NXGN - Earnings call transcript Q3 2022 | Nextgen Healthcare, Inc.

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Operator

Welcome to the NextGen Healthcare Fiscal 2022 Third Quarter Financial Results Conference Call. Hosting the call today from NextGen is David Sides, President and Chief Executive Officer, Jamie Arnold, Executive Vice President and Chief Financial Officer and Matt Scalo, Vice President of Investor Relations. Today's call is being recorded. And now, I'll turn the call over to Matt Scalo.

Matthew Scalo

Okay. Leo. Thanks, the start, this remind that related call within meaning we comments that are to like including products, the on laws, perspectives the made may of future anticipated I'd industry before limitations, Company's everyone to the forward-looking and trends, And without securities plans, statements performance, federal include strategies. statements and forth expressed cause in in with exist uncertainties differ to and those filings results risks Company's that others, the may set statements, public the forward-looking from Risks including, among those materially U.S. the Exchange Commission, report under and and Factors report Securities Risk Form XX-Q. in the Company's including any annual discussion recent Form the quarterly subsequent on most heading other XX-K the on Any today. forward-looking statements speak as only of these The Company expressly disclaims any update statements. forward-looking intent to or obligation

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

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

David Sides

today. everyone call Matt, and you, Thank on the

and appreciate long-term raising I've of a the joining to been months, your busy the new interest. growth top I made with we and Since story, are that few have priority. a company's last Over the investors rate the number Jamie, Matt company, speaking

focus fiscal team achieve but the accelerating in balanced line. having at ambition even challenging growth the eye approaching our and X% of to fiscal keep in XXXX, delivering X% process. to the growth I'm is is and digits on into fiscal this time, NextGen generated same XXXX, to growth Rule an on keep XXXX growth XX already in the now While planning revenue mid-single internal bottom higher levels, to way One incorporate

familiar, of a XX margin is prevalent value total way For revenue compare Rule where SaaS software and a EBITDA the maturity. you not to investing, those single models SaaS of growth It's percentage. in generated different adjusted into stages at by combine

revenue While direction a company, pure to in not we useful to so financial longer-term we metric moving believe is this are shift highly SaaS model, we recurring a are frame we goals. and continue that as our to a

them go-to-market to target earnings planning effort coordinated our of to total years the practices. We departments NextGen's steady we input is XXXX offerings in the revenue year made to thereafter. from the rate achieve career well driver, the materialize strategic offering a and deliver apart. X help by XXXX. would If them And ways fiscal an independent This to can and anticipate workload higher consulting at fiscal partner reviewed XX% do spent time NextGen ultimately, near-term, management, XX% automate leverage came approaching meet teams how will our main X and This manage you strategic focus in as progress them process elevate with regulatory a our from in comfort also help had effective see the the ease sets quo. physicians now X% question in Sri as grow using We measure fiscal our back in total commercial and product comprehensive individuals, enhancing and prior of would while a points risk term. our long-term XXXX I to mid-XXs Chief requirements? on In growth they execution, fiscal longer the to and this R&D led rate mission plan. X% do a technology, end by achieve highly continuing at have strength familiar comprehensive growth year, NextGen This from and be as are constantly a of executive How Velamoor, their percentage their teamwork great profile, as about core status Board marketing growth To across and we his to result look from think annual that rule, with to all revenue should we who capabilities moving is NextGen's mission. we capabilities. to Officer, our clinical product few XXXX And and All by driven team support next ever-changing to How we tasks? you reiterate repetitive considerable also help McKinsey. NextGen XX% from care? process Growth complexity this commercial has to very the growth level. This significant

in I be mentioned about bring. NextGen's I long-term expanding believe Board details unlock engaged insights growth members to trajectory, and spring. longer-term providing More am future to to deeper the with visibility and at assets event As more this our key plan value directions. investor of breadth future on new upcoming We vital dive I Board our our and they strategic a that forward will plans follow. the and our excited the experiences look last call, along into shaping can

third quarter trends certain in Now shifting fiscal performance. to our

space. to quarter. I momentum, positive total third breadth the the seven-figure medical the of our ambulatory of beginning strong This NextGen this we independent Yes, consolidation NextGen from company's focus on positive wins again am of solutions in team. the XX% execution influence. positive say our are a to strong closed the new commercial specialties, excited bookings. deals I over And said client and handful see influence well performance continues accounted new for reflects quarter of continued business. Fiscal its winning

Let me explain.

