10-Q

UNITED STATES

SECURITIES and EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 001-12537

NEXTGEN HEALTHCARE, INC.

(Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation or organization)	95-2888568 (IRS Employer Identification No.)
Not Applicable(1) (Address of principal executive offices)	Not Applicable(1) (Zip Code)

Not Applicable(1)

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

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

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

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

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

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

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

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

The number of outstanding shares of the Registrant’s common stock as of October 20, 2023 was 67,096,894 shares.

(1)NextGen Healthcare, Inc. is a remote-first company and no longer maintains its principal executive office. For purposes of compliance with applicable requirements of the Securities Act of 1933, as amended, and Securities Exchange Act of 1934, as amended, stockholder communications required to be sent to our principal executive offices should be directed to the email address set forth in our proxy materials and/or identified on our investor relations website.

NEXTGEN HEALTHCARE, INC.

TABLE OF CONTENTS

FORM 10-Q

FOR THE THREE MONTHS ENDED September 30, 2023

	Item	Page
	PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements.	3
	Unaudited Condensed Consolidated Balance Sheets as of September 30, 2023 and March 31, 2023	3
	Unaudited Condensed Consolidated Statements of Net Income and Comprehensive Income for the six months ended September 30, 2023 and 2022	4
	Unaudited Statements of Condensed Consolidated Stockholders’ Equity for the six months ended September 30, 2023 and 2022	5
	Unaudited Condensed Consolidated Statements of Cash Flows for the six months ended September 30, 2023 and 2022	6
	Notes to Unaudited Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	29
Item 3.	Quantitative and Qualitative Disclosures about Market Risk.	42
Item 4.	Controls and Procedures.	42
	PART II. OTHER INFORMATION
Item 1.	Legal Proceedings.	43
Item 1A.	Risk Factors.	43
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	44
Item 3.	Defaults Upon Senior Securities.	44
Item 4.	Mine Safety Disclosure.	45
Item 5.	Other Information.	45
Item 6.	Exhibits.	46
	Signatures	47

2

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

NEXTGEN HEALTHCARE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except per share data)

(Unaudited)

	September 30, 2023			March 31, 2023
ASSETS
Current assets:
Cash and cash equivalents	$	53,867		$	98,719
Restricted cash and cash equivalents		4,914			7,269
Marketable securities		146,432			139,612
Accounts receivable, net		89,277			88,498
Contract assets		20,489			19,561
Income taxes receivable		8,134			5,248
Prepaid expenses and other current assets		39,684			42,916
Total current assets		362,797			401,823
Equipment and improvements, net		4,939			6,421
Capitalized software costs, net		59,875			54,516
Operating lease assets		2,615			3,335
Deferred income taxes, net		29,210			29,472
Contract assets, net of current		5,616			5,572
Intangibles, net		24,480			28,968
Goodwill		322,001			321,756
Other assets		46,217			44,238
Total assets	$	857,750		$	896,101
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	10,467		$	12,022
Contract liabilities		45,932			61,601
Accrued compensation and related benefits		28,407			36,241
Income taxes payable		604			622
Operating lease liabilities		3,471			3,826
Other current liabilities		54,997			83,799
Total current liabilities		143,878			198,111
Contract liabilities, net of current		2,809			10,310
Deferred compensation		8,722			8,033
Convertible senior notes, net, noncurrent		267,565			266,843
Operating lease liabilities, net of current		2,464			4,095
Other noncurrent liabilities		9,037			8,274
Total liabilities		434,475			495,666
Commitments and contingencies (Note 17)
Shareholders' equity:
Common stock, $0.01 par value; authorized 100,000 shares; 71,946 shares and 70,875 shares issued at September 30, 2023 and March 31, 2023, respectively; 67,097 shares and 66,026 shares outstanding at September 30, 2023 and March 31, 2023, respectively		719			709
Treasury stock, at cost, 4,849 shares and 4,849 shares at September 30, 2023 and March 31, 2023, respectively		(85,752	)		(85,752	)
Additional paid-in capital		371,080			359,342
Accumulated other comprehensive loss		(1,581	)		(1,462	)
Retained earnings		138,809			127,598
Total shareholders' equity		423,275			400,435
Total liabilities and shareholders' equity	$	857,750		$	896,101

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

3

NEXTGEN HEALTHCARE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF NET INCOME AND COMPREHENSIVE INCOME

(In thousands, except per share data)

(Unaudited)

	Three Months Ended September 30,						Six Months Ended September 30,
	2023			2022			2023			2022
Revenues:
Recurring	$	161,316		$	143,503		$	324,690		$	283,262
Software, hardware, and other non-recurring		15,102			15,940			29,935			29,483
Total revenues		176,418			159,443			354,625			312,745
Cost of revenue:
Recurring		75,585			65,039			154,806			127,283
Software, hardware, and other non-recurring		12,031			10,797			24,205			21,473
Amortization of capitalized software costs and acquired intangible assets		7,181			6,744			14,172			13,878
Total cost of revenue		94,797			82,580			193,183			162,634
Gross profit		81,621			76,863			161,442			150,111
Operating expenses:
Selling, general and administrative		54,175			44,886			102,368			93,920
Research and development costs, net		18,020			20,857			38,945			42,652
Amortization of acquired intangible assets		1,189			705			2,377			1,410
Impairment of assets		166			805			525			1,329
Restructuring costs		15			321			105			321
Total operating expenses		73,565			67,574			144,320			139,632
Income from operations		8,056			9,289			17,122			10,479
Interest income		1,520			74			3,189			120
Interest expense		(3,310	)		(325	)		(6,549	)		(655	)
Other income, net		430			10,292			1,480			10,287
Income before provision for income taxes		6,696			19,330			15,242			20,231
Provision for income taxes		1,641			5,707			4,031			5,460
Net income	$	5,055		$	13,623		$	11,211		$	14,771
Other comprehensive income:
Foreign currency translation, net of tax		(76	)		(5	)		(77	)		(33	)
Unrealized gain (loss) on marketable securities, net of tax		734			—			(42	)		—
Comprehensive income	$	5,713		$	13,618		$	11,092		$	14,738
Net income per share:
Basic	$	0.08		$	0.20		$	0.17		$	0.22
Diluted	$	0.07		$	0.20		$	0.17		$	0.22
Weighted-average shares outstanding:
Basic		67,074			67,806			66,749			67,698
Diluted		67,690			68,422			67,280			68,353

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

4

NEXTGEN HEALTHCARE, INC.

STATEMENTS OF CONDENSED CONSOLIDATED STOCKHOLDERS’ EQUITY

(In thousands)

(Unaudited)

	Six Months Ended September 30, 2023
								Additional					Accumulated Other			Total
	Common Stock				Treasury			Paid-in			Retained		Comprehensive			Shareholders'
	Shares		Amount		Stock			Capital			Earnings		Income (Loss)			Equity
Balance, March 31, 2023		66,026	$	709	$	(85,752	)	$	359,342		$	127,598	$	(1,462	)	$	400,435
Common stock issued under stock plans, net of shares withheld for taxes		1,017		10		—			(3,258	)		—		—			(3,248	)
Stock-based compensation		—		—		—			7,956			—		—			7,956
Components of other comprehensive income:
Unrealized loss on marketable securities		—		—		—			—			—		(776	)		(776	)
Translation adjustments		—		—		—			—			—		(1	)		(1	)
Net income		—		—		—			—			6,156		—			6,156
Balance, June 30, 2023		67,043		719		(85,752	)		364,040			133,754		(2,239	)		410,522
Common stock issued under stock plans, net of shares withheld for taxes		54		—		—			(2,426	)		—		—			(2,426	)
Stock-based compensation		—		—		—			9,466			—		—			9,466
Components of other comprehensive income:
Reclassification of unrealized loss on marketable securities		—		—		—			—			—		734			734
Translation adjustments		—		—		—			—			—		(76	)		(76	)
Net income		—		—		—			—			5,055		—			5,055
Balance, September 30, 2023		67,097		719		(85,752	)		371,080			138,809		(1,581	)		423,275

	Six Months Ended September 30, 2022
									Additional					Accumulated Other			Total
	Common Stock					Treasury			Paid-in			Retained		Comprehensive			Shareholders'
	Shares			Amount		Stock			Capital			Earnings		Income (Loss)			Equity
Balance, March 31, 2022		67,075		$	692	$	(35,874	)	$	329,917		$	130,252	$	(1,909	)	$	423,078
Common stock issued under stock plans, net of shares withheld for taxes		1,137			12		—			(1,612	)		—		—			(1,600	)
Stock-based compensation		—			—		—			8,766			—		—			8,766
Repurchase of common stock (1)		(148	)		—		(2,505	)		—			—		—			(2,505	)
Components of other comprehensive income:
Translation adjustments		—			—		—			—			—		(28	)		(28	)
Net income		—			—		—			—			1,148		—			1,148
Balance, June 30, 2022		68,064			704		(38,379	)		337,071			131,400		(1,937	)		428,859
Common stock issued under stock plans, net of shares withheld for taxes		(31	)		—		—			(1,949	)		—		—			(1,949	)
Stock-based compensation		—			—		—			8,687			—		—			8,687
Repurchase of common stock (2)		(428	)		—		(7,373	)		—			—		—			(7,373	)
Components of other comprehensive loss:																		—
Translation adjustments		—			—		—			—			—		(5	)		(5	)
Net income		—			—		—			—			13,623		—			13,623
Balance, September 30, 2022		67,605			704		(45,752	)		343,809			145,023		(1,942	)		441,842

(1)Weighted-average repurchase price (dollars per share) for the three months ended June 30, 2022 was $16.93.

(2)Weighted-average repurchase price (dollars per share) for the three months ended September 30, 2022 was $17.21.

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

5

NEXTGEN HEALTHCARE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Six Months Ended September 30,
	2023			2022
Cash flows from operating activities:
Net income	$	11,211		$	14,771
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of capitalized software costs		12,061			10,725
Amortization of debt issuance costs		976			254
Amortization of other intangibles		4,488			4,564
Net amortization (accretion) of premiums/discounts on marketable securities		(1,956	)		—
Change in fair value of contingent consideration		400			—
Depreciation		2,064			2,646
Excess tax deficiency (benefit) from share-based compensation		170			(434	)
Gain on disposition of Commercial Dental assets		—			(10,296	)
Impairment of assets		171			1,329
Realized loss on marketable securities		734			—
Loss on disposal of equipment and improvements		37			74
Loss on foreign currency exchange rates		100			7
Non-cash operating lease costs		763			1,682
Provision for bad debts		1,826			600
Share-based compensation		17,422			17,453
Changes in assets and liabilities:
Accounts receivable		(2,606	)		(1,527	)
Contract assets		(972	)		(2	)
Accounts payable		(1,571	)		3,153
Contract liabilities		(23,170	)		1,739
Accrued compensation and related benefits		(7,802	)		(20,422	)
Income taxes		(2,825	)		3,934
Deferred compensation		689			(249	)
Operating lease liabilities		(1,979	)		(4,097	)
Other assets and liabilities		(27,746	)		7,892
Net cash provided by (used in) operating activities		(17,515	)		33,796
Cash flows from investing activities:
Additions to capitalized software costs		(17,420	)		(18,416	)
Additions to equipment and improvements		(854	)		(1,426	)
Proceeds from sales of marketable securities		15,457			—
Proceeds from maturities and redemptions of marketable securities		42,871			—
Purchases of marketable securities		(63,942	)		—
Proceeds from disposition of Commercial Dental assets		—			11,253
Net cash used in investing activities		(23,888	)		(8,589	)
Cash flows from financing activities:
Proceeds from issuance of shares under employee plans		1,430			2,575
Repurchase of common stock		—			(9,878	)
Payments for taxes related to net share settlement of equity awards		(7,104	)		(6,124	)
Net cash used in financing activities		(5,674	)		(13,427	)
Effect of exchange rate changes on cash and cash equivalents		(130	)		(219	)
Net increase (decrease) in cash, cash equivalents, and restricted cash		(47,207	)		11,561
Cash, cash equivalents, and restricted cash at beginning of period		105,988			66,747
Cash, cash equivalents, and restricted cash at end of period	$	58,781		$	78,308
Supplemental disclosures of cash flow information:
Cash paid for income taxes	$	6,689		$	1,963
Cash refunds from income taxes		4			9
Cash paid for interest		5,723			190
Cash paid for amounts included in the measurement of operating lease liabilities		2,127			4,533
Operating lease assets obtained in exchange for operating lease liabilities		585			—
Accrued purchases of equipment and improvements		20			144

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

6

NEXTGEN HEALTHCARE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTES INDEX

Note		Page
Note 1	Summary of Significant Accounting Policies	8
Note 2	Revenue from Contracts with Customers	8
Note 3	Accounts Receivable	11
Note 4	Fair Value Measurements	12
Note 5	Investments	13
Note 6	Leases	14
Note 7	Business Combinations and Disposals	15
Note 8	Goodwill	17
Note 9	Intangible Assets	17
Note 10	Capitalized Software Costs	18
Note 11	Debt	18
Note 12	Composition of Certain Financial Statement Captions	20
Note 13	Income Taxes	22
Note 14	Earnings Per Share	23
Note 15	Stockholders' Equity	23
Note 16	Concentration of Credit Risk	26
Note 17	Commitments, Guarantees and Contingencies	27

7

NEXTGEN HEALTHCARE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except shares and per share data)

(Unaudited)

1. Summary of Significant Accounting Policies

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

Pending Merger. On September 5, 2023, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Next Holdco, LLC, a Delaware limited liability company (“Parent”), and Next Merger Sub, Inc., a Delaware corporation and direct wholly owned subsidiary of Parent (“Merger Sub”), pursuant to which, and on the terms and subject to the conditions thereof, Merger Sub will merge with and into the Company, with the Company surviving as a wholly owned subsidiary of Parent (the “Merger”). Parent and Merger Sub are affiliates of Thoma Bravo Discover Fund IV, L.P., an investment fund managed by Thoma Bravo, L.P.

Subject to the terms and conditions of the Merger Agreement, each share of Company common stock, par value $0.01 per share that is issued and outstanding immediately prior to the effective time of the Merger (except for certain shares specified in the Merger Agreement) will be canceled and extinguished and automatically converted into the right to receive $23.95 per share in cash, without interest and subject to any applicable withholding taxes.

Upon completion of the transaction, which is expected to close in the fourth calendar quarter of 2023, our common stock will no longer be listed on any public stock exchange.

Basis of Presentation. The accompanying unaudited condensed consolidated financial statements as of September 30, 2023 and for the three and six months ended September 30, 2023 have been prepared in accordance with the requirements of Quarterly Report on Form 10-Q and Article 10 of the Securities and Exchange Commission Regulation S-X and therefore do not include all information and notes which would be presented were such condensed consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements presented in our Annual Report on Form 10-K for the fiscal year ended March 31, 2023. In the opinion of management, the accompanying condensed consolidated financial statements reflect all adjustments which are necessary for a fair statement of the results of operations and cash flows for the periods presented. The results of operations for such interim periods are not necessarily indicative of results of operations to be expected for the full year.

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

Use of Estimates. The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”), which requires us to make estimates and assumptions that affect the amounts reported and disclosed in the consolidated financial statements and the accompanying notes. Actual results could differ materially from these estimates. We evaluate our estimates on an ongoing basis. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and recording revenue and expenses during the period.

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

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

2. Revenue from Contracts with Customers

Revenue Recognition and Performance Obligations

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

The total transaction price is allocated to each performance obligation within a contract based on estimated standalone selling prices. We generally determine standalone selling prices based on the prices charged to customers, except for certain software licenses that are based on the residual approach because their standalone selling prices are highly variable and certain maintenance customers that are based on substantive renewal rates. In instances where standalone selling price is not sufficiently

8

observable, such as revenue cycle management ("RCM") services and software licenses included in our RCM arrangements, we estimate standalone selling price utilizing an expected cost plus a margin approach. When standalone selling prices are not observable, significant judgment is required in estimating the standalone selling price for each performance obligation.

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

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

The following table presents our revenues disaggregated by our major revenue categories and by occurrence:

	Three Months Ended September 30,				Six Months Ended September 30,
	2023		2022		2023		2022
Recurring revenues:
Subscription services	$	50,263	$	43,416	$	102,761	$	86,175
Support and maintenance		37,561		38,150		76,070		77,288
Managed services		35,063		31,055		69,822		61,700
Transactional and data services		38,429		30,882		76,037		58,099
Total recurring revenues		161,316		143,503		324,690		283,262
Software, hardware, and other non-recurring revenues:
Software license and hardware		5,521		7,916		10,492		14,115
Other non-recurring services		9,581		8,024		19,443		15,368
Total software, hardware and other non-recurring revenues		15,102		15,940		29,935		29,483
Total revenues	$	176,418	$	159,443	$	354,625	$	312,745

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

We generally recognize revenue for our most significant performance obligations as follows:

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

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

Managed services. Managed services consist primarily of RCM and related services, but also includes our hosting services, which we refer to as managed cloud services, transcription services, and certain other recurring services. Performance obligations associated with RCM services are satisfied over time as the customer simultaneously receives and consumes the benefits of the services executed throughout the contract period. The majority of service fees under our RCM arrangements are variable consideration contingent upon collections by our clients. We estimate the variable consideration which we expect to be entitled to over the noncancelable contract term associated with our RCM service arrangements. The estimate of variable consideration included in the transaction price typically involves estimating the amounts we will ultimately collect on behalf of our clients and the relative fee we charge that is generally calculated as a percentage of those collections. Inputs to these estimates include, but are

9

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

Transactional and data services. Performance obligations related to transactional and data services, including electronic data interchange (“EDI”), patient pay, and other transaction processing services are satisfied at the point in time the services are rendered or delivered. The transfer of control occurs when the transactional and data services are delivered and the customer receives the benefits from the services provided. Revenue is recognized as such services are rendered.

Beginning in fiscal year 2023, to align the presentation of disaggregated revenue with the manner in which management reviews such information, the presentation of disaggregated revenues by major revenue categories was revised to reclassify revenues related to patient pay services and certain other services from the managed services category into the transactional and data services category, which replaced the prior EDI and data services category. The prior period presentation of revenues disaggregated by major revenue categories and by occurrence above has been reclassified to conform with current period presentation.

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

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

Transaction Price Allocated to Remaining Performance Obligations

As of September 30, 2023, the aggregate amount of transaction price related to remaining unsatisfied or partially unsatisfied performance obligations over the respective noncancelable contract term was approximately $726,000, of which we expect to recognize approximately 6% as services are rendered or goods are delivered, 53% over the next 12 months, and the remainder thereafter.

As of September 30, 2022, the aggregate amount of transaction price related to remaining unsatisfied or partially unsatisfied performance obligations over the respective noncancelable contract term was approximately $563,900, of which we expect to recognize approximately 9% as services are rendered or goods are delivered, 51% over the next 12 months, and the remainder thereafter.

Contract Balances

Contract balances result from the timing differences between our revenue recognition, invoicing, and cash collections. Such contract balances include accounts receivables, contract assets and liabilities, and other customer deposits and liabilities balances. Accounts receivables include invoiced amounts where the right to receive payment is unconditional and only subject to the passage of time. Contract assets, consisting of unbilled receivables, include amounts where revenue recognized exceeds the amount invoiced to the customer and the right to payment is not solely subject to the passage of time. Contract assets are generally associated with our sales of software licenses, but may also be associated with other performance obligations such as subscription services, support and maintenance, annual libraries, and professional services, where control has been transferred to our customers but the associated payments are based on future customer collections (in the case of our RCM service arrangements) or based on future milestone payment due dates. In such instances, the revenue recognized may exceed the amount invoiced to the customer and such balances are included in contract assets since our right to receive payment is not unconditional, but rather is conditional upon customer collections or the continued functionality of the software and our ongoing support and maintenance obligations. Contract liabilities consist mainly of fees invoiced or paid by our clients for which the associated services have not been performed and revenues have not been recognized. Contract assets and contract liabilities are reported in a net position on an individual contract basis at the end of each reporting period. Contract assets are classified as current or long-term on our consolidated balance sheets based on the timing of when we expect to complete the related performance obligations and invoice

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the customer. Contract liabilities are classified as current on our consolidated balance sheets since the revenue recognition associated with the related customer payments and invoicing is expected to occur within the next twelve months.

During the three months ended September 30, 2023 and 2022, we recognized $18,672 and $17,521 respectively, of revenues that were included in the contract liability balance or invoiced to customers since the beginning of the corresponding periods. During the six months ended September 30, 2023 and 2022, we recognized $36,917 and $35,245, respectively, of revenues that were included in the contract liability balance or invoiced to customers since the beginning of the corresponding periods.

Our contracts with customers do not include any major financing components.

Costs to Obtain or Fulfill a Contract

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

Capitalized commissions costs were $41,862 as of September 30, 2023, of which $14,363 is classified as current and included as prepaid expenses and other current assets and $27,498 is classified as long-term and included within other assets on our condensed consolidated balance sheets, based on the expected timing of expense recognition.

During the three months ended September 30, 2023 and 2022, we recognized $4,356 and $3,634, respectively, of commissions expense. During the six months ended September 30, 2023 and 2022, we recognized $8,329 and $7,121, respectively, of commissions expense. Commissions expense primarily relates to the amortization of capitalized commissions costs, which is included as a selling, general and administrative expense in the consolidated statements of net income and comprehensive income.

3. Accounts Receivable

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

	September 30, 2023			March 31, 2023
Accounts receivable, gross	$	93,289		$	92,360
Allowance for credit losses		(4,012	)		(3,862	)
Accounts receivable, net	$	89,277		$	88,498

The following table represents the changes in the allowance for credit losses, as of and for the three months ended September 30, 2023:

Balance as of June 30, 2023	$	(3,906	)
Additions charged to costs and expenses		(951	)
Deductions		845
Balance as of September 30, 2023	$	(4,012	)

The following table represents the changes in the allowance for credit losses, as of and for the six months ended September 30, 2023:

Balance as of March 31, 2023	$	(3,862	)
Additions charged to costs and expenses		(1,826	)
Deductions		1,676
Balance as of September 30, 2023	$	(4,012	)

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4. Fair Value Measurements

The following tables set forth by level within the fair value hierarchy our financial assets and liabilities that were accounted for at fair value on a recurring basis at September 30, 2023 and March 31, 2023:

	Balance At		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Unobservable Inputs
	September 30, 2023		(Level 1)		(Level 2)		(Level 3)
ASSETS
Cash and money market funds	$	52,077	$	52,077	$	—	$	—
Commercial paper		1,790		—		1,790		—
Total cash and cash equivalents		53,867		52,077		1,790		—
Restricted cash and cash equivalents		4,914		4,914		—		—
United States treasury securities		70,937		—		70,937		—
Agency securities		32,732		—		32,732		—
Corporate notes and bonds		25,984		—		25,984		—
Commercial paper		16,779		—		16,779		—
Total marketable securities		146,432		—		146,432		—
TOTAL ASSETS	$	205,213	$	56,991	$	148,222	$	—
LIABILITIES
Contingent consideration related to acquisitions	$	4,200	$	—	$	—	$	4,200
Convertible senior notes, net, noncurrent		267,565		—		267,565		—
TOTAL LIABILITIES	$	271,765	$	—	$	267,565	$	4,200

	Balance At		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Unobservable Inputs
	March 31, 2023		(Level 1)		(Level 2)		(Level 3)
ASSETS
Cash and money market funds	$	73,754	$	73,754	$	—	$	—
Commercial paper		10,795		—		10,795		—
United States treasury securities		9,979		—		9,979		—
Corporate notes and bonds		3,349		—		3,349		—
Agency securities		842		—		842		—
Total cash and cash equivalents		98,719		73,754		24,965		—
Restricted cash and cash equivalents		7,269		7,269		—		—
United States treasury securities		56,890		—		56,890		—
Agency securities		37,991		—		37,991		—
Corporate notes and bonds		26,590		—		26,590		—
Commercial paper		18,141		—		18,141		—
Total marketable securities		139,612		—		139,612		—
TOTAL ASSETS	$	245,600	$	81,023	$	164,577	$	—
LIABILITIES
Contingent consideration related to acquisitions	$	3,800	$	—	$	—	$	3,800
Convertible senior notes, net, noncurrent		266,843		—		266,843		—
TOTAL LIABILITIES	$	270,643	$	—	$	266,843	$	3,800

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We classify our highly liquid money market funds within Level 1 of the fair value hierarchy because they are valued based on quoted market prices in active markets. We classify our United States treasury securities, corporate notes and bonds, agency securities, and commercial paper within Level 2 of the fair value hierarchy because they are valued using inputs other than quoted prices that are directly or indirectly observable in the market, including readily available pricing sources for the identical underlying security that may not be actively traded.

The following table presents activity in our financial assets and liabilities measured at fair value using significant unobservable inputs (Level 3), as of and for the three months ended September 30, 2023:

	Total Liabilities
Balance as of March 31, 2023	$	3,800
Fair value adjustments		400
Balance as of September 30, 2023	$	4,200

As of September 30, 2023, the contingent consideration liability balance related to the acquisition of TSI Healthcare, LLC (See Note 7) was $4,200, which reflects a $400 fair value adjustment for the six months ended September 30, 2023. The categorization of the framework used to measure fair value of the contingent consideration liability is within the Level 3 valuation hierarchy due to the subjective nature of the unobservable inputs used. We assess the fair value of the contingent consideration liability on a recurring basis and any adjustments to fair value subsequent to the measurement period are reflected in the consolidated statements of net income and comprehensive income. Key assumptions included probability-adjusted achievement estimates of applicable revenue targets that were not observable in the market. The fair value adjustments to contingent consideration liabilities are included as a component of selling, general and administrative expense in the consolidated statements of net income and comprehensive income. There are no other assets or liabilities accounted for utilizing unobservable inputs (Level 3) as of September 30, 2023.

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

Non-Recurring Fair Value Measurements

We have certain assets, including goodwill and other intangible assets, which are measured at fair value on a non-recurring basis and are adjusted to fair value only if an impairment charge is recognized. The categorization of the framework used to measure fair value of the assets is considered to be within the Level 3 valuation hierarchy due to the subjective nature of the unobservable inputs used.

5. Investments

The following table summarizes the fair value of our investments and marketable securities as of September 30, 2023:

	September 30, 2023
	Amortized Cost		Fair Value
Commercial paper	$	1,790	$	1,790
Money market funds		20,477		20,477
Total cash and cash equivalents		22,267		22,267
United States treasury securities		70,937		70,937
Agency securities		32,732		32,732
Corporate notes and bonds		25,984		25,984
Commercial paper		16,779		16,779
Total marketable securities		146,432		146,432
Total investments	$	168,699	$	168,699

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	March 31, 2023
	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
Commercial paper	$	10,795	$	—	$	—		$	10,795
United States treasury securities		9,977		2		—			9,979
Money market funds		5,976		—		—			5,976
Corporate notes and bonds		3,349		—		—			3,349
Agency securities		842		—		—			842
Total cash and cash equivalents		30,939		2		—			30,941
United States treasury securities		56,795		99		(4	)		56,890
Agency securities		37,999		16		(24	)		37,991
Corporate notes and bonds		26,631		14		(55	)		26,590
Commercial paper		18,147		—		(6	)		18,141
Total marketable securities		139,572		129		(89	)		139,612
Total investments	$	170,511	$	131	$	(89	)	$	170,553

At September 30, 2023, we determined it was more likely than not we would sell our investments before recovery of their amortized cost basis. In the three months ending September 30, 2023, we wrote down the amortized cost basis of our investments to fair value and reclassified $734 in net unrealized losses out of accumulated comprehensive income into other income, net in the consolidated statements of net income and comprehensive income.

The following table presents the contractual maturities of our investments and marketable securities as September 30, 2023:

	Amortized Cost		Fair Value
Due within one year	$	123,457	$	123,457
Due after one year through five years		45,242		45,242
Total		168,699		168,699

6. Leases

Our leasing arrangements are reflected on the balance sheet as right-of-use assets and liabilities pertaining to the rights and obligations created by the leased assets.

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

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

Operating lease costs are recognized on a straight-line basis over the lease term and included as a selling, general and administrative expense in the condensed consolidated statements of net income and comprehensive income. Total operating lease costs were $231 and $708 for the three months ended September 30, 2023 and 2022, respectively. Total operating lease costs were $706 and $1,650 for the six months ended September 30, 2023 and 2022, respectively.

Components of operating lease costs are summarized as follows:

	Three Months Ended September 30,						Six Months Ended September 30,
	2023			2022			2023			2022
Operating lease costs	$	393		$	788		$	1,014		$	1,737
Variable lease costs		138			160			319			334
Less: Sublease income		(300	)		(240	)		(627	)		(421	)
Total operating lease costs	$	231		$	708		$	706		$	1,650

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

	Three Months Ended September 30,				Six Months Ended September 30,
	2023		2022		2023		2022
Cash paid for amounts included in the measurement of operating lease liabilities	$	983	$	2,225	$	2,127	$	4,533
Operating lease assets obtained in exchange for operating lease liabilities		—		—		585		—

We have operating lease agreements for our offices in the United States and India with lease periods expiring between 2024 and 2028. As of September 30, 2023, our operating leases had a weighted average remaining lease term of 1.9 years and a weighted average discount rate of 4.4%. Future minimum aggregate lease payments under operating leases as of September 30, 2023 are summarized as follows:

For the year ended March 31,
2024	$	1,815
2025		3,520
2026		572
2027		143
2028		150
2029 and beyond		13
Total future lease payments		6,213
Less interest		(278	)
Total lease liabilities	$	5,935

In the three and six months ended September 30, 2023, we recorded impairments of $166 and $525 to our right-of-use assets and certain related fixed assets associated with the vacated locations, or portions thereof, in St. Louis, Hunt Valley, and Cary based on projected sublease rental income and estimated sublease commencement dates and the early termination of a portion of our St. Louis lease.

In the three and six months ended September 30, 2022 we vacated portions of certain leased locations and recorded impairments of $805 and $1,329, respectively, to our right-of-use assets and certain related fixed assets associated with the vacated locations or portions thereof, in St. Louis, Atlanta, Horsham, and Bangalore based on projected sublease rental income and estimated sublease commencement dates and the remeasurement of our operating lease liability associated with the modification of our St. Louis lease.

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

7. Business Combinations and Disposals

Acquisition of TSI Healthcare, LLC

On November 30, 2022, we completed the acquisition of TSI Healthcare, LLC ("TSI") pursuant to a securities purchase agreement dated November 30, 2022. TSI is based in Chapel Hill, NC and is a value-added reseller of NextGen Practice Management and Electronic Health Record software and solutions.

The purchase price was $50,449, subject to customary working capital and other adjustments. Additionally, under the provisions of the securities purchase agreement, we may pay up to an additional $22,000 of cash contingent consideration in the form of an earnout, subject to TSI achieving certain revenue targets through March 2025. The initial fair value of the contingent consideration was $3,700, which was estimated using a Monte Carlo simulation in a risk-neutral framework. The purchase price of TSI is summarized in the table below. The acquisition of TSI was funded by cash flows from operations and cash proceeds from our convertible senior notes (see Note 11).

We accounted for the acquisition as a business combination using the acquisition method of accounting. The purchase price was allocated to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date. The fair values of acquired assets and liabilities assumed represent management’s estimate of fair value. During the six months ended September 30, 2023, we recorded a measurement period adjustment of $245 to our goodwill associated with the filing of final tax returns. The purchase price allocation of the TSI acquisition was considered final as of September 30, 2023.

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Identifiable intangible assets acquired from TSI include re-acquired rights, customer relationships, and data health database. The fair values of the acquired intangible assets were determined using the distributor method of the income approach for customer relationships and the multi-period excess earnings method of the income approach for re-acquired rights and the data health database. The valuation model inputs involved the use of significant assumptions, such as distributor margin and discount rate for customer relationships and revenue forecasts, cost of sales and operating expenses as a percentage of revenue, distributor margin, and discount rate for re-acquired rights, which required the application of significant judgment by management. Goodwill represents the excess of the purchase price over the net identifiable assets acquired and liabilities assumed. Goodwill primarily represents, among other factors, the value of synergies expected to be realized and the assemblage of all assets that enable us to create new client relationships, neither of which qualify as separate amortizable intangible assets. Goodwill arising from the acquisition of TSI is considered deductible for tax purposes.

	Purchase Price
Initial purchase price	$	50,449
Fair value of contingent consideration		3,700
Payment for option to early terminate lease		2,000
Working capital adjustment		(430	)
Total purchase price	$	55,719
Fair value of the net tangible assets acquired and liabilities assumed:
Cash and cash equivalents	$	717
Accounts receivable		2,011
Contract assets		1,415
Prepaid expense and other assets		308
Equipment and improvements		879
Contract assets, net of current		2,581
Operating lease assets		957
Deferred income tax asset		1,028
Other assets		50
Accounts payable		(1,773	)
Accrued compensation and related benefits		(917	)
Contract liabilities		(6,247	)
Operating lease liabilities		(533	)
Other current liabilities		(964	)
Contract liabilities, net of current		(11,644	)
Operating lease liabilities, net of current		(639	)
Total net tangible assets acquired and liabilities assumed		(12,771	)
Fair value of identifiable intangible assets acquired:
Goodwill		54,790
Re-acquired rights		6,250
Customer relationships		5,500
Data health database		1,950
Total identifiable intangible assets acquired		68,490
Total purchase price	$	55,719

The re-acquired rights intangible asset will be amortized over 4 years, the acquired customer relationships intangible assets will be amortized over 11 years, and the acquired data health database intangible asset will be amortized over 3 years. The weighted average amortization period for the acquired TSI intangible assets is 6.8 years.

