medical community~~our software products, enhancing our managed cloud and ~~develop a new integrated inpatient~~hosting services to lower our clients' total cost of ownership, expanding our interoperability and ~~outpatient, web-based software platform.~~enterprise analytics capabilities, and furthering development and enhancements of our portfolio of specialty-focused templates within our electronic health records software.

The capitalization of software development costs results in a reduction to our reported net research and development costs. Our software capitalization rate, or capitalized software costs as a percentage of gross expenditures, has varied historically and may continue to vary based on the nature and status of specific projects and initiatives in progress. Although changes in software capitalization rates have no impact on our overall cash flows, it results in fluctuations in the amount of software development costs ~~being~~that may be capitalized or expensed up front and the amount of net research and development costs reported in our condensed consolidated ~~statement~~statements of net income and comprehensive ~~income.~~income, and ultimately also affects the future amortization of our previously capitalized software development costs. Refer to Note 9, "Capitalized Software Costs" of our notes to condensed consolidated financial statements included elsewhere in this Report for additional information on current period amortization of capitalized software costs and an estimate of future expected amortization.

Share-based compensation expense included in research and development costs was ~~$1.0~~$1.1 million and ~~$0.9~~$1.0 million for the three months ended December 31, ~~2019~~2020 and ~~2018,~~2019, respectively. Share-based compensation expense included in research and development costs was ~~$2.8~~$3.0 million and ~~$2.2~~$2.8 million for the nine months ended December 31, ~~2019~~2020 and ~~2018,~~2019, respectively.

Net research and development costs for the three months ended December 31, ~~2019~~2020 decreased ~~$0.7~~$1.8 million compared to the prior year period due to ~~$0.4~~$1.9 million higher capitalization of software costs, ~~and $0.3 million lower~~partially offset by $0.1 higher gross expenditures.

Net research and development costs for the nine months ended December 31, ~~2019 increased $0.6~~2020 decreased $7.8 million compared to the prior year period due to ~~a $0.6~~$4.1 million ~~increase in~~higher capitalization of software costs and $3.6 million lower gross expenditures.

The ~~increase~~decrease in gross expenditures ~~for~~in the nine months ended December 31, ~~2019~~2020 compared to the prior year period was primarily ~~due to higher utilization of our Bangalore development center resources and increased hosting costs, partially offset~~driven by lower salaries and benefits associated with lower headcount, decreased internal hosting costs, lower software and hardware costs, as well as lower spend in travel expense, partially offset by higher consulting costs and an increase in discretionary bonus expense. Capitalization of software costs increased in the three and nine months ended December 31, 2020 compared to the prior year periods due to ~~a reduction in employee headcount as a result~~higher rates of ~~our business restructuring plan announced earlier this year.~~software capitalization. Our software capitalization rate fluctuates due to differences in the nature and status of our projects and initiatives during a given year, which affects the amount of development costs that may be capitalized.

The following table presents our amortization of acquired intangible assets for the three and nine months ended December 31, ~~2019~~2020 and ~~2018~~2019 (in thousands):

Amortization of acquired intangible assets included in operating expense consist of the amortization related to our customer relationships ~~trademarks,~~ and ~~contracts~~trade names intangible assets acquired as part of our business combinations. Refer to Note 7,8, "Intangible Assets" of our notes to condensed consolidated financial statements included elsewhere in this Report for an estimate of future expected amortization.

Amortization of acquired intangible assets for the three and nine months ended December 31, ~~2019 decreased~~2020 increased $0.1 million and $0.6 million, respectively compared to the prior year periods due to ~~certain acquired~~additional amortization of the customer relationships and trade names intangible assets ~~being fully amortized in the prior fiscal year.~~acquired from Medfusion.

In ~~June~~May 2020, we announced a decision to execute a reduction in our workforce of less than 3% as well as other temporary cost reductions in response to the COVID-19 pandemic. We recorded $2.6 million of restructuring costs, consisting of payroll-related costs, such as severance, outplacement costs, and continuing healthcare coverage, associated with the involuntary separation of employees pursuant to a one-time benefit arrangement, for the nine months ended December 31, 2020 within operating expenses in our condensed consolidated statements of net income and comprehensive income. These amounts were accrued when it was probable that the benefits would be paid, and the amounts were reasonably estimable. The payroll-related costs were substantially paid as of December 31, 2020.

