NXGN - Earnings call transcript Q2 2020 | Nextgen Healthcare, Inc.

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Operator

Welcome to the NextGen Healthcare Fiscal 2020 Second Quarter Results Conference Call. Hosting the call today from NextGen are Rusty Frantz, President and Chief Executive Officer and Jamie Arnold, the Chief Financial Officer. Today's call is being recorded. All lines have been placed on listen only mode. And the floor will be open for your questions following the presentation. Instructions] [Operator

federal I'd call everyone are to may the of start, made the forward-looking anticipated to and perspectives, meaning this including and company's on include the performance, industry like trends, we statements plans, that remind comments within without the Before limitations, laws, future relating products, securities statements that strategies.

today. in may forward-looking the heading and company intent any most materially from risks obligation in these any Risk statements, recent expressly XX-Q. Risks to the among and differ company's set reports or public U.S. and the XX-K, update those quarterly Exchange the of company's to Form Form forth on uncertainties on speak filings The Factors subsequent with statements the Any disclaims Commission, cause results Annual forward-looking in exist statements. discussion those including these that others, Securities expressed forward-looking Report as under including only

call earnings remarks include Our both measures. guidance, today's results which certain financial our on non-GAAP contains and

qualitative the can earnings GAAP in between measures non-GAAP and GAAP financial each was of earnings quarterly directly financial to Investors provides press or This comparable used how measure measure measure with within latest financial non-GAAP reconciliation the our and guidance. we the calculated contained our release filed descriptions financial posted and website. SEC also non-GAAP of financial the release to a that have is the section results, our each our be of measures differences found most For comparable discussed

NextGen. Frantz, Mr. the turn begin. call President time, to this At to may like and of CEO you would Rusty Sir, I over

Rusty Frantz

than Healthcare's of X% And review our ASC-XXX. to FY'XX as this afternoon quarter we in operator. a year-over-year FY'XX million $XXX.X solid more execute both This compared year under us was NextGen ago, joining In came QX, everyone revenue NextGen you, at plan. our for second you to represents QX, to results. on quarter strategic continue to million, a $XXX.X thank fiscal growth. Thank

EPS in line with flat of to Our QX, $X.XX compared non-GAAP was our expectations. FY'XX and

million, of for came Looking strong quarter capabilities and expand Operating nicely further growth cash last same $XX.X our at million over quarter very as house dry and year. in NextGen generation million showing was $XX.X to the cash in flow quarter cash a $XX.X the generated free continue our store million flow powder. in $XX.X

$XXX our are available the at we total In able balance on a this current down liquidity remaining million. addition, of pay to revolver giving us fully quarter

will As to uses for to we forward, shareholders. value for move we continue look in drive capital the this additional

the retention or XX-months came in ahead model over of of XX%. at our maintenance Legacy trailing FY'XX XX.X% slightly level

As rate and we on our to level we forward we appropriate. continues be the anticipate model retention move the stated as in some last volatility call, believe

another is comfortable our of software As solution we in all-in my Management, satisfaction look cross-selling has Cycle which the success our top tenure Revenue over million annually. all-in only the almost ago platform. A deal $X was four quarter, dissatisfied further third Including back the represented Management saw Cycle level platform frankly of which competitive they signed client in the QX deals confidence years when I health reached that that replacement. our highly analytics signing in were mobile ambulatory started and entire the deals and larger or at integrated adopting Revenue flow, RCM the Notably continued we quarter. we bookings and totaling

closed in base. This QX deal to wasn't that that us we team a the performances our great Clearly, arrangement innovation really validation significant back proud as look are driving of of forward opportunities year. of half the into I within we $XXX,XXX. satisfaction driving opening over our total and is entered momentum of only the XX who the am and clients is client

TOPAZ deal acquisition both standpoint, strong M&A TOPAZ that solutions, reseller health information an strong, and the quarter. solution a announced to been behavioral closed space partner in month we into commercial has brings From capabilities NextGen. a of end of the the last

While this revenue, our this to and see expands we behavioral key as acquisition health part brings growth strategic transaction our market. NextGen and capabilities in the integrated areas for of negligible deliver care this planned

further investments, the our sales standpoint by will the a both of solution TOPAZ team capabilities augmenting be and team. and further both We incoming expanding NextGen from with

sales to relationships. to we structural we've a significant player of a couple quarter promote Diving structure. on changing that couple of the relationships, time at of to in have end, managers of more the in expand we and organization. closely with we chosen which are the carrying that the made disruptions the both discussed this changes continued our coach strategic evolution. of areas parts our bit our deeper we to number enhancing the while quarter To sales, team same aligning our last Without client sales their feet street, quota more And

allow specialties, to on client commercial acquisition managers TAM evolving in and to model as become advantage a geographies we specialists become even taking a very areas important that new will shift to we this competitively focus their this be effective. have proven Reorganizing for fashion will more in the play. more and Ultimately, declared

we impact to these back expect model as newer evolution and more in this into organizational loaded bit our the minimal do on we full year bookings bookings settle changes see QX have takes hold. While a expect to expectation,

the since score one have more XX In XX% two ranking to than category, only improvement we XX sizes, move touch behind scores EHR our quarter as on a practice and number From rank client XX.X our XXXX, class space. standpoint, management continue management all maintained made just a we satisfaction we the largest In in our a right progress now provider representing the spender meaningful to direction. points September years. increased in in enterprising the the provider our practice