The results of operations of TSI have been included in our consolidated results of operations since the date of acquisition. The results of operations of TSI were not material to our consolidated results of operations for the six months ended September 30, 2023.

Disposition of Commercial Dental Assets

On July 26, 2022, we executed an Asset Purchase Agreement for the sale of certain non-strategic dental related (“Commercial Dental”) assets for $12,000, subject to certain holdback and other adjustments. Total consideration consisted of $11,253 in cash received and $600 additional cash expected to be received approximately twelve months from the close date. We recognized a gain on disposition of $10,296 in our consolidated statement of net income and comprehensive income as a component of other income (expense). The gain was measured as the total consideration received and expected to be received, less net assets and liabilities included in the transaction, consisting primarily of previously capitalized dental related software development costs, and contract liabilities, less direct incremental transaction costs. The impact of the disposition was not significant and does not qualify for

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reporting as a discontinued operation because it did not represent a strategic shift that would have a major effect on our operations and financial results.

8. Goodwill

We test goodwill for impairment annually during our first fiscal quarter, referred to as the annual test date. We will also test for impairment between annual test dates if an event occurs or circumstances change that would indicate the carrying amount may be impaired. Impairment testing for goodwill is performed at a reporting-unit level, which is defined as an operating segment or one level below an operating segment (referred to as a component). We operate as one segment and have a single reporting unit. The measures evaluated by our chief operating decision maker ("CODM"), consisting of the Chief Executive Officer, to assess company performance and make decisions about the allocation of resources include consolidated revenue and consolidated operating results.

We have not identified any events or circumstances as of September 30, 2023 that would require an interim goodwill impairment test.

We do not amortize goodwill as it has been determined to have an indefinite useful life. The carrying amount of goodwill was $322,001 and $321,756 as of September 30, 2023 and March 31, 2023, respectively.

9. Intangible Assets

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

	September 30, 2023
	Customer Relationships			Trade Names			Software Technology			Re-acquired Rights			Data Health Database			Total
Gross carrying amount	$	44,700		$	250		$	22,500		$	6,250		$	1,950		$	75,650
Accumulated amortization		(34,489	)		(191	)		(14,646	)		(1,302	)		(542	)		(51,170	)
Net intangible assets	$	10,211		$	59		$	7,854		$	4,948		$	1,408		$	24,480
	March 31, 2023
	Customer Relationships			Trade Names			Software Technology			Re-acquired Rights			Data Health Database			Total
Gross carrying amount	$	44,700		$	250		$	25,700		$	6,250		$	1,950		$	78,850
Accumulated amortization		(32,918	)		(166	)		(16,060	)		(521	)		(217	)		(49,882	)
Net intangible assets	$	11,782		$	84		$	9,640		$	5,729		$	1,733		$	28,968

Amortization expense related to the customer relationships, trade names, and re-acquired rights intangible assets recorded as operating expenses in the consolidated statements of net income and comprehensive income was $1,189 and $705 for the three months ended September 30, 2023 and 2022, respectively. Amortization expense related to the software technology and data health database intangible assets recorded as cost of revenue was $1,055 and $1,373 for the three months ended September 30, 2023 and 2022, respectively.

Amortization expense related to the customer relationships, trade names, and re-acquired rights intangible assets recorded as operating expenses in the condensed consolidated statements of net income and comprehensive income was $2,377 and $1,410 for the six months ended September 30, 2023 and 2022, respectively. Amortization expense related to software technology and data health database intangible assets recorded as cost of revenue was $2,111 and $3,154 for the six months ended September 30, 2023 and 2022, respectively.

During the six months ended September 30, 2023, we retired $3,200 of fully amortized software technology related to our Inforth acquisition.

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The following table summarizes the remaining estimated amortization of definite-lived intangible assets as of September 30, 2023:

	Estimated Remaining Amortization Expense
	Operating Expense		Cost of Revenue		Total
For the year ended March 31,
2024	$	2,377	$	2,111	$	4,488
2025		4,180		4,223		8,403
2026		3,596		2,684		6,280
2027		2,232		244		2,476
2028 and beyond		2,833		—		2,833
Total	$	15,218	$	9,262	$	24,480

10. Capitalized Software Costs

Our capitalized software costs are summarized as follows:

	September 30, 2023			March 31, 2023
Gross carrying amount	$	139,371		$	131,791
Accumulated amortization		(79,496	)		(77,275	)
Net capitalized software costs	$	59,875		$	54,516

Amortization expense related to capitalized software costs was $6,125 and $5,371 for the three months ended September 30, 2023 and 2022, respectively, and is recorded as cost of revenue in the condensed consolidated statements of net income and comprehensive income.

Amortization expense related to capitalized software costs was $12,061, and $10,725 for the six months ended September 30, 2023 and 2022, respectively.

During the six months ended September 30, 2023, we retired $9,841 of fully amortized capitalized software costs that are no longer being utilized by our client base.

The following table presents the remaining estimated amortization of capitalized software costs as of September 30, 2023. The estimated amortization is comprised of (i) amortization of released products and (ii) the expected amortization for products that are not yet available for sale based on their estimated economic lives and projected general release dates.

For the year ended March 31,
2024	$	17,100
2025		24,100
2026		13,400
2027		5,275
Total	$	59,875

11. Debt

Convertible Senior Notes

On November 1, 2022, we issued $275,000 in aggregate principal amount of 3.75% Convertible Senior Notes due 2027 (“Notes”). The Notes were issued pursuant to, and are governed by, an indenture, dated as of November 1, 2022 (“Indenture”), between the Company and U.S. Bank Trust Company, National Association, as trustee. Net proceeds from the issuance of the Notes were approximately $266,517, after deducting issuance costs totaling $8,483.

The Notes will accrue interest at a rate of 3.75% per annum, payable semi-annually in arrears on May 15 and November 15 of each year, beginning on May 15, 2023. The Notes will mature on November 15, 2027, unless earlier repurchased, redeemed or converted.

Noteholders may convert their notes at their option only in the following circumstances:

•during any calendar quarter (and only during such calendar quarter) commencing after the calendar quarter ending on December 31, 2022, if the last reported sale price per share of our common stock exceeds 130% of the conversion price for each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter;

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•during the five consecutive business days immediately after any 10 consecutive trading day period (such 10 consecutive trading day period, the “measurement period”) in which the trading price per $1 principal amount of notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price per share of our common stock on such trading day and the conversion rate on such trading day;

•upon the occurrence of certain corporate events or distributions on our common stock, as described in the Indenture;

•if we call such notes for redemption; and

•at any time from, and including, August 16, 2027 until the close of business on the second scheduled trading day immediately before the maturity date.

We will settle conversions by paying or delivering, as applicable, cash and, if applicable, shares of common stock, at our election, based on the applicable conversion rate(s). However, upon conversion of any Notes, the conversion value, which will be determined over an observation period consisting of 60 trading days, will be paid in cash up to at least the principal amount of the Notes being converted. The initial conversion rate is 38.9454 shares of common stock per $1 principal amount of Notes, which represents an initial conversion price of approximately $25.68 per share of common stock. The conversion rate and conversion price will be subject to customary adjustments upon the occurrence of certain events. In addition, if certain corporate events that constitute a “Make-Whole Fundamental Change” (as defined in the Indenture) occur, then the conversion rate will, in certain circumstances, be increased for a specified period of time. The customary make-whole adjustments were designed in a manner such that the additional number of shares is consistent with the lost time value of the conversion option. Notwithstanding anything to the contrary, in no event will the conversion rate be increased to a number that exceeds 52.5762 shares of our common stock per $1 principal amount of Notes.

The Notes will be redeemable, in whole or in part (subject to certain limitations described below), at our option at any time, and from time to time, on or after November 20, 2025, and before the 61st scheduled trading day immediately before the maturity date, but only if the last reported sale price per share of our common stock exceeds 130% of the conversion price on (i) each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the trading day immediately before the date we send the related redemption notice; and (ii) the trading day immediately before the date we send such notice. However, we may not redeem less than all of the outstanding Notes unless at least $100,000 aggregate principal amount of Notes are outstanding and not called for redemption as of the time we send the related redemption notice. The redemption price will be a cash amount equal to the principal amount of the Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date. In addition, calling any Note for redemption will constitute a Make-Whole Fundamental Change with respect to that Note, in which case the conversion rate applicable to the conversion of that Note will be increased in certain circumstances if it is converted with a conversion date that is on or after the date we send the related redemption notice and on or before the second business day immediately before the related redemption date. If we elect to redeem less than all of the outstanding Notes, then the redemption will not constitute a make-whole fundamental change with respect to the Notes not called for redemption, and holders of the Notes not called for redemption will not be entitled to an increased conversion rate for such Notes on account of the redemption.

If certain corporate events that constitute a “Fundamental Change” (as defined in the Indenture) occur, then, subject to certain exceptions, noteholders may require us to repurchase their Notes at a cash repurchase price equal to the principal amount of the Notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the fundamental change repurchase date. The definition of Fundamental Change includes certain business combination transactions involving the Company and certain de-listing events with respect to our common stock.

The Notes will be our senior, unsecured obligations and will be (i) equal in right of payment with our existing and future senior, unsecured indebtedness; (ii) senior in right of payment to our existing and future indebtedness that is expressly subordinated to the Notes; (iii) effectively subordinated to our existing and future secured indebtedness, to the extent of the value of the collateral securing that indebtedness; and (iv) structurally subordinated to all existing and future indebtedness and other liabilities, including trade payables.

The Notes are recorded net of issuance costs as noncurrent liabilities in the consolidated balance sheets. The net carrying value of the Notes are as follows:

	September 30, 2023			March 31, 2023
Principal amount	$	275,000		$	275,000
Unamortized issuance costs		(7,435	)		(8,157	)
Carrying value, net	$	267,565		$	266,843

The debt issuance costs of the Notes are being amortized using the effective interest method. The effective interest rate of the Notes is 4.48%. Interest expense related to the Notes was $2,578 and $5,185 for the three and six months ended September 30, 2023, respectively. Amortization of debt issuance costs related to the Notes was $409 and $722 for the three and six months ended September 30, 2023.

Line of Credit

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On March 12, 2021, we entered into a $300,000 second amended and restated revolving credit agreement (the “Credit Agreement”) with JPMorgan Chase Bank, N.A., as administrative agent (in such capacity, the “Administrative Agent”), U.S. Bank National Association and Bank of the West, as co-syndication agents, and certain other agents and lenders. The Credit Agreement replaces our prior $300,000 amended and restated revolving credit agreement, originally entered into on January 4, 2016 and amended on March 29, 2018. The Credit Agreement provides a subfacility of up to $10,000 for letters of credit and a subfacility of up to $10,000 for swing-line loans. The Credit Agreement also provides us with the ability to obtain up to $150,000 in the aggregate of additional revolving credit commitments and/or term loans thereunder (i.e., in excess of $300,000) upon satisfaction of certain conditions, including receipt of commitments from new or existing lenders to provide such additional revolving credit commitments and/or term loans.

On May 17, 2022, we entered into that certain Amendment No. 1 to Credit Agreement (the “First Amendment”) with the Administrative Agent and the lenders party thereto to amend the existing Credit Agreement. The First Amendment modifies the Credit Agreement to increase our net leverage ratio maintenance covenant from 3.75x to 4.00x and increase the related adjusted covenant period option (available upon the consummation of certain acquisitions) from 4.25x to 4.75x, in each case, commencing with the reporting period ending June 30, 2022. The First Amendment also makes certain updates to the conditions restricting the making of certain dividends, distributions, and other restricted payments by the Company so that such conditions are based on the our net leverage ratio (as set forth in the Credit Agreement) rather than our total leverage ratio, to increase the dollar cap for such restricted payments that can be made without satisfying leverage conditions from $11,500 to $25,000, and to increase flexibility in cash netting calculations in connection with the making of restricted payments.

On October 27, 2022, the Company entered into that certain Amendment No. 2 to Credit Agreement (the “Second Amendment”) with the Administrative Agent and the lenders party thereto. The Second Amendment modifies the Credit Agreement to make certain updates to the conditions restricting the making of certain dividends, distributions, and other restricted payments by the Company so that the Company’s compliance with the net leverage ratio governor contained in such conditions is calculated net of the net cash proceeds of the Notes issued pursuant to the Indenture.

Effective April 28, 2023, the Company entered into Amendment No. 3 to the Credit Agreement (the "Third Amendment"), which, among other changes, replaces the existing LIBOR-based rate with a SOFR-based rate.

The Credit Agreement matures on March 12, 2026 and the full balance of the revolving loans and all other obligations under the Credit Agreement must be paid at that time. In addition, we are required to prepay the revolving loan balance if at any time the aggregate principal amount outstanding under the Credit Agreement exceeds the aggregate commitments thereunder. The Credit Agreement is secured by substantially all of our existing and future property and our material domestic subsidiaries. The revolving loans under the Credit Agreement will be available for letters of credit, permitted acquisitions, working capital and general corporate purposes. We were in compliance with all financial and non-financial covenants under the Credit Agreement as of September 30, 2023.

As of September 30, 2023 and March 31, 2023, we had no outstanding loans and $300,000 of unused credit under the Credit Agreement.

Interest expense related to the Credit Agreement was $192 and $198 for the three months ended September 30, 2023 and 2022, respectively.

Interest expense related to the Credit Agreement was $382 and $401 for the six months ended September 30, 2023 and 2022, respectively.

Costs incurred in connection with securing the Credit Agreement, including fees paid to legal advisors and third parties, are deferred and amortized to interest expense over the term of the Credit Agreement. Deferred debt issuance costs are reported as a component of other assets on the consolidated balance sheets. As of September 30, 2023 and 2022, total unamortized debt issuance costs were $1,244 and $2,067, respectively. Amortization of deferred debt issuance costs was $127 and $127 for the three months ended September 30, 2023 and 2022, respectively. Amortization of deferred debt issuance costs was $254 and $254 for the six months ended September 30, 2023 and 2022, respectively.

12. Composition of Certain Financial Statement Captions

Cash, cash equivalents, and restricted cash are summarized as follows:

	September 30, 2023		March 31, 2023
Cash and cash equivalents	$	53,867	$	98,719
Restricted cash and cash equivalents		4,914		7,269
Cash, cash equivalents, and restricted cash	$	58,781	$	105,988

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Prepaid expenses and other current assets are summarized as follows:

	September 30, 2023		March 31, 2023
Prepaid expenses	$	22,673	$	26,365
Capitalized commissions costs		14,363		13,813
Accrued interest on marketable securities		916		699
Other current assets		1,732		2,039
Prepaid expenses and other current assets	$	39,684	$	42,916

Equipment and improvements are summarized as follows:

	September 30, 2023			March 31, 2023
Computer equipment	$	34,503		$	35,019
Internal-use software		20,689			20,064
Leasehold improvements		4,542			7,067
Furniture and fixtures		2,787			4,871
Equipment and improvements, gross		62,521			67,021
Accumulated depreciation and amortization		(57,582	)		(60,600	)
Equipment and improvements, net	$	4,939		$	6,421

Other assets are summarized as follows:

	September 30, 2023		March 31, 2023
Capitalized commission costs	$	27,499	$	26,104
Deposits		7,478		7,447
Debt issuance costs		1,244		1,498
Other noncurrent assets		9,996		9,189
Other assets	$	46,217	$	44,238

Accrued compensation and related benefits are summarized as follows:

	September 30, 2023		March 31, 2023
Accrued bonus	$	11,670	$	15,550
Accrued vacation		13,244		13,271
Accrued commissions		3,148		5,166
Accrued payroll and other		345		2,254
Accrued compensation and related benefits	$	28,407	$	36,241

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Other current and noncurrent liabilities are summarized as follows:

	September 30, 2023		March 31, 2023
Accrued acquisition costs	$	7,861	$	—
Customer credit balances and deposits		7,136		5,417
Sales returns reserves and other customer liabilities		5,614		5,390
Care services liabilities		4,914		7,269
Accrued interest payable		4,081		4,244
Accrued hosting costs		3,553		873
Accrued EDI expense		3,068		3,064
Accrued outsourcing costs		2,785		3,023
Accrued employee benefits and withholdings		2,667		3,195
Accrued self insurance expense		2,299		2,359
Accrued consulting and outside services		2,002		3,957
Accrued royalties		1,838		3,248
Accrued legal expense		907		782
Accrued taxes payable		309		1,746
Accrued legal settlement(1)		-		33,990
Other accrued expenses		5,963		5,242
Other current liabilities	$	54,997	$	83,799
Contingent consideration related to acquisitions, noncurrent	$	4,200	$	3,800
Uncertain tax positions		4,195		3,950
Other liabilities		642		524
Other noncurrent liabilities	$	9,037	$	8,274

(1) Refer to Note 17, "Commitments, Guarantees and Contingencies" for more details.

13. Income Taxes

The provision of income taxes was $1,641 in the three months ended September 30, 2023, reflecting an effective tax rate of 24.5%. The provision of income taxes was $5,707 in the three months ended September 30, 2022, reflecting an effective tax rate of 29.5%.

The provision of income taxes in the six months ended September 30, 2023 was $4,031, reflecting an effective tax rate of 26.4%. The provision of income taxes in the six months ended September 30, 2022 was $5,460, reflecting an effective tax rate of 27.0%.

The decrease in the effective tax rate for the three and six months ended September 30, 2023 compared to the corresponding prior periods was primarily due to an increase to research and development credits and a decrease to nondeductible stock based compensation, partially offset by an increase of discrete items.

The deferred tax assets and liabilities are presented net in the accompanying condensed consolidated balance sheets as noncurrent. We expect to receive the full benefit of the deferred tax assets recorded, with the exception of certain state credits and state net operating loss carryforwards, for which we have recorded a valuation allowance. We had unrecognized tax benefits of $6,198 and $5,911 related to various federal, state, and local income tax matters as of September 30, 2023 and March 31, 2023, respectively. If recognized, this amount would reduce our effective tax rate.

We are subject to taxation in federal, various state, India, and United Kingdom jurisdictions. We are no longer subject to United States federal income tax examinations for tax years before fiscal year ended 2019. With a few exceptions, we are no longer subject to state or local income tax examinations for tax years before fiscal year ended 2018. We do not anticipate the total unrecognized tax benefits to significantly change due to the settlement of audits or the expiration of statute of limitations within the next twelve months.

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14. Earnings per Share

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

	Three Months Ended September 30,				Six Months Ended September 30,
	2023		2022		2023		2022
Earnings per share — Basic:
Net income	$	5,055	$	13,623	$	11,211	$	14,771
Weighted-average shares outstanding — Basic		67,074		67,806		66,749		67,698
Net income per common share — Basic	$	0.08	$	0.20	$	0.17	$	0.22
Earnings per share — Diluted:
Net income	$	5,055	$	13,623	$	11,211	$	14,771
Weighted-average shares outstanding		67,074		67,806		66,749		67,698
Effect of potentially dilutive securities from equity incentive plans		616		616		531		655
Weighted-average shares outstanding — Diluted		67,690		68,422		67,280		68,353
Net income per common share — Diluted	$	0.07	$	0.20	$	0.17	$	0.22

The computation of diluted net income per share does not include 26 options to acquire shares of common stock for the three months ended September 30, 2022 because their inclusion would have an anti-dilutive effect on net income per share. There were no anti-dilutive options for the three months ended September 30, 2023.

The computation of diluted net income per share does not include 23 options to acquire shares of common stock for the six months ended September 30, 2022 because their inclusion would have an anti-dilutive effect on net income per share. There were no anti-dilutive options for the six months ended September 30, 2023.

The dilutive effect of potentially dilutive common shares is reflected in diluted net income per share by application of the if-converted method for the Notes. The shares issuable upon conversion of the Notes, subject to adjustment in some events, are not considered in the calculation of diluted net income per share because their inclusion would have an anti-dilutive effect on net income per share for the three months ended September 30, 2023.

15. Stockholders’ Equity

Equity Incentive Plans

In August 2015, our shareholders approved a stock option and incentive plan (the “2015 Plan”) under which 11,500,000 shares of common stock were reserved for the issuance of awards, including incentive stock options and non-qualified stock options, stock appreciation rights, restricted stock awards and restricted stock unit awards, performance stock awards and other share-based awards. In August 2017, our shareholders approved an amendment to the 2015 Plan, to, among other items, increase the number of shares of common stock reserved for issuance thereunder by 6,000,000 shares, which was further amended in August 2019 as approved by our shareholders, to, among other items, increase the number of shares of common stock reserved for issuance thereunder by an additional 3,575,000 shares. In October 2021, our shareholders approved an amendment and restatement of the Company’s 2015 Equity Incentive Plan (the “Amended 2015 Plan”), to, among other items, increase the number of common stock reserved for issuance thereunder by an additional 1,850,000 shares. In August 2023, our shareholders approved an amendment to the 2015 Plan, to, among other items, increase the number of shares of common stock authorized for issuance by an additional 2,150,000 shares. The Amended 2015 Plan provides that our employees and directors may, at the discretion of the Board of Directors (“Board”) or a duly designated compensation committee, be granted certain share-based awards. In the case of option awards granted under the Amended 2015 Plan, the exercise price of each option is determined based on the date of grant and expire no later than 10 years from the date of grant. Awards granted pursuant to the Amended 2015 Plan are subject to the vesting schedule or performance metrics set forth in the agreements pursuant to which they are granted. Upon a change of control of our Company, as such term is defined in the Amended 2015 Plan, awards under the Amended 2015 Plan will fully vest under certain circumstances. As of September 30, 2023, there were 923,789 outstanding options, 3,091,468 outstanding shares of restricted stock awards, certain outstanding performance stock unit awards as described further below, and 2,725,265 shares available for future grant under the Amended 2015 Plan.

In September 2021, the Board adopted the 2021 Employment Inducement Equity Incentive Plan (the “Inducement Plan”) and initially reserved 1,500,000 shares of common stock for issuance under the Inducement Plan. The Inducement Plan was adopted by the Board without stockholder approval pursuant to Rule 5635(c)(4) of the Nasdaq Listing Rules. In accordance with Rule 5635(c)(4) of the Nasdaq Listing Rules, awards under the Inducement Plan may only be made to an employee who has not previously been an employee or member of the Board or the Board of Directors or any parent or subsidiary, or following a bona fide period of non-employment by the Company or a parent or subsidiary, if he or she is granted such award in connection with his or her commencement of employment with the Company or a subsidiary and such grant is an inducement material to his or her entering into employment with the Company or such subsidiary. The terms of the Inducement Plan were substantially similar to the

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terms of our Amended 2015 Plan, with the exception that incentive stock options may not be granted under the Inducement Plan. Effective as of June 30, 2023, the Inducement Plan was terminated and any shares remaining available for future issuance under the Inducement Plan were canceled; however, the terms and conditions of the Inducement Plan will continue to govern any outstanding awards thereunder granted prior to June 30, 2023. As of September 30, 2023, there were 412,056 outstanding shares of restricted stock awards and 123,390 outstanding performance stock unit awards.

Stock-Based Compensation

The following table summarizes total share-based compensation expense included in the condensed consolidated statements of net income and comprehensive income for the three and six months ended September 30, 2023 and 2022:

	Three Months Ended September 30,						Six Months Ended September 30,
	2023			2022			2023			2022
Costs and expenses:
Cost of revenue	$	1,036		$	951		$	1,878		$	1,514
Research and development costs		1,183			1,655			1,838			3,238
Selling, general and administrative		7,247			6,081			13,706			12,701
Total share-based compensation		9,466			8,687			17,422			17,453
Income tax benefit		(2,250	)		(2,078	)		(4,144	)		(4,123	)
Decrease in net income	$	7,216		$	6,609		$	13,278		$	13,330

Share-based compensation expense under our equity incentive plans is based on the number awards that ultimately vest and forfeitures are accounted for as they occur.

Restricted Stock Awards

Restricted stock awards activity during the six months ended September 30, 2023 is summarized as follows:

Restricted Stock Award Activity				Weighted-
				Average
				Grant-Date
	Number of			Fair Value
	Shares			per Share
Outstanding, March 31, 2023		3,297,512		$	16.72
Granted		1,436,071			15.57
Vested		(1,086,413	)		15.66
Canceled		(143,646	)		16.50
Outstanding, September 30, 2023		3,503,524		$	16.59

Share-based compensation expense related to restricted stock awards was $7,067 and $6,372 for the three months ended September 30, 2023 and 2022, respectively. Share-based compensation expense related to restricted stock awards was $13,058 and $12,651 for the six months ended September 30, 2023 and 2022, respectively.

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

As of September 30, 2023, $46,335 of total unrecognized compensation costs related to restricted stock awards is expected to be recognized over a weighted-average period of 1.9 years. This amount does not include the cost of new restricted stock awards that may be granted in future periods.

The total fair value of restricted stock awards vested as of the vesting dates were $7,050 and $7,114 for the three months ended September 30, 2023 and 2022, respectively. The total fair value of restricted stock awards vested as of the vesting dates were $18,742 and $18,205 for the six months ended September 30, 2023 and 2022, respectively.

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Stock Options

The following table summarizes the stock option transactions during the six months ended September 30, 2023:

				Weighted-		Weighted-
				Average		Average		Aggregate
				Exercise		Remaining		Intrinsic
	Number of			Price		Contractual		Value
	Shares			per Share		Life (years)		(in thousands)
Outstanding, March 31, 2023		1,130,813		$	14.75		1.7	$	3,011
Exercised		(201,824	)		14.33		1.3	$	254
Forfeited/Canceled		(500	)		—
Expired		(4,700	)		16.64
Outstanding, September 30, 2023		923,789		$	14.83		1.5	$	8,224
Vested and expected to vest, September 30, 2023		923,789		$	14.83		1.5	$	8,224
Exercisable, September 30, 2023		923,789		$	14.83		1.5	$	8,224

Net Share Settlements

Restricted stock awards and performance stock units are generally net share-settled upon vesting to cover the required withholding taxes, and the remaining share amount is transferred to the employee. The majority of restricted stock awards and performance stock units that vested during the six months ended September 30, 2023 and 2022 were net-share settled such that we withheld shares with value equivalent to the employees’ applicable income tax obligations for the applicable income and other employment taxes and remitted the equivalent amount of cash to the appropriate taxing authorities. Total payments for the employees’ applicable income tax obligations are reflected as a financing activity within the accompanying consolidated statements of cash flows. The total shares withheld during the three months ended September 30, 2023 and 2022 were 145,073 and 142,751 respectively, and were based on the value of the restricted stock awards and performance stock units on their vesting date as determined by our closing stock price. The total shares withheld during the six months ended September 30, 2023 and 2022 were 395,048 and 345,263, respectively. These net-share settlements had the effect of share repurchases by us as they reduced the number of shares that would have otherwise been issued at the vesting date.

Performance Stock Units and Awards

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

On September 20, 2021, the Compensation Committee of the Board approved an award of 450,000 performance stock units to be granted to our Chief Executive Officer under the Inducement Plan. The award has a grant date of September 22, 2021 and portions of the award vest upon both the attainment of five separate pre-determined stock price milestones during a five-year performance period and continued service over a period of three years following the grant date. The fair value and derived service period for each share-price milestone tranche was estimated separately using a Monte-Carlo based valuation model. The expense for each share-price milestone tranche is amortized over the longer of the derived service period or the explicit service period. The weighted-average grant date fair value of the award was $10.52 per share. As of September 30, 2023, 48,667 units were earned and issued as shares.

On October 26, 2021, the Compensation Committee of the Board approved 476,713 performance stock units to be granted to certain members of the executive leadership team. The awards have a grant date of November 2, 2021 and portions of the award vest upon both the attainment of four separate pre-determined stock price milestones through September 22, 2026 and continued service over a period of three years following the grant date. The fair value and derived service period for each share-price milestone tranche was estimated separately using a Monte-Carlo based valuation model. The expense for each share-price milestone tranche is amortized over the longer of the derived service period or the explicit service period. The weighted-average grant date fair value of the award was $13.02 per share. As of September 30, 2023, 62,668 units were earned and issued as shares.

On October 25, 2022, the Compensation Committee of the Board approved 475,337 target performance stock unit awards to be granted to certain executives and non-executive members of the executive leadership team. The awards have a grant date of

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October 28, 2022 and vest only in the event certain performance goals are achieved and with continuous service through the date the goals are certified. Approximately 50% of the performance stock units are tied to the Company’s fiscal year 2025 revenue goal and 50% are tied to the Company’s fiscal year 2025 EBITDA goal. Performance stock unit awards funded will be modified for cumulative 3-year TSR on the three-year grant date anniversary, which is also the cliff vest date. The number of shares to be issued may vary between 0% and 210% of the number of target performance stock units depending on performance, and no such shares will be issued if threshold performance is not achieved. The weighted-average grant date fair value of the awards was $22.81 per share, which was estimated using a Monte Carlo-based valuation model for the awards based on total shareholder return and using a probability adjusted achievement rate combined with the market price of the common stock on the date of grant.

Share-based compensation expense related to the performance stock units and awards was 2,290 and 4,064 for the three and six months ended September 30, 2023, respectively. Share-based compensation expense related to the performance stock units and awards was 2,172 and 4,374 for the three and six months ended September 30, 2022, respectively.

As of September 30, 2023, $8,457 of total estimated unrecognized compensation costs related to performance stock units and awards is expected to be recognized over a weighted-average period of 1.9 years. This amount does not include the cost of new performance stock units and awards that may be granted in future periods.

Employee Share Purchase Plan

On August 11, 2014, our shareholders approved an Employee Share Purchase Plan (the “Purchase Plan”) under which 4,000,000 shares of common stock were reserved for future grant. The Purchase Plan allows eligible employees to purchase shares through payroll deductions of up to 15% of total base salary at a price equal to 90% of the lower of the fair market values of the shares as of the beginning or the end of the corresponding offering period. Any shares purchased under the Purchase Plan are subject to a six-month holding period. Employees are limited to purchasing no more than 1,500 shares on any single purchase date and no more than $25 in total fair market value of shares during any one calendar year. Effective September 15, 2023, the Purchase Plan was suspended in connection with the Merger Agreement. As of September 30, 2023, we have issued 1,140,806 shares under the Purchase Plan.

Share-based compensation expense recorded for the employee share purchase plan was $109 and $130 for the three months ended September 30, 2023 and 2022, respectively. Share-based compensation expense recorded for the employee share purchase plan was $300 and $349 for the six months ended September 30, 2023 and 2022, respectively.

Share Repurchase Program

In October 2021, the Board authorized a share repurchase program under which we may repurchase up to $60,000 of our outstanding shares of common stock through March 2023. On October 25, 2022, the Board authorized a new share repurchase program under which we may repurchase up to an additional $100,000 of outstanding shares of our common stock through March 2025.

The timing and amount of any share repurchases under the share repurchase programs will be determined by our management at its discretion based on ongoing assessments of the capital needs of the business, the market price of our common stock and general market conditions. Share repurchases under the programs may be made through a variety of methods, which may include open market purchases, in block trades, accelerated share repurchase transactions, exchange transactions, or any combination of such methods. Repurchases may also be made under Rule 10b5-1 plans, which permit shares of common stock to be repurchased through pre-determined criteria. The programs do not obligate the Company to acquire any particular amount of our common stock, and the share repurchase programs may be suspended or discontinued at any time at our discretion.

We did not repurchase any shares of common stock in the six months ended September 30, 2023. As of September 30, 2023, $74,303 remained available for share repurchases pursuant to our share repurchase programs.

16. Concentration of Credit Risk

We had cash deposits at United States banks and financial institutions which exceeded federally insured limits at September 30, 2023. We are exposed to credit loss for amounts in excess of insured limits in the event of non-performance by the institutions; however, we do not anticipate non-performance by these institutions.

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17. Commitments, Guarantees and Contingencies

Commitments and Guarantees

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

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

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

We also have contingent consideration liabilities related to our acquisitions. Refer to Note 7, “Business Combinations and Disposals” and Note 4, “Fair Value Measurements” of our notes to consolidated financial statements included elsewhere in this Report for further information.

Contingencies

In addition to commitments and obligations in the ordinary course of business and routine legal proceedings, we are currently subject to various non-ordinary course legal proceedings, claims and investigations, as described below.

We accrue estimates for resolution of any legal proceeding and other contingencies when losses are probable and reasonably estimable in accordance with ASC 450, Contingencies (“ASC 450”). No less than quarterly, and as facts and circumstances change, we review the status of each significant matter underlying a legal proceeding or claim and assess our potential financial exposure. We accrue a liability for an estimated loss if the potential loss from any legal proceeding or claim is considered probable and the amount can be reasonably estimated. Significant judgment is required in both the determination of probability and the determination as to whether the amount of an exposure is reasonably estimable, and accruals are based only on the information available to our management at the time the judgment is made, which may prove to be incomplete, or inaccurate or unanticipated events and circumstances may occur that might cause us to change those estimates and assumptions.

The outcome of legal proceedings is inherently uncertain, and we may incur substantial defense costs and expenses defending any of these matters. If one or more of these legal proceedings were resolved against or settled by us in a reporting period for amounts in excess of our management’s expectations, our consolidated financial statements for that and subsequent reporting periods could be materially adversely affected. In addition, we could be forced to incur increased compliance costs or change the manner in which we operate our business, which could have a material adverse impact on our business, results of operations, cash flows or financial condition.

