NXGN - Earnings call transcript Q1 2023 | Nextgen Healthcare, Inc.

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Operator

Welcome to the NextGen Healthcare Fiscal 2023 First 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 will turn the call over to Matt Scalo.

Matthew Scalo

you. Thank 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 the 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 on Securities Risk Form in the company's including any annual discussion recent XX-Q. the report quarterly Form most heading subsequent XX-K the in speak forward-looking of Any statements only as today. to update these expressly company The forward-looking obligation disclaims any or statements. intent

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

President the qualitative CEO, calculated financial and For the this 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 our I'd section time, over was the reconciliation measures posted our This measure the David Relations call SEC the Investor each have contained financial to results, each used measure and the quarterly can financial GAAP of At between financial financial earnings measure GAAP within non-GAAP non-GAAP filed how in to descriptions comparable to guidance. the turn differences and Sides.

David Sides

solid our pleased another first performance quarter. Matt. I'm you, Thank for to report fiscal

ability sizable our on our achieve reflect independent better delivering and wins results. handful a inside NextGen Healthcare's clients' that and closing clinical and to XX% outside execute, X-figure base to continues both team bookings provider offerings the These growth. from commercial enhance financial while wins comprehensive the focus Our of

confidence for of And a over second see again, new to continue across multi-specialty accounted groups. in ophthalmology clients believe wins acceleration fiscal the bookings. these our first once to quarter orthopedics from support integrated growth medical We fiscal range and XX% our specialties of We to half. trends

call double-digit cross-selling As for revenue drivers line reflects our NextGen for key our growth Office, market $XXX investor for quarter, and grew reiterate target growth remain subscription our recent our revenue year conditions, to in enterprise healthy a by surround contracted XX% and solutions the ambulatory on end and solutions out this market outlook to services wanted We of general recurring questions business base. track the million annualized into independent of achieve revenue In model. NextGen's surround and I response the to regarding 'XX. fiscal positive our some I

We ongoing practice of of in volumes out cost and continue shows trend independent settings data health to settings volume-driven higher-cost and overall as industry This healthy such migrating prepandemic providers. businesses reflects our at an hospitals, volumes procedure like see levels. lower care favoring

reflect to We activities levels environment. also as Development healthy continue see positive lead in pipeline. demand our demos generation and current activity the such

concerns. much from seeing not are economic We impact

ways confirmation to insights. at with our focus aligned outcomes that find to at enhanced better technology, and I've sites cloud clients capabilities get Since Summit. our move mobile our We in client good about call, client last continue our on strategies. native achieve It leaders user to largest earnings with or to strategies group, was opportunity to large and the our for prospects to client our Healthcare outcomes We're engage our meet clients excited at person constructively all. in our our and had on

outlook positive what the So from seeing has are from changed. we our market, not

achieve in of are have to And our building risk. on steady XX% is we revenue our nature, model. this we recurring business foundation concentration and no long-term NextGen's to goals. Turning customer

strategic certain on to initiatives. continue make progress We

monetizing fiscal the today, 'XX assets, Through our we strictly assets. legacy we are account financial more forward of guidance of management note fact, part adjusting with to transaction. for important that dental we process, nonstrategic In disciplined this move sale portfolio company. announced our these a the It's certain to

our with of example progress Another the is InstaMed we that relationship expanded announced. recently

pleased are patient even offering pay is easy and We now our to clients. both patients more use for that accessible and

and fiscal patient contribute expect already to year to incorporated into is We pay guidance. growth year its fiscal our contribution

me provide further details. let ask to Jamie Now Jamie?

James Arnold

positive call. David modest how and certain generated activities, SaaS dental Web, contribution Dental in Centers. where to for periods. the of Thank include good the left our welcome commercial is while approximately assets record Quality strategic transaction, you, our example value. annual dental contracts, generated margin, while dental growth licensed I assets. The multi-tenant on would and will David, broad relatively sale of off, over which year. to their focus this customer EDR, years financial everyone last incremental contribution system, significant no our me in in portfolio let revenue assets but specifically is dental they investment to offering produced Federally the dental per of future start practice terms Qualified million $XX required Health legacy we excludes the strategic These system we are And increasing and their a few and they assets This have

the prepared XXXX these found year pleased fiscal we'll and a later on guidance home remarks. discuss financial impact our in have assets transaction's We good are my