our the NextGen with pleased Our voice clients experience. point for are another the proof client survey that provides

our practice increase This Specifically, in expansion quarter has the XX% in and recommend our along recommend field. competitive client would us the satisfaction NextGen continued solution. said EHR, they enterprise in management of respondents our with solutions made the XX% would of increasingly enterprise

was very I nine another pleased with validation point quarter in and This number. improvement takeaways am second the this bookings of captured competitive for our quarter

well are feedback we User up, Among Group gather to of looking to our areas UGM federally in a base as areas qualified opportunity the weeks. our to both with of behavioral health behavioral as clients few evolution. as resonate our large showcase health and Coming forward we XXXX an many showcase, number strong both growing to a clients. of amazing excited capabilities represents key from health our as well new present centre our areas we will integrated are care and Meeting base that

clients both footprint. of drive by clients value how investments also to platform. are significant the our Many journey of on expanding the from significant of client the increased on them to cross-sell the not to supports capabilities This see more aspect breadth further of NextGen We educate we NextGen of educating our platform. satisfaction they've solution the a strategy get and leveraging education clients our on are the made. And opportunity also already

EHR, show usability In standpoint operate we area addition, from specifically another in the in a we the at step will providers show primary new first launched forward look our note. for soap as clients users the great our interface

spend these other group increasing to so as with are number forward look many We on client of user to existing prospects excited time another and meeting. areas and exciting new an we great

We happy relationships we at reaffirm we with more FY'XX are revenue. deliver. the meaningful to for revenue being $XXX year, muted of Veradigm guidance growth look more full to As a QX QX to see being begins our revenue as $XXX million million for chunk bit our

at of we back year to $X.XX the EPS to the of As reaffirm the $X.XX. our look half we on guidance also happy full year line,

our with of We the continue plan revenue our strategic and organic to beginning progress on be growth. pleased

are excited see years the We and growth year's this for future. bookings into continue revenue growth to

our plan, only on ability execute deliver we increase and confidence as our we our seek to increases. improve, competitive our As current

the to Jamie? numbers. dive let Jamie Now met into for

Jamie Arnold

EDI you and And increases of of the with in ago data services. of decline with maintenance or million managed a million X% the $X.X for our the revenue. partially Rusty. to on XX% million services compared in XX% to and $XXX.X in higher to Offset revenue Total of by Recurring than X% everyone a modest expectations. you, call. X% Recurring is and $X increased the revenue, year was X% prior thank compared increased line of subscription and same slightly services year Thank and support last million our or $XXX.X total year. revenue revenue X% period approximately

due NextGen and by legacy a to growth $XX.X million offset $XXX,XXX revenue by million $X.X attrition new The largely Subscription analytics and maintenance office. customers driven revenue compared $XX.X increases. was in increased to Support our of decreased year-over-year contracts year of primarily CPI ago. and million NGE

services million $X services proposals data in volume, remained to new penetration customers. large increases by our EDI in due $XXX,XXX year. year-over-year, customer growth year we data services leading of well with a in in it focused ago customer Managed mainly new June driving existing in million offset modest of to largely and on and to increased as of as and new revenue revenue base, to to due $XX.X million the $XX.X services hosting decrease last revenue. compared customer RCM related services increased RCM signed We

was Non-recurring year. time over X% same million, a or quarter the revenue last and one $XX.X $XXX,XXX reduction

services. $X.X consistent year $X.X up against connected trend compared professional X.X% of of Software ago quarter, health a last hardware at very in license $X.X revenue in and comparison. tough to discussed basis year-over-year, increased $XXX,XXX or on in we due year-over-year with analytics services XX% $XX.X million came or the a the XX% the quarter. revenue Non-recurring million to and million growth million, declined Bookings

X% just to of look year $X.X XX% quarter shareholder X% The cost million of prior $XX expense. insurance to XX% is credit is due $X.X goods gross primarily or increase to amortization related managed higher shift. Taking of Gross million to development a year to ago. a SG&A discussed. to the million mix year litigation. due of in due a to by prior higher services increases to million XX.X%. at operating from of declined an our due increased and of of million Cost increase and margin goods profit $XX.X cost compared This the cost declined $XX.X capitalized is

increase from million Impairment lease slight a income of ago. million increase or million increased on $XX.X million, cost. primarily and R&D to $XX.X in development cost with restructuring the property. $X.X This is Horsham reduction and $X.X the capital charges sub of X% our of related vacated a expected to related are software associated gross and spending year and reduction portion

non-GAAP a rate with GAAP tax of X.X% tax rate QX Our for FY'XX was XX%.

will we continue tax the FY'XX, For of non-GAAP XX%. rate to use

my GAAP To our a $X.XX comments year decreased from statement, $X.XX on the conclude income QX EPS of ago.

the EPS QX non-GAAP was Our for $X.XX to prior year. flat of

Turning XX to quarter days, decrease to XX credit cash All year from and balance balance our ended a $XX.X three the quarter agreement. with days. to the DSOs were within million sheet. and expected and outstanding in range last the equivalent We on revolving days flat last quarter. XX a zero a of in of

Our CapEx R&D $X.X excluding capitalized million. was R&D million $X.X was capitalized and

