NXGN - Earnings call transcript Q1 2021 | Nextgen Healthcare, Inc.

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Operator

Welcome to the NextGen Healthcare Fiscal 2021 First Quarter Results Conference Call. Hosting the call today from NextGen are Rusty Frantz, President and Chief Executive Officer; and Jamie Arnold, Chief Financial Officer. Today's call is being recorded. All lines have been placed on a listen-only mode, and the floor will be open for your questions following the presentation. [Operator Instructions] Before we start, I'd like to remind everyone that the comments made on this call may include statements that are forward-looking within the meaning of the federal securities laws, including and without limitations, statements related to anticipated industry trend, the Company's plans, future performance, products, perspectives and strategies. the that in results among these risks forth exist from differ others, uncertainties with set expressed filing those forward-looking in and may to cause materially those the Risk U.S. public Company's statements, including under subsequent Commission, the Factors Form quarterly recent report report discussion most XX-K Form heading on Risk on Securities and the the and the Exchange annual including in Company's any XX-Q. other as only forward-looking today. speak Any of statements statements. The to disclaims update Company any obligation forward-looking expressly or intent these

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

our measures measure of At SEC most Rusty to non-GAAP qualitative the measure each call Mr. have Frantz, calculated results, each and be is also you latest release our can posted the over of NextGen. For release used may CEO turn of President financial earnings comparable financial Sir, provides between financial the in differences financial This GAAP found was to our would begin. within of measure reconciliation measures non-GAAP filed how to like earnings a we time, with the directly quarterly financial and or website. I the contained Investors our that and description discussed GAAP the to section and non-GAAP this guidance. comparable

Rusty Frantz

been bravery never In a has level 'XX, you, showed truly important, our and The FY heroics, immediate. QX mission commitment at Thank amazing that operator. healthcare personal provider resilience, clients awe-inspiring. and is more

interest clients practices, tough country it providing and work of in need and volume the consumption With intense client continue ambulatory with the quality patients and new to the financial stability, help engaging creating privilege the back look everyone. space, their across innovating the all our our healthcare ensure for have across ways that As care we base, restart on in we clients see their we focus to those our restore our time. build of to for

many on seen seeing to take for break double the need down normal. are We've relaunch. clients get We guidance help some to and transforming and new clients investing struggle of advantage the and

help positive We have capabilities true the are blessed healthcare effort. force a and opportunity back the in to scale bring be the and to to

at time. make execution, In from negative our a QX, costs manage Major make NextGen and resilience, to of offset and our bolus were patient our our willingness deliver As revenue to business our financially sequentially. the operational back show less service very client a year-over-year continued impact integrated robust of than efforts came as platform, we significant subscription growth tough the the and in a as well in continued exceptional revenue. advancements down visit revenue business to look commercial due the satisfaction, to drivers we great to at by solution the quarter lower NextGen volume-based $XXX.X competitive deliver and volume by standpoint, our ability in -- our to actions X% volume million, X% non-recurring team ambulatory continued to the strong decisive strength

decreases at an year-over-year, on increase sequentially, pay perpetual impact of clients increased recurring at XX% 'XX's in $X.X cash to significant Free a services focus uptick accounted or meet came from Subscription prospects modeled stay inability from million strong we hardware range reflecting unrestricted at while in increase came in XX.X%, flow move the some higher in the value the Bookings our exited magnitude and XX% a volumes. purposes $XXX the down experiencing cash that shortly reflecting and to million, we already in clients demonstrating ambulatory year-over-year cost in license selling $XX.X the and visit $X.X retention we believe XX%. XX% environment at $X.XX, still of came challenged partially an fell came million, after expect by Client EPS improved quarter. and FY portion $XX.X we and person of both with moving and as legacy arrangements. XX% subscription -- down effect confidence of on retention X% software our bookings in purchases, implemented. a above million, QX expect the revolver environment and resulted a freezing and a performance our forward. in sequentially, to prospects in XX% bookings days, non-GAAP giving an actions of for Our the increase COVID-related based from -- license positive year-over-year COVID of long-term to million yielding but DSOs and short-term both XX We us away decisions,

at and to the like on I'd of look we a As executed touch quarter unique number in pandemic, well the of key face points. a

of accelerated capabilities. highly client a total commercial one-time complete cash track balance NextGen's to recurring and We licenses generate strong record, away operationally and we revenue. pandemic. driven a success, even perpetual strength the solid We're are can flow with and to our from solution satisfaction have nearly free move business are We seeing in sheet commercial and resilient, model and transformation subscription by

here. the Stepping NextGen great engaged of team, the our and into first point. We a success have foundation energized

strong our driven success solution, service share accelerated in core our expanding seeing a satisfaction, and to take are and ability by of strengthening competitive increasing client and product the quality capabilities markets. We robust

acquired of for platform. the across of significant tight see QX, service and to of platform these key solutions the everything. drivers workflows in deliver our are all key to quality Let's success. great integrated of solution and continue and across integration differentiators -- significant offerings schedule teams step work market-specific patient-focused some R&D on and make continued global take is platform on belief we the to time commercial It's that into It are advances, tightly on our delivering into drivers. midst a integration assets In that enhanced

most forward along strengthened NextGen with the our aspects with was ambulatory to EHR/PM platform, of our complete enterprise, sets platform This run growing in recent all recently system and acquired March integrated future integrated core releases of complex practices. integrated assets. the access to including ambulatory release designed long-term Our strategy