XXXX. let Now quarter of turn fiscal to me first the

in Total surround Adding and page of $XX.X and and came $XX.X million of of table client bookings grew the $XX.X patient includes accounted includes and we the to new investor XX% Of a revenue line. modeling SaaS office pay, such I and in seen for well we as in managed A on comments, XX% our million million, we've by was services for our data for that million quarter is transactional in XX% revenue out of increased enterprise generated approximately driven longer wins years. Managed growth to fiscal base managed of across year-over-year or XX% First X on services the over and and revenue our continuation that to $XXX.X this increase an this of historical trend was patient plus like basis. or introduced $XXX host now recurring Growth accounted an subscription services, of quarter, a revenue year-over-year. continue want million previously call increase telehealth. reported see Subscription solutions by a which at next-gen as increased a demands web year-over-year. XX% TDS. and total, quarter a which first no EDI recurring X% quarter services. mobile have over purposes. bookings Services, to services generated Data surround revenue David's for in in services solutions reclassification EDI new revenue, year. line be as continue of managed line drivers for available last pay, This client comprised

drive which this to data down this services which can managed Transactional due period Our be as pay, services, includes in cloud over $XX.X and continues generated million patient well performance year ago as data quarter, modest revenue, fiscal decline management the of revenue cycle X% line. lumpy. to revenue in

quarter $XX.X year a perpetual client year. to this reflects in a million of last growth XX.X% side period. and mix in large and a and shift, margins was essentially was item, down nonrecurring some and hardware 'XX nonrecurring and upfront particularly migration points accelerate reflecting up expansion contract our services. in combination revenue $XX.X maintenance license clients, This the year. flat lower-margin and trend Inside million timing, and the strong quarter license of managed the reflects quarter, of basis retention pursue including the was over Gross other Nonrecurring low line same the software which software centers This down of products software offset by discussed decline model. given XXX of lumpiness license, factors, last maintenance to excellence from to services. of line in support same we were Software X% investments compared revenue increase revenue over prior spring continuing activities the last

increased that increased compared return This first $XX quarter benefit million lower Net costs. Fiscal and X R&D year a travel GAAP personnel R&D from cost-saving net expenses. of tax million actions $XXX,XXX XX%. to a of expenses of year $X.X and effective $XX.X SG&A disputes a ago and previously operating represents a expenses to offset tax of domains. now GAAP across resolved Turning our represents legal million total shareholder increased approximately benefit have XX% this discussed, projects to had reflected spend additional a quarter associated with of by We with X% ago. been revenue.

per per fully earnings of a share compared to diluted for share at share XX%. with On $X.XX per quarter -- $X.XX remains first GAAP year-ago rate fiscal result income commentary the net of the the net $X.XX tax fourth compared non-GAAP XXXX. diluted quarter. $X.XX This to and income was quarter basis, Our was our in in On non-GAAP first consensus. basis, quarter line is of QX a in fourth fiscal XXXX fully quarter

purchased We quarter an line per outstanding credit. average with million equivalents on cost and for XXX,XXX balance balance the Turning million our no $XX.XX the We $XX.X ended to sheet. fiscal of in share. at and first cash shares of $X.X

the quarter's a million share seasonal Free quarter reflecting such cash million, flow have payout buyback negative of for current program. accrued bonus. remaining was We on our first this as activities $XX.X $XX.X

Now fiscal XXXX to our financial guidance.

We we impact dental sold noted of contribution revenue guidance in for X expect to of are release, assets. $XXX down want commercial press the transaction's only approximately million the from full here are adjusting now and be months impact. the be adjusting we million, our fiscal assets. total the As prior range reflect the year reflecting I $X our transactions divestiture to $XXX clear guidance in the the our million, dental 'XX to to

range $X $X.XX. our Moving and about is now of our fiscal to or a we EPS $XXX $X.XX million. and million between are lowering range a by in non-GAAP EBITDA, between And $X.XX reduction to adjusted $XXX million

adjust following annual cell in in million generated in services. and growth your quarter. EDI, and we have closing, million the In million If we divested $X X approximately lines: this with $X I in continued diversified the revenue models, am from historical maintenance momentum $X products subscription the you want pleased to into

shareholder value. profitable for closing the to comments. will me now external continue internal We call And to let drive growth turn and to David long-term back as capital focus deployment we on consider

David Sides

Thank you, Jamie.

using made our revenue investor feels where and introduced in it was like some it by our mid-single-digit time at model office Enterprise ahead the area grow overall should While and market. we is our continue to ago, only range and largest the enterprise, of business X domains: event insights.