XXXX. To the our reiterate I today, outlook close fiscal for call

We per EPS to between revenue and million. million non-GAAP $XXX and to expect $X.XX $X.XX And be $XXX between share. be

forward strategic So plan, our and performance next share. And QX. Overall, I continue am year. I generally pleased $X.XX our this looking we with that as in to progress throughout am year into per execute to $X.XX

review my the the financial call now to results. I'll second turn quarter concludes Rusty. of This back

Rusty Frantz

well platform, as our has one We innovation. four client the you, robust our We've solution the to last sector to enabled acquisitions. the successful levels expand satisfaction client employee Jamie. I the of to back years as made. look continue from be tremendous through plus over our at culture satisfaction in We've that both one significantly If of I come built amazed multiple NextGen, progress here having we've a best. worst both Thank strong organically and

organization. most so positive of revenue the into am and a our to force bookings become importantly, We growth. and do amazing by are well as we once seek so in And I to of growth this delivered team part be earnings healthcare and moving we of proud significant evolution grateful doing have now good.

With over that, questions. it to operator open for up I'll you. Thank the and it pass

Operator

Instructions] [Operator

Your from William comes question Jeff & with Garro Blair first Co.

JeffGarro

the the first set certainly taking bookings. the year. for start Yes, good I'll I on and with to and the want afternoon the hoping understand off thanks organization. comparable question questions. relative performance good all half was expectations bookings could sure you puts of And small changes second some growth against help make takes of Maybe for for and a full been has us I those the set half, sound challenging to some promising we for sales to

RustyFrantz

really be And a look I I sight be a of will to provided last Yes. year, kind the am little that we've rebound. -- the expectation to had robust bit quarter I pipeline. think back single good year of that quarter. mean year the half expect, guidance more is what I feel a as I'd quarter this got of top say half and through will that, is a very muted QX the we digits. but XX% confirm We growth. I in is great of I This at delivered clear like my which I QX year line are the bookings we expected the we beginning year-over-year would last

JeffGarro

still very population script system. That's win university that specifically one at in front, health And the on hospital the is didn't thing bookings helpful. come Great. health the

your I client NextGen? of have process think outside that's large on curios set there, of substance base. system core chose a that the both and And they one so that then about why an eye people

RustyFrantz

Yes.

So actually this new of why press it include of kind didn't at deal But this beginning is net news. quarter. release the in which makes we before a days quarter's of couple reason quarter because this the signed

about excited very are We it.

where system four remember hospitals If about top a the win Northeast year are and and hospital about a closed ago. interesting deal half I our pulled these in that in talked you in is health. an year

what until I I opportunity. it points I an know more you got going not is win And declare said interesting but data am an to

feeds one clinical we starting feel are broader because is source claim win, university a multi That in really bringing just just we a those together mean but feeds really bring chosen more we've data way and to space I we client say become excellent. about base. both core the information the high-teens were a not to our ability showing shown EHR cost multi like clinical but just the outcome a the by multiple data By that bringing truly beyond that interested little source I With so platform in entire in together cost they have of which have across across necessary somewhere altogether interoperate By EHR achieving validate did our information we or you not system that that the those. quality but to that also where pre ecosystem can an talked standpoint. we prior in I'd group from and not

maybe Almost a activity and actionable ability information health together truly bring standpoint. to and then and deliver really XXXX from that so top drive that all

the really things an as of those a a a of even maybe somewhat a of all think are EMR. than I extension opportunity space of is an part just single us much positioning in unique that agnostic of market more in

Operator

Your next Fargo. question Jamie with Wells from Stockton is

JamieStockton

you reps the question. of what for go there, their thanks Good what kind experience it sense on a change in carrying The be evening. the what past, will just look will your taking of sales us their like, a basis for I forward quarter versus guess give was Rusty, about job? what restructuring, could

RustyFrantz

it's great a Yes, question.

So about this think it way.

group healthcare acquisition prior base, outside multi-specialty orthopedic reps Vice federally center inside primary client an health the are group new President a So managing of care on the a a group. that focused in base Regional ecosystem behavioral on to of a may on in health a October the qualified and parts cross-sell Xst, and be the like

sales team, of the have their engage very Vice was knowledge being President mentoring, being the also so directly were coach frankly truly significant. more and managing being process breadth that of to but think able to player that you when had they reps And mentoring participate And in entire regional about to as than forecasting the the and both client. to able mentoring

more so there under of that team so segmenting And our out is pure group leadership a by them.

a leadership are the support executives enabling new hunters, be might of bringing any solely example, President better kind and we're to responsible that Vice for team, for Jamie so So the sales who color. alignment Regional by client

JamieArnold

Rusty. Sure,

divided most We pivot focused focused focused those the The are the primarily base. and inside base between reps change them the base, it who they thing who are to those sales into the focuses. about the To are now. sales is been who is there starts, the previously outside have they -- leadership. organization this So important leadership, bifurcated no right had it's inside specialty outside base, the the at

the change the them, scope it a is targeted. for category their the we inside charge it's farmers where Regional three And are now there have same President and outside there's help So in whether kind more and the change for separated is narrow bit become it base. them the President them but to is Vice of or base Vice the of three will regional of that little biggest but the