In the three and nine months ended December 31, 2019, we implemented a business restructuring plan as part of our continued efforts to preserve and grow the value of the Company through client-focused innovations while reducing our cost structure. As part of the restructuring, we reduced our total workforce by approximately 4% primarily within the research and development function and intend to expand on our research and development resources in India. We recorded $0.5 million and $2.4 million of restructuring costs, ~~in the three and nine months ended December 31, 2019,~~ respectively, ~~within operating expenses in our condensed consolidated statements of comprehensive income. The restructuring costs consisted~~consisting primarily of payroll-related costs, such as severance, outplacement costs, and continuing healthcare coverage, associated with the involuntary separation of employees pursuant to a one-time benefit ~~arrangement. These amounts were accrued when it was probable that~~arrangement, as part of a business restructuring plan implemented in June 2019.

As part of our response to the ~~benefits would be paid,~~COVID-19 pandemic and ongoing cost reduction efforts, we vacated a portion of our Irvine office and the ~~amounts were reasonably estimable.~~ Asremainder of our San Diego office. In the three months ended December 31, ~~2019, the remaining liability~~2020, we recorded impairments of $2.2 million to our operating right-of-use assets and certain related fixed assets associated with ~~payroll-related costs was $0.3 million, which we expect to be substantially paid during~~ the ~~fourth quarter of fiscal 2020.~~

vacated locations based on projected sublease rental income and estimated sublease commencement dates. In connection with the June 2019 restructuring plan, we ~~also~~ vacated portions of certain leased locations and recorded impairments of $1.9 million and $4.4 million in the three and nine months ended December 31, 2019 ~~respectively,~~ to our operating right-of-use assets and certain related fixed assets associated with the vacated locations, or portions thereof, in ~~North Canton, San Diego,~~ Horsham, St. Louis, Irvine, and Atlanta based on projected sublease rental income and estimated sublease commencement dates. The impairment analyses were performed at the asset group level and the impairment charge was estimated by comparing the fair value of each asset group based on the expected cash flows to its respective book value. We determined the discount rate for each asset group based on the approximate interest rate on a collateralized basis with similar remaining terms and payments as of the impairment date. Significant judgment was required to estimate the fair value of each asset group and actual results could vary from the estimates, resulting in potential future adjustments to amounts previously recorded. R~~efer to Note 16, “Restructuring Plan”~~ ~~of our notes to condensed consolidated financial statements included elsewhere in this Report for further details.~~

The following table presents our interest expense for the three and nine months ended December 31, ~~2019~~2020 and ~~2018~~2019 (in thousands):

	Three Months Ended December 31,						Nine Months Ended December 31,						Three Months Ended December 31,						Nine Months Ended December 31,
	2019			2018			2019			2018			2020			2019			2020			2019
Interest income	$	30		$	44		$	145		$	113		$	9		$	30		$	27		$	145
Interest expense		(435	)		(720	)		(1,294	)		(2,219	)		(631	)		(435	)		(2,873	)		(1,294	)
Other income (expense), net		137			(227	)		214			384			(15	)		137			(17	)		214

Interest expense relates to our revolving credit agreement and the related amortization of deferred debt issuance costs. Refer to Note 9,10, “Line of Credit” of our notes to condensed consolidated financial statements included elsewhere in this Report for additional information.

The changes in interest expense is primarily caused by fluctuations in outstanding balances under our revolving credit agreement and the related amortization of debt issuance costs. As of December 31, ~~2019,~~2020, we had ~~$37.0~~$29.0 million of outstanding balances under the revolving credit agreement, compared to an outstanding balance of ~~$11.0~~$129.0 million as of March 31, ~~2019~~2020 and ~~$27.0 million~~$37.0 outstanding as of December 31, ~~2018.~~2019. The fluctuations of other income and expense compared to the prior year periods are primarily due to changes to the India foreign exchange rates.

The following table presents our provision for (benefit of) income taxes for the three and nine months ended December 31, ~~2019~~2020 and ~~2018~~2019 (in thousands):

	Three Months Ended December 31,						Nine Months Ended December 31,						Three Months Ended December 31,						Nine Months Ended December 31,
	2019			2018			2019			2018			2020			2019			2020			2019
Provision for (benefit of) income taxes		(1,403	)	$	456		$	(1,274	)	$	2,794			(169	)	$	(1,403	)	$	149		$	(1,274	)
Effective tax rate		-46.6	%		8.6	%		-12.2	%		12.0	%		(57.3	)%		(46.6	)%		1.5	%		(12.2	)%

The ~~decrease~~increased benefit in the effective tax rate for the three months ended December 31, 2020 compared to the prior year was primarily due to an increase in the tax benefit for research and development credits whereby the research and development credit remained consistent on a gross basis compared to the prior year while the annualized estimated pretax book income decreased. This benefit was partially offset by a decrease of various discrete return to provision benefits and higher nondeductible officer’s compensation.