DOJ Investigation

On July 13, 2023, we entered into a settlement agreement (the “Settlement Agreement”) with the U.S. Department of Justice (the “DOJ”) and two private parties (the “Relators”) to resolve the previously disclosed investigation by the DOJ regarding the Company’s software certification under the United States Department of Health and Human Services Electronic Health Record Incentive Program and the Company’s marketing practices. The investigation also involved a previously disclosed qui tam lawsuit (the “Civil Action”) filed by the Relators against the Company alleging violations of the federal False Claims Act.

Pursuant to the terms of the Settlement Agreement, on July 14, 2023, the Company paid a total of $31,268 to the United States to settle the claims and a total of $1,200 to the Relators for attorneys’ fees, expenses and costs. Upon receipt of such payments, the DOJ and the Relators dismissed the Civil Action and released the Company from the claims specified in the Settlement Agreement.

Although we admitted no wrongdoing, the Civil Action and Settlement Agreement may have a material adverse effect on our reputation and consequently our business and operations.

Security Incident and Related Litigation

On April 28, 2023, the Company issued written notification to approximately 1 million individuals notifying them that NextGen Healthcare, Inc. had discovered that certain of their personal information (name, address, date of birth, and social security number)

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had been accessed without authorization during a recent data security incident impacting the NextGen Office system. Following notification of the data breach, NextGen Healthcare, Inc. was named as a defendant in sixteen putative class action lawsuits in the United States District Court for the Northern District of Georgia, all of which assert various claims stemming from the data breach and NextGen Healthcare’s alleged failure to safeguard personal information. These lawsuits seek monetary damages, injunctive and declaratory relief, and attorneys’ fees and costs. On July 17, 2023, the Court consolidated all sixteen of the lawsuits into one action in the Northern District of Georgia, styled as Miller v. NextGen Healthcare, Inc., 1:23-cv-02043-TWT. The Court has appointed interim lead counsel for the consolidated matter, and the plaintiffs will be serving NextGen with a consolidated amended complaint on or about November 30, 2023. We believe we have meritorious defenses to this litigation and intend to vigorously oppose the claims asserted in these complaints and any amended consolidated complaint to be filed in the consolidated action. We cannot reasonably estimate the range of potential losses that may be associated with this litigation because of the early stage of the litigation. We also cannot assure you that we will not become subject to other lawsuits, inquiries, or claims relating to or arising from the matter. Although we maintain cyber-technology liability insurance, it is possible that the ultimate amount paid by us, if we are unsuccessful in defending all of the litigation, will be in excess of our cyber-technology liability insurance coverage applicable to claims of this nature.

Hussein Litigation

On October 7, 2013, a complaint was filed against our Company and certain of our officers and directors in the Superior Court of the State of California for the County of Orange, captioned Ahmed D. Hussein v. Sheldon Razin, Steven Plochocki, Quality Systems, Inc. and Does 1-10, inclusive, No. 30-2013-00679600-CU-NP-CJC, by Ahmed Hussein, a former director and significant shareholder of our Company. The amended complaint generally alleges fraud and deceit, constructive fraud, negligent misrepresentation and breach of fiduciary duty in connection with statements made to our shareholders regarding our financial condition and projected future performance. The amended complaint seeks actual damages, exemplary and punitive damages and costs. Hussein’s breach of fiduciary duty claims were dismissed on demurrer, and we filed an answer and cross-complaint against Hussein, alleging that he breached fiduciary duties owed to the Company. On September 16, 2015, the Court granted summary judgment with respect to Hussein’s remaining claims, dismissing all claims against us. The cross-complaint against Hussein went to trial, but the Court granted judgment in favor of Hussein on our cross-complaint. Final judgment over Hussein’s claims and our cross-claims was entered on January 9, 2018. Hussein appealed the order granting summary judgment over his claims, and we appealed the court’s decision granting Hussein’s motion for judgment on our cross-complaint. On October 8, 2019, the California State Court of Appeal for the Fourth Appellate District, Division Three, reversed the Superior Court’s grant of summary judgment on Hussein’s affirmative claims and affirmed the trial court’s judgment on the Company’s breach of fiduciary duty claims against Hussein. As a result, the case returned to the trial court for resolution of Hussein’s claims against us. On July 29, 2021, the jury rendered a verdict in favor of the Company and the individual defendants on all counts. Hussein filed a Motion for New Trial, which the Court denied. Hussein has appealed the jury verdict in favor of the Company and the individual defendants. Hussein, the Company, and the individual defendants have appealed the trial court’s denial of requests for recovery of costs arising from the litigation. The parties have completed briefing on the various appeals. The California State Court of Appeal for the Fourth Appellate District, Division Three, held a hearing on the various appeals on August 25, 2023. At this time, NextGen Healthcare is unable to estimate the probability or the amount of liability, if any, related to these claims.

Merger Litigation

On September 29, 2023 and October 3, 2023, purported stockholders Denise Redfield and Yadira Torres sent demand letters to the Company. These demand letters allege that NextGen Healthcare’s September 26, 2023 Proxy Statement is materially false or misleading because it omitted certain information related to the Company’s merger with Thoma Bravo, LP, including but not limited to information about the Company’s financial projections and analyses performed by NextGen’s financial advisor, Morgan Stanley.

On October 7, 2023, October 10, 2023, and October 12, 2023, purported stockholders Toni Dougherty, Ryan O’Dell, and Elaine Wang filed three actions in the United States District Court for the Southern District of New York (Dougherty v. NextGen Healthcare, Inc., et al., Case No. 1:23-cv-08845, O’Dell v. NextGen Healthcare, Inc., et al., Case No. 1:23-cv-08895, and Wang v. NextGen Healthcare, Inc., et al., Case No. 1:23-cv-08982). On October 13, 2023, purported stockholders Michael Floyd and John McDaniels filed actions in the United States District Court for the District of Delaware (Floyd v. NextGen Healthcare, Inc., et al., Case No. 1:23-cv-01150, and McDaniels v. NextGen Healthcare, Inc., et al., Case No. 1:23-cv-01149). On October 12, 2023, October 13, 2023, and October 19, 2023, purported stockholders Michael Kent, Scott Young, and Rina Brodt sent demand letters to the Company. The complaints and demands allege that certain officers and directors of NextGen Healthcare violated Sections 14(a) and 20(a) of the Exchange Act by causing a materially incomplete and misleading registration statement to be filed with the SEC on October 6, 2023 in connection with NextGen Healthcare’s proposed merger with Thoma Bravo, L.P. In particular, the stockholders request that NextGen Healthcare make additional disclosures regarding certain information related to the Merger, including but not limited to financial projections and analyses performed by NextGen Healthcare’s financial advisor, Morgan Stanley. The Company may be involved in additional litigation related to the Merger.

The Company believes that the allegations in the complaints and demands are without merit. However, the Company plans to issue supplemental disclosures to address the claims in the various complaints and demands. At this time, NextGen Healthcare is unable to estimate the probability or the amount of liability, if any, related to these claims.

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Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (this "Report"), including the documents and certain information incorporated herein by reference, contain forward-looking statements within the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. All statements included or incorporated by reference in this Report, other than statements that are purely historical, are forward-looking statements. Words such as “anticipate,” “expect,” “intend,” “plan,” “believe,” “seek,” “estimate,” “will,” “should,” “would,” “could,” “may,” and similar expressions also identify forward-looking statements. These forward-looking statements include, without limitation, discussions of our trend analyses, product development plans, business and growth strategies, future operations, financial condition and prospects, developments in and the impacts of government regulation and legislation, and market factors influencing our results, all of which are based on current expectations, estimates, and forecasts, and the beliefs and assumptions of our management. Our expectations, beliefs, objectives, intentions and strategies regarding our future results are not guarantees of future performance and are subject to risks and uncertainties, both foreseen and unforeseen, that could cause actual results to differ materially from results contemplated in our forward-looking statements. These risks and uncertainties include, but are not limited to, our ability to consummate our proposed acquisition by entities affiliated with Thoma Bravo, L.P., our ability to continue to develop and sell new products and services in markets characterized by rapid technological evolution, consolidation, and competition from larger, better-capitalized competitors, cybersecurity and data protection risk and related liabilities, current or potential legal proceedings involving us, and the effect of developments in and the impacts of government regulation and legislation. Many other economic, competitive, governmental and technological factors could affect our ability to achieve our goals, and interested persons are urged to review the risk factors discussed in “Item 1A. Risk Factors” of this Report, as well as in our other public disclosures and filings with the Securities and Exchange Commission (“SEC”). Because of these risk factors, as well as other variables affecting our financial condition and results of operations, past financial performance may not be a reliable indicator of future performance and historical trends should not be used to anticipate results or trends in future periods. We assume no obligation to update any forward-looking statements. You are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of the filing of this Report.

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

Company Overview

NextGen Healthcare is a leading provider of innovative, cloud-based, healthcare technology solutions that empower ambulatory healthcare providers to manage the risk and complexity of delivering care in the United States healthcare system. Our combination of technological breadth, depth, and domain expertise positions us as a preferred solution provider and trusted advisor for our clients. In addition to highly configurable core clinical and financial capabilities, our portfolio includes tightly integrated surround solutions that deliver on ambulatory healthcare imperatives, including consumerism, digitization, risk allocation, regulatory influence, and integrated care and health equity.

We serve clients across all 50 states. Over 100,000 providers use NextGen Healthcare solutions to deliver care in nearly every medical specialty in a wide variety of practice models including accountable care organizations (“ACOs”), independent physician associations (“IPAs”), managed service organizations (“MSOs”), veterans service organizations (“VSOs”), and dental service organizations (“DSOs”). Our clients range from some of the largest and most progressive multi-specialty groups in the country to sole practitioners with a wide variety of business models. Our sweet spot is practices with 10-75 physicians. With the addition of behavioral health to our medical and oral health capabilities in 2019, we continue to extend our market share not only in federally qualified health centers (“FQHCs”) but also in the growing integrated care market.

Our company was incorporated in California in 1974. Previously named Quality Systems, Inc., we changed our corporate name to NextGen Healthcare, Inc. in September 2018. In 2021, we changed our state of incorporation to Delaware. As a remote-first company, we no longer maintain a principal executive office. Our principal website is www.nextgen.com. We operate on a fiscal year ending on March 31.

Merger Agreement

On September 5, 2023, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Next Holdco, LLC, a Delaware limited liability company (“Parent”), and Next Merger Sub, Inc., a Delaware corporation and direct wholly owned subsidiary of Parent (“Merger Sub”), pursuant to which, and on the terms and subject to the conditions thereof, Merger Sub will merge with and into us, and we will survive as a wholly owned subsidiary of Parent (the “Merger”). Parent and Merger Sub are affiliates of Thoma Bravo Discover Fund IV, L.P., an investment fund managed by Thoma Bravo, L.P.

Subject to the terms and conditions of the Merger Agreement, each share of our common stock, par value $0.01 per share that is issued and outstanding immediately prior to the effective time of the Merger (except for certain shares specified in the Merger

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Agreement) will be canceled and extinguished and automatically converted into the right to receive $23.95 per share in cash, without interest and subject to any applicable withholding taxes.

The consummation of the Merger, which is expected to close in the fourth calendar quarter of 2023, is subject to certain customary closing conditions set forth in the Merger Agreement, including (i) adoption of the Merger Agreement and approval of the Merger by the affirmative vote of the holders of a majority of the outstanding shares of common stock entitled to vote thereon, (ii) the expiration or termination of the required waiting period applicable to the consummation of the Merger under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, as well as all other required waivers, approvals and waiting periods under certain other specified antitrust laws having been obtained, terminated or expired, and (iii) the absence of any injunction, order or decree by any court of competent jurisdiction preventing the consummation of the Merger, and any law or order that prohibits or makes illegal the consummation of the Merger. The Merger Agreement also contains certain customary termination rights in favor of each of us and Parent. If the Merger Agreement is terminated under specified circumstances, we will be required to pay Parent a termination fee of $41.2 million. The Merger Agreement also provides that, in connection with the termination of the Merger Agreement under specified circumstances including antitrust related circumstances, Parent will be required to pay us a “reverse termination fee” of $98.8 million. Upon completion of the transaction, our common stock will no longer be listed on any public stock exchange.

Our Vision, Mission and Strategy

NextGen Healthcare’s vision is to "achieve better healthcare outcomes for all." We strive to achieve this vision by delivering innovative solutions and insights aimed at creating healthier communities. We focus on improving care delivered in ambulatory settings and do so recognizing that the entire healthcare ecosystem needs to work in concert to achieve the quadruple aim to: “improve patient experience, improve provider experience, improve the health of a population, and reduce per capita health care costs.”

Our long-term strategy is to position NextGen Healthcare as the leader in the ambulatory EHR, PM and surround solutions marketplace. To that end, we primarily serve organizations that provide or orchestrate care in ambulatory settings and do so across diverse practice sizes, specialties, care modalities, and business models. These customers include conventional practices as well as new market entrants.

We plan to invest in our current capabilities as well as build and/or acquire new capabilities. In October 2019, we acquired Topaz Information Systems, LLC for its behavioral health solutions. In December 2019, we acquired Medfusion, Inc. for its Patient Experience Platform capabilities (i.e., patient portal, self-scheduling, and patient pay) and OTTO Health, LLC for its virtual care solutions, notably telemedicine. In August 2022, we divested our commercial dental assets, further emphasizing the company’s focus on serving ambulatory care. In November 2022, we acquired TSI Healthcare, LLC ("TSI") for its purpose-built clinical content and differentiated service offerings, which has expanded our addressable market in new specialties such as rheumatology, pulmonology, and cardiology. The integration of these acquired technologies, along with our recent launches of AI-powered solutions including: patient engagement capabilities with intake and self-scheduling; and NextGen® Ambient Assist, an ambient listening solution which can save physicians up to two hours per day of charting time, has made NextGen Healthcare’s solutions among the most comprehensive and competitive in the market. Further, we continue to actively innovate our business models and explore new high-growth market domains.

Market Opportunity, and Trends

The scale and scope of the healthcare industry continues to expand. According to the latest data published by Centers for Medicare and Medicaid (CMS), the United States healthcare spend in 2021 was $4.3 trillion, representing 18.3% of GDP. A significant portion of this spend is directed towards the treatment of chronic conditions and administrative solutions that service an increasingly complex system with diverse stakeholders. While there are several convergent market forces reshaping the healthcare industry landscape, we are focused on six trends we believe will materially impact the markets we participate in and our customer value proposition:

1.Regulatory Drivers – Medicare and Medicaid continue to expand and represent approximately a third of covered lives. Further, the 21st Century Cures Act (“Cures Act”) certification requirements and impending changes by Centers for Medicare & Medicaid Services (“CMS”) to Medicare reimbursement and shared savings programs parameters (i.e., MIPS, MSSP and telehealth programs) represent continued and escalating regulatory requirements in the healthcare industry broadly and the shape of primary healthcare. Considering these regulatory and market-based changes, many ambulatory practices have come to place a very high value on partnering with vendors that demonstrate the expertise and consistency to stay ahead of these regulatory and industry changes.

2.Risk Reallocation – As healthcare shifts away from defined benefit models towards defined contribution, employers, payors, providers, and consumers are increasingly evaluating models to share and reallocate risk. In 2020, nearly 40% of all healthcare payments representing over 75% of all covered lives flowed through an alternative payment model. While Medicare Advantage related payments led the charge with over 55% of payments tied to alternative models, a plurality of commercial payors are also leveraging value-based provider arrangements to incent care quality standards and reduce health disparities. For providers, effective participation in these models requires a full view of the patient population’s clinical and cost data and robust financial management solutions and services to navigate multiple contract types.

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3.Consumerism – Consumers increasingly direct their own healthcare and require greater levels of access, convenience, and experience personalization. Beyond tailoring healthcare interactions to their needs and preferences, they also expect greater transparency about the costs for visits, medications, and procedures. Accompanied by a significant shift of care from inpatient to lower cost outpatient settings and virtual modes, healthcare is poised to become increasingly ‘retail-like’ and will place unique demands on practices and care providers who need comprehensive engagement platforms to attract, retain and engage patients through their complete health journey

4.New Modalities and Coordinated Team Based Care – Untethered from physical clinics and desktops, care is now being delivered in “boundless” venues by multiple, coordinated care providers.

5.Meaningful Interoperability & Digitization – Greater levels of data exchange, automation, Artificial Intelligence (AI) and speech enabled workflows.

6.Integrated Care and Health Equity– Integrated, whole-person health continues to trend strongly as evidenced by FQHCs/CHCs receiving Health Resources and Services Administration (“HRSA”) funding to drive integrated medical, behavioral, and oral health. Public sector and private investment in understanding and addressing social determinants of health and improving community health are growing.

NextGen Healthcare is well positioned to play a key role in guiding our clients through short-term and long-term changes that impact healthcare in the United States and is committed to helping them deliver better outcomes.

Our Value Proposition

NextGen Healthcare’s value proposition to our clients can be summarized by the four “I’s” as follows:

•Integration – Delivering a broad and highly integrated set of solutions and end-user experiences. NextGen Healthcare, a top ranked platform solution provider, is driving greater levels of efficiency and engagement for practices. Our clients value the full breadth of our solution offering and seamless integration into their clinical workflows. This integration is an important determinant of our success.

•Interoperability – Building seamlessly connected data and human networks across ambulatory healthcare. NextGen Healthcare’s Interoperability solutions help create a frictionless environment where those that need important healthcare data can rapidly find and utilize it. For example, NextGen Healthcare powers over a third of all United States state-based Health Information Exchanges (“HIE’s”), with over 170 million patient records passing over our network of almost 2.8 million directory addresses.

•Insights – Providing intelligence at the point of care to enable better health and financial decision-making. We are helping our clients move from being data rich to insight rich. By providing intelligence, through innovative solutions that take data out of electronic health records (“EHRs”), normalize, cleanse, and present it back as usable data pipelines, NextGen Healthcare can help optimize prescription guidance, care gap reviews, billing quality, practice variance, etc. and insert it directly into clinician’s workflows in order to facilitate sound clinical and financial decisions when serving patients.

•Impact – Delivering and shaping outcomes in all aspects of our solutions and service. NextGen Healthcare is pivoting towards becoming a true performance partner for our clients and is evidenced by proactively helping manage performance and outcomes for our clients.

NextGen Healthcare delivers value to our clients in several ways. Our solutions enable our clients to address current needs while preparing for the needs of the future including expanding access to health services, enhancing the coordination and management of care, and optimizing patient outcomes while also ensuring the sustainability of their practices. Specifically, we offer a range of solutions to allow clinicians to practice anywhere and work in new and innovative collaboration models.

NextGen Healthcare provides integrated cloud-based solutions and services that align with our client’s strategic imperatives. Ultimately, this value is reflected in the overall insights and impact delivered to the client. The foundation for our integrated ambulatory care platform is a core of our industry-leading EHR and practice management (“PM”) systems that support clinical, financial and patient engagement activities.

We optimize the core with an automation and workflow layer that gives our clients control over how platform capabilities are implemented to drive their desired outcomes. The workflow layer includes mobile and voice-enabled capabilities proven to reduce physician burden. Recognizing that engaged patients are key to positive outcomes, our patient experience platform enables our clients to create personalized care experiences that enhance trust and drive patient loyalty. Further, we support the advances in integrated care that focus on the whole person with solutions supporting behavioral and oral health. Our cloud-based population health and analytics engine allows our clients to improve results in both fee-for-service and fee-for-value environments.

In support of extensibility, we surround the core with open, web-based application programming interfaces (“APIs”) to drive the secure exchange of health and patient data with connected health solutions. Our commitment to interoperability, defragmenting care and our experience powering many of the nation’s HIE’s places us in a unique position to enable our clients to leverage this technology to lower the cost of care and improve the patient and provider experience by providing an integrated community patient record.

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Finally, to ensure our clients get maximum value from our solutions, we have augmented our technology with key services aligned with their needs, helping to ensure they reach their organizational goals. We partner with our clients to optimize their information technology (“IT”) operations, enhance revenue cycle processes across fee-for-service and fee-for-value models, service line expansion and operations, as well as advise on long-term strategy.

Positioning NextGen Healthcare for Growth. As NextGen Healthcare applies this value proposition framework across the ambulatory care market, we incorporate some or all our current solution offerings within three broad domains illustrated in Figure 1 below:

•Enterprise – The Enterprise domain is both the largest and encompasses our broadest portfolio of solutions (e.g., clinical, financial, and patient engagement solution portfolios) provided to ambulatory care practices that incorporate 10 or more healthcare providers.

•Office – The Office domain reflects almost all solutions (software solutions and adjacent services) provided to an ambulatory care practice that incorporates fewer than 10 healthcare providers. Our main offering in this group is a cloud-based, multi-tenant SaaS EHR and PM solution, called NextGen® Office.

•Insights – The Insights domain incorporates solutions that address interoperability, data and analytics, and value-based care. Previously described as population health and connected health, the Insights solutions portfolio is offered to clients across both our Enterprise and Office domains as well as additional ambulatory healthcare stakeholders addressing connectivity or value-based care needs. NextGen is highlighting this domain as a reflection of its overall importance and high future growth potential.

Figure 1: NextGen Healthcare Solutions Domains

 

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Results of Operations

The following table sets forth the percentage of revenue represented by each item in our condensed consolidated statements of net income and comprehensive income for the three and six months ended September 30, 2023 and 2022 (certain percentages below may not sum due to rounding):

	Three Months Ended September 30,						Six Months Ended September 30,
	2023			2022			2023			2022
Revenues:
Recurring		91.4	%		90.0	%		91.6	%		90.6	%
Software, hardware, and other non-recurring		8.6			10.0			8.4			9.4
Total revenues		100.0			100.0			100.0			100.0
Cost of revenue:
Recurring		42.8			40.8			43.7			40.7
Software, hardware, and other non-recurring		6.8			6.8			6.8			6.9
Amortization of capitalized software costs and acquired intangible assets		4.1			4.2			4.0			4.4
Total cost of revenue		53.7			51.8			54.5			52.0
Gross profit		46.3			48.2			45.5			48.0
Operating expenses:
Selling, general and administrative		30.7			28.2			28.9			30.0
Research and development costs, net		10.2			13.1			11.0			13.6
Amortization of acquired intangible assets		0.7			0.4			0.7			0.5
Impairment of assets		0.1			0.5			0.1			0.4
Restructuring costs		0.0			0.2			0.0			0.1
Total operating expenses		41.7			42.4			40.7			44.6
Income from operations		4.6			5.8			4.8			3.4
Interest income		0.9			0.0			0.9			0.0
Interest expense		(1.9	)		(0.2	)		(1.8	)		(0.2	)
Other income, net		0.2			6.5			0.4			3.3
Income before provision for income taxes		3.8			12.1			4.3			6.5
Provision for income taxes		0.9			3.6			1.1			1.7
Net income		2.9	%		8.5	%		3.2	%		4.7	%

Revenues

The following table presents our disaggregated revenues for the three and six months ended September 30, 2023 and 2022 (in thousands):

	Three Months Ended September 30,						Six Months Ended September 30,
	2023			2022			2023			2022
Recurring revenues:
Subscription services	$	50,263		$	43,416		$	102,761		$	86,175
Support and maintenance		37,561			38,150			76,070			77,288
Managed services		35,063			31,055			69,822			61,700
Transactional and data services		38,429			30,882			76,037			58,099
Total recurring revenues		161,316			143,503			324,690			283,262
Software, hardware, and other non-recurring revenues:
Software license and hardware		5,521			7,916			10,492			14,115
Other non-recurring services		9,581			8,024			19,443			15,368
Total software, hardware and other non-recurring revenues		15,102			15,940			29,935			29,483
Total revenues	$	176,418		$	159,443		$	354,625		$	312,745
Recurring revenues as a percentage of total revenues		91.4	%		90.0	%		91.6	%		90.6	%

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We generate revenue from sales of licensing rights and subscriptions to our software solutions, hardware and third-party software products, support and maintenance, managed services, transactional and data services, and other non-recurring services, including implementation, training, and consulting services performed for clients who use our products.

Consolidated revenue for the three months ended September 30, 2023 increased $17.0 million compared to the prior year period due to a $17.8 million increase in recurring revenues, offset by a $0.8 million decrease in software, hardware and other non-recurring revenues. The increase in recurring revenues was driven by a $7.5 million increase in transactional and data services, $6.8 million increase in subscription services, and a $4.0 million increase in managed services, partially offset by a $0.6 million decrease in support and maintenance.

Consolidated revenue for the six months ended September 30, 2023 increased $41.9 million compared to the prior year period due to a $41.4 million increase in recurring revenues and a $0.5 million increase in software, hardware and other non-recurring revenues. The increase in recurring revenues was driven by a $17.9 million increase in transactional and data services, $16.6 million increase in subscription services, and a $8.1 million increase in managed services, partially offset by a $1.2 million decrease in support and maintenance.

The increase in transactional and data services revenue for both the three and six months ended September 30, 2023 was primarily driven by higher transaction volumes associated with our patient pay solutions, electronic data interchange (“EDI”), and data services revenue. The increase in subscription services reflect the incremental revenues associated with the acquisition of TSI and higher subscriptions across all domains, including Enterprise, Office, and Insights, due to higher recent bookings. The increase in managed services revenue was primarily due to an increase in revenue cycle management (“RCM”) services and hosting services revenues associated with higher recent bookings. Support and maintenance decreased primarily due to net client attrition, our continued shift to subscription-based solutions, the negative impact to revenues associated with the acquisition of TSI, which was one of our value-added resellers, and the disposition of our Commercial Dental assets in July 2022, as described in Note 7, "Business Combinations and Disposals" of our notes to condensed consolidated financial statements included elsewhere in this Report.

The decrease in software, hardware, and other non-recurring revenues for the three months ended September 30, 2023 was primarily due to a decrease in software license revenue due to lower software bookings, partially offset by higher professional services revenue from more hours incurred and projects completed in the current year period.

The increase in software, hardware, and other non-recurring revenues for the six months ended September 30, 2023 was primarily due to higher professional services revenue from more hours incurred and projects completed in the current year period, partially offset by a decrease in software license revenue due to lower software bookings.

Bookings reflect the estimated annual value of our executed contracts and are believed to provide a broad indicator of the general direction and progress of the business. Total bookings were $40.8 million and $37.4 million for the three months ended September 30, 2023 and 2022, respectively. Total bookings were $79.7 million and $76.6 million for the six months ended September 30, 2023 and 2022, respectively. The increase is due to higher bookings of our Insight solutions, hosting, and the incremental bookings from the acquisition of TSI, partially offset by lower bookings of software and RCM services.

We continue to see overall practice volumes at healthy, pre-pandemic levels. This reflects in our volume- and transaction-based solutions, as noted above, and reflects an ongoing industry trend of procedure volumes migrating out of higher cost settings, like hospitals, favoring lower cost care settings and independent healthcare providers. We also continue to see healthy activity levels in our current pipeline. Sales development activities, such as lead generation and demos, indicate a positive demand environment. We have not been significantly impacted by the current economic concerns and general market conditions, and we continue to constructively engage prospects and our clients to find ways to achieve better outcomes for all.

Cost of Revenue and Gross Profit

The following table presents our consolidated cost of revenue and gross profit for the three and six months ended September 30, 2023 and 2022 (in thousands):

	Three Months Ended September 30,						Six Months Ended September 30,
	2023			2022			2023			2022
Cost of revenue:
Recurring	$	75,585		$	65,039		$	154,806		$	127,283
Software, hardware, and other non-recurring		12,031			10,797			24,205			21,473
Amortization of capitalized software costs and acquired intangible assets		7,181			6,744			14,172			13,878
Total cost of revenue	$	94,797		$	82,580		$	193,183		$	162,634
Gross profit	$	81,621		$	76,863		$	161,442		$	150,111
Gross margin %		46.3	%		48.2	%		45.5	%		48.0	%

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Cost of revenue consists primarily of compensation expense, including share-based compensation, for personnel that deliver our products and services. Cost of revenue also includes amortization of capitalized software costs and acquired technology, third party consultant and outsourcing costs, costs associated with our EDI business partners and clearinghouses, patient pay processing and support costs, hosting service costs, third party software costs and royalties, and other costs directly associated with delivering our products and services. Refer to Note 9, "Intangible Assets" and Note 10, "Capitalized Software Costs" of our notes to condensed consolidated financial statements included elsewhere in this Report for additional information on current period amortization of capitalized software costs and acquired technology and an estimate of future expected amortization.

Share-based compensation expense included in cost of revenue was $1.0 million and $1.0 million for the three months ended September 30, 2023 and 2022, respectively. Share-based compensation expense included in cost of revenue was $1.9 million and $1.5 million for the six months ended September 30, 2023 and 2022, respectively.

Gross profit for the three months ended September 30, 2023 was $81.6 million compared to $76.9 million in the prior year due to a $17.0 million increase in revenues as discussed above, offset by a $12.2 million increase in cost of revenue as discussed further below. Our gross margin decreased to 46.3% for the three months ended September 30, 2023 compared 48.2% in the prior year period.

Gross profit for the six months ended September 30, 2023 was $161.4 million compared to $150.1 million in the prior year due to a $41.9 million increase in revenues as discussed above, offset by a $30.5 million increase in cost of revenue as discussed further below. Our gross margin decreased to 45.5% for the three months ended September 30, 2023 compared 48.0% in the prior year period.

The increase in cost of revenue for the three and six months ended September 30, 2023 compared to the prior year period was primarily due to higher costs of patient pay services directly associated with higher recent revenues. Other recurring cost of revenue, including subscription services and EDI and data services costs also increased driven by higher revenues and bookings. Support and maintenance costs increased primarily due to higher salaries and benefits and third party temporary labor costs. Software, hardware, and other non-recurring services revenue costs increased compared to the prior periods primarily due to higher salaries and benefits from increased employee headcount and an increase in consulting costs associated with the delivery of our professional services as we continue our Spring’21 migrations. Amortization of capitalized software costs increased primarily due to various projects going live in the current period, partially offset by lower amortization of acquired intangibles as our software technology acquired from Inforth became fully amortized at the end of the prior fiscal year.

Our gross margin for the three and six months ended September 30, 2023 decreased compared to the prior year period primarily due a shift in product mix to lower margin transactional and data services, including patient pay services, and higher managed services, as noted above.

Selling, General and Administrative Expense

The following table presents our selling, general and administrative expense for the three and six months ended September 30, 2023 and 2022 (in thousands):

	Three Months Ended September 30,						Six Months Ended September 30,
	2023			2022			2023			2022
Selling, general and administrative	$	54,175		$	44,886		$	102,368		$	93,920
Selling, general and administrative, as a percentage of revenue		30.7	%		28.2	%		28.9	%		30.0	%

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

Share-based compensation expense included in selling, general and administrative expenses was $7.2 million and $6.1 million for the three months ended September 30, 2023 and 2022, respectively. Share-based compensation expense included in selling, general and administrative expenses was $13.7 million and $12.7 million for the six months ended September 30, 2023 and 2022, respectively. Refer to Note 15, "Stockholders’ Equity" of our notes to condensed consolidated financial statements included elsewhere in this Report for additional information of our share-based awards and related incentive plans.

Selling, general and administrative expenses increased $9.3 million and $8.4 million in the three and six months ended September 30, 2023 compared to the prior year. The increase in expense from the prior year periods was primarily due to acquisition costs in the current period for the Thoma Bravo merger and higher personnel costs from our annual merit increases, higher share-based compensation expense as noted above, and higher annual bonus expense due to a higher expected achievement rate, partially offset by a decrease in legal settlement costs associated with the DOJ investigation regulatory matter.

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Research and Development Costs, net

The following table presents our consolidated net research and development costs, capitalized software costs, and gross expenditures prior to capitalization, for the three and six months ended September 30, 2023 and 2022 (in thousands):

	Three Months Ended September 30,						Six Months Ended September 30,
	2023			2022			2023			2022
Gross expenditures	$	27,215		$	30,275		$	56,365		$	61,068
Capitalized software costs		(9,195	)		(9,418	)		(17,420	)		(18,416	)
Research and development costs, net	$	18,020		$	20,857		$	38,945		$	42,652
Research and development costs, as a percentage of revenue		10.2	%		13.1	%		11.0	%		13.6	%
Capitalized software costs as a percentage of gross expenditures		33.8	%		31.1	%		30.9	%		30.2	%

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

The healthcare information systems and services industry is characterized by rapid technological change, requiring us to engage in continuing investments in our research and development to update, enhance and improve our systems. This includes expansion of our software and service offerings that support pay-for-performance initiatives around accountable care organizations, bringing greater ease of use and intuitiveness to our software products, enhancing our managed cloud and hosting services to lower our clients' total cost of ownership, expanding our interoperability and enterprise analytics capabilities, and furthering development and enhancements of our portfolio of specialty-focused templates within our electronic health records software.