RustyFrantz

year. much We're response great was leaning really in think to And any driving bookings this was the growth forward rep here the the into in as because is is are this disrupt the opportunity. Yes. the we relationship possible, other of of one I'd not core and to degree of principles middle sales I the say as client this to problem lease thing

JamieStockton

this thing were R&D some there, like, you to down and or say like Okay, shift spend. there little the that's but I If although we that I number maybe through I any realize runs I mind the think great. Maybe and down have pro about, sequentially, one capitalized fair levels just is amount, as we just think not color that much the would be number a as this at came I noise, great. be on your it the up should it R&D a India that count is new my the if head more, -- maybe seeing look came bit, want guess to forma might

RustyFrantz

Yes, the in making way through that. we that to of we through we talked a head success and are in on the intention as takes that, we well expansion. will on saving ago shift are way move have count about R&D I no process of way that but and along couple the our of as quarters there the puts We're line. say

year from at the number you the what and is right the last very said standpoint, some cap software a and number. in flows should we expectation expect Our ebb of be will line while resembles beginning there closely to with full-year year's

Operator

Your next Matthew is Baird. Gillmor with from question

MatthewGillmor

Hey, this thanks base. like the the of the more question. a little there. reorg One the of will and a goals focus for on sales outside you give seems of It some bit clear

where I could where kind the will standpoint. where you Is So was do still are hoping bookings and are confirm XX:XX get next into you then you from we a of expect sort with it year? you of trend as that sales

RustyFrantz

look XX Like is I year down we road, But we move I - say past next range look that what as to are as And the XX the mathematically as because having I say like if success. it's would I probably somewhere because think XX:XX. we possible. that we XX: in see starting that going are we at not XX: feel doesn't ways

Now having is the continuous the great news inside base. success we're

extend creates the over natural few and And going that the expect forward. base really outside can the we've curve accelerate that growth last so bookings discussed if to we years

good we the number carrying as there played the because and the reps base a hand expanding quota are that focused a reasonably we've successful for are investment of shareholders. win We that in a see simply outside

MatthewGillmor

Got math it. Thanks the too. for lesson

debt on up, the building you've pretty the one your no this cash Let just it more deployment priorities, at point, me capital is deal Topaz seems ask got small.

acquisitions you where focused to are anything? just are and you So close on

RustyFrantz

our --last I if year we're a one acquisition Well, this think which musculoskeletal ago, in which close reseller. all way focused of when there. population to a something orthopedic we,--the October acquisition was you XX, EagleDream Health, the last what in and been have tuck-in and would we're health was, about of analytics But Prior back we'll I that would was another an is, the tell play. small to look the half say prior to

As job done integrating of delivered sit on done. both and we've things really good here the of we've a today, that we value

as as to see forward liquidity start the greater would I And patient with as we have, us my at on things the those to opportunities move to provider a is energy And believe make you'll interaction. we the the frankly through being that four see more as things you some have win areas. now do never that to we for and to well focus expect in a emphasis price can right so on us especially interesting asset the time actionable we we next definitely believe look moves those quarters. forecast right depends transition some is continue two a value, expectation to But we shareholders. given and at in the

Operator

Hooker Your KeyBanc. is Donald question with next from

DonaldHooker

Great.

that the traction been System, health legacy maybe now NextGen in on interesting and EagleDream. it referenced that, University deal what update last give NextGen can the health break and analytics there, it's of you more that a kind . win, sounded there, -- guess population how call now was getting outside that I of you is down in count will client of think are Health that XX.XX growing an of You base you now it I terms population us it where nicely, much like you quarter are like but

RustyFrantz

getting expand really product wrap that number heads start and to the really are clients and to the starting think we people plus having minus I and, I I can are within it Well, The would success as distribution what of count to around continues as of increase. is We're that client but actually feeds organization. much are starting we're XXX though see around their as base. haven't their agnostically the for the are out say broken than more or expand clients do what to think we

that's about process FY health calendar what and up really are cohort of needs. 'XX now taking population fact population think the capabilities analytics consistent, the really to to that up in personalized 'XX and I extend calendar calendar the in around publicly management not sorry, those adding then we've that that show calendar and rather, care in FY'XX analytics talked we health identified will 'XX into the will action allowing also show

so to kind And that patient, which you you're just paying need on then that allows it's you consistent focused a really proactively the of not cohorts what that a attention, special to continue actually costs -- that can attention become to approach a lower identifying standpoint but evolve bad ensuring to have fact practice and client. the to from deliver better profitability quality at they before for patients relatively

stepping now so health out and are we kind starting the broader right top look a success that at health. back really we're we've are to And set had really taking and of the capabilities we now, with integrate figure in what population can

ambulatory both also within we on over that. but the potentially of tell for time clients, an critical and will in hand and base base, more so more in NextGen the care space. Time play the important can strategic outside even and NextGen And more

DonaldHooker

broader perspective on to last just perspective on new some we're regards taking waiting clients risk. XXXX details taking model. clients of your I hear guess where we're question, your or ACO on guess contracting sort that direct for or be be looking but love contracts there'll to change risk? seeing to ahead one you not And might in might love your appetite any maybe just among your on I on with