For elements the want a highlight to exciting patient. broad solution. now, I of with NextGen the Starting and key just few

Our new integrated patient experience and platform provides interactions, visits, pre-visit self-scheduling, including integrated virtual check-in a fully to provider patient patient patient engagements. approach

visits as have result to a all Many visits might roughly above our Our of are pandemic. FY alone already than X. of executed putting satisfaction versus clients the as clients virtual XX,XXX QX rate secure in it 'XX, of these XXX,XXX QX patient more in the occurred not otherwise use

available level an virtual pure is as are in-person visits bit with provider, option patients benefit seeing their clients We a key a our of that's but off telepractice. not up an experience NextGen's telehealth, with for same

in In positive market. addition, our to continues behavioral traction the see health suite

recent to week our most capabilities that acquired last announce officially Topaz are the We next we excited the release in announced incorporates October. acquisition

but this and are to virtual health enabling only an are to coordinated in XX% a behavioral visits are provide pressing experience within single believe the estimated care bringing an a behavioral experience within last have integrated by May, do also uniquely million is necessary market would year. meet market, Delivering this during we many client where health adults address increasing our a the not expanded not communities. solution total patient quick that addition, enabling we others. client care, happened into client integrated and given a record momentum. of We problem needs behavioral visits wellness treatment to our And impacted, nearly -- physical strong great not caregivers receive separate of yet by possession reminder, an from to environment XX pandemic positioned in A In we thriving us satisfaction otherwise. and continues to

to We quest progress continue meaningful a clients. advisor trusted to in be make our to our

strategic one number priority it fact, In objectives. 'XX is our FY five among the

bringing and clients intensive future. focus programs to back a training enhancing to our education enable member on are ability success well drive to into every client team as as the successful We

Along Our to planned advisor response pandemic pandemic. lines, the advisor to tours insights client of our goal team truly own trusted and time launched NextGen Having our recently we've culture. those COVID-XX visiting the as early fabric real into institute the our began. weave essentials, is of

many initiated successfully. have However team able act trusted to to advisers groups sharing as also clients, our best other the of was NextGen advisor that innovations and practices

And the types form truly for of clients so, go-forward strategy. these help that life interactions create and to ability the

satisfaction Our client resulted success in exceptional focus has client momentum.

had XX complementing at Management XX we first our since Solution. the EHR, up my we score of board -- now tender on from start across ranked have exceeded KLAS, of been the my a tenure, Practice For our by best-in-class time the

year's for to increasingly confidence improve well and measured, increasing satisfaction, volume is could feat are the seeing sequential but every already the number, bookings affordable, that KLAS sales demo ambulatory in enable an are quality area with the In hitting footprint clients focus improved truly and delivering during patient four the $X their down reflecting year. to company become we feedback from opportunities only giving a over arrangements. are patient XXs. they deals, We COVID. platform, healthcare, had we'd strong prospects still scalable, aforementioned positioned remember as noted is next pure Executive accessible, solution [indiscernible] we center collaboration a in license to team the especially volume, up our consumer experience all have The that largest addition, that the can new engaged robust very competitive the really positions perpetual health. quarter a Such high combined and month high care they've patients single their that million patient worthy moving on in considering to stride increasingly six to client even of us team and According with essential of demo being last last in recurring we away new our mature a in provider future, be from competitive being takeaway as the proactive, that step opened and the takeaways, significant six

pandemic, us the ability base to demonstrate solid midst cash to the we to our earnings an situation. impact continued an highly reductions. on adjust strong both and NextGen to took external Moving operational line this on, time. minimize the the of control react cost business. business, to actions our cost that delivering are during resilient still in operationally employee dictate our we on of to proven enabled temporary the pandemic, and of Though during Both QX, uncertain while leverage permanent sets and preserving In the

to Expect QX resulting primarily were the in it the reductions deliver while suspension hours of to XX to versus normal of and also reduction other for of temporary cost our us quarter under the in a merit we with accept footprint all continued quarter, efficiency a facilities focus coinciding the and including representative longer-term and discussed favorability a and we as call, volume-based salary favorability different. hourly the in the executive time of things. contributions, to expire, structural company many of cost longer-term last CARES, improving our the year. voluntary delay $X.XX point as a structure short-term workforce QX beyond. we cost the workers no of XX reduction in QX, cost restored matching Naturally, actions certain lower see was continued expiration non-headcount to increase. before continue actions As took fact, of throughout reductions, cost similar number transition XXX(k) --expect business about represented to actions cost of see AWS benefits able in still more well temporary to in These full and to we our In always on significant of among are