The increase in the effective tax rate for the nine months ended December 31, ~~2019~~2020 compared to the prior year ~~periods~~benefit was primarily due to the ~~increased net benefit~~decrease of ~~the research and development credits, partially~~various discrete return to provision benefits, offset by an increase of nondeductible stock option ~~expense, nondeductible officer’s compensation,~~expense.

The Coronavirus Aid, Relief, and ~~reserves for uncertain tax position. Additionally, due~~Economic Security Act (“CARES Act”) and the Consolidated Appropriations Act, 2021 (“Stimulus Bill”), signed into law on March 27, 2020 and December 27, 2020, respectively, have resulted in significant changes to the ~~differences in~~U.S. federal corporate tax law. Additionally, several state and foreign jurisdictions have enacted additional legislation and or comply with federal changes. We have considered the ~~amount of income before taxes,~~applicable tax law changes and recognized the impact ~~of the rate reconciliation items on the effective~~in our quarterly income tax ~~rates were more significant in the three and nine months ended December 31, 2019.~~provision, as applicable.

The following table presents our net income (in thousands) and net income per share and for the three months ended December 31, ~~2019~~2020 and ~~2018:~~2019:

	Three Months Ended December 31,				Nine Months Ended December 31,				Three Months Ended December 31,				Nine Months Ended December 31,
	2019		2018		2019		2018		2020		2019		2020		2019
Net income	$	4,415	$	4,824	$	11,740	$	20,566	$	464	$	4,415	$	10,095	$	11,740
Net income per share:
Basic	$	0.07	$	0.07	$	0.18	$	0.32	$	0.01	$	0.07	$	0.15	$	0.18
Diluted	$	0.07	$	0.07	$	0.18	$	0.32	$	0.01	$	0.07	$	0.15	$	0.18

As a result of the foregoing changes in revenue and expense, net income for the three months ended December 31, ~~2019~~2020 decreased ~~$0.4~~$4.0 million compared to the prior year period.

As a result of the foregoing changes in revenue and expense, net income for the nine months ended December 31, ~~2019~~2020 decreased ~~$8.8~~$1.6 million compared to the prior period.

The following table presents selected financial statistics and information for the nine months ended December 31, ~~2019~~2020 and ~~2018~~2019 (in thousands):

	Nine Months Ended December 31,				Nine Months Ended December 31,
	2019		2018		2020		2019
Cash and cash equivalents	$	26,790	$	30,054	$	89,523	$	26,790
Unused portion of revolving credit agreement ⁽¹⁾		263,000		273,000		271,000		263,000
Total liquidity	$	289,790	$	303,054	$	360,523	$	289,790

Net income	$	11,740	$	20,566	$	10,095	$	11,740
Net cash provided by operating activities	$	64,371	$	33,279	$	75,978	$	64,371

Our outstanding borrowings under our revolving credit agreement was $29.0 million as of December 31, 2020 compared to $129.0 million as of March 31, 2020 and $37.0 million as of December 31, 2019.

Our principal sources of liquidity are our cash generated from operations, driven mostly by our net income and working capital management, our cash and cash equivalents, and our revolving credit agreement.

We believe that our cash and cash equivalents on hand at December 31, 2020, together with our cash flows from operating activities and liquidity provided by our revolving credit agreement, will be sufficient to meet our working capital and capital expenditure requirements for the next twelve months. Due to the ongoing uncertainties of the impact of the COVID-19 pandemic on the industry in which we operate, we proactively implemented certain precautionary measures, including cost containment and strengthening our cash position by increasing the outstanding borrowings under our revolving credit agreement. We borrowed an additional $50.0 million under our revolving credit agreement in April 2020 and subsequently paid down $150.0 million in the nine months ended December 31, 2020 based on the reassessment of our short-term cash flow and working capital requirements. The impact of COVID-19 is rapidly evolving and widespread, and therefore, it is not possible to fully identify, measure, and predict the various impacts that COVID-19 may have on our financial condition, results of operations, cash flows, and liquidity requirements. We will continue to assess the potential effects of the COVID-19 pandemic on our business and actively manage our response accordingly.

As of December 31, ~~2019,~~2020, our cash and cash equivalents balance of ~~$26.8~~$89.5 million ~~reflects a $6.3 million decrease compared~~compares to ~~$33.1~~$138.0 million as of March 31, ~~2019. We had $37.0~~2020 and $26.8 million ~~of outstanding loans under our revolving credit agreement~~ as of December 31, 2019.