The capitalization of software development costs results in a reduction to our reported net research and development costs. Our software capitalization rate, or capitalized software costs as a percentage of gross expenditures, has varied historically and may continue to vary based on the nature and status of specific projects and initiatives in progress. Although changes in software capitalization rates have no impact on our overall cash flows, it results in fluctuations in the amount of software development costs that may be capitalized or expensed up front and the amount of net research and development costs reported in our condensed consolidated statements of net income and comprehensive income, and ultimately also affects the future amortization of our previously capitalized software development costs. Refer to Note 10, "Capitalized Software Costs" of our notes to condensed consolidated financial statements included elsewhere in this Report for additional information on current period amortization of capitalized software costs and an estimate of future expected amortization.

Share-based compensation expense included in research and development costs was $1.2 million and $1.7 million for the three months ended September 30, 2023 and 2022, respectively. Share-based compensation expense included in research and development costs was $1.8 million and $3.2 million for the six months ended September 30, 2023 and 2022, respectively.

Net research and development costs for the three months ended September 30, 2023 decreased $2.8 million compared to the prior year period due to $3.0 million lower gross expenditures, offset by $0.2 million lower capitalization of software costs.

Net research and development costs for the six months ended September 30, 2023 decreased $3.7 million compared to the prior year period due to $4.7 million lower gross expenditures, offset by $1.0 million lower capitalization of software costs.

The decrease in gross expenditures in the three and six months ended September 30, 2023 compared to the prior year was primarily driven by a decrease in consulting costs and share-based compensation noted above. Our software capitalization rate fluctuates due to differences in the nature and status of our projects and initiatives during a given year, which affects the amount of development costs that may be capitalized.

Amortization of Acquired Intangible Assets

The following table presents our amortization of acquired intangible assets for the three and six months ended September 30, 2023 and 2022 (in thousands):

	Three Months Ended September 30,				Six Months Ended September 30,
	2023		2022		2023		2022
Amortization of acquired intangible assets	$	1,189	$	705	$	2,377	$	1,410

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Amortization of acquired intangible assets included in operating expense consists of the amortization related to our customer relationships, trade names, and re-acquired rights intangible assets acquired as part of our business combinations. Refer to Note 9, "Intangible Assets" of our notes to condensed consolidated financial statements included elsewhere in this Report for an estimate of future expected amortization.

Amortization of acquired intangible assets increased for the three and six months ended September 30, 2023 compared to the prior year period due to the amortization of customer relationships and re-acquired rights assets associated with our acquisition of TSI, partially offset by the declining amortization of the customer relationships intangible assets associated with Medfusion and HealthFusion that are amortized under an accelerated method of amortization.

Impairment of Assets

In the three and six months ended September 30, 2023 we recorded impairments of $0.2 million and $0.5 million, respectively, to our right-of-use assets and certain related fixed assets associated with the vacated locations, or portions thereof, in St. Louis, Hunt Valley, and Cary based on projected sublease rental income and estimated sublease commencement dates and the early termination of a portion of our St. Louis lease. In the three and six months ended September 30, 2022 we vacated portions of certain leased locations and recorded impairments of $0.8 million and $1.3 million, respectively, to our right-of-use assets and certain related fixed assets associated with the vacated locations, or portions thereof, in St. Louis, Atlanta, Horsham, and Bangalore based on projected sublease rental income and estimated sublease commencement dates and the remeasurement of our operating lease liability associated with the modification of our St. Louis lease.

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

Interest and Other Income and Expense

The following table presents our interest and other income and expense for the three and six months ended September 30, 2023 and 2022 (in thousands):

	Three Months Ended September 30,						Six Months Ended September 30,
	2023			2022			2023			2022
Interest income	$	1,520		$	74		$	3,189		$	120
Interest expense		(3,310	)		(325	)		(6,549	)		(655	)
Other income, net		430			10,292			1,480			10,287

Interest expense relates to our convertible senior notes and revolving credit agreement, as well as the related amortization of deferred debt issuance costs. Refer to Note 11, “Debt” of our notes to condensed consolidated financial statements included elsewhere in this Report for additional information.

The increase in interest expense for the three months ended September 30, 2023 compared to the prior year period is primarily related to the $275.0 million aggregate principal amount of 3.75% Convertible Senior Notes due 2027 that we issued on November 1, 2022, as described in more detail in Note 11, “Debt” of our notes to condensed consolidated financial statements included elsewhere in this Report. Interest expense changes are also caused by fluctuations in outstanding balances under our revolving credit agreement and the related amortization of debt issuance costs. As of September 30, 2023 and September 30, 2022, we had no outstanding balances under the revolving credit agreement.

Interest income is earned from funds in our money market and marketable securities accounts. The decrease in other income and expense, net is due to the $10.3 million gain from our disposition of our Commercial Dental assets in the prior year period, offset by accretion income on our marketable securities in the current period, realized loss on our marketable securities, and changes to the India foreign exchange rates.

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Provision for Income Taxes

The following table presents our provision for income taxes for the three and six months ended September 30, 2023 and 2022 (in thousands):

	Three Months Ended September 30,						Six Months Ended September 30,
	2023			2022			2023			2022
Provision for income taxes	$	1,641		$	5,707		$	4,031		$	5,460
Effective tax rate		24.5	%		29.5	%		26.4	%		27.0	%

The decrease in the effective tax rate for the three and six months ended September 30, 2023 compared to the corresponding prior periods was primarily due to an increase to research and development credits and a decrease to nondeductible stock based compensation, partially offset by an increase of discrete items.

Liquidity and Capital Resources

The following table presents selected financial statistics and information for the six months ended September 30, 2023 and 2022 (in thousands):

	Six Months Ended September 30,
	2023			2022
Cash and cash equivalents	$	53,867		$	70,728
Marketable securities		146,432			—
Unused portion of revolving credit agreement (1)		300,000			300,000
Total liquidity	$	500,299		$	370,728
Net income	$	5,055		$	14,771
Net cash used in operating activities	$	(17,515	)	$	33,796

(1)We had no outstanding loans under our $300.0 million revolving credit agreement as of September 30, 2023 and 2022.

Our principal sources of liquidity are our cash generated from operations, driven mostly by our net income and working capital management, our cash and cash equivalents, marketable securities, and our debt arrangements.

We believe that our cash and cash equivalents on hand at September 30, 2023, together with our cash flows from operating activities and liquidity provided by our marketable securities and debt arrangements, will be sufficient to meet our working capital and capital expenditure requirements for the next twelve months. We intend to expend some of our available funds for the development and/or acquisition of products complementary to our existing product line as well as new versions of certain of our products. These developments are intended to take advantage of more powerful technologies and to increase the integration of our products. Our investment policy is determined by our Board of Directors. Excess cash, if any, may be invested in very liquid short term assets including tax exempt and taxable money market funds, certificates of deposit and short-term municipal bonds with weighted-average maturities of 365 days or less at the time of purchase. Our Board of Directors continues to review alternate uses for our cash including an expansion of our investment policy and other items. Any or all of these programs could significantly impact our investment income in future periods.

For the period beyond the next twelve months, we believe that we will be able to meet our working capital and capital expenditure needs from our existing cash and cash equivalents, marketable securities, cash flows generated from our operating activities, and, if necessary, proceeds from our debt arrangements. Our cash, cash equivalents, and marketable securities consist of bank deposits, United States treasury securities, money market funds, corporate notes and bonds, agency securities, and commercial paper. Our assessments of the period of time through which our existing liquidity and capital resources will be adequate to support our ongoing operations and our expected sources of capital for the future operations of our business after such period of time are forward-looking statements and involve risks and uncertainties. Our actual results could vary as a result of, and our near- and long-term future capital requirements will depend on, many factors, including our growth rate, the timing and extent of spending to support our infrastructure and research and development efforts, the expansion of sales and marketing activities, the timing of new product development and enhancements, and other general market and economic factors.

We may, from time to time, enter into arrangements to acquire or invest in complementary businesses, services and technologies, including intellectual property rights, and such acquisitions and investments could increase our need for additional capital. We may be required to seek additional financing from time to time in the future. In the event that additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us or at all.

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Cash Flows from Operating Activities

The following table summarizes our condensed consolidated statements of cash flows for the six months ended September 30, 2023 and 2022 (in thousands):

	Six Months Ended September 30,
	2023			2022
Net income	$	11,211		$	14,771
Non-cash expenses		39,256			28,604
Cash from net income, as adjusted	$	50,467		$	43,375
Change in contract assets and liabilities, net		(24,142	)		1,737
Change in accounts receivable		(2,606	)		(1,527	)
Change in all other assets and liabilities		(41,234	)		(9,789	)
Net cash used in operating activities	$	(17,515	)	$	33,796

For the six months ended September 30, 2023, cash used in operating activities increased $51.3 million compared to the prior year period, primarily due to a $31.4 million increase in cash used from changes in other assets and liabilities, $25.9 million net change in contract assets and liabilities, and a $1.1 million decrease in cash from changes in accounts receivable, partially offset by $7.1 million higher cash from net income, as adjusted for a $10.7 million increase in non-cash expenses. The decrease in cash from changes in other assets and liabilities is primarily due to $32.5 million in payments related to the DOJ investigation regulatory matter in the current period, as well as changes in our income tax assets and liabilities, including our uncertain tax positions tax liability, and changes in accounts payable due to timing of invoice payments. These decreases were partially offset by lower payments of cash incentive bonuses compared to payments in the prior year as a result of a lower rate of bonus achievement for the prior fiscal year. The decrease in cash from changes in net contract assets and liabilities was primarily due to the payoff of certain revenue lease liabilities associated with our acquisition of TSI. The decrease in cash from changes in accounts receivable is primarily due to higher accounts receivable in the current period from growth in bookings. Net income decreased $3.6 million compared to the prior year period, as described in the sections above. Non-cash expenses increased primarily due to a $10.3 million gain from the disposition of our Commercial Dental assets reflected in the prior year period.

Cash Flows from Investing Activities

Net cash used in investing activities for the six months ended September 30, 2023 was $23.9 million compared with $8.6 million in the prior year period. The increase in net cash used in investing activities is primarily due to $63.9 million in purchases of marketable securities and $11.3 million in cash proceeds from the disposition of our Commercial Dental assets in the prior year period, partially offset by $58.3 million in proceeds from marketable securities.

Cash Flows from Financing Activities

Net cash used in financing activities for the six months ended September 30, 2023 was $5.7 million compared with $13.4 million cash used in financing activities in the prior year period. The decrease in cash used in financing activities is primarily due to $9.9 million of share repurchases in the prior year period, partially offset by lower proceeds from the issuance of shares under our employee equity plans in the current year period.

Contractual Obligations and Commitments

Convertible Senior Notes

On November 1, 2022, we issued $275.0 million in aggregate principal amount of 3.75% Convertible Senior Notes due 2027 (“Notes”). The Notes were issued pursuant to, and are governed by, an indenture, dated as of November 1, 2022, between the Company and U.S. Bank Trust Company, National Association, as trustee. Net proceeds from the issuance of the Notes were approximately $266.5 million, after deducting issuance costs totaling $8.5 million.

The Notes will accrue interest at a rate of 3.75% per annum, payable semi-annually in arrears on May 15 and November 15 of each year, beginning on May 15, 2023. The Notes will mature on November 15, 2027, unless earlier repurchased, redeemed or converted.

Approximately $10.3 million in interest payments are due within the next 12 months for our Notes. There are no required principal payments on the Notes prior to their maturity.

Refer to Note 11, “Debt” of our notes to condensed consolidated financial statements included elsewhere in this Report for additional information.

Line of Credit

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On March 12, 2021, we entered into a $300 million second amended and restated revolving credit agreement (the “Credit Agreement”). The Credit Agreement matures on March 12, 2026 and the full balance of the revolving loans and all other obligations under the Credit Agreement must be paid at that time. In addition, we are required to prepay the revolving loan balance if at any time the aggregate principal amount outstanding under the Credit Agreement exceeds the aggregate commitments thereunder.

On May 17, 2022, we entered into an amendment to the Credit Agreement, which, among other changes, provides more favorable terms and flexibility with regards to our ability to obtain additional revolving credit commitments and/or term loans thereunder, including amendments to the net leverage ratio and definition of restricted payments.

On October 27, 2022, the Company entered into that certain Amendment No. 2 to Credit Agreement (the “Second Amendment”) with the Administrative Agent and the lenders party thereto. The Second Amendment modifies the Credit Agreement to make certain updates to the conditions restricting the making of certain dividends, distributions, and other restricted payments by the Company so that the Company’s compliance with the net leverage ratio governor contained in such conditions is calculated net of the net cash proceeds of the Notes issued pursuant to the Indenture.

Effective April 28, 2023, the Company entered into Amendment No. 3 to the Credit Agreement (the "Third Amendment"), which, among other changes, replaces the existing LIBOR-based rates with SOFR-based rates.

On As of September 30, 2023, we had no outstanding borrowings under the Credit Agreement.

Refer to Note 11, “Debt” of our notes to condensed consolidated financial statements included elsewhere in this Report for additional information.

Non-cancelable Operating Leases

As of September 30, 2023, the total amount of future lease payments under operating leases was $6.2 million, of which $3.7 million is short-term. Our operating leases have a weighted average remaining lease term of 1.9 years. Included in our total future lease payments are $5.0 million of remaining lease obligations for vacated properties, of which $3.1 million is short-term. Remaining lease obligations for vacated properties relates to certain locations, including Cary, Brentwood, Fairport, Atlanta, St. Louis, and portions of Irvine, Hunt Valley and Chapel Hill that we have vacated as part of our reorganization efforts and are actively marketing for sublease. Refer to Note 6, “Leases” of our notes to consolidated financial statements included elsewhere in this Report for additional information. The remaining obligations have not been reduced by projected sublease rentals or by minimum sublease rentals of $1.8 million due in future periods under non-cancelable subleases.

Purchase Obligations

As of September 30, 2023, we had minimum purchase commitments of $130.5 million related to payments due under certain non-cancelable agreements to purchase goods and services, of which $30.8 million is due within the next 12 months.

Share Repurchase Program

In October 2021, the Board authorized a share repurchase program under which we may repurchase up to $60.0 million of our outstanding shares of common stock through March 2023. The timing and amount of any share repurchases under the share repurchase program will be determined by our management at its discretion based on ongoing assessments of the capital needs of the business, the market price of our common stock and general market conditions. The program does not obligate the Company to acquire any particular amount of our common stock, and the share repurchase program may be suspended or discontinued at any time at our discretion.

On October 25, 2022, our Board of Directors authorized a new share repurchase program under which we may repurchase up to an additional $100.0 million of outstanding shares of our common stock through March 2025.

We did not repurchase any shares of common stock in the three months ended September 30, 2023. As of September 30, 2023, $74.3 million remained available for share repurchases pursuant to the Company’s share repurchase programs.

Deferred Compensation

Deferred compensation liability was $8.7 million, for which timing of future benefit payments to employees is not determinable. To offset this liability, we have purchased life insurance policies on some of the participants. The Company is the owner and beneficiary of the policies and the cash values are intended to produce cash needed to help make the benefit payments to employees when they retire or otherwise leave the Company. The cash surrender value of the life insurance policies for deferred compensation was $9.0 million.

Income Taxes

We have an uncertain tax position liability of $4.8 million as of September 30, 2023, for which timing of expected payments is not determinable.

Off-Balance Sheet Arrangements

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During the three months ended, we did not have any relationships with unconsolidated organizations, financial partnerships, or special purpose entities that would have been established for the purpose of facilitating off-balance sheet arrangements or other limited purposes.

Recent Accounting Pronouncements

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

Critical Accounting Policies and Estimates

The discussion and analysis of our condensed consolidated financial statements and results of operations is based upon our condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). The preparation of these condensed consolidated financial statements requires us to make estimates and judgments that affect our reported amounts of assets, liabilities, revenue and expenses, and related disclosures. We base our assumptions, estimates and judgments on historical experience, current trends, and other factors we believe to be reasonable under the circumstances, and we evaluate these estimates on an ongoing basis. On a regular basis, we review the accounting policies and update our assumptions, estimates, and judgments, as needed, to ensure that our condensed consolidated financial statements are presented fairly and in accordance with GAAP. Actual results could differ materially from our estimates under different assumptions or conditions. To the extent that there are material differences between our estimates and actual results, our financial condition or results of operations will be affected.

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

There have been no other material changes in our significant accounting policies or critical accounting policies and estimates since the fiscal year ended March 31, 2023.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

We primarily operate within the United States and also have certain international operations. We are exposed to market risks in the ordinary course of our business. These risks primarily include interest rate, foreign exchange and inflation risks, as well as risks relating to changes in the general economic conditions in the countries where we conduct business. To reduce these risks, we monitor the financial condition of our customers to limit credit exposure as we deem appropriate. In addition, our investment strategy has historically been to invest in financial instruments that are highly liquid and readily convertible into cash. We have not used derivative instruments to mitigate the impact of our market risk exposures and we also have not used, nor do we intend to use, derivatives for trading or speculative purposes.

As of September 30, 2023, we believe we are subject to minimal market risk on our cash and cash equivalents and marketable securities as our balances recorded at fair value and are maintained in highly liquid funds and investments. While we do not believe our cash and cash equivalents and marketable securities have significant risk of default or illiquidity and we believe our investments do not contain excessive risk, we cannot provide absolute assurance that in the future our investments will not be subject to adverse changes in market value.

As of September 30, 2023, we had no outstanding borrowings under our second amended and restated revolving credit agreement (“the Credit Agreement”). The revolving loans under the Credit Agreement bear interest at either, at our option of either, (a) for base rate loans, a base rate based on the highest of (i) 1%, (ii) the “prime rate” quoted in the Wall Street Journal for the United States of America, (iii) the overnight bank funding rate (not to be less than zero) as determined by the Federal Reserve Bank of New York plus 0.50% or (iv) the Adjusted Term SOFR Rate for a one month Interest Period as published two U.S. Government Securities Business Days prior to such day (or if such day is not a U.S. Government Securities Business Day, the immediately preceding U.S. Government Securities Business Day) plus 1%, in each case, an applicable margin based on our net leverage ratio from time to time, ranging from 0.50% to 1.75% for base rate loans, and from 1.50% to 2.75% for any Term Benchmark loans. Accordingly, we may be exposed to interest rate risk, primarily changes in SOFR, due to outstanding loans, if any, under the revolving credit agreement.

On November 1, 2022, we issued $275,000 in aggregate principal amount of 3.75% Convertible Senior Notes due 2027 (“Notes”). The Notes will accrue interest at a rate of 3.75% per annum, payable semi-annually in arrears on May 15 and November 15 of each year, beginning on May 15, 2023. The Notes will mature on November 15, 2027, unless earlier repurchased, redeemed or converted. As the Notes have a fixed annual interest rate, we do not have economic interest rate exposure with respect to the Notes. Refer to Note 11, “Debt” of our notes to consolidated financial statements included elsewhere in this Report for additional information.

As of September 30, 2023 we had international operations that exposed us to the risk of fluctuations in foreign currency exchange rates against the United States dollar. However, the impact of foreign currency fluctuations has not been material to our financial position or operating results.

ITEM 4. CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

Our Chief Executive Officer and Chief Financial Officer (our principal executive officer and principal financial officer, respectively) have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Security Exchange Act of 1934, as amended, the "Exchange Act") as of September 30, 2023, the end of the period covered by this Quarterly Report on Form 10-Q (the “Evaluation Date”). They have concluded that, as of the Evaluation Date, these disclosure controls and procedures were effective to ensure that material information relating to the Company and its consolidated subsidiaries would be made known to them by others within those entities and would be disclosed on a timely basis. The Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures are designed, and are effective, to give reasonable assurance that the information required to be disclosed by us in reports that we file under the Exchange Act is recorded, processed, summarized and reported within the time period specified in the rules and forms of the Securities and Exchange Commission. They have also concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed in the reports that are filed or submitted under the Exchange Act are accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

During the quarter ended September 30, 2023, there were no changes in our “internal control over financial reporting” (as defined in Rule 13a-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

42

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

The information required by Item 1 is incorporated herein by reference from Note 17, “Commitments, Guarantees and Contingencies” of our notes to condensed consolidated financial statements in this Report.

ITEM 1A. RISK FACTORS.

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

The Merger may not be completed within the expected timeframe, or at all, and significant delay or the failure to complete the Merger could adversely affect our business and the market price of our common stock.

On September 5, 2023, we entered into the Merger Agreement with Parent and Merger Sub, pursuant to which, and on the terms and subject to the conditions thereof, Merger Sub will merge with and into us, and we will survive as a wholly owned subsidiary of Parent. The consummation of the Merger is subject to customary closing conditions, including, among other things, (i) adoption of the Merger Agreement and approval of the Merger by the affirmative vote of the holders of a majority of the outstanding shares of common stock entitled to vote thereon, (ii) the expiration or termination of the required waiting period applicable to the consummation of the Merger under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, as well as all other required waivers, approvals and waiting periods under certain other specified antitrust laws having been obtained, terminated or expired, and (iii) the absence of any injunction, order or decree by any court of competent jurisdiction preventing the consummation of the Merger, and any law or order that prohibits or makes illegal the consummation of the Merger.

Many of the conditions to consummation of the Merger are not within our control or the control of Parent or Merger Sub, and we cannot predict when or if these conditions will be satisfied. There can be no assurance that our business, our relationships or our financial condition will not be adversely affected, as compared to the condition prior to the announcement of the Merger, if the Merger is not consummated within the expected timeframe, or at all. Failure to complete the Merger within the expected timeframe, or at all, could adversely affect our business and the market price of our common stock in a number of ways, including the following:

• if the Merger is not completed within the expected timeframe, or at all, the share price of our common stock may change to the extent that the current market price of our stock reflects assumptions regarding the completion of the Merger;

•we have incurred, and will continue to incur, significant costs, expenses and fees for professional services and other costs in connection with the Merger, for which we may receive little or no benefit if the Merger is not completed. Many of these fees and costs will be payable by us even if the Merger is not completed and may relate to activities that we would not have undertaken other than to complete the Merger;

•failure to complete the Merger within the expected timeframe, or at all, may result in negative publicity and a negative impression of us in the investment community and may lead to subsequent offers to acquire our company at a lower price or otherwise on less favorable terms to us and our stockholders than contemplated by the Merger;

•the impairment of our ability to attract, retain and motivate personnel, including our senior management; • difficulties maintaining relationships with third-party manufacturers, contract research organizations, collaborators and other business partners;

•upon termination of the Merger Agreement by us or Parent under specified circumstances, we would be required to pay a termination fee of approximately $41.2 million; and

•we could be subject to litigation related to any failure to complete the Merger.

The announcement and pendency of our acquisition by Parent could adversely affect our business, prospects, financial condition, and results of operations.

The announcement and pendency of the Merger could cause disruptions in and create uncertainty surrounding our business, which could have an adverse effect on our business, prospects, financial condition, and results of operations, regardless of whether the Merger is completed. These risks to our business include the following, all of which could be exacerbated by a delay in the completion of the Merger:

•the diversion of significant management time and resources towards the completion of the Merger;

•the impairment of our ability to attract, retain and motivate key personnel, including our senior management;

43

•difficulties maintaining relationships with third-party payors, customers, distributors, suppliers and other business partners, who may defer decisions about working with us or seek to change existing business relationships with us;

•the inability to pursue alternative business opportunities or make appropriate changes to our business because of requirements in the Merger Agreement that we conduct our business in the ordinary course and not engage in certain kinds of transactions or business activities prior to the completion of the Merger; and

•litigation relating to the Merger and the costs and distractions related thereto.

The Merger Agreement contains provisions that could discourage a potential competing acquirer of our company or could result in any competing proposal being at a lower price than it might otherwise be.

We are subject to certain restrictions on our ability to solicit alternative acquisition proposals from third parties, to provide information to third parties and to enter into or continue discussions or negotiations with third parties regarding alternative acquisition proposals, subject to customary exceptions. In addition, we may be required to pay Parent a termination fee of approximately $41.2 million in specified circumstances, including if the Merger Agreement is terminated in specified circumstances following our receipt of a Superior Proposal (as defined in the Merger Agreement). These provisions could discourage a potential competing acquirer that might have an interest in acquiring all or a significant part of our company from considering or proposing such an acquisition, including, if the Merger Agreement is terminated prior to the consummation of the Merger, after such termination of the Merger Agreement, even if it were prepared to pay a purchase price per share higher than the purchase price per share proposed to be paid in the Merger, or might result in a potential competing acquirer proposing to pay a lower price than it might otherwise have proposed to pay because of the added expense of the termination fee that may become payable in specified circumstances under the Merger Agreement, including, in certain circumstances, after a valid termination of the Merger Agreement in accordance with the terms thereof.

While the Merger Agreement is in effect, we are subject to restrictions on our business activities.

The Merger Agreement includes restrictions on the conduct of our business prior to the completion of the Merger, generally requiring us to use reasonable efforts to conduct our business in the ordinary course and to preserve intact our business organization and significant business relationships. In addition, we are subject to a variety of specified restrictions. Unless we obtain Parent’s prior written consent (which consent may not be unreasonably withheld, conditioned or delayed), except as specifically required by the Merger Agreement or required by applicable law, we may not, among other things and subject to certain exceptions, limitations and qualifications, incur additional indebtedness, issue additional shares of our common stock outside of our equity incentive plans, repurchase our common stock, pay dividends, acquire certain assets or securities, sell or dispose of intellectual property, or enter into material contracts or make certain capital expenditures. We may find that these and other contractual restrictions in the Merger Agreement delay or prevent us from responding, or limit our ability to respond, effectively to competitive pressures, industry developments and future business opportunities that may arise during such period, even if our management believes they may be advisable. If any of these effects were to occur, it could materially and adversely impact our operating results, financial position, cash flows or the price of our common stock.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

Month	Total Number of Shares Purchased (1)		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Programs (1)		Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program
July 1 - 31		—	$	—		—	$	74,303
August 1 - 31		—	$	—		—	$	74,303
September 1 - 30		—	$	—		—	$	74,303
Total		—				—

(1)On October 28, 2021, our Board of Directors authorized a share repurchase program under which we may repurchase up to $60.0 million of outstanding shares of our common stock through March 2023. On October 25, 2022, our Board of Directors authorized a new share repurchase program under which we may repurchase up to an additional $100.0 million of outstanding shares of our common stock through March 2025. All share repurchases were made under these publicly announced programs.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

44

ITEM 4. MINE SAFETY DISCLOSURES.

Not Applicable.

ITEM 5. OTHER INFORMATION.

None.

45

ITEM 6. EXHIBITS.

				Incorporated by Reference
Exhibit Number	Exhibit Description	Filed Herewith		Form	Exhibit		Filing Date
10.1	NextGen Healthcare, Inc. Amended 2015 Equity Incentive Plan, as Amended and Restated.		8-K			10.1	23-Aug-23
2.1	Agreement and Plan of Merger, dated as of September 5, 2023, by and among NextGen Healthcare, Inc., Holdco, LLC, and Next Merger Sub, Inc.		8-K			2.1	6-Sep-23
31.1	Certification of Principal Executive Officer Required by Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	X
31.2	Certification of Principal Financial Officer Required by Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	X
32.1	Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	X
101.INS**	Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH**	Inline XBRL Taxonomy Extension Schema Document
101.CAL**	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF**	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB**	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE**	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104	The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2023, has been formatted in Inline XBRL.

** XBRL information is furnished and not filed or a part of a registration statement or prospectus for purposes of section 11 or 12 of the Securities and Exchange Act of 1933, as amended, is deemed not filed for purposes of section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

46

SIGNATURES

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

		NEXTGEN HEALTHCARE, INC.
Date: October 24, 2023	By:	/s/ David Sides
		David Sides
		Chief Executive Officer (Principal Executive Officer)
Date: October 24, 2023	By:	/s/ James R. Arnold, Jr.
		James R. Arnold, Jr.
		Chief Financial Officer (Principal Financial Officer)
Date: October 24, 2023	By:	/s/ David Ahmadzai
		David Ahmadzai
		Chief Accounting Officer (Principal Accounting Officer)

47

EX-31.1

EXHIBIT 31.1

Certification of Principal Executive Officer Required by

Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended,

as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, David Sides, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of NextGen Healthcare, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	October 24, 2023	By:	/s/ David Sides
			David Sides
			Chief Executive Officer
			(Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

Certification of Principal Financial Officer Required by

Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended,

as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, James R. Arnold, Jr., certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of NextGen Healthcare, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	October 24, 2023	By:	/s/ James R. Arnold, Jr.
			James R. Arnold, Jr.
			Chief Financial Officer
			(Principal Financial Officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of NextGen Healthcare, Inc. (the “Company”) for the quarterly period ended September 30, 2023 (the “Report”), the undersigned hereby certify in their capacities as Chief Executive Officer and Chief Financial Officer of the Company, respectively, pursuant to 18 U.S.C. section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1.the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2.the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	October 24, 2023	By:	/s/ David Sides
			David Sides
			Chief Executive Officer
			(Principal Executive Officer)
Date:	October 24, 2023	By:	/s/ James R. Arnold, Jr.
			James R. Arnold, Jr.
			Chief Financial Officer
			(Principal Financial Officer)

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signatures that appear in typed form within the electronic version of this written statement required by Section 906, has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Document and Entity Information - shares	6 Months Ended
	Sep. 30, 2023	Oct. 20, 2023
Cover [Abstract]
Entity Registrant Name	NEXTGEN HEALTHCARE, INC.
Trading Symbol	NXGN
Entity Central Index Key	0000708818
Document Type	10-Q
Document Period End Date	Sep. 30, 2023
Amendment Flag	false
Document Fiscal Year Focus	2024
Document Fiscal Period Focus	Q2
Current Fiscal Year End Date	--03-31
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Shell Company	false
Entity Emerging Growth Company	false
Entity Current Reporting Status	Yes
Entity File Number	001-12537
Entity Tax Identification Number	95-2888568
Entity Interactive Data Current	Yes
Title of 12(b) Security	Common Stock, $0.01 Par Value
Security Exchange Name	NASDAQ
Entity Incorporation, State or Country Code	DE
Document Quarterly Report	true
Document Transition Report	false
Entity Common Stock, Shares Outstanding		67,096,894

XML

Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Sep. 30, 2023	Mar. 31, 2023
Current assets:
Cash and cash equivalents	$ 53,867	$ 98,719
Restricted cash and cash equivalents	4,914	7,269
Marketable securities	146,432	139,612
Accounts receivable, net	89,277	88,498
Contract assets	20,489	19,561
Income taxes receivable	8,134	5,248
Prepaid expenses and other current assets	39,684	42,916
Total current assets	362,797	401,823
Equipment and improvements, net	4,939	6,421
Capitalized software costs, net	59,875	54,516
Operating lease assets	2,615	3,335
Deferred income taxes, net	29,210	29,472
Contract assets, net of current	5,616	5,572
Intangibles, net	24,480	28,968
Goodwill	322,001	321,756
Other assets	46,217	44,238
Total assets	857,750	896,101
Current liabilities:
Accounts payable	10,467	12,022
Contract liabilities	45,932	61,601
Accrued compensation and related benefits	28,407	36,241
Income taxes payable	604	622
Operating lease liabilities	3,471	3,826
Other current liabilities	54,997	83,799
Total current liabilities	143,878	198,111
Contract liabilities, net of current	2,809	10,310
Deferred compensation	8,722	8,033
Convertible senior notes, net, noncurrent	267,565	266,843
Operating lease liabilities, net of current	2,464	4,095
Other noncurrent liabilities	9,037	8,274
Total liabilities	434,475	495,666
Commitments and contingencies (Note 17)
Shareholders' equity:
Common stock, $0.01 par value; authorized 100,000 shares; 71,946 shares and 70,875 shares issued at September 30, 2023 and March 31, 2023, respectively; 67,097 shares and 66,026 shares outstanding at September 30, 2023 and March 31, 2023, respectively	719	709
Treasury stock, at cost, 4,849 shares and 4,849 shares at September 30, 2023 and March 31, 2023, respectively	(85,752)	(85,752)
Additional paid-in capital	371,080	359,342
Accumulated other comprehensive loss	(1,581)	(1,462)
Retained earnings	138,809	127,598
Total shareholders' equity	423,275	400,435
Total liabilities and shareholders' equity	$ 857,750	$ 896,101

XML

Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares	Sep. 30, 2023	Mar. 31, 2023
Statement of Financial Position [Abstract]
Common stock, par value (in USD per share)	$ 0.01	$ 0.01
Common stock, shares authorized	100,000,000	100,000,000
Common stock, shares issued	71,946,000	70,875,000
Common stock, shares outstanding	67,097,000	66,026,000
Treasury stock, shares	4,849,000	4,849,000