While space their provider ambulatory is decades, most flows the of independence, are investors. that seeing with acquiring the value trends ebbs aware past over the practices other the hospital-driven now investors well-financed independent of and consolidation from support few groups

practices provide becomes these obvious the in providers, just offered data, but NextGen not to number choice of and the insights. complexity, services grow and As clinical financial

rapidly across eye has centers. to financed They adding ophthalmic goals. over me and fiscal states well optometry example. as of been a their X,XXX expansionary clinics quarter, well surgery across now in hundreds win and providers third Let locations an are In multiple as operate This continue has provide provider nice of large the organization clinically care. NextGen growing mission-driven had and a integrated

breadth scalability multiple beat win and of total due client solutions. presence NextGen well this our and commitment to to as competitors important long-standing to care as the vision our

It will analytics Mirth Management Practice services. be the and we our NextGen's additional opportunity offering, Connect, to and implementing market. an by and of and along EMR plus offering our We surround in value the speaks win financial with exciting core certain coasting is how offerings true

While questions provide the details on quarter, we've will a to recently. Jamie the few fielding wanted I been also address

our interest rate higher Regarding business. affects and inflation how environment a

cash balance NextGen resilient significant sheet model no flow. generates business a First, a solid has debt free and with that

to Second, consumer hedge a automatic annual index. portion tied have inflation price our of the contracts an client

we So it. are positioned environment, not well thrive are protected So to why? in we only in an but inflationary

market. NextGen. outcomes labor the see current potential We to tight some for Turning interesting

us our engaging experiencing higher actively in of not now shortage And the discussed and like for First, to services. are are many past management we would clients and evaluating outsourcing seeing turnover. activities cycle labor staff probably customers have revenue these

The its that to decision. other As built not especially NextGen clients was existing we an value clients I it's in just of group an years. strong NextGen a this fiscal compelling, services here, about same has over see operating But client, earned the client The the XX over were service this turn the on quarter, environment, RCM makes locations has relationship ROI making can multi-specialty RCM a example, in been to to first. cross-sell out in of the so it's Texas. third that trust with able

as market positive for see incremental an Select tailwind tight Solutions. we So this employment

to As have itself, in are the and our need. dividends made for the we being culture attract NextGen investments able we paying talent

talent. find to allows broadly save offerings, we one on and of to NextGen model optimistic we the find the it it's positions and but And only that are talent. does hybrid advantages cost, hire of to us given better vision States course, Not work top across as hybrid is top but ability data to scientists footprint data it our India. challenging real attract United model work the expand our Of estate our

its say driven it a growth and regarding might means. to on received has perspective whether we by a my I'll is I internal-external questions growth number going affect M&A is forward. agnostic Lastly, singular focus am on accelerating this how the as company's NextGen profile. stance of What

growth X% clear, Let me we revenue through to make drive organic expect means. to X%

assets considerable with ample has drive external it future significant dry will growth. NextGen that, comes likely powder. has NextGen to activities, When investment,

months. don't have growth line revenue with Critical elements clear not cost the we've and first decided capability technology a ourselves. price bolt-on dilutive transactions fit, targets to above the We hurdles that just at fit, not which level, make in We is or a add process in strategic to many XX that a cultural build cut. disciplined and synergies of include that multiple favor NextGen's sight

to And with provide ask our important that, details third rule on Jamie won't transactions. However, quarter. the we CFO, Arnold, out fiscal I'll larger

James Arnold

you, Thank David.

begin row, in $XX.X for over track quarter, a the up client Bookings a Let's slightly expectations. and new with bookings. came year-over-year wins million on on our highlights. quarter in accounted of in And for with few at XX% another basis operational a

and are quarter. and with noted, fully specialties scalable range away our to to transactions execute legacy appreciation new clients different core of cases, to well medical across As NextGen to of enhance wins the capabilities In reflect systems existing and These that moving clients wins working from a ophthalmology seven-figure NextGen and our managing are experience. neurosurgery strong reflect multi-specialty. NextGen's handful market's solution. the commercial solutions In productivity NextGen consolidating closed cases, other certain surround and growing multiple span add as and is proposition. their These value on integrated with as to customer David clients of ability partnering from both a in we

quarter the Now on to financial results. fiscal third

Of $XXX.X in this NextGen accounted recurring generated of year-over-year. total, or revenue X% increase for quarter, total million XX%. of million $XXX.X revenue an the