We new solutions. with breadth penetration of existing expect further client growth wins and to by expanding be of clients driven our

slightly execute insights, area office This untapped and to market. domain to digits reflecting success as what second adjacent into time. practice domain over we offers our continuing potential. specialties We we continues Our focuses independent and grow in medical on providing SaaS the smaller of practices larger our In offering strength grow see call office our double third the ongoing domain, services. well, significant ambulatory the expand it managed

investing outcomes in and solutions that driving are strong business with across a will provide accelerating long and growth the and of number on analytics execute a In growth. focus We Healthcare continues over for profitable connectivity, closing, strategies NextGen to in foundation term. this a solid

This combination of value. positive concludes model health move ambulatory driving to resilient the comments. reflects Operator? our of We'll on focus general the business independent overall my outlook and NextGen's shareholder market, Our questions. the

Operator

[Operator Instructions].

question comes Jeff first from Garro Our Piper Stanley. from

Jeffrey Garro

on don't assets. dental start we sale the of off the Why

the help So timing expected. while retaining specifics proceeds then the needed understand net you the FQHC us close assets any maybe And can deal of didn't first around assets? I support make and to and support update that and to ask strategically, wanted is resources maybe to sense it more related share divested

David Sides

question. Good Yes.

the are folks allocation would your support when keeping but been assets we modern the the... so looked capital divestiture health other focusing And standards. business have pieces big we the for assets better a give a to script, Jamie centers further, to it to of us about that To manage community divested a tribal details looked and point, the that all can and in for kind to FQHC, keep was the details. that we from at the way portfolio They technical any a So bring up dental date. lift at the them, and were perspective. thought return that

James Arnold

period. normal was transaction -- hold question -- for proceeds X-year back to when going of Your total prices $XX million with a closed close? is It is And is are sort purchase today. about the a the

in cash we be this the there'll is proceeds at -- quarter. And So point, the of use will... this

David Sides

on the sheet. Call balance cash it

James Arnold

balance the cash of other the All sheet. on

Jeffrey Garro

does on ongoing Excellent. front. That increased allow use this liquidity recent balance the the follow seem It flows to capital And could helps. your like actively allocation more and sheet. dental I'll plus cash sales up you

want I current get then to private So and M&A realistic. is getting on the process on thought whether versus company valuations ask what are your buybacks share more pulse

David Sides

your attractive. to So private on your we company is to first bias we're lag question, toward implied show valuations usually question, think answer valuations to get M&A our a the because to see starting be more private third public, and X-quarter

we towards did with we shares about buy back the quarter, M&A share a cash $XX.XX. say a repurchases, bias I'd though level, So have modest at over in

to price, is we but further we've we grow more can industry quickly shares strategic still get business talked preferred to and are buying what growth offer investments that the that an of products to to further we and when the use see see we double-digit cash at our that about. attractive them So the as

Operator

question Stephanie from next Securities. Our Davis comes SVP from

Stephanie Davis

for I that just looking finish there portfolio, to from thumb you question. any not divesting a are rule little your think growth either your strategy that what assets, keep? margins of is portfolio general more or When core of management in to on bit you you're about debating want

David Sides

grow a probably that for a right? at. aren't whole a that opportunity as are business, on trying we're we the to see look the say preference to or don't ones quickly as assets the take quickly we grow near-term have So growing XX% I'd going we're growth, closer the as to

are of the of that others portfolio seen where growing way of portfolio can with some that at our have We you've everything. adapt we've our we've seen Some partner. buy don't looked we of parts or doing those that are rapidly clients announcements, fill recent if business better, our in to to places parts

of There's So you've seen clients get our using more InstaMed market with partner were us recently InstaMed. about to there. where into half opportunity

we've so change. And made that

happen to So won't I see good like won't very you'll often, -- where it InstaMed see where it's already uptick. another just we accelerate example divestitures we us -- growth do actually, think that things be see client don't opportunities

Stephanie Davis

Understood.

on the given premium So less the of assets? focus margin in just side, a portfolio dental the

James Arnold

that you again, say Could Stephanie?

Stephanie Davis

side, for on dental the is there So less margin profile of assets? premium given focus a the the EBITDA

David Sides

is is question we our your Yes. I'd say think grow. I But mean about to both. bias and before was bias our where

if we're that getting XX% So they are to are how slower growth there that our the growing or are strategic at that look are them hard assets ones taking the than that ascribing to, business. either to a those profile we're

Stephanie Davis

really had growth the few going about of pace Hey, for speeds me. converting business. the of a lot Can to into follow-up Understood. of past that you the talk revenues? You've One strong bookings over booking side quarters.

guidance. why core curious revenue reiterated a was So there

David Sides

X in. only We're quarter

to year We'll There's see that how from do as So rest work still the a I'd We plays the said. did perspective. in out of reasonable say the exactly we quarter. had good, we've year.