XML

Condensed Consolidated Statements of Net Income and Comprehensive Income (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Revenues:
Total revenues	$ 176,418	$ 159,443	$ 354,625	$ 312,745
Cost of revenue:
Amortization of capitalized software costs and acquired intangible assets	7,181	6,744	14,172	13,878
Total cost of revenue	94,797	82,580	193,183	162,634
Gross profit	81,621	76,863	161,442	150,111
Operating expenses:
Selling, general and administrative	54,175	44,886	102,368	93,920
Research and development costs, net	18,020	20,857	38,945	42,652
Amortization of acquired intangible assets	1,189	705	2,377	1,410
Impairment of assets	166	805	525	1,329
Restructuring costs	15	321	105	321
Total operating expenses	73,565	67,574	144,320	139,632
Income from operations	8,056	9,289	17,122	10,479
Interest income	1,520	74	3,189	120
Interest expense	(3,310)	(325)	(6,549)	(655)
Other income, net	430	10,292	1,480	10,287
Income before provision for income taxes	6,696	19,330	15,242	20,231
Provision for income taxes	1,641	5,707	4,031	5,460
Net income	5,055	13,623	11,211	14,771
Other comprehensive income:
Foreign currency translation, net of tax	(76)	(5)	(77)	(33)
Unrealized gain (loss) on marketable securities, net of tax	734		(42)
Comprehensive income	$ 5,713	$ 13,618	$ 11,092	$ 14,738
Net income per share:
Basic	$ 0.08	$ 0.2	$ 0.17	$ 0.22
Diluted	$ 0.07	$ 0.2	$ 0.17	$ 0.22
Weighted-average shares outstanding:
Basic	67,074	67,806	66,749	67,698
Diluted	67,690	68,422	67,280	68,353
Recurring
Revenues:
Total revenues	$ 161,316	$ 143,503	$ 324,690	$ 283,262
Cost of revenue:
Cost of revenue excluding amortization of capitalized software costs and acquired intangible assets	75,585	65,039	154,806	127,283
Software, hardware, and other non-recurring
Revenues:
Total revenues	15,102	15,940	29,935	29,483
Cost of revenue:
Cost of revenue excluding amortization of capitalized software costs and acquired intangible assets	$ 12,031	$ 10,797	$ 24,205	$ 21,473

XML

Condensed Consolidated Statement of Stockholders' Equity (Unaudited) - USD ($) $ in Thousands		Total	Common Stock	Treasury Stock	Additional Paid-in Capital	Retained Earnings	Accumulated Other Comprehensive Income (Loss)
Balance at Mar. 31, 2022		$ 423,078	$ 692	$ (35,874)	$ 329,917	$ 130,252	$ (1,909)
Balance, Shares at Mar. 31, 2022			67,075,000
Common stock issued under stock plans, net of shares withheld for taxes		(1,600)	$ 12		(1,612)
Common stock issued under stock plans, net of shares withheld for taxes, Shares			1,137,000
Stock-based compensation		8,766			8,766
Repurchase of common stock	[1]	(2,505)		(2,505)
Repurchase of common stock, Shares	[1]		(148,000)
Components of other comprehensive income:
Translation adjustments		(28)					(28)
Net income		1,148				1,148
Balance at Jun. 30, 2022		428,859	$ 704	(38,379)	337,071	131,400	(1,937)
Balance, Shares at Jun. 30, 2022			68,064,000
Balance at Mar. 31, 2022		423,078	$ 692	(35,874)	329,917	130,252	(1,909)
Balance, Shares at Mar. 31, 2022			67,075,000
Components of other comprehensive income:
Translation adjustments		(33)
Net income		14,771
Balance at Sep. 30, 2022		441,842	$ 704	(45,752)	343,809	145,023	(1,942)
Balance, Shares at Sep. 30, 2022			67,605,000
Balance at Jun. 30, 2022		428,859	$ 704	(38,379)	337,071	131,400	(1,937)
Balance, Shares at Jun. 30, 2022			68,064,000
Common stock issued under stock plans, net of shares withheld for taxes		(1,949)			(1,949)
Common stock issued under stock plans, net of shares withheld for taxes, Shares			(31,000)
Stock-based compensation		8,687			8,687
Repurchase of common stock	[2]	(7,373)		(7,373)
Repurchase of common stock, Shares	[2]		(428,000)
Components of other comprehensive income:
Translation adjustments		(5)					(5)
Net income		13,623				13,623
Balance at Sep. 30, 2022		441,842	$ 704	(45,752)	343,809	145,023	(1,942)
Balance, Shares at Sep. 30, 2022			67,605,000
Balance at Mar. 31, 2023		400,435	$ 709	(85,752)	359,342	127,598	(1,462)
Balance, Shares at Mar. 31, 2023			66,026,000
Common stock issued under stock plans, net of shares withheld for taxes		(3,248)	$ 10		(3,258)
Common stock issued under stock plans, net of shares withheld for taxes, Shares			1,017,000
Stock-based compensation		7,956			7,956
Components of other comprehensive income:
Unrealized gain (loss) on marketable securities, net of tax		(776)					(776)
Translation adjustments		(1)					(1)
Net income		6,156				6,156
Balance at Jun. 30, 2023		410,522	$ 719	(85,752)	364,040	133,754	(2,239)
Balance, Shares at Jun. 30, 2023			67,043,000
Balance at Mar. 31, 2023		$ 400,435	$ 709	(85,752)	359,342	127,598	(1,462)
Balance, Shares at Mar. 31, 2023			66,026,000
Repurchase of common stock, Shares		0
Components of other comprehensive income:
Unrealized gain (loss) on marketable securities, net of tax		$ (42)
Translation adjustments		(77)
Net income		11,211
Balance at Sep. 30, 2023		423,275	$ 719	(85,752)	371,080	138,809	(1,581)
Balance, Shares at Sep. 30, 2023			67,097,000
Balance at Jun. 30, 2023		410,522	$ 719	(85,752)	364,040	133,754	(2,239)
Balance, Shares at Jun. 30, 2023			67,043,000
Common stock issued under stock plans, net of shares withheld for taxes		(2,426)			(2,426)
Common stock issued under stock plans, net of shares withheld for taxes, Shares			54,000
Stock-based compensation		9,466			9,466
Components of other comprehensive income:
Unrealized gain (loss) on marketable securities, net of tax		734
Reclassification of unrealized loss on marketable securities		734					734
Translation adjustments		(76)					(76)
Net income		5,055				5,055
Balance at Sep. 30, 2023		$ 423,275	$ 719	$ (85,752)	$ 371,080	$ 138,809	$ (1,581)
Balance, Shares at Sep. 30, 2023			67,097,000

[1] Weighted-average repurchase price (dollars per share) for the three months ended June 30, 2022 was $16.93.

[2] Weighted-average repurchase price (dollars per share) for the three months ended September 30, 2022 was $17.21.

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Condensed Consolidated Statement of Stockholders' Equity (Unaudited) (Parenthetical) - $ / shares	3 Months Ended
	Sep. 30, 2022	Jun. 30, 2022
Statement of Stockholders' Equity [Abstract]
Weighted-average share repurchase price	$ 17.21	$ 16.93

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Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Cash flows from operating activities:
Net income	$ 11,211	$ 14,771
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of capitalized software costs	12,061	10,725
Amortization of debt issuance costs	976	254
Amortization of other intangibles	4,488	4,564
Net amortization (accretion) of premiums/discounts on marketable securities	(1,956)
Change in fair value of contingent consideration	400
Depreciation	2,064	2,646
Excess tax deficiency (benefit) from share-based compensation	170	(434)
Gain on disposition of Commercial Dental assets		(10,296)
Impairment of assets	171	1,329
Realized loss on marketable securities	734
Loss on disposal of equipment and improvements	37	74
Loss on foreign currency exchange rates	100	7
Non-cash operating lease costs	763	1,682
Provision for bad debts	1,826	600
Share-based compensation	17,422	17,453
Changes in assets and liabilities:
Accounts receivable	(2,606)	(1,527)
Contract assets	(972)	(2)
Accounts payable	(1,571)	3,153
Contract liabilities	(23,170)	1,739
Accrued compensation and related benefits	(7,802)	(20,422)
Income taxes	(2,825)	3,934
Deferred compensation	689	(249)
Operating lease liabilities	(1,979)	(4,097)
Other assets and liabilities	(27,746)	7,892
Net cash provided by (used in) operating activities	(17,515)	33,796
Cash flows from investing activities:
Additions to capitalized software costs	(17,420)	(18,416)
Additions to equipment and improvements	(854)	(1,426)
Proceeds from sales of marketable securities	15,457
Proceeds from maturities and redemptions of marketable securities	42,871
Purchases of marketable securities	(63,942)
Proceeds from disposition of Commercial Dental assets		11,253
Net cash used in investing activities	(23,888)	(8,589)
Cash flows from financing activities:
Proceeds from issuance of shares under employee plans	1,430	2,575
Repurchase of common stock		(9,878)
Payments for taxes related to net share settlement of equity awards	(7,104)	(6,124)
Net cash used in financing activities	(5,674)	(13,427)
Effect of exchange rate changes on cash and cash equivalents	(130)	(219)
Net increase (decrease) in cash, cash equivalents, and restricted cash	(47,207)	11,561
Cash, cash equivalents, and restricted cash at beginning of period	105,988	66,747
Cash, cash equivalents, and restricted cash at end of period	58,781	78,308
Supplemental disclosures of cash flow information:
Cash paid for income taxes	6,689	1,963
Cash refunds from income taxes	4	9
Cash paid for interest	5,723	190
Cash paid for amounts included in the measurement of operating lease liabilities	2,127	4,533
Operating lease assets obtained in exchange for operating lease liabilities	585
Accrued purchases of equipment and improvements	$ 20	$ 144

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Summary of Significant Accounting Policies

6 Months Ended

Sep. 30, 2023

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

1. Summary of Significant Accounting Policies

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

Pending Merger. On September 5, 2023, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Next Holdco, LLC, a Delaware limited liability company (“Parent”), and Next Merger Sub, Inc., a Delaware corporation and direct wholly owned subsidiary of Parent (“Merger Sub”), pursuant to which, and on the terms and subject to the conditions thereof, Merger Sub will merge with and into the Company, with the Company surviving as a wholly owned subsidiary of Parent (the “Merger”). Parent and Merger Sub are affiliates of Thoma Bravo Discover Fund IV, L.P., an investment fund managed by Thoma Bravo, L.P.

Subject to the terms and conditions of the Merger Agreement, each share of Company common stock, par value $0.01 per share that is issued and outstanding immediately prior to the effective time of the Merger (except for certain shares specified in the Merger Agreement) will be canceled and extinguished and automatically converted into the right to receive $23.95 per share in cash, without interest and subject to any applicable withholding taxes.

Upon completion of the transaction, which is expected to close in the fourth calendar quarter of 2023, our common stock will no longer be listed on any public stock exchange.

Basis of Presentation. The accompanying unaudited condensed consolidated financial statements as of September 30, 2023 and for the three and six months ended September 30, 2023 have been prepared in accordance with the requirements of Quarterly Report on Form 10-Q and Article 10 of the Securities and Exchange Commission Regulation S-X and therefore do not include all information and notes which would be presented were such condensed consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements presented in our Annual Report on Form 10-K for the fiscal year ended March 31, 2023. In the opinion of management, the accompanying condensed consolidated financial statements reflect all adjustments which are necessary for a fair statement of the results of operations and cash flows for the periods presented. The results of operations for such interim periods are not necessarily indicative of results of operations to be expected for the full year.

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

Use of Estimates. The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”), which requires us to make estimates and assumptions that affect the amounts reported and disclosed in the consolidated financial statements and the accompanying notes. Actual results could differ materially from these estimates. We evaluate our estimates on an ongoing basis. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and recording revenue and expenses during the period.

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

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

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Revenue from Contracts with Customers

6 Months Ended

Sep. 30, 2023

Revenue from Contract with Customer [Abstract]

Revenue from Contract with Customer

2. Revenue from Contracts with Customers

Revenue Recognition and Performance Obligations

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

The total transaction price is allocated to each performance obligation within a contract based on estimated standalone selling prices. We generally determine standalone selling prices based on the prices charged to customers, except for certain software licenses that are based on the residual approach because their standalone selling prices are highly variable and certain maintenance customers that are based on substantive renewal rates. In instances where standalone selling price is not sufficiently

observable, such as revenue cycle management ("RCM") services and software licenses included in our RCM arrangements, we estimate standalone selling price utilizing an expected cost plus a margin approach. When standalone selling prices are not observable, significant judgment is required in estimating the standalone selling price for each performance obligation.

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

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

The following table presents our revenues disaggregated by our major revenue categories and by occurrence:

	Three Months Ended September 30,				Six Months Ended September 30,
	2023		2022		2023		2022
Recurring revenues:
Subscription services	$	50,263	$	43,416	$	102,761	$	86,175
Support and maintenance		37,561		38,150		76,070		77,288
Managed services		35,063		31,055		69,822		61,700
Transactional and data services		38,429		30,882		76,037		58,099
Total recurring revenues		161,316		143,503		324,690		283,262
Software, hardware, and other non-recurring revenues:
Software license and hardware		5,521		7,916		10,492		14,115
Other non-recurring services		9,581		8,024		19,443		15,368
Total software, hardware and other non-recurring revenues		15,102		15,940		29,935		29,483
Total revenues	$	176,418	$	159,443	$	354,625	$	312,745

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

We generally recognize revenue for our most significant performance obligations as follows:

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

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

Managed services. Managed services consist primarily of RCM and related services, but also includes our hosting services, which we refer to as managed cloud services, transcription services, and certain other recurring services. Performance obligations associated with RCM services are satisfied over time as the customer simultaneously receives and consumes the benefits of the services executed throughout the contract period. The majority of service fees under our RCM arrangements are variable consideration contingent upon collections by our clients. We estimate the variable consideration which we expect to be entitled to over the noncancelable contract term associated with our RCM service arrangements. The estimate of variable consideration included in the transaction price typically involves estimating the amounts we will ultimately collect on behalf of our clients and the relative fee we charge that is generally calculated as a percentage of those collections. Inputs to these estimates include, but are

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

Transactional and data services. Performance obligations related to transactional and data services, including electronic data interchange (“EDI”), patient pay, and other transaction processing services are satisfied at the point in time the services are rendered or delivered. The transfer of control occurs when the transactional and data services are delivered and the customer receives the benefits from the services provided. Revenue is recognized as such services are rendered.

Beginning in fiscal year 2023, to align the presentation of disaggregated revenue with the manner in which management reviews such information, the presentation of disaggregated revenues by major revenue categories was revised to reclassify revenues related to patient pay services and certain other services from the managed services category into the transactional and data services category, which replaced the prior EDI and data services category. The prior period presentation of revenues disaggregated by major revenue categories and by occurrence above has been reclassified to conform with current period presentation.

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

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

Transaction Price Allocated to Remaining Performance Obligations

As of September 30, 2023, the aggregate amount of transaction price related to remaining unsatisfied or partially unsatisfied performance obligations over the respective noncancelable contract term was approximately $726,000, of which we expect to recognize approximately 6% as services are rendered or goods are delivered, 53% over the next 12 months, and the remainder thereafter.

As of September 30, 2022, the aggregate amount of transaction price related to remaining unsatisfied or partially unsatisfied performance obligations over the respective noncancelable contract term was approximately $563,900, of which we expect to recognize approximately 9% as services are rendered or goods are delivered, 51% over the next 12 months, and the remainder thereafter.

Contract Balances

Contract balances result from the timing differences between our revenue recognition, invoicing, and cash collections. Such contract balances include accounts receivables, contract assets and liabilities, and other customer deposits and liabilities balances. Accounts receivables include invoiced amounts where the right to receive payment is unconditional and only subject to the passage of time. Contract assets, consisting of unbilled receivables, include amounts where revenue recognized exceeds the amount invoiced to the customer and the right to payment is not solely subject to the passage of time. Contract assets are generally associated with our sales of software licenses, but may also be associated with other performance obligations such as subscription services, support and maintenance, annual libraries, and professional services, where control has been transferred to our customers but the associated payments are based on future customer collections (in the case of our RCM service arrangements) or based on future milestone payment due dates. In such instances, the revenue recognized may exceed the amount invoiced to the customer and such balances are included in contract assets since our right to receive payment is not unconditional, but rather is conditional upon customer collections or the continued functionality of the software and our ongoing support and maintenance obligations. Contract liabilities consist mainly of fees invoiced or paid by our clients for which the associated services have not been performed and revenues have not been recognized. Contract assets and contract liabilities are reported in a net position on an individual contract basis at the end of each reporting period. Contract assets are classified as current or long-term on our consolidated balance sheets based on the timing of when we expect to complete the related performance obligations and invoice

the customer. Contract liabilities are classified as current on our consolidated balance sheets since the revenue recognition associated with the related customer payments and invoicing is expected to occur within the next twelve months.

During the three months ended September 30, 2023 and 2022, we recognized $18,672 and $17,521 respectively, of revenues that were included in the contract liability balance or invoiced to customers since the beginning of the corresponding periods. During the six months ended September 30, 2023 and 2022, we recognized $36,917 and $35,245, respectively, of revenues that were included in the contract liability balance or invoiced to customers since the beginning of the corresponding periods.

Our contracts with customers do not include any major financing components.

Costs to Obtain or Fulfill a Contract

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

Capitalized commissions costs were $41,862 as of September 30, 2023, of which $14,363 is classified as current and included as prepaid expenses and other current assets and $27,498 is classified as long-term and included within other assets on our condensed consolidated balance sheets, based on the expected timing of expense recognition.

During the three months ended September 30, 2023 and 2022, we recognized $4,356 and $3,634, respectively, of commissions expense. During the six months ended September 30, 2023 and 2022, we recognized $8,329 and $7,121, respectively, of commissions expense. Commissions expense primarily relates to the amortization of capitalized commissions costs, which is included as a selling, general and administrative expense in the consolidated statements of net income and comprehensive income.

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Accounts Receivable

6 Months Ended

Sep. 30, 2023

Receivables [Abstract]

Accounts Receivable

3. Accounts Receivable

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

	September 30, 2023			March 31, 2023
Accounts receivable, gross	$	93,289		$	92,360
Allowance for credit losses		(4,012	)		(3,862	)
Accounts receivable, net	$	89,277		$	88,498

The following table represents the changes in the allowance for credit losses, as of and for the three months ended September 30, 2023:

Balance as of June 30, 2023	$	(3,906	)
Additions charged to costs and expenses		(951	)
Deductions		845
Balance as of September 30, 2023	$	(4,012	)

The following table represents the changes in the allowance for credit losses, as of and for the six months ended September 30, 2023:

Balance as of March 31, 2023	$	(3,862	)
Additions charged to costs and expenses		(1,826	)
Deductions		1,676
Balance as of September 30, 2023	$	(4,012	)

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Fair Value Measurements

6 Months Ended

Sep. 30, 2023

Fair Value Disclosures [Abstract]

Fair Value Measurements

4. Fair Value Measurements

The following tables set forth by level within the fair value hierarchy our financial assets and liabilities that were accounted for at fair value on a recurring basis at September 30, 2023 and March 31, 2023:

	Balance At		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Unobservable Inputs
	September 30, 2023		(Level 1)		(Level 2)		(Level 3)
ASSETS
Cash and money market funds	$	52,077	$	52,077	$	—	$	—
Commercial paper		1,790		—		1,790		—
Total cash and cash equivalents		53,867		52,077		1,790		—
Restricted cash and cash equivalents		4,914		4,914		—		—
United States treasury securities		70,937		—		70,937		—
Agency securities		32,732		—		32,732		—
Corporate notes and bonds		25,984		—		25,984		—
Commercial paper		16,779		—		16,779		—
Total marketable securities		146,432		—		146,432		—
TOTAL ASSETS	$	205,213	$	56,991	$	148,222	$	—
LIABILITIES
Contingent consideration related to acquisitions	$	4,200	$	—	$	—	$	4,200
Convertible senior notes, net, noncurrent		267,565		—		267,565		—
TOTAL LIABILITIES	$	271,765	$	—	$	267,565	$	4,200

	Balance At		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Unobservable Inputs
	March 31, 2023		(Level 1)		(Level 2)		(Level 3)
ASSETS
Cash and money market funds	$	73,754	$	73,754	$	—	$	—
Commercial paper		10,795		—		10,795		—
United States treasury securities		9,979		—		9,979		—
Corporate notes and bonds		3,349		—		3,349		—
Agency securities		842		—		842		—
Total cash and cash equivalents		98,719		73,754		24,965		—
Restricted cash and cash equivalents		7,269		7,269		—		—
United States treasury securities		56,890		—		56,890		—
Agency securities		37,991		—		37,991		—
Corporate notes and bonds		26,590		—		26,590		—
Commercial paper		18,141		—		18,141		—
Total marketable securities		139,612		—		139,612		—
TOTAL ASSETS	$	245,600	$	81,023	$	164,577	$	—
LIABILITIES
Contingent consideration related to acquisitions	$	3,800	$	—	$	—	$	3,800
Convertible senior notes, net, noncurrent		266,843		—		266,843		—
TOTAL LIABILITIES	$	270,643	$	—	$	266,843	$	3,800

We classify our highly liquid money market funds within Level 1 of the fair value hierarchy because they are valued based on quoted market prices in active markets. We classify our United States treasury securities, corporate notes and bonds, agency securities, and commercial paper within Level 2 of the fair value hierarchy because they are valued using inputs other than quoted prices that are directly or indirectly observable in the market, including readily available pricing sources for the identical underlying security that may not be actively traded.

The following table presents activity in our financial assets and liabilities measured at fair value using significant unobservable inputs (Level 3), as of and for the three months ended September 30, 2023:

	Total Liabilities
Balance as of March 31, 2023	$	3,800
Fair value adjustments		400
Balance as of September 30, 2023	$	4,200

As of September 30, 2023, the contingent consideration liability balance related to the acquisition of TSI Healthcare, LLC (See Note 7) was $4,200, which reflects a $400 fair value adjustment for the six months ended September 30, 2023. The categorization of the framework used to measure fair value of the contingent consideration liability is within the Level 3 valuation hierarchy due to the subjective nature of the unobservable inputs used. We assess the fair value of the contingent consideration liability on a recurring basis and any adjustments to fair value subsequent to the measurement period are reflected in the consolidated statements of net income and comprehensive income. Key assumptions included probability-adjusted achievement estimates of applicable revenue targets that were not observable in the market. The fair value adjustments to contingent consideration liabilities are included as a component of selling, general and administrative expense in the consolidated statements of net income and comprehensive income. There are no other assets or liabilities accounted for utilizing unobservable inputs (Level 3) as of September 30, 2023.

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

Non-Recurring Fair Value Measurements

We have certain assets, including goodwill and other intangible assets, which are measured at fair value on a non-recurring basis and are adjusted to fair value only if an impairment charge is recognized. The categorization of the framework used to measure fair value of the assets is considered to be within the Level 3 valuation hierarchy due to the subjective nature of the unobservable inputs used.

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Investments

6 Months Ended

Sep. 30, 2023

Investments, Debt and Equity Securities [Abstract]

Investments

5. Investments

The following table summarizes the fair value of our investments and marketable securities as of September 30, 2023:

	September 30, 2023
	Amortized Cost		Fair Value
Commercial paper	$	1,790	$	1,790
Money market funds		20,477		20,477
Total cash and cash equivalents		22,267		22,267
United States treasury securities		70,937		70,937
Agency securities		32,732		32,732
Corporate notes and bonds		25,984		25,984
Commercial paper		16,779		16,779
Total marketable securities		146,432		146,432
Total investments	$	168,699	$	168,699

	March 31, 2023
	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
Commercial paper	$	10,795	$	—	$	—		$	10,795
United States treasury securities		9,977		2		—			9,979
Money market funds		5,976		—		—			5,976
Corporate notes and bonds		3,349		—		—			3,349
Agency securities		842		—		—			842
Total cash and cash equivalents		30,939		2		—			30,941
United States treasury securities		56,795		99		(4	)		56,890
Agency securities		37,999		16		(24	)		37,991
Corporate notes and bonds		26,631		14		(55	)		26,590
Commercial paper		18,147		—		(6	)		18,141
Total marketable securities		139,572		129		(89	)		139,612
Total investments	$	170,511	$	131	$	(89	)	$	170,553

At September 30, 2023, we determined it was more likely than not we would sell our investments before recovery of their amortized cost basis. In the three months ending September 30, 2023, we wrote down the amortized cost basis of our investments to fair value and reclassified $734 in net unrealized losses out of accumulated comprehensive income into other income, net in the consolidated statements of net income and comprehensive income.

The following table presents the contractual maturities of our investments and marketable securities as September 30, 2023:

	Amortized Cost		Fair Value
Due within one year	$	123,457	$	123,457
Due after one year through five years		45,242		45,242
Total		168,699		168,699

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Leases

6 Months Ended

Sep. 30, 2023

Leases [Abstract]

Leases

6. Leases

Our leasing arrangements are reflected on the balance sheet as right-of-use assets and liabilities pertaining to the rights and obligations created by the leased assets.

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

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

Operating lease costs are recognized on a straight-line basis over the lease term and included as a selling, general and administrative expense in the condensed consolidated statements of net income and comprehensive income. Total operating lease costs were $231 and $708 for the three months ended September 30, 2023 and 2022, respectively. Total operating lease costs were $706 and $1,650 for the six months ended September 30, 2023 and 2022, respectively.

Components of operating lease costs are summarized as follows:

	Three Months Ended September 30,						Six Months Ended September 30,
	2023			2022			2023			2022
Operating lease costs	$	393		$	788		$	1,014		$	1,737
Variable lease costs		138			160			319			334
Less: Sublease income		(300	)		(240	)		(627	)		(421	)
Total operating lease costs	$	231		$	708		$	706		$	1,650

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

	Three Months Ended September 30,				Six Months Ended September 30,
	2023		2022		2023		2022
Cash paid for amounts included in the measurement of operating lease liabilities	$	983	$	2,225	$	2,127	$	4,533
Operating lease assets obtained in exchange for operating lease liabilities		—		—		585		—

We have operating lease agreements for our offices in the United States and India with lease periods expiring between 2024 and 2028. As of September 30, 2023, our operating leases had a weighted average remaining lease term of 1.9 years and a weighted average discount rate of 4.4%. Future minimum aggregate lease payments under operating leases as of September 30, 2023 are summarized as follows:

For the year ended March 31,
2024	$	1,815
2025		3,520
2026		572
2027		143
2028		150
2029 and beyond		13
Total future lease payments		6,213
Less interest		(278	)
Total lease liabilities	$	5,935

In the three and six months ended September 30, 2023, we recorded impairments of $166 and $525 to our right-of-use assets and certain related fixed assets associated with the vacated locations, or portions thereof, in St. Louis, Hunt Valley, and Cary based on projected sublease rental income and estimated sublease commencement dates and the early termination of a portion of our St. Louis lease.

In the three and six months ended September 30, 2022 we vacated portions of certain leased locations and recorded impairments of $805 and $1,329, respectively, to our right-of-use assets and certain related fixed assets associated with the vacated locations or portions thereof, in St. Louis, Atlanta, Horsham, and Bangalore based on projected sublease rental income and estimated sublease commencement dates and the remeasurement of our operating lease liability associated with the modification of our St. Louis lease.

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

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Business Combinations and Disposals

6 Months Ended

Sep. 30, 2023

Business Disposition [Abstract]

Business Combinations and Disposals

7. Business Combinations and Disposals

Acquisition of TSI Healthcare, LLC

On November 30, 2022, we completed the acquisition of TSI Healthcare, LLC ("TSI") pursuant to a securities purchase agreement dated November 30, 2022. TSI is based in Chapel Hill, NC and is a value-added reseller of NextGen Practice Management and Electronic Health Record software and solutions.

The purchase price was $50,449, subject to customary working capital and other adjustments. Additionally, under the provisions of the securities purchase agreement, we may pay up to an additional $22,000 of cash contingent consideration in the form of an earnout, subject to TSI achieving certain revenue targets through March 2025. The initial fair value of the contingent consideration was $3,700, which was estimated using a Monte Carlo simulation in a risk-neutral framework. The purchase price of TSI is summarized in the table below. The acquisition of TSI was funded by cash flows from operations and cash proceeds from our convertible senior notes (see Note 11).

We accounted for the acquisition as a business combination using the acquisition method of accounting. The purchase price was allocated to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date. The fair values of acquired assets and liabilities assumed represent management’s estimate of fair value. During the six months ended September 30, 2023, we recorded a measurement period adjustment of $245 to our goodwill associated with the filing of final tax returns. The purchase price allocation of the TSI acquisition was considered final as of September 30, 2023.

Identifiable intangible assets acquired from TSI include re-acquired rights, customer relationships, and data health database. The fair values of the acquired intangible assets were determined using the distributor method of the income approach for customer relationships and the multi-period excess earnings method of the income approach for re-acquired rights and the data health database. The valuation model inputs involved the use of significant assumptions, such as distributor margin and discount rate for customer relationships and revenue forecasts, cost of sales and operating expenses as a percentage of revenue, distributor margin, and discount rate for re-acquired rights, which required the application of significant judgment by management. Goodwill represents the excess of the purchase price over the net identifiable assets acquired and liabilities assumed. Goodwill primarily represents, among other factors, the value of synergies expected to be realized and the assemblage of all assets that enable us to create new client relationships, neither of which qualify as separate amortizable intangible assets. Goodwill arising from the acquisition of TSI is considered deductible for tax purposes.

	Purchase Price
Initial purchase price	$	50,449
Fair value of contingent consideration		3,700
Payment for option to early terminate lease		2,000
Working capital adjustment		(430	)
Total purchase price	$	55,719
Fair value of the net tangible assets acquired and liabilities assumed:
Cash and cash equivalents	$	717
Accounts receivable		2,011
Contract assets		1,415
Prepaid expense and other assets		308
Equipment and improvements		879
Contract assets, net of current		2,581
Operating lease assets		957
Deferred income tax asset		1,028
Other assets		50
Accounts payable		(1,773	)
Accrued compensation and related benefits		(917	)
Contract liabilities		(6,247	)
Operating lease liabilities		(533	)
Other current liabilities		(964	)
Contract liabilities, net of current		(11,644	)
Operating lease liabilities, net of current		(639	)
Total net tangible assets acquired and liabilities assumed		(12,771	)
Fair value of identifiable intangible assets acquired:
Goodwill		54,790
Re-acquired rights		6,250
Customer relationships		5,500
Data health database		1,950
Total identifiable intangible assets acquired		68,490
Total purchase price	$	55,719

The re-acquired rights intangible asset will be amortized over 4 years, the acquired customer relationships intangible assets will be amortized over 11 years, and the acquired data health database intangible asset will be amortized over 3 years. The weighted average amortization period for the acquired TSI intangible assets is 6.8 years.

The results of operations of TSI have been included in our consolidated results of operations since the date of acquisition. The results of operations of TSI were not material to our consolidated results of operations for the six months ended September 30, 2023.

Disposition of Commercial Dental Assets

On July 26, 2022, we executed an Asset Purchase Agreement for the sale of certain non-strategic dental related (“Commercial Dental”) assets for $12,000, subject to certain holdback and other adjustments. Total consideration consisted of $11,253 in cash received and $600 additional cash expected to be received approximately twelve months from the close date. We recognized a gain on disposition of $10,296 in our consolidated statement of net income and comprehensive income as a component of other income (expense). The gain was measured as the total consideration received and expected to be received, less net assets and liabilities included in the transaction, consisting primarily of previously capitalized dental related software development costs, and contract liabilities, less direct incremental transaction costs. The impact of the disposition was not significant and does not qualify for

reporting as a discontinued operation because it did not represent a strategic shift that would have a major effect on our operations and financial results.

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Goodwill

6 Months Ended

Sep. 30, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill

8. Goodwill

We test goodwill for impairment annually during our first fiscal quarter, referred to as the annual test date. We will also test for impairment between annual test dates if an event occurs or circumstances change that would indicate the carrying amount may be impaired. Impairment testing for goodwill is performed at a reporting-unit level, which is defined as an operating segment or one level below an operating segment (referred to as a component). We operate as one segment and have a single reporting unit. The measures evaluated by our chief operating decision maker ("CODM"), consisting of the Chief Executive Officer, to assess company performance and make decisions about the allocation of resources include consolidated revenue and consolidated operating results.

We have not identified any events or circumstances as of September 30, 2023 that would require an interim goodwill impairment test.

We do not amortize goodwill as it has been determined to have an indefinite useful life. The carrying amount of goodwill was $322,001 and $321,756 as of September 30, 2023 and March 31, 2023, respectively.

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Intangible Assets

6 Months Ended

Sep. 30, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets

9. Intangible Assets

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

	September 30, 2023
	Customer Relationships			Trade Names			Software Technology			Re-acquired Rights			Data Health Database			Total
Gross carrying amount	$	44,700		$	250		$	22,500		$	6,250		$	1,950		$	75,650
Accumulated amortization		(34,489	)		(191	)		(14,646	)		(1,302	)		(542	)		(51,170	)
Net intangible assets	$	10,211		$	59		$	7,854		$	4,948		$	1,408		$	24,480
	March 31, 2023
	Customer Relationships			Trade Names			Software Technology			Re-acquired Rights			Data Health Database			Total
Gross carrying amount	$	44,700		$	250		$	25,700		$	6,250		$	1,950		$	78,850
Accumulated amortization		(32,918	)		(166	)		(16,060	)		(521	)		(217	)		(49,882	)
Net intangible assets	$	11,782		$	84		$	9,640		$	5,729		$	1,733		$	28,968

Amortization expense related to the customer relationships, trade names, and re-acquired rights intangible assets recorded as operating expenses in the consolidated statements of net income and comprehensive income was $1,189 and $705 for the three months ended September 30, 2023 and 2022, respectively. Amortization expense related to the software technology and data health database intangible assets recorded as cost of revenue was $1,055 and $1,373 for the three months ended September 30, 2023 and 2022, respectively.

Amortization expense related to the customer relationships, trade names, and re-acquired rights intangible assets recorded as operating expenses in the condensed consolidated statements of net income and comprehensive income was $2,377 and $1,410 for the six months ended September 30, 2023 and 2022, respectively. Amortization expense related to software technology and data health database intangible assets recorded as cost of revenue was $2,111 and $3,154 for the six months ended September 30, 2023 and 2022, respectively.