Our generated managed in subscription revenue the Clients growth our patients surround services data X% and continued even grew or revenue volumes $XX.X to and $XX.X largest continue of Omicron remain late year million and volumes third patient fiscal in over $XX.X transaction third client encounter up generated the better their strong. this engage category, to to year-over-year. in strong ago adopt X% services continued QX growth management million to variant solutions due be quarter, provider services as as our million in the fiscal by the X% strength quarter. cloud the Managed in quarter grew software experience. revenue continue cycle as EDI revenue improve period,

flat of remained reflecting XXXX prior and XX.X% by support services higher hosting million $XX.X costs, bookings and and of revenue software in large the slightly revenue rollout with up increased Spring maintenance several support last same XX% amortization staff and Software of technology. $XX.X over prior transactions year revenue the increased reflects quarter periods. strength license reduction period. year Non-recurring added million to in along Gross offset of margins perpetual the of was license acquisition-related the year-over-year, over

to million million period timing total development of XX% decreased tight a by of litigation capitalization, lower and and slightly and net spend increased demand of due $XX.X to research generation spend by G&A R&D represents $X.X Net in reflects sales revenue. Turning which in expense. ago SG&A to year and shareholder R&D grew compared reduction ago. project in the gross is increases million X% to increasing The offset year expense, $XX.X investments personnel. controls operating due Net and decrease expenses. over

a of share diluted quarter approximately per Our was was net GAAP rate compared a tax fully quarter compared $X.XX net third fully income XXXX. per year the share quarter. a fiscal GAAP was income $X.XX of with diluted QX rate non-GAAP in tax basis, share On non-GAAP ago to for XX%, per basis, $X.XX of in On third fiscal the earnings the to $X.XX XX%.

$XX.X equivalents no to line cash credit. sheet. of Turning in outstanding balance our with balance fiscal ended the quarter third and the and on We million

buyback Our plan. the fiscal to initiation from quarter share of due second cash down balance our is the

on $X.X open X.X As positive you million approximately previous quarter. capacity this while million cash quarter DSOs outstanding of a quarter return million and historic shareholders Board strategy. stock flow market at to we a decrease ample at This of approval to repurchase $XX.XX may were purchase the and the recall, to in shares. we tax carryover a fiscal strong contest Free announced from pandemic. of continuing the generation million, proxy our average October. from the should days, in flow program balance to our XX in for our We $XX levels confidence of worth third deferral in cash the of the And believe return purchased business to Free million due execute was momentum reflecting quarter. price our cash our up cash stock the employer repayment to generation. flow quarter, of weighted in one-day provides or growth underscores sheet $X fourth $XX.X to

financial guidance. fiscal our to Now XXXX

guidance XXXX. raising the As noted are our we fiscal for press in release,

$XXX For and to $X. $XXX million, million revenue, guidance is EPS is range $X.XX and and the non-GAAP raised updated guidance

Our was strong and balanced. performance quarter's well fiscal third

monitor continue Omicron impact the to variant. We the of

potentially the be While appears fourth on of in quarter, month disruptive it wane. early to the

followed time, which of that time But As historically any our out. know to few front for the typically the there we an discussed to of are fiscal impact the managed smooth half, And quarter potential trends quarter's of volumes some in last have and that half lines business. deductible have you transactions lower EDI software approximately single can timing on large days services are resets, and over in back those the fourth fewer performance. year of business the a impact the fiscal the due five compared patient quarter, will story

XXXX the reflect expect amortization R&D. the continue the revenue associated at to continue personnel fiscal capitalized XX% with will services implementation higher full-year. increased slightly of XXXX subscription approximately We and to grow process margins for cost to Spring previously Gross for

year, ongoing generation are momentum make investments the we non-GAAP generated to this in with the growth I EPS remainder pleased R&D our raising closing, diversified to overall offerings. our and and demand the These of and will continue fiscal throughout We quarter. investments sales we enhance accelerate In range. in yet am and

turn for NextGen right me revenue And now, investments longer let is to the total term. David back comments. growth the making closing call drive to

David Sides

Jamie. NextGen company's key I market executive driving wrap a shareholder the to that driving of accelerating revenue you, did on action company's purchased by capital, focus Thank being more members I the add are add and as also responsive the quarter focus interest. to call aligned buyback to team to your but up with in comments like would This the interest we big And on reflects in share want on shares a open growth. over the profitable I'll regarding also activity. today's believers last reiterating all return

has NextGen potential. untapped significant

technology. refresh a of breadth Board in healthcare an have We with excellent and experience

to go have We opportunities. the and a attractive right strategy assets market after leadership, clear high-growth

in by was Employers. just the of one that win be will position and honored now NextGen We Forbes right that And Best America's to as future. informed will investments the make continue to NextGen I

So company, initiatives. exciting at will execute and here it's on This the my as our an comments. you hope we us continue join concludes time strategic to

questions. move Operator? Let's to

Operator

[Operator question will from Piper Garro, take Instructions] We first our Jeff Sandler.