We may continue to use a portion of our funds as well as available financing from our revolving credit agreement for future acquisitions or other similar business activities, although the specific timing and amount of funds to be used is not currently determinable. We intend to expend some of our available funds for the development of products complementary to our existing product line as well as new versions of certain of our products. These developments are intended to take advantage of more powerful technologies and to increase the integration of our products.

Our investment policy is determined by our Board of Directors. Excess cash, if any, may be invested in very liquid short term assets including tax exempt and taxable money market funds, certificates of deposit and short term municipal bonds with average maturities of 365 days or less at the time of purchase. Our Board of Directors continues to review alternate uses for our cash including an expansion of our investment policy and other items. Any or all of these programs could significantly impact our investment income in future periods.

We believe that our cash and cash equivalents on hand at December 31, 2019, together with our cash flows from operations and liquidity provided by our revolving credit agreement, will be sufficient to meet our working capital and capital expenditure requirements for the next twelve months.

The following table summarizes our condensed consolidated statements of cash flows for the nine months ended December 31, ~~2019~~2020 and ~~2018~~2019 (in thousands):

	Nine Months Ended December 31,						Nine Months Ended December 31,
	2019			2018			2020			2019
Net income	$	11,740		$	20,566		$	10,095		$	11,740
Non-cash expenses		63,480			46,736			66,241			63,474
Cash from net income, as adjusted	$	75,220		$	67,302		$	76,336		$	75,214
Change in contract assets and liabilities, net		(2,933	)		(6,516	)		(12,189	)		(2,933	)
Change in accounts receivable		6,184			242			1,221			6,184
Change in other assets and liabilities		(14,100	)		(27,749	)
Change in all other assets and liabilities								10,610			(14,094	)
Net cash provided by operating activities	$	64,371		$	33,279		$	75,978		$	64,371

For the nine months ended December 31, ~~2019,~~2020, cash provided by operating activities increased ~~$31.1~~$11.6 million compared to the prior year period, ~~of which $13.6 million is~~primarily due to increases of $24.7 million in changes in other assets and liabilities, ~~$7.9~~and $1.1 million ~~due to~~ higher cash from net income, as adjusted for ~~$16.7 million higher~~ non-cash expenses, ~~$5.9 million from~~partially offset by decreases ~~in accounts receivable, and $3.6~~of $9.3 million from net changes in contract assets and ~~liabilities.~~liabilities, and $5.0 million from decreases in accounts receivable. The increase in cash from net changes in other assets and liabilities is primarily due to ~~payments~~higher accruals of discretionary and annual merit bonuses, an increase in accrued hosting costs, and the ~~prior year related to~~deferral of payroll taxes associated with the ~~$19.0 million settlement of the Federal Securities Class Action complaint.~~ Non-cash expenses increased primarily due to higher amortization of operating lease assets, higher amortization of previously capitalized software costs, impairment charges related to our vacated lease locations, and higher share-based compensation expenses while net income forCARES Act in the nine months ended December 31, ~~2019~~2020, offset by a decrease in cash from changes in accounts payable due to timing of invoice payments, changes in income taxes receivable, and the net impact of the early termination of our San Diego lease on our lease liabilities. Net income for the nine months decreased ~~$8.8~~$1.6 million compared to the prior year period, as described in the ~~"Net Income"~~“Net Income” section above. ~~Accounts receivable balances decreased~~Non-cash expenses increased primarily due to ~~continued efforts to collect~~higher share-based compensation expense, higher amortization of capitalized software costs, and ~~resolve aged balances, resulting in a corresponding increase in cash from collections in the nine months ended December 31, 2019.~~ higher amortization of intangible assets, partially offset by lower asset impairment charges and lower amortization of right-of-use assets. The ~~increase~~decrease in cash associated with net changes in contract assets and liabilities is primarily due to atiming differences between client invoicing and

revenue recognition, lower level of maintenance invoicing as a result of client attrition and completion of professional service projects. Accounts receivable balances continued to decrease from our efforts to collect and resolve aged balances, resulting in a ~~higher amount~~corresponding increase in cash provided by operating activities of ~~invoices issued~~$1.2 million and $6.2 million in the ~~fourth quarter of fiscal year 2019.~~nine months ended December 31, 2020 and 2019, respectively.