During the six months ended September 30, 2023, we retired $3,200 of fully amortized software technology related to our Inforth acquisition.

The following table summarizes the remaining estimated amortization of definite-lived intangible assets as of September 30, 2023:

	Estimated Remaining Amortization Expense
	Operating Expense		Cost of Revenue		Total
For the year ended March 31,
2024	$	2,377	$	2,111	$	4,488
2025		4,180		4,223		8,403
2026		3,596		2,684		6,280
2027		2,232		244		2,476
2028 and beyond		2,833		—		2,833
Total	$	15,218	$	9,262	$	24,480

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Capitalized Software Costs

6 Months Ended

Sep. 30, 2023

Research and Development [Abstract]

Capitalized Software Costs

10. Capitalized Software Costs

Our capitalized software costs are summarized as follows:

	September 30, 2023			March 31, 2023
Gross carrying amount	$	139,371		$	131,791
Accumulated amortization		(79,496	)		(77,275	)
Net capitalized software costs	$	59,875		$	54,516

Amortization expense related to capitalized software costs was $6,125 and $5,371 for the three months ended September 30, 2023 and 2022, respectively, and is recorded as cost of revenue in the condensed consolidated statements of net income and comprehensive income.

Amortization expense related to capitalized software costs was $12,061, and $10,725 for the six months ended September 30, 2023 and 2022, respectively.

During the six months ended September 30, 2023, we retired $9,841 of fully amortized capitalized software costs that are no longer being utilized by our client base.

The following table presents the remaining estimated amortization of capitalized software costs as of September 30, 2023. The estimated amortization is comprised of (i) amortization of released products and (ii) the expected amortization for products that are not yet available for sale based on their estimated economic lives and projected general release dates.

For the year ended March 31,
2024	$	17,100
2025		24,100
2026		13,400
2027		5,275
Total	$	59,875

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Debt

6 Months Ended

Sep. 30, 2023

Debt Disclosure [Abstract]

Debt

11. Debt

Convertible Senior Notes

On November 1, 2022, we issued $275,000 in aggregate principal amount of 3.75% Convertible Senior Notes due 2027 (“Notes”). The Notes were issued pursuant to, and are governed by, an indenture, dated as of November 1, 2022 (“Indenture”), between the Company and U.S. Bank Trust Company, National Association, as trustee. Net proceeds from the issuance of the Notes were approximately $266,517, after deducting issuance costs totaling $8,483.

The Notes will accrue interest at a rate of 3.75% per annum, payable semi-annually in arrears on May 15 and November 15 of each year, beginning on May 15, 2023. The Notes will mature on November 15, 2027, unless earlier repurchased, redeemed or converted.

Noteholders may convert their notes at their option only in the following circumstances:

•during any calendar quarter (and only during such calendar quarter) commencing after the calendar quarter ending on December 31, 2022, if the last reported sale price per share of our common stock exceeds 130% of the conversion price for each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter;

•during the five consecutive business days immediately after any 10 consecutive trading day period (such 10 consecutive trading day period, the “measurement period”) in which the trading price per $1 principal amount of notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price per share of our common stock on such trading day and the conversion rate on such trading day;

•upon the occurrence of certain corporate events or distributions on our common stock, as described in the Indenture;

•if we call such notes for redemption; and

•at any time from, and including, August 16, 2027 until the close of business on the second scheduled trading day immediately before the maturity date.

We will settle conversions by paying or delivering, as applicable, cash and, if applicable, shares of common stock, at our election, based on the applicable conversion rate(s). However, upon conversion of any Notes, the conversion value, which will be determined over an observation period consisting of 60 trading days, will be paid in cash up to at least the principal amount of the Notes being converted. The initial conversion rate is 38.9454 shares of common stock per $1 principal amount of Notes, which represents an initial conversion price of approximately $25.68 per share of common stock. The conversion rate and conversion price will be subject to customary adjustments upon the occurrence of certain events. In addition, if certain corporate events that constitute a “Make-Whole Fundamental Change” (as defined in the Indenture) occur, then the conversion rate will, in certain circumstances, be increased for a specified period of time. The customary make-whole adjustments were designed in a manner such that the additional number of shares is consistent with the lost time value of the conversion option. Notwithstanding anything to the contrary, in no event will the conversion rate be increased to a number that exceeds 52.5762 shares of our common stock per $1 principal amount of Notes.

The Notes will be redeemable, in whole or in part (subject to certain limitations described below), at our option at any time, and from time to time, on or after November 20, 2025, and before the 61st scheduled trading day immediately before the maturity date, but only if the last reported sale price per share of our common stock exceeds 130% of the conversion price on (i) each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the trading day immediately before the date we send the related redemption notice; and (ii) the trading day immediately before the date we send such notice. However, we may not redeem less than all of the outstanding Notes unless at least $100,000 aggregate principal amount of Notes are outstanding and not called for redemption as of the time we send the related redemption notice. The redemption price will be a cash amount equal to the principal amount of the Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date. In addition, calling any Note for redemption will constitute a Make-Whole Fundamental Change with respect to that Note, in which case the conversion rate applicable to the conversion of that Note will be increased in certain circumstances if it is converted with a conversion date that is on or after the date we send the related redemption notice and on or before the second business day immediately before the related redemption date. If we elect to redeem less than all of the outstanding Notes, then the redemption will not constitute a make-whole fundamental change with respect to the Notes not called for redemption, and holders of the Notes not called for redemption will not be entitled to an increased conversion rate for such Notes on account of the redemption.

If certain corporate events that constitute a “Fundamental Change” (as defined in the Indenture) occur, then, subject to certain exceptions, noteholders may require us to repurchase their Notes at a cash repurchase price equal to the principal amount of the Notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the fundamental change repurchase date. The definition of Fundamental Change includes certain business combination transactions involving the Company and certain de-listing events with respect to our common stock.

The Notes will be our senior, unsecured obligations and will be (i) equal in right of payment with our existing and future senior, unsecured indebtedness; (ii) senior in right of payment to our existing and future indebtedness that is expressly subordinated to the Notes; (iii) effectively subordinated to our existing and future secured indebtedness, to the extent of the value of the collateral securing that indebtedness; and (iv) structurally subordinated to all existing and future indebtedness and other liabilities, including trade payables.

The Notes are recorded net of issuance costs as noncurrent liabilities in the consolidated balance sheets. The net carrying value of the Notes are as follows:

	September 30, 2023			March 31, 2023
Principal amount	$	275,000		$	275,000
Unamortized issuance costs		(7,435	)		(8,157	)
Carrying value, net	$	267,565		$	266,843

The debt issuance costs of the Notes are being amortized using the effective interest method. The effective interest rate of the Notes is 4.48%. Interest expense related to the Notes was $2,578 and $5,185 for the three and six months ended September 30, 2023, respectively. Amortization of debt issuance costs related to the Notes was $409 and $722 for the three and six months ended September 30, 2023.

Line of Credit

On March 12, 2021, we entered into a $300,000 second amended and restated revolving credit agreement (the “Credit Agreement”) with JPMorgan Chase Bank, N.A., as administrative agent (in such capacity, the “Administrative Agent”), U.S. Bank National Association and Bank of the West, as co-syndication agents, and certain other agents and lenders. The Credit Agreement replaces our prior $300,000 amended and restated revolving credit agreement, originally entered into on January 4, 2016 and amended on March 29, 2018. The Credit Agreement provides a subfacility of up to $10,000 for letters of credit and a subfacility of up to $10,000 for swing-line loans. The Credit Agreement also provides us with the ability to obtain up to $150,000 in the aggregate of additional revolving credit commitments and/or term loans thereunder (i.e., in excess of $300,000) upon satisfaction of certain conditions, including receipt of commitments from new or existing lenders to provide such additional revolving credit commitments and/or term loans.

On May 17, 2022, we entered into that certain Amendment No. 1 to Credit Agreement (the “First Amendment”) with the Administrative Agent and the lenders party thereto to amend the existing Credit Agreement. The First Amendment modifies the Credit Agreement to increase our net leverage ratio maintenance covenant from 3.75x to 4.00x and increase the related adjusted covenant period option (available upon the consummation of certain acquisitions) from 4.25x to 4.75x, in each case, commencing with the reporting period ending June 30, 2022. The First Amendment also makes certain updates to the conditions restricting the making of certain dividends, distributions, and other restricted payments by the Company so that such conditions are based on the our net leverage ratio (as set forth in the Credit Agreement) rather than our total leverage ratio, to increase the dollar cap for such restricted payments that can be made without satisfying leverage conditions from $11,500 to $25,000, and to increase flexibility in cash netting calculations in connection with the making of restricted payments.

On October 27, 2022, the Company entered into that certain Amendment No. 2 to Credit Agreement (the “Second Amendment”) with the Administrative Agent and the lenders party thereto. The Second Amendment modifies the Credit Agreement to make certain updates to the conditions restricting the making of certain dividends, distributions, and other restricted payments by the Company so that the Company’s compliance with the net leverage ratio governor contained in such conditions is calculated net of the net cash proceeds of the Notes issued pursuant to the Indenture.

Effective April 28, 2023, the Company entered into Amendment No. 3 to the Credit Agreement (the "Third Amendment"), which, among other changes, replaces the existing LIBOR-based rate with a SOFR-based rate.

The Credit Agreement matures on March 12, 2026 and the full balance of the revolving loans and all other obligations under the Credit Agreement must be paid at that time. In addition, we are required to prepay the revolving loan balance if at any time the aggregate principal amount outstanding under the Credit Agreement exceeds the aggregate commitments thereunder. The Credit Agreement is secured by substantially all of our existing and future property and our material domestic subsidiaries. The revolving loans under the Credit Agreement will be available for letters of credit, permitted acquisitions, working capital and general corporate purposes. We were in compliance with all financial and non-financial covenants under the Credit Agreement as of September 30, 2023.

As of September 30, 2023 and March 31, 2023, we had no outstanding loans and $300,000 of unused credit under the Credit Agreement.

Interest expense related to the Credit Agreement was $192 and $198 for the three months ended September 30, 2023 and 2022, respectively.

Interest expense related to the Credit Agreement was $382 and $401 for the six months ended September 30, 2023 and 2022, respectively.

Costs incurred in connection with securing the Credit Agreement, including fees paid to legal advisors and third parties, are deferred and amortized to interest expense over the term of the Credit Agreement. Deferred debt issuance costs are reported as a component of other assets on the consolidated balance sheets. As of September 30, 2023 and 2022, total unamortized debt issuance costs were $1,244 and $2,067, respectively. Amortization of deferred debt issuance costs was $127 and $127 for the three months ended September 30, 2023 and 2022, respectively. Amortization of deferred debt issuance costs was $254 and $254 for the six months ended September 30, 2023 and 2022, respectively.

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Composition of Certain Financial Statement Captions

6 Months Ended

Sep. 30, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Composition of Certain Financial Statement Captions

12. Composition of Certain Financial Statement Captions

Cash, cash equivalents, and restricted cash are summarized as follows:

	September 30, 2023		March 31, 2023
Cash and cash equivalents	$	53,867	$	98,719
Restricted cash and cash equivalents		4,914		7,269
Cash, cash equivalents, and restricted cash	$	58,781	$	105,988

Prepaid expenses and other current assets are summarized as follows:

	September 30, 2023		March 31, 2023
Prepaid expenses	$	22,673	$	26,365
Capitalized commissions costs		14,363		13,813
Accrued interest on marketable securities		916		699
Other current assets		1,732		2,039
Prepaid expenses and other current assets	$	39,684	$	42,916

Equipment and improvements are summarized as follows:

	September 30, 2023			March 31, 2023
Computer equipment	$	34,503		$	35,019
Internal-use software		20,689			20,064
Leasehold improvements		4,542			7,067
Furniture and fixtures		2,787			4,871
Equipment and improvements, gross		62,521			67,021
Accumulated depreciation and amortization		(57,582	)		(60,600	)
Equipment and improvements, net	$	4,939		$	6,421

Other assets are summarized as follows:

	September 30, 2023		March 31, 2023
Capitalized commission costs	$	27,499	$	26,104
Deposits		7,478		7,447
Debt issuance costs		1,244		1,498
Other noncurrent assets		9,996		9,189
Other assets	$	46,217	$	44,238

Accrued compensation and related benefits are summarized as follows:

	September 30, 2023		March 31, 2023
Accrued bonus	$	11,670	$	15,550
Accrued vacation		13,244		13,271
Accrued commissions		3,148		5,166
Accrued payroll and other		345		2,254
Accrued compensation and related benefits	$	28,407	$	36,241

Other current and noncurrent liabilities are summarized as follows:

	September 30, 2023		March 31, 2023
Accrued acquisition costs	$	7,861	$	—
Customer credit balances and deposits		7,136		5,417
Sales returns reserves and other customer liabilities		5,614		5,390
Care services liabilities		4,914		7,269
Accrued interest payable		4,081		4,244
Accrued hosting costs		3,553		873
Accrued EDI expense		3,068		3,064
Accrued outsourcing costs		2,785		3,023
Accrued employee benefits and withholdings		2,667		3,195
Accrued self insurance expense		2,299		2,359
Accrued consulting and outside services		2,002		3,957
Accrued royalties		1,838		3,248
Accrued legal expense		907		782
Accrued taxes payable		309		1,746
Accrued legal settlement(1)		-		33,990
Other accrued expenses		5,963		5,242
Other current liabilities	$	54,997	$	83,799
Contingent consideration related to acquisitions, noncurrent	$	4,200	$	3,800
Uncertain tax positions		4,195		3,950
Other liabilities		642		524
Other noncurrent liabilities	$	9,037	$	8,274

(1) Refer to Note 17, "Commitments, Guarantees and Contingencies" for more details.

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Income Taxes

6 Months Ended

Sep. 30, 2023

Income Tax Disclosure [Abstract]

Income Taxes

13. Income Taxes

The provision of income taxes was $1,641 in the three months ended September 30, 2023, reflecting an effective tax rate of 24.5%. The provision of income taxes was $5,707 in the three months ended September 30, 2022, reflecting an effective tax rate of 29.5%.

The provision of income taxes in the six months ended September 30, 2023 was $4,031, reflecting an effective tax rate of 26.4%. The provision of income taxes in the six months ended September 30, 2022 was $5,460, reflecting an effective tax rate of 27.0%.

The decrease in the effective tax rate for the three and six months ended September 30, 2023 compared to the corresponding prior periods was primarily due to an increase to research and development credits and a decrease to nondeductible stock based compensation, partially offset by an increase of discrete items.

The deferred tax assets and liabilities are presented net in the accompanying condensed consolidated balance sheets as noncurrent. We expect to receive the full benefit of the deferred tax assets recorded, with the exception of certain state credits and state net operating loss carryforwards, for which we have recorded a valuation allowance. We had unrecognized tax benefits of $6,198 and $5,911 related to various federal, state, and local income tax matters as of September 30, 2023 and March 31, 2023, respectively. If recognized, this amount would reduce our effective tax rate.

We are subject to taxation in federal, various state, India, and United Kingdom jurisdictions. We are no longer subject to United States federal income tax examinations for tax years before fiscal year ended 2019. With a few exceptions, we are no longer subject to state or local income tax examinations for tax years before fiscal year ended 2018. We do not anticipate the total unrecognized tax benefits to significantly change due to the settlement of audits or the expiration of statute of limitations within the next twelve months.

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Earnings Per Share

6 Months Ended

Sep. 30, 2023

Earnings Per Share [Abstract]

Earnings Per Share

14. Earnings per Share

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

	Three Months Ended September 30,				Six Months Ended September 30,
	2023		2022		2023		2022
Earnings per share — Basic:
Net income	$	5,055	$	13,623	$	11,211	$	14,771
Weighted-average shares outstanding — Basic		67,074		67,806		66,749		67,698
Net income per common share — Basic	$	0.08	$	0.20	$	0.17	$	0.22
Earnings per share — Diluted:
Net income	$	5,055	$	13,623	$	11,211	$	14,771
Weighted-average shares outstanding		67,074		67,806		66,749		67,698
Effect of potentially dilutive securities from equity incentive plans		616		616		531		655
Weighted-average shares outstanding — Diluted		67,690		68,422		67,280		68,353
Net income per common share — Diluted	$	0.07	$	0.20	$	0.17	$	0.22

The computation of diluted net income per share does not include 26 options to acquire shares of common stock for the three months ended September 30, 2022 because their inclusion would have an anti-dilutive effect on net income per share. There were no anti-dilutive options for the three months ended September 30, 2023.

The computation of diluted net income per share does not include 23 options to acquire shares of common stock for the six months ended September 30, 2022 because their inclusion would have an anti-dilutive effect on net income per share. There were no anti-dilutive options for the six months ended September 30, 2023.

The dilutive effect of potentially dilutive common shares is reflected in diluted net income per share by application of the if-converted method for the Notes. The shares issuable upon conversion of the Notes, subject to adjustment in some events, are not considered in the calculation of diluted net income per share because their inclusion would have an anti-dilutive effect on net income per share for the three months ended September 30, 2023.

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Stockholders' Equity

6 Months Ended

Sep. 30, 2023

Stockholders' Equity Note [Abstract]

Stockholders' Equity

15. Stockholders’ Equity

Equity Incentive Plans

In August 2015, our shareholders approved a stock option and incentive plan (the “2015 Plan”) under which 11,500,000 shares of common stock were reserved for the issuance of awards, including incentive stock options and non-qualified stock options, stock appreciation rights, restricted stock awards and restricted stock unit awards, performance stock awards and other share-based awards. In August 2017, our shareholders approved an amendment to the 2015 Plan, to, among other items, increase the number of shares of common stock reserved for issuance thereunder by 6,000,000 shares, which was further amended in August 2019 as approved by our shareholders, to, among other items, increase the number of shares of common stock reserved for issuance thereunder by an additional 3,575,000 shares. In October 2021, our shareholders approved an amendment and restatement of the Company’s 2015 Equity Incentive Plan (the “Amended 2015 Plan”), to, among other items, increase the number of common stock reserved for issuance thereunder by an additional 1,850,000 shares. In August 2023, our shareholders approved an amendment to the 2015 Plan, to, among other items, increase the number of shares of common stock authorized for issuance by an additional 2,150,000 shares. The Amended 2015 Plan provides that our employees and directors may, at the discretion of the Board of Directors (“Board”) or a duly designated compensation committee, be granted certain share-based awards. In the case of option awards granted under the Amended 2015 Plan, the exercise price of each option is determined based on the date of grant and expire no later than 10 years from the date of grant. Awards granted pursuant to the Amended 2015 Plan are subject to the vesting schedule or performance metrics set forth in the agreements pursuant to which they are granted. Upon a change of control of our Company, as such term is defined in the Amended 2015 Plan, awards under the Amended 2015 Plan will fully vest under certain circumstances. As of September 30, 2023, there were 923,789 outstanding options, 3,091,468 outstanding shares of restricted stock awards, certain outstanding performance stock unit awards as described further below, and 2,725,265 shares available for future grant under the Amended 2015 Plan.

In September 2021, the Board adopted the 2021 Employment Inducement Equity Incentive Plan (the “Inducement Plan”) and initially reserved 1,500,000 shares of common stock for issuance under the Inducement Plan. The Inducement Plan was adopted by the Board without stockholder approval pursuant to Rule 5635(c)(4) of the Nasdaq Listing Rules. In accordance with Rule 5635(c)(4) of the Nasdaq Listing Rules, awards under the Inducement Plan may only be made to an employee who has not previously been an employee or member of the Board or the Board of Directors or any parent or subsidiary, or following a bona fide period of non-employment by the Company or a parent or subsidiary, if he or she is granted such award in connection with his or her commencement of employment with the Company or a subsidiary and such grant is an inducement material to his or her entering into employment with the Company or such subsidiary. The terms of the Inducement Plan were substantially similar to the

terms of our Amended 2015 Plan, with the exception that incentive stock options may not be granted under the Inducement Plan. Effective as of June 30, 2023, the Inducement Plan was terminated and any shares remaining available for future issuance under the Inducement Plan were canceled; however, the terms and conditions of the Inducement Plan will continue to govern any outstanding awards thereunder granted prior to June 30, 2023. As of September 30, 2023, there were 412,056 outstanding shares of restricted stock awards and 123,390 outstanding performance stock unit awards.

Stock-Based Compensation

The following table summarizes total share-based compensation expense included in the condensed consolidated statements of net income and comprehensive income for the three and six months ended September 30, 2023 and 2022:

	Three Months Ended September 30,						Six Months Ended September 30,
	2023			2022			2023			2022
Costs and expenses:
Cost of revenue	$	1,036		$	951		$	1,878		$	1,514
Research and development costs		1,183			1,655			1,838			3,238
Selling, general and administrative		7,247			6,081			13,706			12,701
Total share-based compensation		9,466			8,687			17,422			17,453
Income tax benefit		(2,250	)		(2,078	)		(4,144	)		(4,123	)
Decrease in net income	$	7,216		$	6,609		$	13,278		$	13,330

Share-based compensation expense under our equity incentive plans is based on the number awards that ultimately vest and forfeitures are accounted for as they occur.

Restricted Stock Awards

Restricted stock awards activity during the six months ended September 30, 2023 is summarized as follows:

Restricted Stock Award Activity				Weighted-
				Average
				Grant-Date
	Number of			Fair Value
	Shares			per Share
Outstanding, March 31, 2023		3,297,512		$	16.72
Granted		1,436,071			15.57
Vested		(1,086,413	)		15.66
Canceled		(143,646	)		16.50
Outstanding, September 30, 2023		3,503,524		$	16.59

Share-based compensation expense related to restricted stock awards was $7,067 and $6,372 for the three months ended September 30, 2023 and 2022, respectively. Share-based compensation expense related to restricted stock awards was $13,058 and $12,651 for the six months ended September 30, 2023 and 2022, respectively.

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

As of September 30, 2023, $46,335 of total unrecognized compensation costs related to restricted stock awards is expected to be recognized over a weighted-average period of 1.9 years. This amount does not include the cost of new restricted stock awards that may be granted in future periods.

The total fair value of restricted stock awards vested as of the vesting dates were $7,050 and $7,114 for the three months ended September 30, 2023 and 2022, respectively. The total fair value of restricted stock awards vested as of the vesting dates were $18,742 and $18,205 for the six months ended September 30, 2023 and 2022, respectively.

Stock Options

The following table summarizes the stock option transactions during the six months ended September 30, 2023:

				Weighted-		Weighted-
				Average		Average		Aggregate
				Exercise		Remaining		Intrinsic
	Number of			Price		Contractual		Value
	Shares			per Share		Life (years)		(in thousands)
Outstanding, March 31, 2023		1,130,813		$	14.75		1.7	$	3,011
Exercised		(201,824	)		14.33		1.3	$	254
Forfeited/Canceled		(500	)		—
Expired		(4,700	)		16.64
Outstanding, September 30, 2023		923,789		$	14.83		1.5	$	8,224
Vested and expected to vest, September 30, 2023		923,789		$	14.83		1.5	$	8,224
Exercisable, September 30, 2023		923,789		$	14.83		1.5	$	8,224

Net Share Settlements

Restricted stock awards and performance stock units are generally net share-settled upon vesting to cover the required withholding taxes, and the remaining share amount is transferred to the employee. The majority of restricted stock awards and performance stock units that vested during the six months ended September 30, 2023 and 2022 were net-share settled such that we withheld shares with value equivalent to the employees’ applicable income tax obligations for the applicable income and other employment taxes and remitted the equivalent amount of cash to the appropriate taxing authorities. Total payments for the employees’ applicable income tax obligations are reflected as a financing activity within the accompanying consolidated statements of cash flows. The total shares withheld during the three months ended September 30, 2023 and 2022 were 145,073 and 142,751 respectively, and were based on the value of the restricted stock awards and performance stock units on their vesting date as determined by our closing stock price. The total shares withheld during the six months ended September 30, 2023 and 2022 were 395,048 and 345,263, respectively. These net-share settlements had the effect of share repurchases by us as they reduced the number of shares that would have otherwise been issued at the vesting date.

Performance Stock Units and Awards

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

On September 20, 2021, the Compensation Committee of the Board approved an award of 450,000 performance stock units to be granted to our Chief Executive Officer under the Inducement Plan. The award has a grant date of September 22, 2021 and portions of the award vest upon both the attainment of five separate pre-determined stock price milestones during a five-year performance period and continued service over a period of three years following the grant date. The fair value and derived service period for each share-price milestone tranche was estimated separately using a Monte-Carlo based valuation model. The expense for each share-price milestone tranche is amortized over the longer of the derived service period or the explicit service period. The weighted-average grant date fair value of the award was $10.52 per share. As of September 30, 2023, 48,667 units were earned and issued as shares.

On October 26, 2021, the Compensation Committee of the Board approved 476,713 performance stock units to be granted to certain members of the executive leadership team. The awards have a grant date of November 2, 2021 and portions of the award vest upon both the attainment of four separate pre-determined stock price milestones through September 22, 2026 and continued service over a period of three years following the grant date. The fair value and derived service period for each share-price milestone tranche was estimated separately using a Monte-Carlo based valuation model. The expense for each share-price milestone tranche is amortized over the longer of the derived service period or the explicit service period. The weighted-average grant date fair value of the award was $13.02 per share. As of September 30, 2023, 62,668 units were earned and issued as shares.

On October 25, 2022, the Compensation Committee of the Board approved 475,337 target performance stock unit awards to be granted to certain executives and non-executive members of the executive leadership team. The awards have a grant date of

October 28, 2022 and vest only in the event certain performance goals are achieved and with continuous service through the date the goals are certified. Approximately 50% of the performance stock units are tied to the Company’s fiscal year 2025 revenue goal and 50% are tied to the Company’s fiscal year 2025 EBITDA goal. Performance stock unit awards funded will be modified for cumulative 3-year TSR on the three-year grant date anniversary, which is also the cliff vest date. The number of shares to be issued may vary between 0% and 210% of the number of target performance stock units depending on performance, and no such shares will be issued if threshold performance is not achieved. The weighted-average grant date fair value of the awards was $22.81 per share, which was estimated using a Monte Carlo-based valuation model for the awards based on total shareholder return and using a probability adjusted achievement rate combined with the market price of the common stock on the date of grant.

Share-based compensation expense related to the performance stock units and awards was 2,290 and 4,064 for the three and six months ended September 30, 2023, respectively. Share-based compensation expense related to the performance stock units and awards was 2,172 and 4,374 for the three and six months ended September 30, 2022, respectively.

As of September 30, 2023, $8,457 of total estimated unrecognized compensation costs related to performance stock units and awards is expected to be recognized over a weighted-average period of 1.9 years. This amount does not include the cost of new performance stock units and awards that may be granted in future periods.

Employee Share Purchase Plan

On August 11, 2014, our shareholders approved an Employee Share Purchase Plan (the “Purchase Plan”) under which 4,000,000 shares of common stock were reserved for future grant. The Purchase Plan allows eligible employees to purchase shares through payroll deductions of up to 15% of total base salary at a price equal to 90% of the lower of the fair market values of the shares as of the beginning or the end of the corresponding offering period. Any shares purchased under the Purchase Plan are subject to a six-month holding period. Employees are limited to purchasing no more than 1,500 shares on any single purchase date and no more than $25 in total fair market value of shares during any one calendar year. Effective September 15, 2023, the Purchase Plan was suspended in connection with the Merger Agreement. As of September 30, 2023, we have issued 1,140,806 shares under the Purchase Plan.

Share-based compensation expense recorded for the employee share purchase plan was $109 and $130 for the three months ended September 30, 2023 and 2022, respectively. Share-based compensation expense recorded for the employee share purchase plan was $300 and $349 for the six months ended September 30, 2023 and 2022, respectively.

Share Repurchase Program

In October 2021, the Board authorized a share repurchase program under which we may repurchase up to $60,000 of our outstanding shares of common stock through March 2023. On October 25, 2022, the Board authorized a new share repurchase program under which we may repurchase up to an additional $100,000 of outstanding shares of our common stock through March 2025.

The timing and amount of any share repurchases under the share repurchase programs will be determined by our management at its discretion based on ongoing assessments of the capital needs of the business, the market price of our common stock and general market conditions. Share repurchases under the programs may be made through a variety of methods, which may include open market purchases, in block trades, accelerated share repurchase transactions, exchange transactions, or any combination of such methods. Repurchases may also be made under Rule 10b5-1 plans, which permit shares of common stock to be repurchased through pre-determined criteria. The programs do not obligate the Company to acquire any particular amount of our common stock, and the share repurchase programs may be suspended or discontinued at any time at our discretion.

We did not repurchase any shares of common stock in the six months ended September 30, 2023. As of September 30, 2023, $74,303 remained available for share repurchases pursuant to our share repurchase programs.

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Concentration of Credit Risk

6 Months Ended

Sep. 30, 2023

Risks and Uncertainties [Abstract]

Concentration of Credit Risk

16. Concentration of Credit Risk

We had cash deposits at United States banks and financial institutions which exceeded federally insured limits at September 30, 2023. We are exposed to credit loss for amounts in excess of insured limits in the event of non-performance by the institutions; however, we do not anticipate non-performance by these institutions.

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Commitments, Guarantees and Contingencies

6 Months Ended

Sep. 30, 2023

Commitments and Contingencies Disclosure [Abstract]

Commitments, Guarantees and Contingencies

17. Commitments, Guarantees and Contingencies

Commitments and Guarantees

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

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

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

We also have contingent consideration liabilities related to our acquisitions. Refer to Note 7, “Business Combinations and Disposals” and Note 4, “Fair Value Measurements” of our notes to consolidated financial statements included elsewhere in this Report for further information.

Contingencies

In addition to commitments and obligations in the ordinary course of business and routine legal proceedings, we are currently subject to various non-ordinary course legal proceedings, claims and investigations, as described below.

We accrue estimates for resolution of any legal proceeding and other contingencies when losses are probable and reasonably estimable in accordance with ASC 450, Contingencies (“ASC 450”). No less than quarterly, and as facts and circumstances change, we review the status of each significant matter underlying a legal proceeding or claim and assess our potential financial exposure. We accrue a liability for an estimated loss if the potential loss from any legal proceeding or claim is considered probable and the amount can be reasonably estimated. Significant judgment is required in both the determination of probability and the determination as to whether the amount of an exposure is reasonably estimable, and accruals are based only on the information available to our management at the time the judgment is made, which may prove to be incomplete, or inaccurate or unanticipated events and circumstances may occur that might cause us to change those estimates and assumptions.

The outcome of legal proceedings is inherently uncertain, and we may incur substantial defense costs and expenses defending any of these matters. If one or more of these legal proceedings were resolved against or settled by us in a reporting period for amounts in excess of our management’s expectations, our consolidated financial statements for that and subsequent reporting periods could be materially adversely affected. In addition, we could be forced to incur increased compliance costs or change the manner in which we operate our business, which could have a material adverse impact on our business, results of operations, cash flows or financial condition.

DOJ Investigation

On July 13, 2023, we entered into a settlement agreement (the “Settlement Agreement”) with the U.S. Department of Justice (the “DOJ”) and two private parties (the “Relators”) to resolve the previously disclosed investigation by the DOJ regarding the Company’s software certification under the United States Department of Health and Human Services Electronic Health Record Incentive Program and the Company’s marketing practices. The investigation also involved a previously disclosed qui tam lawsuit (the “Civil Action”) filed by the Relators against the Company alleging violations of the federal False Claims Act.

Pursuant to the terms of the Settlement Agreement, on July 14, 2023, the Company paid a total of $31,268 to the United States to settle the claims and a total of $1,200 to the Relators for attorneys’ fees, expenses and costs. Upon receipt of such payments, the DOJ and the Relators dismissed the Civil Action and released the Company from the claims specified in the Settlement Agreement.

Although we admitted no wrongdoing, the Civil Action and Settlement Agreement may have a material adverse effect on our reputation and consequently our business and operations.

Security Incident and Related Litigation

On April 28, 2023, the Company issued written notification to approximately 1 million individuals notifying them that NextGen Healthcare, Inc. had discovered that certain of their personal information (name, address, date of birth, and social security number)

had been accessed without authorization during a recent data security incident impacting the NextGen Office system. Following notification of the data breach, NextGen Healthcare, Inc. was named as a defendant in sixteen putative class action lawsuits in the United States District Court for the Northern District of Georgia, all of which assert various claims stemming from the data breach and NextGen Healthcare’s alleged failure to safeguard personal information. These lawsuits seek monetary damages, injunctive and declaratory relief, and attorneys’ fees and costs. On July 17, 2023, the Court consolidated all sixteen of the lawsuits into one action in the Northern District of Georgia, styled as Miller v. NextGen Healthcare, Inc., 1:23-cv-02043-TWT. The Court has appointed interim lead counsel for the consolidated matter, and the plaintiffs will be serving NextGen with a consolidated amended complaint on or about November 30, 2023. We believe we have meritorious defenses to this litigation and intend to vigorously oppose the claims asserted in these complaints and any amended consolidated complaint to be filed in the consolidated action. We cannot reasonably estimate the range of potential losses that may be associated with this litigation because of the early stage of the litigation. We also cannot assure you that we will not become subject to other lawsuits, inquiries, or claims relating to or arising from the matter. Although we maintain cyber-technology liability insurance, it is possible that the ultimate amount paid by us, if we are unsuccessful in defending all of the litigation, will be in excess of our cyber-technology liability insurance coverage applicable to claims of this nature.