We a and continue of notably business. business transformation intrinsic to revenue perpetual enhance license to the the recurring a as from well, business the value through subscription

executing of to to years Over been quality gradual on transition significantly five the the accelerate higher call, the transition and we've a announced going recurring first my model the forward. intent last the tenure,

it we subscription subscription because have the leverage generally been gross both offsetting down both the improved was margin, we luxury near on flow and win recurring even with team a quarter cash by cash as to as been time that DSO higher in In builds it had products selling significant line maintained over days, on strong XX% value operations. a balance in -- and the generated NextGen of of it testament as quarter. model, quarter our have driver less core million will primary a and downward quarter. from having sheet a a $XX our competitively of that true maintenance term and anticipated generated including effect The revenue broad from surround performance yields we've a ended fall this ended revenue net to the distress We entered revenue. position robust and with is the of this well positive this free clients time. Continue operating cash and While XX strong uncertainty, off quarter--

We of and continue client for base to the allowed expansion have monitor forward. going DSOs some

the situation analysis paying revolver on current down of $XX on our cash million us in quarter However, comfort from hand gave following end. our

will to the to situation evaluate We revolver intend the continue down as forward and appropriate. going pay

enhanced extraordinary will COVID. that enhanced culture protected significantly already our corporate We capabilities strong an have and during

the members last last We've up experience XX% all the in year. degree to possible. rather our to financially team XX employee moved monitors -- sacrifices in Our year made greatest the points protect

our of healthy. team and kept all We safe have

diversity We inclusion. a understands and prioritization We've have this with next now program strategy, have our that ethos. indicated an an robust in focus continuing the a everyone already of long but to committed come that area organization journey and constantly years. We've priorities augmented we further that are true the organizations few enhanced over as way with

is the we that patient. and everything show the healthcare, up in a day the important and in every provider the accomplish meeting we foundation middle of between Our team of most

-- at future made Jamie, successful and like these in makes the with when what us into numbers remember we the things. dive you so I'd look and as So what QX confident you to

total driven by strength of solution and We track record, client satisfaction the NextGen's capabilities. commercial success, commercial are seeing

operationally are solid highly and resilient. We

generate We have can and flow a balance a pandemic. strong cash even free sheet in

a making are and We to strong near-final recurring revenue. transformation subscription

success of great, have our foundation engaged We a NextGen and the energized team, here.

how up in all the see let's that Now, Jamie? numbers. shows

Jamie Arnold

Thank on the you, Rusty, and thank you call. everyone

results selflessly through was for first numbers, And revenue last under admiration down conditions. million million, quarter to to previously and of and I $X responders worked express of compared compared revenue and based data by appreciation from results. EDI our light go I Total increased subscription have in circumstances, of And X% I period in of total healthcare now, of 'XX. same is fourth the of services, services X% or believe fiscal the were support. in the revenue want managed $XXX.X X% XX% providers services, my to periods the QX year expectations. million on ago while to offset XX% $XXX,XXX declines down $XXX.X a and increase maintenance the the unimaginable above and Before who decreased year and prior in compared Recurring an in the X%

quarter QX patient EDI and a services. For the decreases modest 'XX. the visit $X.X was million all trends, led bookings. the declines had This performance enjoyed revenue million. which and $X.X $X the revenues by in unlike for increased of years and with volume X% or FY quarters, preceding million Subscription with March expectations. a of trend and consistent other to recurring was revenue, compared in previous this in quarter, to well is million, $X lines. general over recurring services X.X%. or informative consistent More declines three virtual largely more and is or support data boost several for case, past QX, decreased X%, the historical COVID-driven But XX% generally Maintenance from current QX revenue net unlike quarter comparison interesting FY recurring a million significantly offset the 'XX increase this for decrease and trends $X.X Quarter-over-quarter managed to and

last we total stayed. slightly is revenue, where recover saw over year. they $X.X have pre-COVID XX.X% higher Non-recurring the or of the XX.X% significantly revenue prior of million Recurring approximately in the our then volumes revenue quarter decline X% $XX.X quarter, the of than to During levels and initially XX% million decreased year. same

and higher XX% but of at we million. license to better pre-COVID ago rate Non-recurring in announced to Cost the expect increased X% or amortization profit $X.X $XX.X to revenue volume Software a million virtual starting were highlights clients coming with and in $X.X coming year-over-year. replacement return of of largely management were development as hardware reopening year-over-year XX.X% This $X.X although million $X.X a is of of services services previous still gross levels. million We slightly primarily of capitalized focused trend their wins million to the million higher or decline Lower or declined $X.X cost decline compared down due prior-year than a lower EDI $XX.X at with increased period, revenue and decreased visits in year, in higher quarters. managed by cost the XX% consistent many we due reorganization strong of and offset to and compared in million six our non-recurring bookings of of by these to period. quarter data out revenue XX% NGE, year the quarter, XX.X%. basis in results. to the Bookings services is to million services contracts QX due Two service to transactional reflects practices. include which believe will produce $X.X that subscription earlier margin last the efforts Gross near close services X% signed goods on sales on quarter primarily declined to cost.