Operator

comes from Jack Goenheim. Our Wallace question next from

Jack Wallace

just Two like hire are plan? any Where It quarter hiring I an hiring incremental for cadence? go on year? year, quarter. And color the you we faster be have as up you're fourth -- to schedule progress this on it, R&D we more, to a third, uptick to knew wanted let's in little the cadence could the goal last we Did been particularly behind coming there we through call catch the some there that get me. with lumpy year. or is a into would seemed liked have bit able to

David Sides

for and could We're get a backlog. help quarter. a HR make to good in a our us ours of more sales, that there, continue through the more that. There's looking with progress We to hire implementation people behind ramp good We sales focus team. that's

you to skills So install the the ramp next they have and get gen. people install to gen to next

But that a cost third there's to carrying cost the preferable is beginning, parties. in there. So using carrying

prudent we're that but mix, still there. So in hiring we're

I we're side, mainly for always think looking developers. on engineering good, the good

those any you on roles. way sent appreciated of resumes either X our So

James Arnold

to we caught caught I QX. just back, were largely. up we QX, But go up. QX, behind in We think Yes. have

the training talked with and about, with So of where implementation well to resources, we exception one expected caught the we're be. that up David pretty area

Jack Wallace

about gears, in a That's quarter Hub. Insights business, put Data helpful. Switching out the the release the press Insights

Just wondering any that's there's if more market you so release how and received in and that that, been activity bookings the far place taken could talk about a has little that if set bit out. press offering product

David Sides

are Which insights on you...

Jack Wallace

The hub? next-gen data

David Sides

Yes.

We're building hub, the uptick. data we good what's market, target next-gen approach, sales far, do pipeline on the how So force still there. the training so the that

it's really, year to exit QX was say our in that. some this goal with good But I'd impact behind small. nominal, So very momentum is

a point. early the no days, from yet really pipeline build, item but line revenue So in results this promising at

Operator

Instructions]. Samuel Anne from comes [Operator And our next from question JPMorgan.

Anne Samuel

could if business? to there's a utilization, I touch you're if any and what on was there payments wondering seeing little your maybe impact bit you

David Sides

Okay. Yes. Andy. Thanks,

So our from above an seeing from RCM of prepandemic perspective, we're we're still -- levels. there a kind use the elevated seeing clients from EDI

So think that's returned to continues. normal. We that

So there. we're not a seeing slowdown

and be bit changes still If that the see is the it little a for your around any elevated seems how thought year. don't comfortable we've We question to about we're there. at levels, with economy,

Anne Samuel

business, Great. the seeing we're that's just wondering particularly around given And of maybe environment. just RCM in on labor the hospital how some what going,

David Sides

so even services then those expand needs at we've have a our the a tailwind I they done for offering -- working or last they see Yes. we bit started labor In offering in perhaps AR. working environment as little quarter, market. The mentioned try looking be and good just difficulty we clients a We're piecemeal like view, is spot can SKU that for to started -- Claims It's that. question. that we our services actually work think

achieve you strategy $XX was before And $XX continue kind see will to about of new an competing increased to against helping lower were growth to about for when $XX expect where of their end switch. to financial so that drive clients offices is think the the sure they That -- that read dramatically many outcomes, not at hour the we has that normal. they're market be because us

especially So further looking we as hard see a clients for services have see us an opportunity. for We automate, they automation that and as to time recruiting. that

we're the business. So part of on that bullish

Operator

Garro comes Piper And from Jeff Stanley. our next from question

Jeffrey Garro

me. to wanted the One InstaMed I more on touch for partnership.

to Just partnership of and Google -- new expanded than there's more -- relationship? release wanted ask or kind stronger be a in the of you it what's think, recent too. offering maybe reference, interest, capabilities what's as Is And go-to-market client about level Apple could on of would I helpful, noticed, that adoption the there I that anything but well. Pay, of share level

David Sides

really off during piece for us pandemic. InstaMed So the took the

Our internally developed payment. contactless feature pay didn't support

pandemic, can so that became we were contactless that, both imagine supporting really the and in Apple And you a Google had who Pay. item InstaMed that and clients hot

And some has also nice how as features you and that's and attractive. a uptake, far as so other good go-to-market we client saw pieces collections manage

move and it really It's to guidance a piece. that way. say, more us, direction that and our let's move for in straightforward forward plans been was in that So decision in fairly

better. it didn't we broad what no good patient accept payments such and new the there's experience because a all But we change before. kinds with real like it -- using because comes compared indications there. we that offered clients range So functionality to that is have where of early are the

Operator

at program turn questions over David time. have the And it further we I to appears now back will Sides. this no

David Sides

good this the QX in it company. for your a and continued Thank earnings joining We thought quarter appreciate you, call. interest everyone, was

earnings think have Solid for months picking we we X good this quarter. of forward we to The again. talking and quarter next is for activity us. up momentum call. as we Thanks year, our look you and enter to fiscal through pace QX And fiscal

Stephanie Davis

This ladies gentlemen. today's and concludes conference. you, Thank

You may now disconnect.

Nextgen Healthcare (NXGN) 27 Jul 222023 Q1 Earnings call transcript