Hussein Litigation

On October 7, 2013, a complaint was filed against our Company and certain of our officers and directors in the Superior Court of the State of California for the County of Orange, captioned Ahmed D. Hussein v. Sheldon Razin, Steven Plochocki, Quality Systems, Inc. and Does 1-10, inclusive, No. 30-2013-00679600-CU-NP-CJC, by Ahmed Hussein, a former director and significant shareholder of our Company. The amended complaint generally alleges fraud and deceit, constructive fraud, negligent misrepresentation and breach of fiduciary duty in connection with statements made to our shareholders regarding our financial condition and projected future performance. The amended complaint seeks actual damages, exemplary and punitive damages and costs. Hussein’s breach of fiduciary duty claims were dismissed on demurrer, and we filed an answer and cross-complaint against Hussein, alleging that he breached fiduciary duties owed to the Company. On September 16, 2015, the Court granted summary judgment with respect to Hussein’s remaining claims, dismissing all claims against us. The cross-complaint against Hussein went to trial, but the Court granted judgment in favor of Hussein on our cross-complaint. Final judgment over Hussein’s claims and our cross-claims was entered on January 9, 2018. Hussein appealed the order granting summary judgment over his claims, and we appealed the court’s decision granting Hussein’s motion for judgment on our cross-complaint. On October 8, 2019, the California State Court of Appeal for the Fourth Appellate District, Division Three, reversed the Superior Court’s grant of summary judgment on Hussein’s affirmative claims and affirmed the trial court’s judgment on the Company’s breach of fiduciary duty claims against Hussein. As a result, the case returned to the trial court for resolution of Hussein’s claims against us. On July 29, 2021, the jury rendered a verdict in favor of the Company and the individual defendants on all counts. Hussein filed a Motion for New Trial, which the Court denied. Hussein has appealed the jury verdict in favor of the Company and the individual defendants. Hussein, the Company, and the individual defendants have appealed the trial court’s denial of requests for recovery of costs arising from the litigation. The parties have completed briefing on the various appeals. The California State Court of Appeal for the Fourth Appellate District, Division Three, held a hearing on the various appeals on August 25, 2023. At this time, NextGen Healthcare is unable to estimate the probability or the amount of liability, if any, related to these claims.

Merger Litigation

On September 29, 2023 and October 3, 2023, purported stockholders Denise Redfield and Yadira Torres sent demand letters to the Company. These demand letters allege that NextGen Healthcare’s September 26, 2023 Proxy Statement is materially false or misleading because it omitted certain information related to the Company’s merger with Thoma Bravo, LP, including but not limited to information about the Company’s financial projections and analyses performed by NextGen’s financial advisor, Morgan Stanley.

On October 7, 2023, October 10, 2023, and October 12, 2023, purported stockholders Toni Dougherty, Ryan O’Dell, and Elaine Wang filed three actions in the United States District Court for the Southern District of New York (Dougherty v. NextGen Healthcare, Inc., et al., Case No. 1:23-cv-08845, O’Dell v. NextGen Healthcare, Inc., et al., Case No. 1:23-cv-08895, and Wang v. NextGen Healthcare, Inc., et al., Case No. 1:23-cv-08982). On October 13, 2023, purported stockholders Michael Floyd and John McDaniels filed actions in the United States District Court for the District of Delaware (Floyd v. NextGen Healthcare, Inc., et al., Case No. 1:23-cv-01150, and McDaniels v. NextGen Healthcare, Inc., et al., Case No. 1:23-cv-01149). On October 12, 2023, October 13, 2023, and October 19, 2023, purported stockholders Michael Kent, Scott Young, and Rina Brodt sent demand letters to the Company. The complaints and demands allege that certain officers and directors of NextGen Healthcare violated Sections 14(a) and 20(a) of the Exchange Act by causing a materially incomplete and misleading registration statement to be filed with the SEC on October 6, 2023 in connection with NextGen Healthcare’s proposed merger with Thoma Bravo, L.P. In particular, the stockholders request that NextGen Healthcare make additional disclosures regarding certain information related to the Merger, including but not limited to financial projections and analyses performed by NextGen Healthcare’s financial advisor, Morgan Stanley. The Company may be involved in additional litigation related to the Merger.

The Company believes that the allegations in the complaints and demands are without merit. However, the Company plans to issue supplemental disclosures to address the claims in the various complaints and demands. At this time, NextGen Healthcare is unable to estimate the probability or the amount of liability, if any, related to these claims.

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Summary of Significant Accounting Policies (Policies)

6 Months Ended

Sep. 30, 2023

Accounting Policies [Abstract]

Principles of Consolidation

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

Pending Merger

Pending Merger. On September 5, 2023, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Next Holdco, LLC, a Delaware limited liability company (“Parent”), and Next Merger Sub, Inc., a Delaware corporation and direct wholly owned subsidiary of Parent (“Merger Sub”), pursuant to which, and on the terms and subject to the conditions thereof, Merger Sub will merge with and into the Company, with the Company surviving as a wholly owned subsidiary of Parent (the “Merger”). Parent and Merger Sub are affiliates of Thoma Bravo Discover Fund IV, L.P., an investment fund managed by Thoma Bravo, L.P.

Subject to the terms and conditions of the Merger Agreement, each share of Company common stock, par value $0.01 per share that is issued and outstanding immediately prior to the effective time of the Merger (except for certain shares specified in the Merger Agreement) will be canceled and extinguished and automatically converted into the right to receive $23.95 per share in cash, without interest and subject to any applicable withholding taxes.

Upon completion of the transaction, which is expected to close in the fourth calendar quarter of 2023, our common stock will no longer be listed on any public stock exchange.

Basis of Presentation

Basis of Presentation. The accompanying unaudited condensed consolidated financial statements as of September 30, 2023 and for the three and six months ended September 30, 2023 have been prepared in accordance with the requirements of Quarterly Report on Form 10-Q and Article 10 of the Securities and Exchange Commission Regulation S-X and therefore do not include all information and notes which would be presented were such condensed consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements presented in our Annual Report on Form 10-K for the fiscal year ended March 31, 2023. In the opinion of management, the accompanying condensed consolidated financial statements reflect all adjustments which are necessary for a fair statement of the results of operations and cash flows for the periods presented. The results of operations for such interim periods are not necessarily indicative of results of operations to be expected for the full year.

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

Use of Estimates

Use of Estimates. The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”), which requires us to make estimates and assumptions that affect the amounts reported and disclosed in the consolidated financial statements and the accompanying notes. Actual results could differ materially from these estimates. We evaluate our estimates on an ongoing basis. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and recording revenue and expenses during the period.

Recent Accounting Standards

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

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

Revenue Recognition and Performance Obligations

Revenue Recognition and Performance Obligations

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

The total transaction price is allocated to each performance obligation within a contract based on estimated standalone selling prices. We generally determine standalone selling prices based on the prices charged to customers, except for certain software licenses that are based on the residual approach because their standalone selling prices are highly variable and certain maintenance customers that are based on substantive renewal rates. In instances where standalone selling price is not sufficiently

observable, such as revenue cycle management ("RCM") services and software licenses included in our RCM arrangements, we estimate standalone selling price utilizing an expected cost plus a margin approach. When standalone selling prices are not observable, significant judgment is required in estimating the standalone selling price for each performance obligation.

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

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

The following table presents our revenues disaggregated by our major revenue categories and by occurrence:

Revenue Recognition

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

We generally recognize revenue for our most significant performance obligations as follows:

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

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

Managed services. Managed services consist primarily of RCM and related services, but also includes our hosting services, which we refer to as managed cloud services, transcription services, and certain other recurring services. Performance obligations associated with RCM services are satisfied over time as the customer simultaneously receives and consumes the benefits of the services executed throughout the contract period. The majority of service fees under our RCM arrangements are variable consideration contingent upon collections by our clients. We estimate the variable consideration which we expect to be entitled to over the noncancelable contract term associated with our RCM service arrangements. The estimate of variable consideration included in the transaction price typically involves estimating the amounts we will ultimately collect on behalf of our clients and the relative fee we charge that is generally calculated as a percentage of those collections. Inputs to these estimates include, but are

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

Transactional and data services. Performance obligations related to transactional and data services, including electronic data interchange (“EDI”), patient pay, and other transaction processing services are satisfied at the point in time the services are rendered or delivered. The transfer of control occurs when the transactional and data services are delivered and the customer receives the benefits from the services provided. Revenue is recognized as such services are rendered.

Beginning in fiscal year 2023, to align the presentation of disaggregated revenue with the manner in which management reviews such information, the presentation of disaggregated revenues by major revenue categories was revised to reclassify revenues related to patient pay services and certain other services from the managed services category into the transactional and data services category, which replaced the prior EDI and data services category. The prior period presentation of revenues disaggregated by major revenue categories and by occurrence above has been reclassified to conform with current period presentation.

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

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

Non-Recurring Fair Value Measurements

Non-Recurring Fair Value Measurements

We have certain assets, including goodwill and other intangible assets, which are measured at fair value on a non-recurring basis and are adjusted to fair value only if an impairment charge is recognized. The categorization of the framework used to measure fair value of the assets is considered to be within the Level 3 valuation hierarchy due to the subjective nature of the unobservable inputs used.

Leases

Our leasing arrangements are reflected on the balance sheet as right-of-use assets and liabilities pertaining to the rights and obligations created by the leased assets.

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

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

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Revenue from Contracts with Customers (Tables)

6 Months Ended

Sep. 30, 2023

Revenue from Contract with Customer [Abstract]

Schedule of Revenues Disaggregated by Major Revenue Categories and by Occurrence

The following table presents our revenues disaggregated by our major revenue categories and by occurrence:

	Three Months Ended September 30,				Six Months Ended September 30,
	2023		2022		2023		2022
Recurring revenues:
Subscription services	$	50,263	$	43,416	$	102,761	$	86,175
Support and maintenance		37,561		38,150		76,070		77,288
Managed services		35,063		31,055		69,822		61,700
Transactional and data services		38,429		30,882		76,037		58,099
Total recurring revenues		161,316		143,503		324,690		283,262
Software, hardware, and other non-recurring revenues:
Software license and hardware		5,521		7,916		10,492		14,115
Other non-recurring services		9,581		8,024		19,443		15,368
Total software, hardware and other non-recurring revenues		15,102		15,940		29,935		29,483
Total revenues	$	176,418	$	159,443	$	354,625	$	312,745

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Accounts Receivable (Tables)

6 Months Ended

Sep. 30, 2023

Receivables [Abstract]

Summary of Accounts Receivable

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

	September 30, 2023			March 31, 2023
Accounts receivable, gross	$	93,289		$	92,360
Allowance for credit losses		(4,012	)		(3,862	)
Accounts receivable, net	$	89,277		$	88,498

Summary of Changes in Allowance for Doubtful Accounts

The following table represents the changes in the allowance for credit losses, as of and for the three months ended September 30, 2023:

Balance as of June 30, 2023	$	(3,906	)
Additions charged to costs and expenses		(951	)
Deductions		845
Balance as of September 30, 2023	$	(4,012	)

The following table represents the changes in the allowance for credit losses, as of and for the six months ended September 30, 2023:

Balance as of March 31, 2023	$	(3,862	)
Additions charged to costs and expenses		(1,826	)
Deductions		1,676
Balance as of September 30, 2023	$	(4,012	)

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Fair Value Measurements (Tables)

6 Months Ended

Sep. 30, 2023

Fair Value Disclosures [Abstract]

Fair Value of Assets and Liabilities on a Recurring Basis

The following tables set forth by level within the fair value hierarchy our financial assets and liabilities that were accounted for at fair value on a recurring basis at September 30, 2023 and March 31, 2023:

	Balance At		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Unobservable Inputs
	September 30, 2023		(Level 1)		(Level 2)		(Level 3)
ASSETS
Cash and money market funds	$	52,077	$	52,077	$	—	$	—
Commercial paper		1,790		—		1,790		—
Total cash and cash equivalents		53,867		52,077		1,790		—
Restricted cash and cash equivalents		4,914		4,914		—		—
United States treasury securities		70,937		—		70,937		—
Agency securities		32,732		—		32,732		—
Corporate notes and bonds		25,984		—		25,984		—
Commercial paper		16,779		—		16,779		—
Total marketable securities		146,432		—		146,432		—
TOTAL ASSETS	$	205,213	$	56,991	$	148,222	$	—
LIABILITIES
Contingent consideration related to acquisitions	$	4,200	$	—	$	—	$	4,200
Convertible senior notes, net, noncurrent		267,565		—		267,565		—
TOTAL LIABILITIES	$	271,765	$	—	$	267,565	$	4,200

	Balance At		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Unobservable Inputs
	March 31, 2023		(Level 1)		(Level 2)		(Level 3)
ASSETS
Cash and money market funds	$	73,754	$	73,754	$	—	$	—
Commercial paper		10,795		—		10,795		—
United States treasury securities		9,979		—		9,979		—
Corporate notes and bonds		3,349		—		3,349		—
Agency securities		842		—		842		—
Total cash and cash equivalents		98,719		73,754		24,965		—
Restricted cash and cash equivalents		7,269		7,269		—		—
United States treasury securities		56,890		—		56,890		—
Agency securities		37,991		—		37,991		—
Corporate notes and bonds		26,590		—		26,590		—
Commercial paper		18,141		—		18,141		—
Total marketable securities		139,612		—		139,612		—
TOTAL ASSETS	$	245,600	$	81,023	$	164,577	$	—
LIABILITIES
Contingent consideration related to acquisitions	$	3,800	$	—	$	—	$	3,800
Convertible senior notes, net, noncurrent		266,843		—		266,843		—
TOTAL LIABILITIES	$	270,643	$	—	$	266,843	$	3,800

Financial Assets and Liabilities Measured At Fair Value Using Significant Unobservable Inputs (Level 3)

The following table presents activity in our financial assets and liabilities measured at fair value using significant unobservable inputs (Level 3), as of and for the three months ended September 30, 2023:

	Total Liabilities
Balance as of March 31, 2023	$	3,800
Fair value adjustments		400
Balance as of September 30, 2023	$	4,200

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Investments (Tables)

6 Months Ended

Sep. 30, 2023

Investments, Debt and Equity Securities [Abstract]

Summary of Fair Value of Investments and Marketable Securities

The following table summarizes the fair value of our investments and marketable securities as of September 30, 2023:

	September 30, 2023
	Amortized Cost		Fair Value
Commercial paper	$	1,790	$	1,790
Money market funds		20,477		20,477
Total cash and cash equivalents		22,267		22,267
United States treasury securities		70,937		70,937
Agency securities		32,732		32,732
Corporate notes and bonds		25,984		25,984
Commercial paper		16,779		16,779
Total marketable securities		146,432		146,432
Total investments	$	168,699	$	168,699

	March 31, 2023
	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
Commercial paper	$	10,795	$	—	$	—		$	10,795
United States treasury securities		9,977		2		—			9,979
Money market funds		5,976		—		—			5,976
Corporate notes and bonds		3,349		—		—			3,349
Agency securities		842		—		—			842
Total cash and cash equivalents		30,939		2		—			30,941
United States treasury securities		56,795		99		(4	)		56,890
Agency securities		37,999		16		(24	)		37,991
Corporate notes and bonds		26,631		14		(55	)		26,590
Commercial paper		18,147		—		(6	)		18,141
Total marketable securities		139,572		129		(89	)		139,612
Total investments	$	170,511	$	131	$	(89	)	$	170,553

Summary of Contractual Maturities of Investments and Marketable Securities

The following table presents the contractual maturities of our investments and marketable securities as September 30, 2023:

	Amortized Cost		Fair Value
Due within one year	$	123,457	$	123,457
Due after one year through five years		45,242		45,242
Total		168,699		168,699

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Leases (Tables)

6 Months Ended

Sep. 30, 2023

Leases [Abstract]

Summary of Components of Operating Lease Costs

Components of operating lease costs are summarized as follows:

	Three Months Ended September 30,						Six Months Ended September 30,
	2023			2022			2023			2022
Operating lease costs	$	393		$	788		$	1,014		$	1,737
Variable lease costs		138			160			319			334
Less: Sublease income		(300	)		(240	)		(627	)		(421	)
Total operating lease costs	$	231		$	708		$	706		$	1,650

Supplemental Cash Flow Information Related to Operating Leases

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

	Three Months Ended September 30,				Six Months Ended September 30,
	2023		2022		2023		2022
Cash paid for amounts included in the measurement of operating lease liabilities	$	983	$	2,225	$	2,127	$	4,533
Operating lease assets obtained in exchange for operating lease liabilities		—		—		585		—

Summary of Future Minimum Aggregate Lease Payments Operating Leases

Future minimum aggregate lease payments under operating leases as of September 30, 2023 are summarized as follows:

For the year ended March 31,
2024	$	1,815
2025		3,520
2026		572
2027		143
2028		150
2029 and beyond		13
Total future lease payments		6,213
Less interest		(278	)
Total lease liabilities	$	5,935

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Business Combinations and Disposals (Tables)

6 Months Ended

Sep. 30, 2023

Business Disposition [Abstract]

Summary of Purchase Price Allocation

	Purchase Price
Initial purchase price	$	50,449
Fair value of contingent consideration		3,700
Payment for option to early terminate lease		2,000
Working capital adjustment		(430	)
Total purchase price	$	55,719
Fair value of the net tangible assets acquired and liabilities assumed:
Cash and cash equivalents	$	717
Accounts receivable		2,011
Contract assets		1,415
Prepaid expense and other assets		308
Equipment and improvements		879
Contract assets, net of current		2,581
Operating lease assets		957
Deferred income tax asset		1,028
Other assets		50
Accounts payable		(1,773	)
Accrued compensation and related benefits		(917	)
Contract liabilities		(6,247	)
Operating lease liabilities		(533	)
Other current liabilities		(964	)
Contract liabilities, net of current		(11,644	)
Operating lease liabilities, net of current		(639	)
Total net tangible assets acquired and liabilities assumed		(12,771	)
Fair value of identifiable intangible assets acquired:
Goodwill		54,790
Re-acquired rights		6,250
Customer relationships		5,500
Data health database		1,950
Total identifiable intangible assets acquired		68,490
Total purchase price	$	55,719

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Intangible Assets (Tables)

6 Months Ended

Sep. 30, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets, Other than Capitalized Software Development Costs

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

	September 30, 2023
	Customer Relationships			Trade Names			Software Technology			Re-acquired Rights			Data Health Database			Total
Gross carrying amount	$	44,700		$	250		$	22,500		$	6,250		$	1,950		$	75,650
Accumulated amortization		(34,489	)		(191	)		(14,646	)		(1,302	)		(542	)		(51,170	)
Net intangible assets	$	10,211		$	59		$	7,854		$	4,948		$	1,408		$	24,480
	March 31, 2023
	Customer Relationships			Trade Names			Software Technology			Re-acquired Rights			Data Health Database			Total
Gross carrying amount	$	44,700		$	250		$	25,700		$	6,250		$	1,950		$	78,850
Accumulated amortization		(32,918	)		(166	)		(16,060	)		(521	)		(217	)		(49,882	)
Net intangible assets	$	11,782		$	84		$	9,640		$	5,729		$	1,733		$	28,968

Estimated Amortization of Intangible Assets with Determinable Lives

The following table summarizes the remaining estimated amortization of definite-lived intangible assets as of September 30, 2023:

	Estimated Remaining Amortization Expense
	Operating Expense		Cost of Revenue		Total
For the year ended March 31,
2024	$	2,377	$	2,111	$	4,488
2025		4,180		4,223		8,403
2026		3,596		2,684		6,280
2027		2,232		244		2,476
2028 and beyond		2,833		—		2,833
Total	$	15,218	$	9,262	$	24,480

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Capitalized Software Costs (Tables)

6 Months Ended

Sep. 30, 2023

Research and Development [Abstract]

Capitalized Software Development Costs

Our capitalized software costs are summarized as follows:

	September 30, 2023			March 31, 2023
Gross carrying amount	$	139,371		$	131,791
Accumulated amortization		(79,496	)		(77,275	)
Net capitalized software costs	$	59,875		$	54,516

Estimated Amortization of Capitalized Software Costs

The following table presents the remaining estimated amortization of capitalized software costs as of September 30, 2023. The estimated amortization is comprised of (i) amortization of released products and (ii) the expected amortization for products that are not yet available for sale based on their estimated economic lives and projected general release dates.

For the year ended March 31,
2024	$	17,100
2025		24,100
2026		13,400
2027		5,275
Total	$	59,875

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Debt (Tables)

6 Months Ended

Sep. 30, 2023

Debt Disclosure [Abstract]

Schedule of Notes Recorded Net of Issuance Costs

The Notes are recorded net of issuance costs as noncurrent liabilities in the consolidated balance sheets. The net carrying value of the Notes are as follows:

	September 30, 2023			March 31, 2023
Principal amount	$	275,000		$	275,000
Unamortized issuance costs		(7,435	)		(8,157	)
Carrying value, net	$	267,565		$	266,843

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Composition of Certain Financial Statement Captions (Tables)

6 Months Ended

Sep. 30, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Summary of Cash, Cash Equivalents, and Restricted Cash

Cash, cash equivalents, and restricted cash are summarized as follows:

	September 30, 2023		March 31, 2023
Cash and cash equivalents	$	53,867	$	98,719
Restricted cash and cash equivalents		4,914		7,269
Cash, cash equivalents, and restricted cash	$	58,781	$	105,988

Summary of Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets are summarized as follows:

	September 30, 2023		March 31, 2023
Prepaid expenses	$	22,673	$	26,365
Capitalized commissions costs		14,363		13,813
Accrued interest on marketable securities		916		699
Other current assets		1,732		2,039
Prepaid expenses and other current assets	$	39,684	$	42,916

Summary of Equipment and Improvements

Equipment and improvements are summarized as follows:

	September 30, 2023			March 31, 2023
Computer equipment	$	34,503		$	35,019
Internal-use software		20,689			20,064
Leasehold improvements		4,542			7,067
Furniture and fixtures		2,787			4,871
Equipment and improvements, gross		62,521			67,021
Accumulated depreciation and amortization		(57,582	)		(60,600	)
Equipment and improvements, net	$	4,939		$	6,421

Summary of Other Assets

Other assets are summarized as follows:

	September 30, 2023		March 31, 2023
Capitalized commission costs	$	27,499	$	26,104
Deposits		7,478		7,447
Debt issuance costs		1,244		1,498
Other noncurrent assets		9,996		9,189
Other assets	$	46,217	$	44,238

Summary of Accrued Compensation and Related Benefits

Accrued compensation and related benefits are summarized as follows:

	September 30, 2023		March 31, 2023
Accrued bonus	$	11,670	$	15,550
Accrued vacation		13,244		13,271
Accrued commissions		3,148		5,166
Accrued payroll and other		345		2,254
Accrued compensation and related benefits	$	28,407	$	36,241

Summary of Other Current and Noncurrent Liabilities

Other current and noncurrent liabilities are summarized as follows:

	September 30, 2023		March 31, 2023
Accrued acquisition costs	$	7,861	$	—
Customer credit balances and deposits		7,136		5,417
Sales returns reserves and other customer liabilities		5,614		5,390
Care services liabilities		4,914		7,269
Accrued interest payable		4,081		4,244
Accrued hosting costs		3,553		873
Accrued EDI expense		3,068		3,064
Accrued outsourcing costs		2,785		3,023
Accrued employee benefits and withholdings		2,667		3,195
Accrued self insurance expense		2,299		2,359
Accrued consulting and outside services		2,002		3,957
Accrued royalties		1,838		3,248
Accrued legal expense		907		782
Accrued taxes payable		309		1,746
Accrued legal settlement(1)		-		33,990
Other accrued expenses		5,963		5,242
Other current liabilities	$	54,997	$	83,799
Contingent consideration related to acquisitions, noncurrent	$	4,200	$	3,800
Uncertain tax positions		4,195		3,950
Other liabilities		642		524
Other noncurrent liabilities	$	9,037	$	8,274

(1) Refer to Note 17, "Commitments, Guarantees and Contingencies" for more details.

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Earnings Per Share (Tables)

6 Months Ended

Sep. 30, 2023

Earnings Per Share [Abstract]

Weighted Average Shares Outstanding for Basic and Diluted Net Income Per Share

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

	Three Months Ended September 30,				Six Months Ended September 30,
	2023		2022		2023		2022
Earnings per share — Basic:
Net income	$	5,055	$	13,623	$	11,211	$	14,771
Weighted-average shares outstanding — Basic		67,074		67,806		66,749		67,698
Net income per common share — Basic	$	0.08	$	0.20	$	0.17	$	0.22
Earnings per share — Diluted:
Net income	$	5,055	$	13,623	$	11,211	$	14,771
Weighted-average shares outstanding		67,074		67,806		66,749		67,698
Effect of potentially dilutive securities from equity incentive plans		616		616		531		655
Weighted-average shares outstanding — Diluted		67,690		68,422		67,280		68,353
Net income per common share — Diluted	$	0.07	$	0.20	$	0.17	$	0.22

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Stockholders' Equity (Tables)

6 Months Ended

Sep. 30, 2023

Stockholders' Equity Note [Abstract]

Schedule of Stock-Based Compensation Expense

The following table summarizes total share-based compensation expense included in the condensed consolidated statements of net income and comprehensive income for the three and six months ended September 30, 2023 and 2022:

	Three Months Ended September 30,						Six Months Ended September 30,
	2023			2022			2023			2022
Costs and expenses:
Cost of revenue	$	1,036		$	951		$	1,878		$	1,514
Research and development costs		1,183			1,655			1,838			3,238
Selling, general and administrative		7,247			6,081			13,706			12,701
Total share-based compensation		9,466			8,687			17,422			17,453
Income tax benefit		(2,250	)		(2,078	)		(4,144	)		(4,123	)
Decrease in net income	$	7,216		$	6,609		$	13,278		$	13,330

Summary of Restricted Stock Awards Activity

Restricted stock awards activity during the six months ended September 30, 2023 is summarized as follows:

Restricted Stock Award Activity				Weighted-
				Average
				Grant-Date
	Number of			Fair Value
	Shares			per Share
Outstanding, March 31, 2023		3,297,512		$	16.72
Granted		1,436,071			15.57
Vested		(1,086,413	)		15.66
Canceled		(143,646	)		16.50
Outstanding, September 30, 2023		3,503,524		$	16.59

Summary of Stock Option Activity

The following table summarizes the stock option transactions during the six months ended September 30, 2023:

				Weighted-		Weighted-
				Average		Average		Aggregate
				Exercise		Remaining		Intrinsic
	Number of			Price		Contractual		Value
	Shares			per Share		Life (years)		(in thousands)
Outstanding, March 31, 2023		1,130,813		$	14.75		1.7	$	3,011
Exercised		(201,824	)		14.33		1.3	$	254
Forfeited/Canceled		(500	)		—
Expired		(4,700	)		16.64
Outstanding, September 30, 2023		923,789		$	14.83		1.5	$	8,224
Vested and expected to vest, September 30, 2023		923,789		$	14.83		1.5	$	8,224
Exercisable, September 30, 2023		923,789		$	14.83		1.5	$	8,224

XML

Summary of Significant Accounting Policies - Additional Information (Details) - $ / shares	Sep. 05, 2023	Sep. 30, 2023	Mar. 31, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Common stock, par value (in USD per share)	$ 0.01	$ 0.01	$ 0.01
Price per share	$ 23.95

XML

Revenue from Contracts with Customers - Schedule of Revenues Disaggregated by Major Revenue Categories and by Occurrence (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Disaggregation Of Revenue [Line Items]
Total revenues	$ 176,418	$ 159,443	$ 354,625	$ 312,745
Subscription Services
Disaggregation Of Revenue [Line Items]
Total revenues	50,263	43,416	102,761	86,175
Support And Maintenance
Disaggregation Of Revenue [Line Items]
Total revenues	37,561	38,150	76,070	77,288
Managed Services
Disaggregation Of Revenue [Line Items]
Total revenues	35,063	31,055	69,822	61,700
Transactional And Data Services
Disaggregation Of Revenue [Line Items]
Total revenues	38,429	30,882	76,037	58,099
Recurring Revenue
Disaggregation Of Revenue [Line Items]
Total revenues	161,316	143,503	324,690	283,262
Software License and Hardware
Disaggregation Of Revenue [Line Items]
Total revenues	5,521	7,916	10,492	14,115
Other Non-recurring Services
Disaggregation Of Revenue [Line Items]
Total revenues	9,581	8,024	19,443	15,368
Software, hardware, and other non-recurring
Disaggregation Of Revenue [Line Items]
Total revenues	$ 15,102	$ 15,940	$ 29,935	$ 29,483

XML

Revenue from Contracts with Customers - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Revenue From Contract With Customer [Line Items]
Revenue, Remaining Performance Obligation, Amount	$ 726,000	$ 563,900	$ 726,000	$ 563,900
Percentage of revenue expected to recognize as services rendered and goods delivered	6.00%	9.00%	6.00%	9.00%
Percentage of revenue expected to recognize over next 12 months	53.00%	51.00%	53.00%	51.00%
Contract liability balance or invoiced to customers	$ 18,672	$ 17,521	$ 36,917	$ 35,245
Capitalized commission costs			41,862
Commission expenses	$ 4,356	$ 3,634	8,329	$ 7,121
Prepaid Expenses And Other Current Assets
Revenue From Contract With Customer [Line Items]
Capitalized commission costs			14,363
Other Noncurrent Assets
Revenue From Contract With Customer [Line Items]
Capitalized commission costs			$ 27,498
Minimum
Revenue From Contract With Customer [Line Items]
Capitalized contract cost, amortization period	1 year		1 year
Maximum
Revenue From Contract With Customer [Line Items]
Capitalized contract cost, amortization period	5 years		5 years

XML

Accounts Receivable - Summary of Accounts Receivable (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Jun. 30, 2023	Mar. 31, 2023
Receivables [Abstract]
Accounts receivable, gross	$ 93,289		$ 92,360
Allowance for credit losses	(4,012)	$ (3,906)	(3,862)
Accounts receivable, net	$ 89,277		$ 88,498

XML

Accounts Receivable - Summary of Changes in Allowance for Doubtful Accounts (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Sep. 30, 2023	Sep. 30, 2023	Sep. 30, 2022
Receivables [Abstract]
Balance	$ (3,906)	$ (3,862)
Additions charged to costs and expenses	(951)	(1,826)	$ (600)
Deductions	845	1,676
Balance	$ (4,012)	$ (4,012)

XML

Fair Value Measurements - Fair Value of Assets and Liabilities on a Recurring Basis (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Mar. 31, 2023
ASSETS
Marketable securities	$ 146,432	$ 139,612
LIABILITIES
Convertible senior notes, net, noncurrent	267,565	266,843
Fair Value, Measurements, Recurring | Carrying Value
ASSETS
Cash and cash equivalents	53,867	98,719
Restricted cash and cash equivalents	4,914	7,269
Marketable securities	146,432	139,612
Total	205,213	245,600
LIABILITIES
Contingent consideration related to acquisitions	4,200	3,800
Convertible senior notes, net, noncurrent	267,565	266,843
Total	271,765	270,643
Fair Value, Measurements, Recurring | Carrying Value | Cash and Money Market Funds
ASSETS
Cash and cash equivalents	52,077	73,754
Fair Value, Measurements, Recurring | Carrying Value | Commercial Paper
ASSETS
Cash and cash equivalents	1,790	10,795
Marketable securities	16,779	18,141
Fair Value, Measurements, Recurring | Carrying Value | United States Treasury Securities
ASSETS
Cash and cash equivalents		9,979
Marketable securities	70,937	56,890
Fair Value, Measurements, Recurring | Carrying Value | Corporate Notes and Bonds
ASSETS
Cash and cash equivalents		3,349
Marketable securities	25,984	26,590
Fair Value, Measurements, Recurring | Carrying Value | Agency Securities
ASSETS
Cash and cash equivalents		842
Marketable securities	32,732	37,991
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair Value, Measurements, Recurring | Fair Value
ASSETS
Cash and cash equivalents	52,077	73,754
Restricted cash and cash equivalents	4,914	7,269
Marketable securities	0	0
Total	56,991	81,023
LIABILITIES
Contingent consideration related to acquisitions	0	0
Convertible senior notes, net, noncurrent	0	0
Total	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair Value, Measurements, Recurring | Fair Value | Cash and Money Market Funds
ASSETS
Cash and cash equivalents	52,077	73,754
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair Value, Measurements, Recurring | Fair Value | Commercial Paper
ASSETS
Cash and cash equivalents	0	0
Marketable securities	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair Value, Measurements, Recurring | Fair Value | United States Treasury Securities
ASSETS
Cash and cash equivalents		0
Marketable securities	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair Value, Measurements, Recurring | Fair Value | Corporate Notes and Bonds
ASSETS
Cash and cash equivalents		0
Marketable securities	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair Value, Measurements, Recurring | Fair Value | Agency Securities
ASSETS
Cash and cash equivalents		0
Marketable securities	0	0
Significant Other Observable Inputs (Level 2) | Fair Value, Measurements, Recurring | Fair Value
ASSETS
Cash and cash equivalents	1,790	24,965
Restricted cash and cash equivalents	0	0
Marketable securities	146,432	139,612
Total	148,222	164,577
LIABILITIES
Contingent consideration related to acquisitions	0	0
Convertible senior notes, net, noncurrent	267,565	266,843
Total	267,565	266,843
Significant Other Observable Inputs (Level 2) | Fair Value, Measurements, Recurring | Fair Value | Cash and Money Market Funds
ASSETS
Cash and cash equivalents	0	0
Significant Other Observable Inputs (Level 2) | Fair Value, Measurements, Recurring | Fair Value | Commercial Paper
ASSETS
Cash and cash equivalents	1,790	10,795
Marketable securities	16,779	18,141
Significant Other Observable Inputs (Level 2) | Fair Value, Measurements, Recurring | Fair Value | United States Treasury Securities
ASSETS
Cash and cash equivalents		9,979
Marketable securities	70,937	56,890
Significant Other Observable Inputs (Level 2) | Fair Value, Measurements, Recurring | Fair Value | Corporate Notes and Bonds
ASSETS
Cash and cash equivalents		3,349
Marketable securities	25,984	26,590
Significant Other Observable Inputs (Level 2) | Fair Value, Measurements, Recurring | Fair Value | Agency Securities
ASSETS
Cash and cash equivalents		842
Marketable securities	32,732	37,991
Unobservable Inputs (Level 3)
ASSETS
Total	0
LIABILITIES
Total	0
Unobservable Inputs (Level 3) | Fair Value, Measurements, Recurring | Fair Value
ASSETS
Cash and cash equivalents	0	0
Restricted cash and cash equivalents	0	0
Marketable securities	0	0
Total	0	0
LIABILITIES
Contingent consideration related to acquisitions	4,200	3,800
Convertible senior notes, net, noncurrent	0	0
Total	4,200	3,800
Unobservable Inputs (Level 3) | Fair Value, Measurements, Recurring | Fair Value | Cash and Money Market Funds
ASSETS
Cash and cash equivalents	0	0
Unobservable Inputs (Level 3) | Fair Value, Measurements, Recurring | Fair Value | Commercial Paper
ASSETS
Cash and cash equivalents	0	0
Marketable securities	0	0
Unobservable Inputs (Level 3) | Fair Value, Measurements, Recurring | Fair Value | United States Treasury Securities
ASSETS
Cash and cash equivalents		0
Marketable securities	0	0
Unobservable Inputs (Level 3) | Fair Value, Measurements, Recurring | Fair Value | Corporate Notes and Bonds
ASSETS
Cash and cash equivalents		0
Marketable securities	0	0
Unobservable Inputs (Level 3) | Fair Value, Measurements, Recurring | Fair Value | Agency Securities
ASSETS
Cash and cash equivalents		0
Marketable securities	$ 0	$ 0