Net cash used in investing activities for the nine months ended December 31, ~~2019~~2020 was ~~$90.8~~$20.7 million compared with ~~$19.0~~$90.8 million in the prior year period. The ~~increase~~decrease in net cash used in investing activities is primarily due to ~~cash payments for our acquisitions of Topaz, Medfusion and OTTO, net~~$71.6 million of cash ~~acquired,~~paid for acquisitions (net of ~~$71.6~~cash acquired) in the prior year and a $5.4 million ~~and $2.8 million higher~~decrease in additions to equipment and improvements, partially offset by $4.1 million lower additions to capitalized software costs and $2.5 million lower proceeds of over-funded corporate-owned life insurance policies in the current ~~year, offset by $2.5 million of refunds from our corporate-owned life insurance policies.~~year.

Net cash ~~provided by~~used in financing activities for the nine months ended December 31, ~~2019~~2020 was ~~$24.4~~$101.9 million compared with ~~$8.1~~$24.4 million cash ~~used in~~provided by financing activities in the prior year period. The increase in cash ~~provided by~~used in financing activities is primarily due to net ~~additional borrowings~~principal repayments of ~~$26.0~~$100.0 million ~~on our line of credit~~ in the current year, compared to ~~$10.0~~net borrowings of $26.0 million ~~in principal repayments on our line of credit~~ in the prior ~~year, partially offset by $2.4 million lower proceeds from the issuance of shares under employee plans.~~year.

We have minimum purchase commitments of ~~$24.8~~$47.5 million related to payments due under certain non-cancelable agreements to purchase goods and services.

The following table summarizes our significant contractual obligations at December 31, ~~2019~~2020 and the effect that such obligations are expected to have on our liquidity and cash in future periods (in thousands):

			For the year ended March 31,														For the year ended March 31,
Contractual Obligations	Total		2020 (remaining three months)		2021		2022		2023		2024		2025 and beyond		Total		2021 (remaining three months)		2022		2023		2024		2025		2026 and beyond
Operating lease obligations	$	47,135	$	2,483	$	9,873	$	9,640	$	9,491	$	8,179	$	7,469	$	32,152	$	2,044	$	8,351	$	8,414	$	7,106	$	5,050	$	1,187
Remaining lease obligations for vacated properties⁽¹⁾		10,956		669		2,717		2,481		2,036		1,453		1,600		12,899		3,000		3,328		2,649		2,095		1,757		70
Line of credit obligations (Note 9)		37,000		—		—		—		37,000		—		—
Line of credit obligations (Note 10)																29,000		—		—		29,000		—		—		—
Total	$	95,091	$	3,152	$	12,590	$	12,121	$	48,527	$	9,632	$	9,069	$	74,051	$	5,044	$	11,679	$	40,063	$	9,201	$	6,807	$	1,257

The deferred compensation liability as of December 31, ~~2019~~2020 was ~~$6.2~~$6.6 million, which is not included in the table above as the timing of future benefit payments to employees is not determinable.

The impact of our uncertain tax positions is not included in the table above as the timing of expected payments is not determinable. Refer to Note 12, “Income Taxes” of our notes to condensed consolidated financial statements included elsewhere in this Report for additional information.

Refer to Note 1, “Summary of Significant Accounting Policies” of our notes to condensed consolidated financial statements included elsewhere in this Report for a discussion of new accounting standards.

The discussion and analysis of our condensed consolidated financial statements and results of operations is based upon our condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). The preparation of these condensed consolidated financial statements requires

us to make estimates and judgments that affect our reported amounts of assets, liabilities, revenue and expenses, and related disclosures. We base our assumptions, estimates and judgments on historical experience, current trends, and other factors we believe to be reasonable under the circumstances, and we evaluate these estimates on an ongoing basis. On a regular basis, we review the accounting policies and update our assumptions, estimates, and judgments, as needed, to ensure that our condensed consolidated financial statements are presented fairly and in accordance with GAAP. Actual results could differ materially from our estimates under different assumptions or conditions. To the extent that there are material differences between our estimates and actual results, our financial condition or results of operations will be affected.

We adopted Accounting Standards Update No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, using the modified retrospective transition approach, which required the recognition of expected credit losses for our accounts receivable and our contract assets. Refer to Note 3, "Accounts Receivable" of our notes to condensed consolidated financial statements included elsewhere in this Report for additional information.

There have been no other material changes in our significant accounting policies or critical accounting policies and estimates since the fiscal year ended March 31, 2020.

As of December 31, ~~2019,~~2020, we were subject to minimal market risk on our cash and cash equivalents as we maintained our balances in very liquid funds with maturities of 90 days or less at the time of purchase.