expenses. decrease infrastructure increase to personnel as expenses. which slightly R&D ago. and $XX.X personnel reduces year a from $XXX,XXX to year the as travel primarily the in reduction $XX.X third by R&D operating as in in and expense last million decreases million offset and due due their is primarily well related $X.X $XX.X expenses expenses. made of costs million reduction the or well net the higher to from in in severance conferences year our legal cost quarter, Impairment Turning primarily and a operating is increase operating capitalization, an $X.X of restructuring million R&D of lower May. The associated of inheritance $XX.X million with charges million SG&A XX% The headcount as and X.X% other ago. acquisitions increased travel decreased were from or to some expenses and

non-GAAP XXX% comments of a GAAP for conclude of a income XX%. of was to the on our QX statement, $X.XX tax tax a was compared EPS rate year loss GAAP ago. To my with Our income QX $X.XX rate

increased $X.XX of EPS non-GAAP prior Our compared year. the $X.XX to

to the equivalents million and with ended credit balance balance XX revolving our personnel conditions, working and clients strong million of credit want and this and based services revolving $XXX We on collections I in $XXX.X last have we in days, to time. quarter. DSOs year give the Subsequent quarter-end sheet. account team on to decrease of repaid against in quarter credit. a days from million overall tumultuous for the cash agreement. commercial in quarter $XX line five market last Turning with to were outstanding our the from three

R&D the resilience first capitalized towards financial quarter with review In in Rusty. am quarter. progress And $X.X excluding $XXX,XXX results. and for organization my new the performance will was determination. our turn of the pleased for call of R&D and the continue I quarter CapEx, the closing, work normal. was we proud million This I the the capitalized forward to Our look back to now as concludes their quarter, I for

Rusty Frantz

demonstrated revenue, at We we NextGen. and and Jamie. and toughest our our is our to that towards aggressively future-facing Thank quarter while strong, proudest during showed my solution highly was showed financially robust, tenure subscription and 'XX to are the we move and to continuing we've play ability ability offense more the differentiated. you, remain so of recurring FY one far purposely QX

is COVID modeling seen 'XXs. accelerated how slight dynamic. roughly to be too still volume, Looking primary are That macro to been environment recently, said, we've forward, the has to the downtick high currently into us the impact being we we being to seeing a macro comfortable unpredictable guidance. though visit providing have as volume a XX% we we wanted as you give the Currently, however, for see view

this to volume be the world will modeled three people COVID in-person. volume to the that stable relatively to believe as interact have over baselines. as Therefore, XX% in financial and improving with XX% some learned between continue impact providers how And quarters year. we their have of averaging will on virtually last naturally, to our both However, we our have it

patient We also financial ambulatory the slowing the demand financial clients a slightly higher return to normal be in year space bit delayed, to volume. bookings through as expect independent our operations at

As to we 'XX, in through the bookings subscription. perpetual the from shift see FY to of subsequent continued revenue market we continue expect

part this [indiscernible] reduction approximately future near-term on effect see gross a looking an front of temporary doing favorability margin, sun-setting it's QX. we'll beginning support time revenue. stated, to lines As downward such while QX, team be during of for a in In closing, and of to honor another of great critical cost a healthcare of have And a care. will $X.XX the things finally, increasing forward, in

as best honored team who can continue and the we great their little everyone can that a be regardless they feels be a way, organization is. like place, and to future I'm lead self increasingly best a great to to where also, our an fun have along self, as on strive belong, multi-year So inclusive of a can diverse journey

our we we progress as making will to. keep do set with that everything minds We

for As doing let's could opportunity. job safe ever ask the the questions. I tenure Stay for, and for days amazing continuing XX open years sit here, it grateful best in there. up five I I'm And and out

Operator

Jeff question first Blair Your with William Instructions] [Operator & is from Garro Company.