XML

Fair Value Measurements - Financial Assets and Liabilities Measured At Fair Value Using Significant Unobservable Inputs (Level 3) (Details) $ in Thousands	6 Months Ended
	Sep. 30, 2023 USD ($)
Fair Value, Assets and Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Abstract]
Balance	$ (3,800)
Fair value adjustments	(400)
Balance	$ (4,200)

XML

Fair Value Measurements - Additional Information (Details) $ in Thousands	6 Months Ended
	Sep. 30, 2023 USD ($)
Business Acquisition [Line Items]
Change in fair value of contingent consideration	$ 400
Unobservable Inputs (Level 3)
Business Acquisition [Line Items]
Assets	0
Liabilities	0
Unobservable Inputs (Level 3) | TSI Healthcare, LLC [Member]
Business Acquisition [Line Items]
Fair value of contingent consideration	4,200
Change in fair value of contingent consideration	$ 400

XML

Investments - Summary of Fair Value of Investments and Marketable Securities (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Mar. 31, 2023
Marketable Securities [Line Items]
Cash and cash equivalents, Amortized Cost	$ 53,867	$ 98,719
Marketable securities, Amortized Cost	146,432	139,572
Marketable securities, Unrealized Gains		129
Marketable securities, Unrealized Losses		(89)
Marketable securities, Fair Value	146,432	139,612
Investments, Amortized Cost	168,699	170,511
Investments, Unrealized Gains		131
Investments, Unrealized Losses		(89)
Investments, Fair Value	168,699	170,553
Commercial Paper
Marketable Securities [Line Items]
Cash and cash equivalents, Amortized Cost	1,790	10,795
Cash and cash equivalents, Unrealized Gains		0
Cash and cash equivalents, Unrealized Losses		0
Cash and cash equivalents, Fair Value	1,790	10,795
Marketable securities, Amortized Cost	16,779	18,147
Marketable securities, Unrealized Gains		0
Marketable securities, Unrealized Losses		(6)
Marketable securities, Fair Value	16,779	18,141
United States Treasury Securities
Marketable Securities [Line Items]
Cash and cash equivalents, Amortized Cost		9,977
Cash and cash equivalents, Unrealized Gains		2
Cash and cash equivalents, Unrealized Losses		0
Cash and cash equivalents, Fair Value		9,979
Marketable securities, Amortized Cost	70,937	56,795
Marketable securities, Unrealized Gains		99
Marketable securities, Unrealized Losses		(4)
Marketable securities, Fair Value	70,937	56,890
Money Market Funds
Marketable Securities [Line Items]
Cash and cash equivalents, Amortized Cost	20,477	5,976
Cash and cash equivalents, Unrealized Gains		0
Cash and cash equivalents, Unrealized Losses		0
Cash and cash equivalents, Fair Value	20,477	5,976
Corporate Notes and Bonds
Marketable Securities [Line Items]
Cash and cash equivalents, Amortized Cost		3,349
Cash and cash equivalents, Unrealized Gains		0
Cash and cash equivalents, Unrealized Losses		0
Cash and cash equivalents, Fair Value		3,349
Marketable securities, Amortized Cost	25,984	26,631
Marketable securities, Unrealized Gains		14
Marketable securities, Unrealized Losses		(55)
Marketable securities, Fair Value	25,984	26,590
Cash and Cash Equivalents
Marketable Securities [Line Items]
Cash and cash equivalents, Amortized Cost	22,267	30,939
Cash and cash equivalents, Unrealized Gains		2
Cash and cash equivalents, Unrealized Losses		0
Cash and cash equivalents, Fair Value	22,267	30,941
Agency Securities
Marketable Securities [Line Items]
Cash and cash equivalents, Amortized Cost		842
Cash and cash equivalents, Unrealized Gains		0
Cash and cash equivalents, Unrealized Losses		0
Cash and cash equivalents, Fair Value		842
Marketable securities, Amortized Cost	32,732	37,999
Marketable securities, Unrealized Gains		16
Marketable securities, Unrealized Losses		(24)
Marketable securities, Fair Value	$ 32,732	$ 37,991

XML

Investments - Summary of Contractual Maturities of Investments and Marketable Securities (Details) $ in Thousands	Sep. 30, 2023 USD ($)
Investments, Debt and Equity Securities [Abstract]
Due within one year, Amortized Cost	$ 123,457
Due after one year through five years, Amortized Cost	45,242
Total, Amortized Cost	168,699
Due within one year, Fair Value	123,457
Due after one year through five years, Fair Value	45,242
Total, Fair Value	$ 168,699

XML

Investments - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Sep. 30, 2023	Jun. 30, 2023	Sep. 30, 2023
Investments, Debt and Equity Securities [Abstract]
Unrealized loss on marketable securities, net of tax	$ 734	$ (776)	$ (42)

XML

Leases - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Lessee Lease Description [Line Items]
Total operating lease costs	$ 231	$ 708	$ 706	$ 1,650
Operating lease, weighted average remaining lease term	1 year 10 months 24 days		1 year 10 months 24 days
Operating lease, weighted average discount rate, percent	4.40%		4.40%
Lease Right of Use Assets and Property Plant and Equipment
Lessee Lease Description [Line Items]
Other asset impairment charges	$ 166	$ 805	$ 525	$ 1,329
Minimum
Lessee Lease Description [Line Items]
Lease expiration year			2024
Maximum
Lessee Lease Description [Line Items]
Lease expiration year			2028

XML

Leases - Summary of Components of Operating Lease Costs (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Leases [Abstract]
Operating lease costs	$ 393	$ 788	$ 1,014	$ 1,737
Variable lease costs	138	160	319	334
Less: Sublease income	(300)	(240)	(627)	(421)
Total operating lease costs	$ 231	$ 708	$ 706	$ 1,650

XML

Leases - Supplemental Cash Flow Information Related to Operating Leases (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Leases [Abstract]
Cash paid for amounts included in the measurement of operating lease liabilities	$ 983	$ 2,225	$ 2,127	$ 4,533
Operating lease assets obtained in exchange for operating lease liabilities			$ 585

XML

Leases - Summary of Future Minimum Aggregate Lease Payments Operating Leases (Details) $ in Thousands	Sep. 30, 2023 USD ($)
Leases [Abstract]
2024	$ 1,815
2025	3,520
2026	572
2027	143
2028	150
2029 and beyond	13
Total future lease payments	6,213
Less interest	(278)
Total lease liabilities	$ 5,935

XML

Business Combinations and Disposals - Additional Information (Details) - USD ($) $ in Thousands			6 Months Ended
	Nov. 30, 2022	Jul. 26, 2022	Sep. 30, 2023	Sep. 30, 2022
Business Acquisition [Line Items]
Cash consideration				$ 11,253
Asset Purchase Agreement
Business Acquisition [Line Items]
Proceeds from sale of non-strategic dental related assets		$ 12,000
Cash consideration		11,253
Additional cash expected to be received		600
Preliminary gain on disposition of assets		$ 10,296
TSI Healthcare, LLC ("TSI")
Business Acquisition [Line Items]
Acquisition completed date	Nov. 30, 2022
Initial purchase price	$ 50,449
Fair value of contingent consideration	$ 3,700
Adjustment of Goodwill			$ 245
Weighted average amortization period intangible assets	6 years 9 months 18 days
TSI Healthcare, LLC ("TSI") | Re-acquired Rights
Business Acquisition [Line Items]
Amortization period of intangible assets	4 years
TSI Healthcare, LLC ("TSI") | Customer Relationships
Business Acquisition [Line Items]
Amortization period of intangible assets	11 years
TSI Healthcare, LLC ("TSI") | Data Health Database
Business Acquisition [Line Items]
Amortization period of intangible assets	3 years
TSI Healthcare, LLC ("TSI") | Maximum
Business Acquisition [Line Items]
Additional cash contingent consideration	$ 22,000

XML

Business Combinations and Disposals - Summary of Purchase Price Allocation (Details) - USD ($) $ in Thousands	Nov. 30, 2022	Sep. 30, 2023	Mar. 31, 2023
Fair value of identifiable intangible assets acquired:
Goodwill		$ 322,001	$ 321,756
TSI Healthcare, LLC ("TSI")
Business Acquisition [Line Items]
Initial purchase price	$ 50,449
Fair value of contingent consideration	3,700
Payment for option to early terminate lease	2,000
Working capital adjustment	(430)
Total purchase price	55,719
Fair value of the net tangible assets acquired and liabilities assumed:
Cash and cash equivalents	717
Accounts receivable	2,011
Contract assets	1,415
Prepaid expense and other assets	308
Equipment and improvements	879
Contract assets, net of current	2,581
Operating lease assets	957
Deferred income tax asset	1,028
Other assets	50
Accounts payable	(1,773)
Accrued compensation and related benefits	(917)
Contract liabilities	(6,247)
Operating lease liabilities	(533)
Other current liabilities	(964)
Contract liabilities, net of current	(11,644)
Operating lease liabilities, net of current	(639)
Total net tangible assets acquired and liabilities assumed	(12,771)
Fair value of identifiable intangible assets acquired:
Goodwill	54,790
Total identifiable intangible assets acquired	68,490
Total purchase price	55,719
TSI Healthcare, LLC ("TSI") | Re-acquired Rights
Fair value of identifiable intangible assets acquired:
Identifiable intangible assets acquired	6,250
TSI Healthcare, LLC ("TSI") | Customer Relationships
Fair value of identifiable intangible assets acquired:
Identifiable intangible assets acquired	5,500
TSI Healthcare, LLC ("TSI") | Data Health Database
Fair value of identifiable intangible assets acquired:
Identifiable intangible assets acquired	$ 1,950

XML

Goodwill - Additional Information (Details) $ in Thousands	6 Months Ended
	Sep. 30, 2023 USD ($) Segment	Mar. 31, 2023 USD ($)
Goodwill and Intangible Assets Disclosure [Abstract]
Number of operating segments | Segment	1
Goodwill | $	$ 322,001	$ 321,756

XML

Intangible Assets - Intangible Assets, Other than Capitalized Software Development Costs (Details) - Intangible Assets Other Than Capitalized Software - USD ($) $ in Thousands	Sep. 30, 2023	Mar. 31, 2023
Finite Lived Intangible Assets [Line Items]
Gross carrying amount	$ 75,650	$ 78,850
Accumulated amortization	(51,170)	(49,882)
Total	24,480	28,968
Customer Relationships
Finite Lived Intangible Assets [Line Items]
Gross carrying amount	44,700	44,700
Accumulated amortization	(34,489)	(32,918)
Total	10,211	11,782
Trade Names
Finite Lived Intangible Assets [Line Items]
Gross carrying amount	250	250
Accumulated amortization	(191)	(166)
Total	59	84
Computer Software, Intangible Asset
Finite Lived Intangible Assets [Line Items]
Gross carrying amount	22,500	25,700
Accumulated amortization	(14,646)	(16,060)
Total	7,854	9,640
Re-acquired Rights
Finite Lived Intangible Assets [Line Items]
Gross carrying amount	6,250	6,250
Accumulated amortization	(1,302)	(521)
Total	4,948	5,729
Data Health Database
Finite Lived Intangible Assets [Line Items]
Gross carrying amount	1,950	1,950
Accumulated amortization	(542)	(217)
Total	$ 1,408	$ 1,733

XML

Intangible Assets - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Finite Lived Intangible Assets [Line Items]
Amortization of other intangibles			$ 4,488	$ 4,564
Retired amount of fully amortized capitalized software			9,841
Customer Relationships, Trade Names and Re-acquired Rights Intangible Assets | Operating Expense
Finite Lived Intangible Assets [Line Items]
Amortization of other intangibles	$ 1,189	$ 705	2,377	1,410
Software Technology and Data Health Database Intangible Assets | Cost of Revenue
Finite Lived Intangible Assets [Line Items]
Amortization of other intangibles	$ 1,055	$ 1,373	2,111	$ 3,154
Computer Software, Intangible Asset | Inforth
Finite Lived Intangible Assets [Line Items]
Retired amount of fully amortized capitalized software			$ 3,200

XML

Intangible Assets - Estimated Amortization of Intangible Assets with Determinable Lives (Details) - Intangible Assets Other Than Capitalized Software - USD ($) $ in Thousands	Sep. 30, 2023	Mar. 31, 2023
Finite Lived Intangible Assets [Line Items]
2024	$ 4,488
2025	8,403
2026	6,280
2027	2,476
2028 and beyond	2,833
Total	24,480	$ 28,968
Operating Expense
Finite Lived Intangible Assets [Line Items]
2024	2,377
2025	4,180
2026	3,596
2027	2,232
2028 and beyond	2,833
Total	15,218
Cost of Revenue
Finite Lived Intangible Assets [Line Items]
2024	2,111
2025	4,223
2026	2,684
2027	244
Total	$ 9,262

XML

Capitalized Software Costs - Capitalized Software Development Costs (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Mar. 31, 2023
Research and Development [Abstract]
Gross carrying amount	$ 139,371	$ 131,791
Accumulated amortization	(79,496)	(77,275)
Net capitalized software costs	$ 59,875	$ 54,516

XML

Capitalized Software Costs - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Research and Development [Abstract]
Amortization of capitalized software costs	$ 6,125	$ 5,371	$ 12,061	$ 10,725
Retired amount of fully amortized capitalized software			$ 9,841

XML

Capitalized Software Costs - Estimated Amortization of Capitalized Software Costs (Details) - Capitalized Software Costs $ in Thousands	Sep. 30, 2023 USD ($)
Finite Lived Intangible Assets [Line Items]
2024	$ 17,100
2025	24,100
2026	13,400
2027	5,275
Total	$ 59,875

XML

Debt - Additional Information (Details)				3 Months Ended		6 Months Ended
	Nov. 01, 2022 USD ($) Days UsdNote	May 17, 2022 USD ($)	Mar. 12, 2021 USD ($)	Sep. 30, 2023 USD ($) $ / shares	Sep. 30, 2022 USD ($)	Sep. 30, 2023 USD ($) Days UsdNote $ / shares	Sep. 30, 2022 USD ($)	Mar. 31, 2023 USD ($)	Mar. 29, 2018 USD ($)
Debt Instrument [Line Items]
Leverage ratio		4	3.75
Adjusted covenant period option		4.75	4.25
Restricted payments cap		$ 25,000,000	$ 11,500,000
Loans outstanding				$ 0		$ 0		$ 0
Remaining borrowing capacity				300,000,000		300,000,000		300,000,000
Amortization of debt issuance costs						$ 976,000	$ 254,000
3.75% Convertible Senior Notes due 2027
Debt Instrument [Line Items]
Principal amount	$ 275,000,000
Interest rate	3.75%
Net proceeds from issuance of notes	$ 266,517,000
Debt, issuance cost	$ 8,483,000
Debt instrument, payment terms						The Notes will accrue interest at a rate of 3.75% per annum, payable semi-annually in arrears on May 15 and November 15 of each year, beginning on May 15, 2023.
Debt instrument, frequency of interest payment						semi-annually
Conversion price percentage on price per share of common stock	130.00%
Number of trading days exceeds conversion price percentage | Days	20
Number of consecutive trading days exceeds conversion price percentage | Days	30
Number of consecutive trading days | Days						30
Number of consecutive business days | Days	5
Number of consecutive trading days | Days	10
Debt instrument price per principal amount of notes | UsdNote	1					1
Percentage of last reported sale price per share common stock	98.00%
Number of trading days | Days						60
Conversion rate						38.9454
Principal amount for conversion into common stock				$ 1,000		$ 1,000
Initial conversion Price per common stock | $ / shares				$ 25.68		$ 25.68
Conversion price minimum percentage						130.00%
Effective interest rate				4.48%		4.48%
Maturity date						Nov. 15, 2027
Interest expense				$ 2,578,000		$ 5,185,000
Debt issuance costs				7,435,000		7,435,000		$ 8,157,000
Amortization of debt issuance costs				409,000		$ 722,000
3.75% Convertible Senior Notes due 2027 | Minimum
Debt Instrument [Line Items]
Number of trading days | Days						20
Debt instrument, not called for redemption face amount				100,000,000		$ 100,000,000
3.75% Convertible Senior Notes due 2027 | Maximum
Debt Instrument [Line Items]
Conversion rate						52.5762
Other Assets
Debt Instrument [Line Items]
Debt issuance costs				1,244,000	$ 2,067,000	$ 1,244,000	2,067,000
Revolving Credit Facility
Debt Instrument [Line Items]
Maximum borrowing capacity			300,000,000						$ 300,000,000
Additional revolving credit commitments			150,000,000
Maturity date						Mar. 12, 2026
Letter of Credit
Debt Instrument [Line Items]
Maximum borrowing capacity			10,000,000
Swing-Line Loans
Debt Instrument [Line Items]
Maximum borrowing capacity			$ 10,000,000
Line of Credit
Debt Instrument [Line Items]
Interest expense				192,000	198,000	$ 382,000	401,000
Amortization of debt issuance costs				$ 127,000	$ 127,000	$ 254,000	$ 254,000

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Debt - Schedule of Notes Recorded Net of Issuance Costs (Details) - 3.75% Convertible Senior Notes due 2027 - USD ($) $ in Thousands	Sep. 30, 2023	Mar. 31, 2023
Debt Instrument [Line Items]
Principal amount:	$ 275,000	$ 275,000
Unamortized issuance costs	(7,435)	(8,157)
Carrying value, net	$ 267,565	$ 266,843

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Composition of Certain Financial Statement Captions - Summary of Cash, Cash Equivalents, and Restricted Cash (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Mar. 31, 2023	Sep. 30, 2022	Mar. 31, 2022
Cash, Cash Equivalents, Restricted Cash, and Restricted Cash Equivalents [Abstract]
Cash and cash equivalents	$ 53,867	$ 98,719
Restricted cash and cash equivalents	4,914	7,269
Cash, cash equivalents, and restricted cash	$ 58,781	$ 105,988	$ 78,308	$ 66,747

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Composition of Certain Financial Statement Captions - Summary of Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Mar. 31, 2023
Prepaid Expense and Other Assets, Current [Abstract]
Prepaid expenses	$ 22,673	$ 26,365
Capitalized commissions costs	14,363	13,813
Accrued interest on marketable securities	916	699
Other current assets	1,732	2,039
Prepaid expenses and other current assets	$ 39,684	$ 42,916

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Composition of Certain Financial Statement Captions - Summary of Equipment and Improvements (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Mar. 31, 2023
Property Plant And Equipment [Line Items]
Equipment and improvements, gross	$ 62,521	$ 67,021
Accumulated depreciation and amortization	(57,582)	(60,600)
Equipment and improvements, net	4,939	6,421
Computer Equipment
Property Plant And Equipment [Line Items]
Equipment and improvements, gross	34,503	35,019
Internal-Use Software
Property Plant And Equipment [Line Items]
Equipment and improvements, gross	20,689	20,064
Leasehold Improvements
Property Plant And Equipment [Line Items]
Equipment and improvements, gross	4,542	7,067
Furniture and Fixtures
Property Plant And Equipment [Line Items]
Equipment and improvements, gross	$ 2,787	$ 4,871

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Composition of Certain Financial Statement Captions - Summary of Other Assets (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Mar. 31, 2023
Other Assets, Noncurrent Disclosure [Abstract]
Capitalized commission costs	$ 27,499	$ 26,104
Deposits	7,478	7,447
Debt issuance costs	1,244	1,498
Other noncurrent assets	9,996	9,189
Other assets	$ 46,217	$ 44,238

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Composition of Certain Financial Statement Captions - Summary of Accrued Compensation and Related Benefits (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Mar. 31, 2023
Employee-related Liabilities, Current [Abstract]
Accrued bonus	$ 11,670	$ 15,550
Accrued vacation	13,244	13,271
Accrued commissions	3,148	5,166
Accrued payroll and other	345	2,254
Accrued compensation and related benefits	$ 28,407	$ 36,241

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Composition of Certain Financial Statement Captions - Summary of Other Current and Noncurrent Liabilities (Details) - USD ($) $ in Thousands		Sep. 30, 2023	Mar. 31, 2023
Other Liabilities [Abstract]
Accrued acquisition costs		$ 7,861
Customer credit balances and deposits		7,136	$ 5,417
Sales returns reserves and other customer liabilities		5,614	5,390
Care services liabilities		4,914	7,269
Accrued interest payable		4,081	4,244
Accrued hosting costs		3,553	873
Accrued EDI expense		3,068	3,064
Accrued outsourcing costs		2,785	3,023
Accrued employee benefits and withholdings		2,667	3,195
Accrued self insurance expense		2,299	2,359
Accrued consulting and outside services		2,002	3,957
Accrued royalties		1,838	3,248
Accrued legal expense		907	782
Accrued taxes payable		309	1,746
Accrued legal settlement	[1]		33,990
Other accrued expenses		5,963	5,242
Other current liabilities		54,997	83,799
Contingent consideration related to acquisitions, noncurrent		4,200	3,800
Uncertain tax positions		4,195	3,950
Other liabilities		642	524
Other noncurrent liabilities		$ 9,037	$ 8,274

[1] Refer to Note 17, "Commitments, Guarantees and Contingencies" for more details.

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Income Taxes - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Mar. 31, 2023
Income Tax Disclosure [Abstract]
Provision for (benefit of) income taxes	$ 1,641	$ 5,707	$ 4,031	$ 5,460
Effective tax rate (as a percentage)	24.50%	29.50%	26.40%	27.00%
Liability for unrecognized tax benefits	$ 6,198		$ 6,198		$ 5,911
Period within which the company does not anticipate total unrecognized tax benefits to change			within the next twelve months

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Earnings Per Share - Weighted Average Shares Outstanding for Basic and Diluted Net Income Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended				6 Months Ended
	Sep. 30, 2023	Jun. 30, 2023	Sep. 30, 2022	Jun. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Earnings per share — Basic:
Net income	$ 5,055	$ 6,156	$ 13,623	$ 1,148	$ 11,211	$ 14,771
Weighted-average shares outstanding — Basic	67,074		67,806		66,749	67,698
Net income per common share - Basic	$ 0.08		$ 0.2		$ 0.17	$ 0.22
Earnings per share — Diluted:
Net income	$ 5,055	$ 6,156	$ 13,623	$ 1,148	$ 11,211	$ 14,771
Weighted-average shares outstanding — Basic	67,074		67,806		66,749	67,698
Effect of potentially dilutive securities from equity incentive plans	616		616		531	655
Weighted-average shares outstanding — Diluted	67,690		68,422		67,280	68,353
Net income per common share - Diluted	$ 0.07		$ 0.2		$ 0.17	$ 0.22

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Earnings Per Share - Additional Information (Details) - shares	3 Months Ended		6 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Employee Stock Options
Options excluded from the computation of diluted net income per share	0	26,000	0	23,000

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Stockholders' Equity - Additional Information (Details) - USD ($)						3 Months Ended		6 Months Ended
	Oct. 25, 2022	Oct. 26, 2021	Sep. 20, 2021	Oct. 26, 2020	Aug. 11, 2014	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Aug. 31, 2023	Mar. 31, 2023	Oct. 31, 2021	Sep. 30, 2021	Aug. 31, 2019	Aug. 31, 2017	Aug. 31, 2015
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Outstanding stock options						923,789		923,789			1,130,813
Total share-based compensation						$ 9,466,000	$ 8,687,000	$ 17,422,000	$ 17,453,000
Stock repurchase program, authorized amount	$ 100,000,000											$ 60,000,000
Stock repurchased during period, shares								0
Stock repurchased available during period value								$ 74,303,000
Employee Stock Options
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Outstanding stock options						923,789		923,789
Performance Stock Units
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Total unrecognized compensation costs						$ 8,457,000		$ 8,457,000
Stock option recognized over weighted average period (in years)								1 year 10 months 24 days
Performance Stock Units | Units Granted on September 2021
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-based compensation arrangement by share-based payment award, options, grants in period, net of forfeitures			450,000
Weighted-average grant date fair value			$ 10.52
Performance period			5 years
Award continued service period			3 years
Shares earned and issued in period								48,667
Performance Stock Units | Units Granted On October 2020
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-based compensation arrangement by share-based payment award, options, grants in period, net of forfeitures				408,861
Percentage of shares issued, minimum				8.50%
Percentage of shares issued, maximum				199.50%
Weighted-average grant date fair value				$ 16.25
Percentage of performance stock units tied to fiscal year 2022 revenue goal				80.00%
Vesting period for the 3-year total shareholder return				3 years
Percentage of performance stock units tied to fiscal year 2023 revenue goal				20.00%
Performance Stock Units | Units Granted on October 2021
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-based compensation arrangement by share-based payment award, options, grants in period, net of forfeitures		476,713
Weighted-average grant date fair value		$ 13.02
Award continued service period		3 years
Shares earned and issued in period								62,668
Performance Stock Unit Awards | Units Granted on October 2022
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Total share-based compensation						$ 2,290,000	2,172,000	$ 4,064,000	4,374,000
Share-based compensation arrangement by share-based payment award, options, grants in period, net of forfeitures	475,337
Percentage of shares issued, minimum	0.00%
Percentage of shares issued, maximum	210.00%
Weighted-average grant date fair value	$ 22.81
Vesting period for the 3-year total shareholder return	3 years
Percentage of performance stock units tied to fiscal year 2025 revenue goal	50.00%
Percentage of performance stock units tied to fiscal year 2025 EBITDA goal	50.00%
Restricted Stock
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-based compensation arrangement by share-based payment award, non-option equity instruments, outstanding, number						3,503,524		3,503,524			3,297,512
Total share-based compensation						$ 7,067,000	6,372,000	$ 13,058,000	12,651,000
Total unrecognized compensation costs						46,335,000		$ 46,335,000
Stock option recognized over weighted average period (in years)								1 year 10 months 24 days
Stock awards vested as of vesting						$ 7,050,000	$ 7,114,000	$ 18,742,000	$ 18,205,000
Share-based compensation arrangement by share-based payment award, options, grants in period, net of forfeitures								1,436,071
Restricted Stock | Minimum
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Vesting period								1 year
Restricted Stock | Maximum
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Vesting period								3 years
Restricted Stock Awards and Performance Stock Units
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Net share-settled upon vesting						145,073	142,751	395,048	345,263
2015 Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Common stock reserved for issuance										2,150,000		1,850,000		3,575,000	6,000,000
Common stock reserved																11,500,000
Shares available for future grant						2,725,265		2,725,265
2015 Plan | Employee Stock Options
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Expiration period (in years)								10 years
2015 Plan | Restricted Stock
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-based compensation arrangement by share-based payment award, non-option equity instruments, outstanding, number						3,091,468		3,091,468
Inducement Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Common stock reserved for issuance													1,500,000
Inducement Plan | Restricted Stock
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-based compensation arrangement by share-based payment award, non-option equity instruments, outstanding, number						412,056		412,056
Inducement Plan | Performance Stock Unit Awards
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-based compensation arrangement by share-based payment award, non-option equity instruments, outstanding, number						123,390		123,390
Employee Share Purchase Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Common stock reserved for issuance					4,000,000
Total share-based compensation						$ 109,000	$ 130,000	$ 300,000	$ 349,000
Maximum percentage of gross payroll deduction					15.00%
Purchase price as a percentage of fair market value					90.00%
Maximum shares purchase in a single transaction					1,500
Maximum amount purchased in a calendar year					$ 25,000
Shares issued						1,140,806		1,140,806

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Stockholders' Equity - Schedule of Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Costs and expenses:
Total share-based compensation	$ 9,466	$ 8,687	$ 17,422	$ 17,453
Income tax benefit	(2,250)	(2,078)	(4,144)	(4,123)
Decrease in net income	7,216	6,609	13,278	13,330
Cost of Revenue
Costs and expenses:
Total share-based compensation	1,036	951	1,878	1,514
Research and Development Costs
Costs and expenses:
Total share-based compensation	1,183	1,655	1,838	3,238
Selling, General and Administrative
Costs and expenses:
Total share-based compensation	$ 7,247	$ 6,081	$ 13,706	$ 12,701

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Stockholders' Equity - Summary of Restricted Stock Awards Activity (Details) - Restricted Stock	6 Months Ended
	Sep. 30, 2023 $ / shares shares
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of Shares Outstanding Beginning Balance | shares	3,297,512
Granted | shares	1,436,071
Vested | shares	(108,641)
Canceled | shares	(143,646)
Number of Shares Outstanding Ending Balance | shares	3,503,524
Weighted Average Grant-Date Fair Value per Share, Beginning of Period | $ / shares	$ 16.72
Weighted Average Grant-Date Fair Value per Share, Granted | $ / shares	15.57
Weighted Average Grant-Date Fair Value per Share, Vested | $ / shares	15.66
Weighted Average Grant-Date Fair Value per Share, Canceled | $ / shares	16.5
Weighted Average Grant-Date Fair Value per Share, End of Period | $ / shares	$ 0

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Stockholders' Equity - Summary of Stock Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands	6 Months Ended	12 Months Ended
	Sep. 30, 2023	Mar. 31, 2023
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Number of Shares, Outstanding, Beginning	1,130,813
Number of Shares, Exercised	(201,824)
Number of Shares, Forfeited/Canceled	(500)
Number of Shares, Expired	(4,700)
Number of Shares, Outstanding, Ending	923,789	1,130,813
Vested and expected to vest, September 30, 2023	923,789
Exercisable, September 30, 2023	923,789
Weighted- Average Exercise Price per Share
Weighted-Average Exercise Price per Share, Outstanding, Beginning	$ 14.75
Weighted-Average Exercise Price per Share, Exercised	14.33
Weighted-Average Exercise Price per Share, Forfeited/Canceled	0
Weighted-Average Exercise Price per Share, Expired	16.64
Weighted-Average Exercise Price per Share, Outstanding, Ending	14.83	$ 14.75
Vested and expected to vest, September 30, 2023	14.83
Exercisable, September 30, 2023	$ 14.83
Weighted- Average Remaining Contractual Life (years)
Outstanding	1 year 6 months	1 year 8 months 12 days
Exercised	1 year 3 months 18 days
Vested and expected to vest, September 30, 2023	1 year 6 months
Exercisable, September 30, 2023	1 year 6 months
Aggregate Intrinsic Value
Outstanding	$ 3,011
Exercised	254
Outstanding	8,224	$ 3,011
Vested and expected to vest, September 30, 2023	8,224
Exercisable, September 30, 2023	$ 8,224

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Commitments, Guarantees and Contingencies - Additional Information (Details) $ in Thousands, People in Millions		6 Months Ended
	Jul. 14, 2023 USD ($)	Sep. 30, 2023	Apr. 28, 2023 People
Loss Contingencies [Line Items]
Applicable program documentation period		365 days
Payments for legal settlements	$ 31,268
Attorneys fees, expenses and costs	$ 1,200
Number of individuals impacted in security incident | People			1