As of December 31, ~~2019,~~2020, we had ~~$37.0~~$29.0 million of outstanding loans under our revolving credit agreement. The revolving borrowings under our revolving credit agreement bear interest at our option of either, (a) for base rate loans, a base rate based on the highest of (i) 0%, (ii) the rate of interest publicly announced by the administrative agent as its prime rate in effect at its principal office in New York City, (iii) the overnight bank funding rate (not to be less than zero) as determined by the Federal Reserve Bank of New York plus 0.50% or (iv) the LIBOR-based rate for one, two, three or nine months Eurodollar deposits plus 1%, and (b) for Eurodollar loans, the LIBOR-based rate for one, two, three or nine months (as selected by us) Eurodollar deposits plus 1.00%, plus, in each case, an applicable margin based on our total leverage ratio from time to time, ranging from 0.50% to 1.50% for base rate loans, and from 1.50% to 2.50% for Eurodollar loans. Accordingly, we are exposed to interest rate risk, primarily changes in LIBOR, due to our loans under the revolving credit agreement. A one hundred basis point (1.00%) change in the interest rate on our outstanding loans as of December 31, ~~2019~~2020 would result in a corresponding change in our annual interest expense of approximately ~~$0.4~~$0.3 million. Refer to Note 9,10, “Line of Credit” of our notes to condensed consolidated financial statements included elsewhere in this Report for additional information.

As of December 31, ~~2019,~~2020, we had international operations that exposed us to the risk of fluctuations in foreign currency exchange rates against the United States dollar. However, the impact of foreign currency fluctuations has not been material to our financial position or operating results.

Our Chief Executive Officer and Chief Financial Officer (our principal executive officer and principal financial officer, respectively) have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Security Exchange Act of 1934, as amended, the "Exchange Act") as of December 31, ~~2019,~~2020, the end of the period covered by this Quarterly Report on Form 10-Q (the “Evaluation Date”). They have concluded that, as of the Evaluation Date, these disclosure controls and procedures were effective to ensure that material information relating to the Company and its consolidated subsidiaries would be made known to them by others within those entities and would be disclosed on a timely basis. The Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures are designed, and are effective, to give reasonable assurance that the information required to be disclosed by us in reports that we file under the Exchange Act is recorded, processed, summarized and reported within the time period specified in the rules and forms of the Securities and Exchange Commission. They have also concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed in the reports that are filed or submitted under the Exchange Act are accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

During the quarter ended December 31, ~~2019,~~2020, there were no changes in our “internal control over financial reporting” (as defined in Rule 13a-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

On October 7, 2013, a complaint was filed against our Company and certain of our officers and directors in the Superior Court of the State of California for the County of Orange, captioned Ahmed D. Hussein v. Sheldon Razin, Steven Plochocki, Quality Systems, Inc. and Does 1-10, inclusive, No. 30-2013-00679600-CU-NP-CJC, by Ahmed Hussein, a former director and significant shareholder of our Company. ~~We filed a~~After the court sustained our demurrer to the initial complaint, ~~which the Court granted on April 10, 2014. An~~Hussein filed an amended complaint ~~was filed~~ on April 25, 2014. The amended complaint generally alleges fraud and deceit, constructive fraud, negligent misrepresentation and breach of fiduciary duty in connection with statements made to our shareholders regarding our financial condition and projected future performance. The amended complaint seeks actual damages, exemplary and punitive damages and costs. ~~We filed a demurrer to the amended complaint. On July 29, 2014, the Court sustained the demurrer with respect to the~~Hussein’s breach of fiduciary duty ~~claim,~~claims were dismissed on demurrer, and ~~overruled the demurrer with respect to the fraud and deceit claims. On August 28, 2014,~~ we filed an answer and ~~also filed a~~ cross-complaint against Hussein, alleging that he breached fiduciary duties owed to the ~~Company, Mr. Razin and Mr. Plochocki. Mr. Razin and Mr. Plochocki have dismissed their claims against Hussein, leaving QSI as~~Company. On September 16, 2015, the ~~sole plaintiff in the cross-complaint. On June 26, 2015, we filed a motion for~~Court granted summary judgment with respect to Hussein’s remaining claims, ~~which~~dismissing all claims against us. The cross-complaint against Hussein went to trial, but the Court granted ~~on September 16, 2015, dismissing all~~judgment in favor of ~~Hussein’s claims against us. On September 23, 2015,~~ Hussein filed an application for reconsideration of the Court's summary judgment order, which the Court denied. Hussein filed a renewed application for reconsideration of the Court’s summary judgment order on August 3, 2017. The Court again denied Hussein’s application. On October 28, 2015, May 9, 2016, and August 5, 2016, Hussein filed a motion for summary judgment, motion for summary adjudication, and motion for judgment on the pleadings, respectively, seeking to dismiss our cross-complaint. The Court denied each motion. Trial on our cross-complaint began June 12, 2017. On July 26, 2017, the Court issued a statement of decision granting Hussein’s motion for judgment on our cross-complaint. Final judgment over Hussein’s claims and our cross-claims was entered on January 9, 2018. Hussein ~~has noticed his appeal of~~appealed the order granting summary judgment over his claims, and we ~~noticed a cross-appeal on~~appealed the court’s ~~statement of~~ decision granting Hussein’s motion for judgment on our cross-complaint. On October 8, 2019, the California State Court of Appeal for the Fourth Appellate District, Division Three, reversed the Superior Court’s grant of summary judgment ~~against~~on Hussein’s affirmative claims and affirmed the trial court’s judgement ~~after a bench trial against~~on the ~~Company on its~~Company’s breach of fiduciary duty claims against Hussein. We petitioned the California Court of Appeal to rehear the matter with respect to Hussein’s affirmative claims. The Court modified its opinion but denied the Company’s rehearing petition on November 7, 2019. We filed a petition for review with the Supreme Court of California on November 18, 2019, which the Court denied on January 15, 2020. As a result, the case ~~will return~~has returned to the trial court for ~~resolution. A schedule~~resolution of Hussein’s claims against us. Previously scheduled trial dates have been postponed due to the ongoing pandemic, and a new trial date has yet to be set. Separately, Hussein has issued an arbitration demand seeking indemnification for ~~proceedings before~~ the ~~trial court has not yet been established.~~fees he incurred defending against our cross-complaint. At this time, we are unable to estimate the probability or the amount of liability, if any, related to this ~~claim.~~matter.