Jeff Garro

activity bit out the on further and bit I existing the Yes. taking And it guys. and lay more repeat a if to Congrats you on quantify that'd footprints. could from quarter new help little and stood afternoon, could versus what on then, a out product so the want then, quarter bookings the Good you number be detail start categories clients to questions. just if on in looking for little helpful. for thanks

as think I helpful that'd well. be

Rusty Frantz

Yes.

one million. onto $XX.X this you. pass So Jamie, don't why I overall number the was

Jeff Garro

that. think expecting don't was I Jamie

Rusty Frantz

lose did you? Jamie, we

Jamie Arnold

muted. I had you Sorry,

Sorry.

Rusty Frantz

Go ahead, Jamie.

Jamie Arnold

for don't dogs visits pattern to the we my the a question expectation, -- or that was to want as bookings, granular us. it a from The keep into virtual again consistent while for -- get was -- performer again, million, commented the Trying totaled your so strong answering contributor a and I then, me $XX.X Jeff sorry. question virtual it approximately good in The remind million And bookings. again so quarter was $X us. total, of bookings, business this

Rusty Frantz

So I Jeff, was I -- actually with -- the those find brought was footprint and deals what the guess, I surprised within executed a they -- That virtually, we're surprising competitive virtually not was have you're I I the expect way that displacements see sales you of process, into this with to quarter. in was that to is, when process. didn't surprised did entire was and a many new what taking that of is On hand particular you really lot means that because somewhat was gratifying. times a completely play through specialty a strong you cycle something

Jeff Garro

ability NextGen face-to-face that to how the into clients products, more opens adopt clients And see again, platform. from purchase I I and follow-up curious sense, can where helpful. guess completely here all sales but execute that if asking pipeline very guess of footprints? team terms And in to on more I integrate and new travel the a land as even the here, of then, playing more and makes existing looking I'm stands seeing find It the about up, pipeline. virtually, you the

Rusty Frantz

we is going they remember, hundreds here three and fact we And of COVID it a started Surprisingly a invested we that our good happens to to all two of year. last chunk that represents in enough, quarters to was produce, had the be told are. there amazing really well, sudden, to before four footprint you

the actually excited a seeing true we're so, of future. into being in step on it their lot because pipeline, of very a people platform, based is new that experienced And lot a about

product seeing we would not it's activity, so, And good I've say, bit activity now of But as stack because surround activity new sell been surprised, is actually cross I full the are activity. a well.

robust platform of far to are patient and full has that recognized when the the ambulatory is gratifying that, pretty they so, NextGen they're what really integrated really of at that engagement. looking on and because value people it enterprise how most assets seeing how So it's that's around come top have notably, means us really layered we've and

Jeff Garro

there to Great as model is typically models of about more a good is fee One or more percentage stack collection full activity, hear. well? flatter you clarity, there point subscription contracts talk of of amount in when that or

Rusty Frantz

I would say but that one leave to is, Jamie would what I yes.

you I'm when stack, the about -- experience, subscription full versus about But I'm physician how what the Jamie, everything. -- mobility hey, pop of would So breakdown? talking health, talking patient mobility, EHR/PM entire see percentage would revenue per

Jamie Arnold

This subscriptions, they quarter least percentage were a this to opposed at is primarily being our revenue. as of subscriptions

Rusty Frantz

enough, revenue subscription interestingly mean, I year-over-year up X.X% was services XX% this quarter and sequentially.

grinding subscription and flip this So growth back to subscription the in area is business. kind to we're consistent growth of seeing the out earlier perpetual and commentary, the working of

Jeff Garro

the taking for Thanks Great. again. questions

Rusty Frantz

Absolutely.

Operator

with is question from Sandler. Wieland Sean next Piper Your

Sean Wieland

a volume down Thanks XX% your revenue services, you compare or was into cash that a very Managed the does first said, get managed sensitivity sequentially. want quarter much utilization, recurring to among collections? visit particularly and services. How good to as tough congrats in environment. on net the I of providers to

Rusty Frantz

haven't I So what give to volume because that we've I'll a it's but that. on is let, what mean, said, want Sean, relatively gone deep you we've more maybe, little Jamie, said we that, color correlated. that in

Jamie Arnold

directly directly client-driven makes quarter. but hosting at tied a to to correlated the managed patient the kind strongly services, -- services. not that we do are of components the of or we probably or it's volume. managed XX% factor a tied cloud some the volume volume services XX% least also -- that people, say, would which in services in it, the have managed to still It include I In tied is isn't managed volume-driven, to the it's for not

Rusty Frantz

visit But mean course, know, perfectly also, visit time correlated turns either, I you revenue, exactly right. volume into and I when that think that, as in of are not

clouds well. activity so, did bit little as And a

Sean Wieland

utilization XX% that question because -- asked you pre-COVID you're to I But XX% versus say Understood. model your the level. modeling

the So to we that fair? that services line, about of can about is XX% relative think managed

Jamie Arnold

No, no.

Rusty Frantz

That's...