Jeffrey Garro

what products the to to any more that thanks to you'll year. baked for or specific, growth And incremental now and X% be or of taking volumes, higher to there on entering? are demand client, to you trends fiscal revenue in where I it's what's recent markets acceleration hear from next drivers retention, Hi, ask And maybe you patient X%. new for cement profile are the questions. growth want nice the revenue get the

David Sides

a Day, me examples, but let you at give some We'll high level, all through those just Investor go Jeff. at

that subscription solutions. our XX%, of or population areas continuing revenue some the growing data, some like largest in talked at investing So line We've health past about grow. our is care item services and we the our about we are in see value-based where to interoperability, of growth calls

should We we'll this in additional add investments to then and this and through to as last make started continue and expect in all quarter those we've that of year those growth. those quarter, accelerate

retention, the why don't that On to expect seen anymore. and we be, it we report it where we've that's

good that and really in nobody assume few sell last the wins, does. And round, had everything forward new those they quarters add the didn't us can new that's that going these ability the then first into from a to not you client for surround level we've that which a So perspective. client solutions also so clients headwind at our if buy in wins

next So opportunities that sales additional gives growth for us year.

to year. are our with looked so preliminary X% X% for we plans comfortable our next at growth we And that as for budget,

Jeffrey Garro

seems Excellent. following trends balance clients trying to bookings the the think your on of me a size in strong from which from what deal to and from the would would adopting the license a quarter the more bookings up years, I really more number, might coming and one All really two more the half biggest – be new the client. bookings very reflecting maybe in software helpful. be And think profile clients solid against existing understand just come between and I

you the as understand just going push us think forward. kind and help pull the recurring there revenue if So about we profile of could

David Sides

still recurring large much of to But revenue that point, pushed license can. this sell So quarter as very to as we forward. it your preference software our was that is kind deal a

are And a about still that room we're there's talking There's see we'll added talked actually clients comments a especially us. had with in growing client having started that about that of excited talked of we client the because more we that kinds we're them, those mentioned still week. that in We've RCM. deal is forward. RCM to that We're then opportunities with are for the get larger also relationships implementation about But win those We consolidating our where services. them the or goes. that in move and physicians for those things some ones to relationship X,XXX starting big investing next Texas that where in we dinner

client our We have RCM on base capture. we we're not our think as of much to as able services

So your growth. as, see previous question, place that another you'll to for

we for the these larger how on, the systematic those of next then good think in forward up a some really the bookings have, of it new up as quarter. So about the it's we add do growth working And really about going year we're and all some to future, continue rates get momentum sales, get in we but sales accelerate – selling to deals sales of get next to period. the okay,

Operator

Silicon take of next question Bank We'll our Leerink. Davis Stephanie Valley from

Stephanie Davis

Hey, on some you right the going got apologize my question. taking guys. for for COVID Thank I I've hoarseness. now.

David Sides

no. Oh,

James Arnold

to it. hear Sorry

Stephanie Davis

It's I question the quarter, forward. you conservative pull But no is timing my guess fun. big just guidance last a attributed forward

this Is products This putting that read-through to meaningfully new another beat. else Or quarter, there just is starting see we up should surround around Or we that considering? that you're anything a in some upside? surprise conservative? broad-based strategy be the of more timing can the to

James Arnold

we've terms when know, quarter gets and think larger came the that we on probably a the And timing about often license than in the look talked perpetual deal little also about margin harder David number as on said margin. large gross I revenue talked thought this of before, we've about, it, license we to a timing. better license. may spike of Stephanie, close that And your predict No, the and operating little and the into of a when sort deals and you the the one quarter. are And perpetual you just Jeff asked question license,

strength see QX. that managed at So in other reset really a fiscal And fall don't license a calendar of we EDI. first going volume as we QX, think then and typically the anticipate our saw quarter side, and we as years, little prior quarter know, we a from services into And had this there. the least extra on strong I you little from off the year, go we into new deductibles the

forward for our that of this balance guidance factored into of the is all year. So

Stephanie Davis

different a Let me way. try asking in

You saw close large a last quarter. transaction

big competitors side of in there license from with quarter. another sales anything benefit the license one embrace on night seeing market the And the sale You're license that's win. EHR this large pre-announced Is of causing last chunky likely more sales? these your a

David Sides

from are license the have There some of where for the because if stimulus through of multiple buying maybe could a of prefer periods. that say government they're seen future comes offering. want out as been perpetual But money little of that because sure they've there We has bit of lot our as government be SaaS not some that's those there a we gotten recent periods from subscription buy to entities appropriations of money to in kind the money they some that over sell a clients. that clients a some

Stephanie Davis

super back All hop right. That's in the queue. helpful. I'll guys. Thanks,

Operator

from question RBC of next our Sean Capital take Dodge We'll Markets.