RustyFrantz

successful next they current And model, lot I'll get having they Summit. but lot kinds things bundles The a to certainly, I've out, capitation when to analytics in be spent like let's those the aware feel clients user a quarter field. can out. some also look becoming but one around lot a update are time to right able in still are hand, coming say of is meeting a of conversations group episodic having how Yes. need starting models. of be aware through with on And something like that be real to folks -- to as need But capitation, are the There people our clinical the I top concern be definitely are coming bundle should solution. I'm they successful not our of in health both that conversations of something be clients become a just our what that aware do we beyond able the at we lot

job that and goal transition our actually just more that retooling manage risk-based by arrangements. them to on be in to slapping organization, the they the educate works is Our truly way how not successful on but analytics organization

will different I investment our the when paid both education face paid outcomes on It's solutions our us. you're expectation starting more. versus an entirely is are on And and world think And more activity. heavy clients dividends and to pay that for and in that for clients in return

Operator

with Goldwasser Ricky from Morgan is question next Stanley. Your

RickyGoldwasser

afternoon. good hi, Yes,

the small solutions opportunities in think core fits any could list you that here, do in seems we very XX:XX.Xprovider outside acquisition, revenue offering other develop back, a so when it enhance a it's took market physician it strategic the of So value where contribution, that. see kind Topaz of used but like be you within the comfort obviously can really that about think you interesting when do

RustyFrantz

around down this in problems way. mean, health I lot people is treatment yet of we pieces look step that actually the certainly costly country. they emerging Yes health medical we And will one a prevents that realize stigma is as as at as look behavioral real behavioral the proactive a has at those classically of there care of been kind -- Integrated back

there mental combination And and especially us table all really would, play that the so actually given base. for of medical interesting hand dental, to QHC -- of we to for that we a our bring have behavioral through integrated is care that a as

for start work so the a effectively segment industry relatively us. as to really And new with we of

and ambulatory see to some we past above a to real couple When integrated really them. specialties what's been starting FQHC. enrolling focus market. there we're now support in very I'd Ricky, together beyond done look great just primary focused up go kind added multi-specialty, of We're on our solutions say further, single We've health, right much to to of opportunity behavioral the is and the in bring on still but that really

space, which we thing more critical full this only the the top does at to wins little in business is time, doing, two an strategy play started about two opportunistic other point, start this agnostic from think wins not but in care and it's than broader offensive is and University The standpoint value at make health of a example a is there we it point Health form. based care to solution an really a planned have

RickyGoldwasser

I that in the and the majority convert past you vast Okay of year. said the bookings revenue within to then know

seeing more we should think about change this deals. all-in how Does the model You're it? way or timeline you the

RustyFrantz

doesn't. it No,

In financial large should fact, end producing beginning we before just of start signed this of next for the deal one. the right year revenue that example, the or at

so we holds. in that as get if timeline these more And still repeatable it's anything getting more And experience deals.

Operator

question next from JPMorgan. Anne with Your is Samuel

AnneSamuel

forward. is given margin we in Hi, there are the I just taking then of from expansion any if think about quota-carrying guys, And the sales this for force wondering the implications of especially question. investment should going the Thanks. thanks was area changes, reps.

RustyFrantz

And acquired sure the helps so Actually we of. momentum as lose a in, solutions keep solution years make acquired post solution, first overlay aware what with when over do a as the we rule sales that we've general you're we number you of acquisition. not that did a the

field solutions. on solution However, becomes more comping the on general with enables double as that facile us the to force goes than more the perhaps depend individual certain on rather rep time and

pool here bit. we've The segment solution do having what understanding makes So way frankly, the a maybe back we little the the have able narrowed rep more a it broader also And rather those than actually of double rep to them each for into possible is now pull to covering. specialists some them a itself. for little were of market that

budget actually off a way. to so are of all we able neutral this in pull And

AnneSamuel

Thanks very helpful.

RustyFrantz

Yes.

effective mean about, the just we I And how so mean really was for have and more become we efficient us, it today. with I dollars

Operator

with SunTrust. next is from Our Draper question Sandy

SandyDraper

on the remember you. revenue event? retention or for be consistent of things probably start on of quick in fourth to A Thanks I expect like that. are number? Veradigm is the eventually fourth Jamie. number inputs? ones just move the again to second just me around? the remind Is quarter. on I docs? Or couple much clients then can't And we quarter are What sounds there very first can guess pretty of to hit base going the much. that number that a housekeeping that it's it Should you relationship. Because

JamieArnold

that a on me and so dollar-based think quarter. of let much available renewal the how how the the first was statistic is in statistic. the So renewed is it for at the and That answer much of retention at question quarter beginning --

tool. statistic So use what is that make modeling it as that trying to a easier to it

RustyFrantz

on at the Yes, the clients CPI to is it that include clear, same well. It that at because calculation is, add increases. exclude so makes and what it us. any added and not, end. population does is that it is specifically does of end and we that And clients just not be of always it's legacy front we not back include it the And look maintenance. quarter on Is we population look for from the We the sense? paying as population

SandyDraper

does. Yes, then it Veradigm? absolutely And the

JamieArnold

of we will Veradigm the from ratably Veradigm, then contracts, would what get the year. once of expect And relative the, to be course the to those over taken vast majority

start So it this will quarter in of start, fourth to showing we our year. up fiscal expected

RustyFrantz

time fiscal from a last year ratable under number was revenue. one not QX the And that