Jamie Arnold

No.

to Let we in me the related. XX% Rusty, because factored that, fact have correct is not that so volume XX%,

So the directly some Rusty to isn't in factored numbers had gave portion the that that tied Sean. you volume,

Sean Wieland

Got it.

So margins be on going see? quantify you a effect got to think the you it. Can you're we that should okay, downward gross modeling --

Rusty Frantz

this guidance, that. we do But of job forward move when a time at Not time. start into quantifying providing better to we're a as we'll

Sean Wieland

it Is a than bigger breadbox?

Rusty Frantz

we're a a Well, subscription to take give that, or say at of I look XX% If about bunch is... I'd margin bringing perpetual right. level. And here's revenue, in was revenue and subscription

Sean Wieland

Okay.

Rusty Frantz

than that. Better

Sean Wieland

And thought, bolus of revenue you I Okay. out hear services saw of hear the you services, one. one-timers wrong? did that then, I any didn't on quarter, last that shout and any said Rusty, I kind in but non-recurring a

Jamie Arnold

Yes. did contracts a in normally periods. previous we the were signed talks Sean $X.X it of And that in above No, these over to to Rusty million had I mention kind in were we that to would my what about the million close comment out number able is some I able bolus. have range and when $X close expected out that of been

Sean Wieland

Thanks super. very much. Okay,

Rusty Frantz

Yes.

Operator

from with is Sean question next Markets. Capital Your RBC Dodge

Unidentified Participant

I've with per those they've [ph] of are Thomas provider is give over little structure? the got providers telemedicine, how the how fee evolved you going still on few This comfortable more on that one a Thanks can taking for are kind per afternoon. past questions. $XX guys good on detail for Hey, of months, and conversations month sort Sean.

Rusty Frantz

a ways. telehealth simply and they though a what have conversations life I'd couple a One of looking because not And base we go as evolved whether does how in in that RFP in same on want that, for the is -- is, -- cycles directly integrate reimbursement is that makes at to not -- is, you're or meeting especially it's entire into so people into the enterprise from the enough actually we're and want thing, a -- when more that is first area, the everybody into really now of integration great, it's entire base. now right. is, And really house we're provider you say advantaged Webex, their documentation among starting beachfront of expectations to along of was virtual, looking us ring, right? of different to FaceTime have Yes. but actually virtual see the need you an It's are at that client so, scheduling. And But came business. what where we're it our definitely increasing finding are kind platform

was more so, per we're because see back also and volume part spiked little the enterprise the people of a see We're peeled provider And started -- of starting as coming starting then procurement said, to we're I to bit office. into that and it really cycles.

Unidentified Participant

of result pandemic, sense. platform. lot a on you. the Thank you that? of got be virtualize to on you the on slowdown kind And question I've kind seeing as any another of Makes at needs Are done that the all guys work able micro here services are to

Rusty Frantz

Yes.

which bit, commercially risk So a horizon has slowed the -- is because pandemic done how we're it's micro doing I'd developing little in the be perhaps say to the more a interesting services what the little us down oriented -- pandemic platform. what we're enabled has is,

is of as being today. COVID assets capital core because that refactoring it opportunistic We're more building significant And than that's along. these allocating changed and really for clients we're more will platform And integration doing actually our a rather ahead just need we of has later. go that come so, what calculus, time

kind that's it -- as so, building And go, will. we you we're if of

Unidentified Participant

you Thank much. great. Okay, very

Rusty Frantz

Yes.

Operator

Hooker Your next question Donald with is KeyBanc. from

Donald Hooker

said somebody on quarter Good good a environment, well. as else afternoon. in Great. Congrats a tough

on your change into I maybe recommit this commentary all -- to just technology happened, transition, the and just spending that's the -- Investor platform, we last with on about your of following on mean, of the to last just terms think had hear a R&D and of there span not? do focus services in micro So sort obviously of Day whatnot. modernization your aggressive is any How to back investing of wanted outlook lot at that sort for you or year, question you pretty or business

Rusty Frantz

of not to R&D. and Well, expand reality and so, now, a right through R&D here I'd year, the on I what we look in I'm I'd -- say focused looking now, not right I'm decrease now, are to a is, look, kind looking right we're as say new

R&D, we'll year as our as into broadly rather on more strategy. little get our based As R&D we'll assets and of more now to arc have talk through that is span to is have lot of on year, talk year, micro a we provide build what it. -- a we more than now the as we the to next probably long-term next today that allocated we I'd start building -- this right for But start geared is say the services guidance we platform opportunistic

expect I what more bolus we same to build some as continue not -- would have up, show projects. expect to commercial is us out we're away R&D think from so, I to that deliver of bit, but I a to time, And see because see little backing what that that would we

Donald Hooker

question. Okay. financial And then, another maybe

seemed skis to we margin so that get in that are going of forward? kind a You the guys towards our -- sort remind you gross going have terms quarters few warned is SaaS right this pressured. and us assumption pace about picked up just there what given margins Can generally -- for is of over the gross talked move should us there, you pressure and assume strategic of in don't has have be an we what to