Commencing in April 2017, we have received requests for documents and information from the United States Attorney's Office for the District of Vermont and other government agencies in connection with an investigation concerning the ~~certification~~certifications we obtained for our software under the United States Department of Health and Human Services' Electronic Health Record (EHR) Incentive ~~Program.~~Program and our marketing programs for such software. The investigation and requests for information relate to, among other things: (a) payments received by our clients in connection with the EHR Incentive Program, (b) data used to determine objectives and measures under the Meaningful Use (MU) and the Physician Quality Reporting System (PQRS) programs, ~~(b)~~(c) EHR software code used in certifying our software and information, and ~~(c)~~(d) payments provided for the referral of EHR business. We continue to cooperate in this investigation. At this time, we are unable to estimate the probability or the amount of liability, if any, related to this matter. Requests and investigations of this nature may lead to future requests for information and ultimately the assertion of claims or the commencement of legal proceedings against us, as well as other material liabilities. In addition, our responses to these and any future requests require time and effort, which can result in additional cost to us. ~~At this time, we are unable to estimate the probability or the amount of liability, if any, related to this matter.~~ Given the highly-regulated nature of our industry, we may, from time to time, be subject to similar subpoenas, requests for information, or investigations from various government agencies. It is our practice to respond to such matters in a cooperative, thorough and timely ~~manner.~~manner.

Our business is subject to many risks and uncertainties, which may materially and adversely affect our future business, prospects, financial condition and results of operations. These risk factors are disclosed in “Item 1A. Risk Factors” in our Annual Report.

Incorporated by Reference
Exhibit
Number

Exhibit Description

Filed
Herewith

Form

Exhibit

Filing Date

10.1

Agreement and Plan of Merger, dated November 12, 2019, by and among NextGen Healthcare, Inc., Medfusion, Inc., Renegade Merger Sub, Inc., Project Renegade LLC, as the Equityholders Representative, and solely for purposes of Section 6.9 thereof, Greenlight Health Data Solutions, Inc.