SandyDraper

one as helpful. and think market market bit one can that this mean well any consistent in maybe it coming wins RFP. new you doing going you about actually picture you're talked trend, And into then maybe bigger Thanks. their Okay. dissatisfaction squeeze that to fuzzy I a getting. getting trends consistent there see driving to you the When moves. the about not And I when you when existing maybe Rusty. That's someone what's you think health vendor, out little client someone or for drivers about you, market? actually what's really out are And if with top

RustyFrantz

Yes.

can't replacement I years, So when look been for for of the standpoint infrastructure market a there. One going replace up to reasons. and one vendor meme a because And from at just when therefore I client it's the interesting EHR, of four right. market, think regulatory as their bouncing the is keep about because PM their can't couple they around replacement a now is I has stay mean

being second third because by because is somebody poor the gotten one vendor wits else. somebody is their then the client is has and The job to and has just done frankly acquired really end a the

job regulatory look a certainly doing phenomenal we that we when the side. And at are on

the frankly ecosystem XXXX We because as innovate successful. PM solution necessary to and the broader be really sit here in table to bring to to continue necessary is sufficient were clients to and broader and EHR enable a we today, a timeframe

those And size seen that up also M&A fact we think then two the specialties. a us. footprint for lot really bucket tailwind combination the plus I table so in We're visible given we rolling satisfaction. fact the very have things really single about of driving of and you good one are we've come that to seeing And the and that client think when a

If out down. almost been last space you really you NextGen that to class the only vendors else all a upward the has to really over the would map major years, And very is trajectory. see were everybody in scores significant the on flat four for

where in solutions going point where that be a is company there, degree at And look great the trajectory really trajectory. the so I in don't the think to aren't It they look we've often time, other implies separated out the not is because somebody clients based to future. ourselves trajectory on times there a but at is at

for us. I of tailwind And nice are those so all things think really

Operator

Your Windley question is Jefferies. David next with from

DavidWindley

my afternoon. Thanks for Hi, good taking question.

of narrowly to talking more potentially outside makes and broader limited then the that I kind from effectively force set the about solution base question, the asked in sense? with the then outside So you or are expand compete. that focus of have earlier really to maybe sales follow-up is a from your heard granular marketplace being sales Is there? Is to reason If a those I just because Rusty; seem comments, sales solution, your the required a and base force start amount a comments your one how there incongruent. going understood solution deals, little about all-in

RustyFrantz

could. maybe qualified didn't from say a the clearly narrowly standpoint. the Actually are center don't mean the different focused think if solutions I mean I facing as challenges a the we the focus When practices, a speak we as difference more is between health about than What you narrowly, rolling private entirely federally languages, challenges orthopedic facing right, up group. business it equity-backed we

little market And bifurcated so what bit. we've done a is we've the

worried bring base. that they the a always a onto for group table the the to that rep can to patients. about map to solution client very market in have people their if you relatively broad lightweight so becoming to, become So and talking talking you're and I'm it manage consistent example, entire segmentation you're about orthopedic when they talk and

a the because with dealing being understands the about It the base lexicon they're important like company base is simple you're not truly able If are with health even you space. client the that group, you're right thing. to behavioral like seems so wants talk talk for client and to talking that person patients. in clients; talking But about just go to dealing the feel dealing their you're with

when little done in market segment saying you going both for an ambulatory be clients, we that in entire to integrated solution service, for you fee bit. we've as the what going as so successful well narrowed frankly we're value. fee into a these we've need are is enables And But

work to to signed going wand organizational you're large with understand at the this and we're work client and enough, that well priorities, to go all that to Because all last them client year. you the very we map, this. not their of magic going up We're wave of roadmap and strategic going become live on a that to based interestingly to much timelines successful. do through and tomorrow and Now deliver we're on don't going a be once at resource in their evolution. going What to change we're

in sold this our have than and licenses where move You would different it sell This some is really organization past, to and show the take just step-wise. salesperson on. up

said, And Now, vendor client. roadblocks a really high trusted aspirationally being their that there. We're at truly think first to from I strategy a being on I journey a we're both just being that years for conversation establishing to user said I group a I the four stage. look C-Suite and meeting get with UGM my the And and understanding -- ago And stop we're on advisor. partner a them strategic the level journey. on completely to

sell to you wants vendor Your something.

even Your them. issues before trusted and are coming your problems them partner and other hand on helps real you help the your you through understands you A solve they for advisor problems become didn't shows know solve company.

through a view. are a because the starting move we some getting to and that broader trusted We're being seeing aspirationally advisor market cases spectrum in

that can the have help. a we are standpoint, solutions more and We do seeing objective problems from

And if and drop or there, our there so sales in little think tweaks were two bit about a completely it's we always an of time adjustments sales structure, ago but make, significant half, is look, when exciting any a you years our to saw bookings. time. -- reinventing year risk structure anytime we It's we a

This bit to once multi-year much again be to. is not This time sales bookings an little other the growth. team like intimate emergency. really frankly driving the get as -- path with more leaning yes, base in our a continue on But is we feel not and far we get a client of this of up hand, like, may may there as we'd

DavidWindley

of a say you've just both Got base inside it. that And does the definition described, as and rep applies client for outside that on to focus category definition the base?

RustyFrantz

Yes, that's correct.