Rusty Frantz

that some about the said, up the subscription lose XX% as think I ACV, that's you're I to into to about perpetual from really and to That XX% well lose is right. but double-digits something down -- for margin. is I which and migrating year flip -- looking something, you it's you're going the that's what what on after, also said, from to look, XX%. talked year after, you're at Sean going the after, upper being same to And year

Now significant in the bookings, that is, when opportunity to that forward, I was you. the how margin there instead has much what profile. some something -- to walked we made because but you than bookings, contract perpetual part here mishmash because say go think total has away there higher it's business for changes would TCV perpetual our of such you in look though recurring year when higher express as perpetual is in And that quality we've subscription a a bookings that best much it the look, we revenue a amount value looking value we're this I of we same years is is a at there, through strategic amount of and same do even ago, to express a think pretty amount at better from something this actually as transition TCV bookings better gone an about of bookings, and that larger one in it and -- is much we've

Donald Hooker

maybe. to I'd think your we question, sort I kind open-ended since question, answer different here things big be do high some going maybe Is --how one into sort environment clients that's not think maybe is new about of and virtual of second wave registration about it And it these a the bad -- are this, brain great another of but of, lot lot you curious a wave remote like other kind going of downside one, like technologies fair. in the would there's if hear a thinking there an adopted of be COVID-XX mean, technologies with a be to really I could and terms here? a But of love care the a level, really pick That's and look, of place? would your in hear fall to kind and of but your a that. folks there thoughts. to It's have about real I

Rusty Frantz

kind my to at learned it, all, one terrible but more think hierarchy than is I this I -- think part treatment with I mean, Maslow's how the mean, down -- now my think, right. look behavior it's of less -- first think in safe And that all deal educated. April, I -- -- that's forbid, medical heaven much I I comes of I I right. behavior is mean, I needs, of is when think no we've it of

volume. level I -- I are people right going is to knock thing. think the now, I look, friend on who of impacts so, with terrible a a same bound wood, mean, you're And because it it's to don't see have

Donald Hooker

Okay.

Rusty Frantz

But...

Donald Hooker

I appreciate...

Rusty Frantz

virtual in cost what environment. also We've days look, went can lost would in this sell organization we moved can But share say in is, two we virtual home environment, a a never beat. a and we I and in

on we still we and of resilient business, standpoint back to will the end. be will we the do still and offense operationally will this play we do the things from So need

Donald Hooker

the thoughts. thanks for Well, Super. that, thanks for

Rusty Frantz

Yes.

Operator

question Larsen next Verity. Your with from is David

David Larsen

Congratulations color And little are what the that, drove a little more a who with? just talk on about maybe, you good that. give quarter. you bit wins, Can Thanks. six around more competing a

Rusty Frantz

is or in are on to quickly, we center relevance low because and in we are up market, we the really the example, because play I to days like health pieces our And want us ortho, on this When match so focus. because chosen a starting as selling to down said, of Well, a that's lot didn't I we're capability-to-capability show yes, I'm of these said are it. platform, our doorstep the and we're pretty primary lustre won that's that have of have what are know also showing price. that somebody market I've what move us to we the these a and competitors even parts. on mean, simply we get about, strong know like the unbeatable that I strength but selling federally-qualified were would they was have markets in what it's entire up a they unless to not bid increase selling goes things super starting in that that vision we It and to that -- things we've competitors, lot going starting the individual NextGen our as you for specialties to is to in say on hand up

David Larsen

think is added retention are or one XX% maybe solution that going set I years, of Can Okay. have, little from a that it couple each measure have quarters, like important that retention that perspective. very to And you there you the over full the sort want you about which large rolled of have your you're It of have I the you like to maybe ambulatory Like the capabilities attrition physician you've at couple bit was think off? a EagleDream. tick two rate, like, you or now. seems past talk expected more you over Entrada, right next up accounts of however I lot of

Rusty Frantz

good. I no, but think Yes, up tick is up ticking understanding that it will

David Larsen

Yes.

Rusty Frantz

part I [indiscernible] base. right Naturally, handle look the to our that had every and of over far going attrition At some time. abundantly earn in hospital We on our the that hospital P&L. a better run it's -- quantify of I course, we're to in just hospital have in and significant good not clear, that independent base. we its to we're the And this going Right. itself is look and your client But off as keep base, see day don't We as competition significant about long point was get mean, ago. exposure very be we to ambulatory affiliated had some in as worried run the but time, said data. time independent not ambulatory better the clients high-value super stuff to you a to

David Larsen

your of question, please? Okay, great. percentage subscription And revenue Jamie, what then just now, is last

Jamie Arnold

Subscriptions -- second, sorry. one

David Larsen

Recurring.