Sean Dodge

Thanks. Good revenue afternoon. Maybe side target. earlier of taking question growth the year's next around Jeff's flip

has the leading look you at to If up averaged. in quarter in Growth now strong. bookings this were bookings

Or think, growth. previous there are in those layer into the to quarters something faster the this. when been as implementing here last these revenue of convert high these of to revenue I'm recurring happening? like your missing this else are at Is as curious wins and can we're I I'm revenue? and beginning conversion the mid-XXs model, time as into the just we it's mechanically And seeing in of levels not five take over why that's simple revenue some to look it to now in is backlog

David Sides

mainly it. that's think I

there's in. lag then a they six-month to as implement three we layer So and

over the stack do up layers time. So

XXXX stack and revenue showing we're XXXX. why our intend does are for bookings it So we – this accelerating to for we confident level, to up that's in growth and in can if keep what your point, the we continue increase in or it what

Sean Dodge

shared Spring some had to Great. on guess, the last metrics XXXX of I signed Okay. upgrade. around that number quarter, And maybe release and up then you clients upgrade, the David,

said are point on your you that XX% progressing? how of are have up. they opted you those have signed that And that Where now? at how clients already in, think are target I

David Sides

in are just XX% about of contracted. are on We closing those that

We've been on predictable methodology. slotting are the working upgrade more people in for setting up a to methodology We become XX-week now.

on go this process. So we methodical we how are through very becoming

James Arnold

progressing. Yes. I mean it's

through As entire that The originally that so SOWs we've up got described, will as two from previous base. we a surround customer approximately the fact to we've committed to go are bookings. it upgrade, And little terms to three-year to goal close of the take it's the years XX% the signed quarter. we take previously described in

David Sides

But broadly on target.

James Arnold

Yes.

Sean Dodge

Okay. All right. again. Thanks

David Sides

Thanks. Yes.

Operator

Instructions] next George take our question from [Operator Hill of Bank. We'll Deutsche

Unidentified Analyst

on Hi. questions. for for It's Thanks the [Maxima] taking George.

ROI talked are And So the please? us RCM available cross-sell space probably you maybe then Thanks. what's level value about or win clients. to clients? the white penetration opportunities the you existing the to contracts, NextGen strong existing proposition helped that Could key the the remind of services us RCM to you give services of cross-sell and for

David Sides

question. the for Thanks

automate run especially RCM to the – the really for this to RCM find run technology. the now a labor or a struggling level service and we is find higher replacement around can the client system than with expertise who maybe prop in value an service market, the So people with to

better We'll help So with collections. for example, revenue. we'll have

due in levels expense we we're that the expensive of the offering. our On to less side, have usually automation high

struggling attract to attractive. is economy, also, savings market us talent. people labor that are So driver in for as a in we good this current because are It's

also as our base it's good base, our RCM And takes of our that's us. about percentages X% of far what for services. as So

to So areas. one that a lot services. focused we're could main gives as those – the lot of there, room that's be us really a where grow we could of cross-sell of realize we growth that There's and

Unidentified Analyst

us Great. churns your of a give you're an versus Maybe Could the Thanks. seeing follow-up. during quarter on expectations? level the update you

David Sides

at better essentially that. it's report Yes, on our than anymore. expectations don't churn or We

Now that report target. be if less higher, went I than we our And it guess. gotten to it's would

said past within not is in range. we since it, anything, it's the our expected we're So don't saying saying by report what we've

Operator

time. questions at back there this David And closing call the are further [Operator to I'll Instructions] remarks. Sides no over for turn

David Sides

NASDAQ in really May, Thank look appreciate NextGen, we you closer are early to you and event again we of the joining Day the We course, We'll May in that come soon. perhaps know for as for with to But to for your joining We'll, you all where get even thanks, appreciate everyone, questions. interest look forward Investor listed. today. X an at let again, your sometime offices early we as talking as and time. call,

Operator

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

may disconnect. now You

Nextgen Healthcare (NXGN) 26 Jan 222022 Q3 Earnings call transcript