DavidWindley

Right.

on and Okay trusted kind then commentary. that advisor dovetailing of

that Do you well? as a different in an expand that knowledge or do have the need capitation potentially situations. type relationship is to earlier or and service the the consultative an how today organization to of able that an professional area services be to to retool helping they understand question and answer to them to sounds discussion earlier It and Your those in you like to clients operate provision. base, bundles about need or

RustyFrantz

yes would I and say yes.

capability. that flourish. want have I see it expand We to and

framework. example, our look at if For management we account

account really of evolution strategic are selling client and have an responsible account for we existing executives executives So for the client. the

with responsible consistent are for contact managers account the client. have We who

continuing We are educate to now managers. our account

more more We to start just solution an engagement, provide with as talent conversation in an not as are bringing and new that with just as and manager. to everyday your consultative of also well account augmenting but

one talk for evolution. great frankly constantly, build and their they of It's people And have entire another by when thing understand world their that's major client that knowledge the it's fact those your challenges. people, to organization. to the amazed kind a organization; thing have be to service And

type -- it thing, that we so is of but wave the wand magic is this a in something not And it's organization. have

expand We are it knowledge. expand just looking now and that to

Operator

is question next Bank. with from Your Hill George Deutsche

GeorgeHill

is Topaz. about and guys, $XX range question. Rusty you've quarters for my thanks taking I year revenue question acquired two is million. guidance at Jamie, through Hey we're the the and line guess the the But

pieces? probably the versus moving little high You've walk guidance low what got announced of the gets end the [Indiscernible]; end visibility you've Can us Veradigm to UH, of you guidance? are a just you of big in What of. through kind won kind

RustyFrantz

little put right I Veradigm high would appropriate. we out the from standpoint of underperformance If put message, of We have mean, like the were well, as guidance here the From the we of now. different on we over puts on low If us first a on gives end bit Veradigm the maybe on performance all. that see if upside. we we that and us feel of guidance we out or bookings sit the downside. would I that Certainly, end feel is the a of see are guidance, in top client and falling good and are kind things we revenue of that. good really quarter sight normally have so We had much things that did And to we about the George. said, line and indicated pretty trending of bottom, indicate the the revenue, when like like upwards, bankrupt on felt if we we'd I where last got too off the were generated if as we've pretty on we said. I think I range, like

you're that, hardware million So a software on the of loss line. $X seeing revenue, but and that was also top then in of

we that go subscription what is You're seeing in fortunate flip actually the But as from argue to more bookings real it's through in perpetual the to I'd year. came It's reality are expected. for subscription it in under that is that we because from better flip for win of and time the while in lifetime happening the revenue year the may medium be moved a subscription a growth long perpetual this company little actually painful shareholders term. one unfortunate and

Operator

from Ott Your Mike with next is question Oppenheimer.

MikeOtt

bookings and afternoon great of to one-third Good nearly that hear are for thanks from taking cross-sell. my now question. RCM It's

Just your in qualitative could update penetration you there. Thanks. if on base wondered us you share RCM or any color could

RustyFrantz

RCM. starting gone of transformation the really to a volume. lot sales I'd say we've in that see through We're

showing start we've still as Our that. move to on we next would there say a there. into some yes, line. out is But of put really number percentage what volumes inroads. should ready standpoint, anything I'm or not like I a that out a room year From made ton penetration is the up revenue expectation

Operator

Citi. Demko Your next question with is Stephanie from

StephanieDemko

for taking you my questions. Thank guys. Hi,

from? attrition some there traction around you what's Are about prepared of gain acquisition color takeaways this solution to such be as driving resulting been given trends what heightened remarks. your your out or Just may in pure any a in call benefit

RustyFrantz

it sorry one sorry can repeat broke up I'm time? there. Stephanie you Can you, more you

StephanieDemko

some your that Does given drivers historical any trends. of [realistic] pretty competitive a of takeaways it's some the big of

RustyFrantz

taking we've activities distracted of of. perhaps a cases merger away acquisition that's and lot Well, by from part a are they look that vendor we're some in seen,

distraction successful them attempt that coming a a were certainly in of as In and and their end of so life one for a case, clients. onto lot those switch an And vendor of taking the had a And some of we platform platforms. in clients one frankly core another help. to we

it's I the the I unable really, significant And a two through said something, if when drivers. that competitive across to client deliver back it's what the takeaways, look vendor really end those value when or And vendors I wants. market, the to life the replacement that going so the experience wants client it's primary are of about go distraction and our

StephanieDemko

I then and puts looking got through growth tough it the Could just and all-in normalized of to the this and how the to walk us about you comps tough versus for some going for comp? at think bookings takes you're year. growth

RustyFrantz

as year-over-year I full I I single in if Yes, necessarily to we mean mean I just reasonable not at have it's somewhere Look, but on The the more look the for year, I of get takes year. we half I the growth and the the honestly at think or expect of XX% pipeline it been. the upper said year, bookings look last of the continued digits. beginning continues if at, puts the execution robust. Look, way

be to a sales forecasting also better, deal number, traceability standpoint, from forecast, from continues to Our which not get but undervalued both a and is forecasting. sales

feel, and little And got a soft in good last first here be. we've think on having right we're the I as will second back very, which had I had well, half half. think where put we sit half as good year to start very half us a first a we need frankly, we and we a good start year today, we then This focused