Rusty Frantz

is... Where now subscription

Jamie Arnold

would it. be Recurring that is and XX% so

David Larsen

thank you. Okay,

Rusty Frantz

What subscription, Jamie?

Jamie Arnold

second. I need a

Rusty Frantz

questions. move the to Let's next

Operator

Hill next [Operator Your Deutsche Bank. George is question with from Instructions]

Unidentified Participant

on [ph] Hi, Charlotte question. George, this is my for taking thanks for

or Given the byproduct? the varied just cycles sales lighten current different environment, is the are sales you how seeing process is and

Rusty Frantz

end-to-end solutions. Well, so solution, product comment by only we by don't it

delivered right. and hospitals is, practices are that though So their more see seeing right. we're times stuff, mean, I being be time. in buying with still last I a we're cycles seeing quarter. market, they ambulatory the getting even buying at is, the what this ambulatory And with number volumes like on seeing and a going during and good think, This in happy we And do procurement weigh to really their lot seeing That decisions, just very of balance is we say, what sequentially not strong means, -- I'd performance and working that because careful -- expect we're up. people pressure the have -- what They're like question. year during a it's we down, be back they're said, said, that I down we're this up, are though departments from still and sheets as we're

wider they travel because to very a And get but that more it's because point lot to effective successful much actually sell said interesting, we have this. so, to ourselves, I It's at virtually. really on don't back people, organization you and you think think also, And there. get starting can reach in we're to finding the how higher be actually a to much the good people's because learning separate easier the lot within schedule you it has of ways to because really is I done are job team a

And so...

Unidentified Participant

much. so you Thank Great.

Rusty Frantz

world you. Thank for different It's a sure.

Jamie Arnold

this Let me It answer period on total revenue subscriptions $XXX question. is million. XX% the of the was

Rusty Frantz

and a that year-over-year sequentially? was X.X%, XX% And

Jamie Arnold

Yes, it increased.

Rusty Frantz

you. Thank

Next question?

Operator

Your with is Stephanie from next question Leerink. SVB Davis

Stephanie Davis

taking harder. my a I questions, one for two have bit little bit you Thank one question. little a easier,

So I'll Jamie. and next first Rusty to give one to the then one

Rusty Frantz

I guess, easy one, Stephanie? right,

Stephanie Davis

could yourselves model, your model the margins? forward? think sort you kind the going at help a had adopting look much just sales do it When environment, talk for to when about And I street ambulatory model just about the one, to reasons speed you be this and it. future all for virtual this for virtual on like partially you've first your being looks a of the transition preparedness So, see a of transition, this your of smoother longer-term having you

Rusty Frantz

to so here's I'd say Well, what it.

release I end nobody In of on-site would really little, everybody over really, of environment day, virtual will all, I if at I process you're been until us you I organizational broadly very, But That effective expect mean see first. some because the be our the returning what very that would to do of going there wanted is to, time. first a any. footprint interaction selling standpoint, say until the bit in somebody organization. First we've go nobody said, the the be find being believe broadly in wanted -- out is place to to to fully. look, the today, more sales still the there virtually, good for had

Stephanie Davis

understood. Okay,

Rusty Frantz

see said, normal everybody my government much functions I and have footing names the office. in I has a now home footprints be home. to to and also Because right that I to there back relaxed because would as everybody constraints have back from taking from take office go that -- -- HIPAA people want kicking to to be performed to us no am and to in being work is out not to the go there now has hurry will certain an that the now, But -- at beyond that are butt more is -- expect

Stephanie Davis

a and more a -- that's question, kind of So follow-up to complex that.

How than or to backfill the dampening this Assuming softer to a XX to something wins but return and... raging environment have growth have ended going with need in bookings? bit continued in about months could a bookings, be the you you broader do being the revenue this should still have Is a effect the just we little next damps normal these pandemic given on think you on.

Rusty Frantz

going I'm to... know You

Stephanie Davis

that answer Jamie one. let I'll

Rusty Frantz

tread... -- not starts going it I'm Well, Jamie actually to I'm that let one, to answer not Stephanie because

Stephanie Davis

No.

Rusty Frantz

all confident I'm you in not you can lot this I October, on our comment we're What a that's to That's better I with I in so something, say answer. very will tune in yet. but Into a we going say forward-looking; in much if provide time, think more is, would future. that point at

Stephanie Davis

thank will I right, answer an get All you. Okay. Well, then.

Rusty Frantz

Yes.

Operator

at And questions are time. further no this there

Rusty Frantz

thank Well everybody out forward right. talking to October. look safe there All in you, I everybody. and Stay to

Operator

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

You may now disconnect.

Jamie Arnold

Thank you.

Nextgen Healthcare (NXGN) 2 Aug 202021 Q1 Earnings call transcript