8-K

2.1

18-Nov-19

31.1

Certification of Principal Executive Officer Required by Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

X

31.2

Certification of Principal Financial Officer Required by Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

X

32.1

Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

X

101.INS**

XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH**

XBRL Taxonomy Extension Schema

101.CAL**

XBRL Taxonomy Extension Calculation

101.DEF**

XBRL Taxonomy Extension Definition

101.LAB**

XBRL Taxonomy Extension Label

101.PRE**

XBRL Taxonomy Extension Presentation

104

Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

				Incorporated by Reference
Exhibit Number	Exhibit Description	Filed Herewith		Form	Exhibit		Filing Date

3.1	Second Amended and Restated Bylaws of NextGen Healthcare, Inc., effective January 26, 2021.		8-K			3.1	27-Jan-21
31.1	Certification of Principal Executive Officer Required by Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	X

31.2	Certification of Principal Financial Officer Required by Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	X

32.1	Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	X

101.INS**	Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH**	Inline XBRL Taxonomy Extension Schema Document

101.CAL**	Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF**	Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB**	Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE**	Inline XBRL Taxonomy Extension Presentation Linkbase Document

104	The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2020, has been formatted in Inline XBRL.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, $0.01 Par Value	NXGN	NASDAQ Global Select Market

Large accelerated filer ☒	Accelerated filer ☐
Non-accelerated filer ☐	Small reporting company ☐
	Emerging growth company ☐

	Item	Page
	PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements.	3
	Unaudited Condensed Consolidated Balance Sheets as of December 31, ~~2019~~2020 and March 31, ~~2019~~2020	3
	Unaudited Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended December 31, ~~2019~~2020 and ~~2018~~2019	4
	Unaudited Statements of Condensed Consolidated Stockholders’ Equity for the nine months ended December 31, ~~2019~~2020 and ~~2018~~2019	5
	Unaudited Condensed Consolidated Statements of Cash Flows for the nine months ended December 31, ~~2019~~2020 and ~~2018~~2019	6
	Notes to Unaudited Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	2526
Item 3.	Quantitative and Qualitative Disclosures about Market Risk.	3539
Item 4.	Controls and Procedures.	3539
	PART II. OTHER INFORMATION
Item 1.	Legal Proceedings.	3640
Item 1A.	Risk Factors.	3740
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	3740
Item 3.	Defaults Upon Senior Securities.	3740
Item 4.	Mine Safety Disclosure.	3740
Item 5.	Other Information.	3740
Item 6.	Exhibits.	3841
	Signatures	3942

Note		Page

Note 1	Summary of Significant Accounting Policies	8
Note 2	Revenue from Contracts with Customers	9
Note 3	~~Fair Value Measurements~~Accounts Receivable	12
Note 4	~~Leases~~Fair Value Measurements	13
Note 5	~~Business Combinations~~Leases	14
Note 6	~~Goodwill~~Business Combinations	1615
Note 7	~~Intangible Assets~~Goodwill	1617
Note 8	~~Capitalized Software Costs~~Intangible Assets	17
Note 9	Capitalized Software Costs	18
Note 10	Line of Credit	1718
Note 1011	Composition of Certain Financial Statement Captions	18
~~Note 11~~	~~Income Taxes~~	19
Note 12	~~Earnings Per Share~~Income Taxes	20
Note 13	Earnings Per Share	21
Note 14	Share-Based Awards	2021
Note 1415	Concentration of Credit Risk	2224
Note 1516	Commitments, Guarantees and Contingencies	2324
Note 1617	Restructuring Plan	2425
Note 18	Subsequent Events	25

Balance as of September 30, 2020	$	(3,909	)
Additions charged to costs and expenses		(645	)
Deductions		620
Balance as of December 31, 2020	$	(3,934	)

	December 31, 2020			March 31, 2020
Accounts receivable, gross	$	80,675		$	83,555
Allowance for doubtful accounts		(3,934	)		(3,549	)
Accounts receivable, net	$	76,741		$	80,006

Balance as of March 31, 2020	$	(3,549	)
Additions charged to costs and expenses		(2,044	)
Deductions		1,659
Balance as of December 31, 2020	$	(3,934	)

	Total Liabilities
Balance as of September 30, 2020	$	1,950
Fair value adjustments		25
Balance as of December 31, 2020	$	1,975

	Total Liabilities
Balance at March 31, 2020	$	1,900
Fair value adjustments		75
Balance as of December 31, 2020	$	1,975

For the year ended March 31,
2020	$	10,511
2021		10,701
2022		10,161
2023		9,660
2024		7,730
Thereafter		8,097
Total obligations and commitments	$	56,860

		NEXTGEN HEALTHCARE, INC.

Date: January ~~23, 2020~~27, 2021	By:	/s/ John R. Frantz
		John R. Frantz
		Chief Executive Officer (Principal Executive Officer)

Date: January ~~23, 2020~~27, 2021	By:	/s/ James R. Arnold, Jr.
		James R. Arnold, Jr.
		Chief Financial Officer (Principal Financial Officer)
Date: January 27, 2021	By:	/s/ David Ahmadzai
		David Ahmadzai
		Chief Accounting Officer ~~and Principal~~(Principal Accounting Officer)