StephanieDemko

projected you just XX range? the point that mid to get level sticking to need the way or any would of there to high Is the benchmark growth the

RustyFrantz

gives perpetual purely year. an $X, big about drop off the revenue which rather driving to a we're license versus at, growth get perpetual drop-off won't at So which given looking natural bookings it call us ratable stream we are into the that -- long bit a confidence Because year. more having growth of have on the than until have this generates into in we that next look, of at what say year next is that the the curves we refresh haven't term I is, But get and put in to amount after off out year. maintenance subscription time and ranges revenue on we just XX% XX end a increased point of from next frankly the comes now as probably held visibility would

of going bookings. see And to continue is we that given smaller need to actually XX% to especially we're number every expectation but subscription the nature high nature my bookings recurring don't so a the growth, quality It's that. year and deliver

StephanieDemko

which target mid no prior Got hold it to longer digit is that it and high on? seemed single

RustyFrantz

just we for next should that we assume No, our year. guidance refreshed haven't

just might in I literally Stephanie. it time, at point don't know think this

got our year of half out have before own theories forward. the We we the but finishes back see we to how anything push

Operator

And our with final question comes from Gene Mannheimer Dougherty.

GeneMannheimer

little to Congrats bit more guys. thanks the good integration this you. how level Hey, the the on of Topaz What's your between I and overlap NextGen EHR much quarter. dig client with progress from wanted a their so but revenue the revenue characterize this guidance space? behavioral immaterial Topaz the look know would would you how I that raise long-term? you And in competition towards how year, we platform? the didn't is in

RustyFrantz

and think for about in knows is and state we very platform clients, every their of clothe no less forward more your integration we our to right. point, frankly Their is had, other. partner. much capabilities it, cases each of Think a in you intimate and built we revenue state. as a patchwork it earnings them different it's regulations. of all forward to integrating has this that about, reseller revenue on many a example that roughly almost at group more around behavioral a are already single This of much and integrating It's Each of health are about the in

into into is little going nationally a going market bit kind so And a that of different than consistent market.

takes it are side. the than ways carrying in care and that on we have seen different passion. It might It medical takes integrated takes about expertise; behavioral health

great look from because this organization case, and brought think taken the as this to almost share share there's some And we the players in space. player them I into aqua so at some space. the other we've from higher. a We've largest taken it In We've hand almost in play.

is the that and in if We'd can strategic a a And consolidated say, investment in we so way. in important case, consistent control that at this ability we and have augment when this reseller to very out like ha, we enough. but area frankly there, look

can part very store And behavioral for health. large therefore of using in forward our this powder on to our integrate growth make small our plan and we deliver house of as sure that dry a architected simply expectations in

a was it for I us. think easy decision pretty

GeneMannheimer

as balance referenced to like growth No, of as makes Is sense. good will the your from to about it for that way guidance be think respect QX But QX. growth sounds with that Okay. not And year, the QX. the to in just Thanks. much you muted it? some there

RustyFrantz

that, we growth in look; expect say Yes, I'd definitely QX.

clear right. growth all, we be as Let's bigger bit QX smaller as as perpetual on of number Year-over-year we yet QX a expect on abundantly of be And it quarter QX, to that, us look anyways. see a number the in in well. always and frankly the first little better at for in

you accurately sure all folks this were wanted of revenue revenue just that in to understanding we of so it things, And going to we'll greater QX uplift those And is creates then a about the in how level show QX. make when year. up in think see

GeneMannheimer

Thank good. Okay, very you.

RustyFrantz

a comment too. has Jamie

JamieArnold

Gene.

and we an is remind that last So QX I exceptional The a from standpoint had I do to year. timing we Rusty booking number the that everybody fact appreciate transaction. of exuberance. want overachieved against

clear. So the for firm is full want I giving to position just be our year. Rusty

out a in of And of falls so and quarter. the timing deals having sometimes

have than deals of sooner couple would a a little So close expected. I

overachieve I'm So a comfortable comparison? have allowed at more year's outlook to end little us very the of for QX, last So I tough QX, -- against cautious which but

RustyFrantz

booking side. the On

JamieArnold

year On comfortable number, the full I'm that with but the side providing. the is guidance Rusty booking

RustyFrantz

side. Jamie? revenue the on And

JamieArnold

you guidance the reiterated. with and comfortable that I have am both I

RustyFrantz

helpful, Perfect. Gene? Is that

GeneMannheimer

thank is sure you. It

End Q&A of

Rusty Frantz

of very your and weekend to great Have everybody in joining talk and on you, call. we'll you Thank in thank Awesome. much a for January. thanks and rest operator the you

Operator

for gentlemen, this and today's you conference Thank Ladies participating. call. concludes

You may now disconnect.

Rusty Frantz	President and CEO
Jamie Arnold	CFO and EVP
Jeff Garro	William Blair & Co
Jamie Stockton	Wells Fargo
Matthew Gillmor	Robert Baird
Donald Hooker	Keybanc
Ricky Goldwasser	Morgan Stanley
Anne Samuel	JP Morgan
Sandy Draper	SunTrust
David Windley	Jefferies
George Hill	Deutsche Bank.
Mike Ott	Oppenheimer
Stephanie Demko	Citi
Gene Mannheimer	Dougherty

Nextgen Healthcare (NXGN) 23 Oct 192020 Q2 Earnings call transcript