8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report

(Date of earliest event reported):

January 23, 2020

NEXTGEN HEALTHCARE, INC.

(Exact name of Registrant as Specified in Its Charter)

California	001-12537	95-2888568
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)
18111 Von Karman Avenue, Suite 800 Irvine, California		92612
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s Telephone Number, Including Area Code: (949) 255-2600

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2. below):

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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

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

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

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. ☐

Item 2.02 Results of Operations and Financial Condition.

On January 23, 2020, NextGen Healthcare, Inc. (the “Company”) issued a press release announcing its financial performance for the period ended December 31, 2019. A copy of the press release is attached to this Form 8-K as Exhibit 99.1, and is incorporated herein by reference.

The information in this Item 2.02 of this Form 8-K, as well as Exhibit 99.1 attached hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

Item 9.01   Financial Statements and Exhibits.

(d) Exhibits

Exhibit No.	Description
99.1 104	Press Release dated January 23, 2020. Cover Page Interactive Data File (embedded within the Inline XBRL document).

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 hereunto duly authorized.

Date: January 23, 2020	NEXTGEN HEALTHCARE, INC.
	By:	/s/ James R. Arnold, Jr.
		James R. Arnold, Jr.
		Chief Financial Officer

EX-99.1

Exhibit 99.1

FOR IMMEDIATE RELEASE

January 23, 2020

NextGen Healthcare, Inc. Reports Fiscal 2020 Third Quarter

IRVINE, Calif. – (BUSINESS WIRE) – NextGen Healthcare, Inc. (NASDAQ: NXGN), a leading provider of ambulatory-focused healthcare technology solutions, announced today its fiscal 2020 third quarter ended December 31, 2019 operating results.

Fiscal 2020 Third Quarter Highlights

On a GAAP basis, revenue for the fiscal 2020 third quarter was $137.7 million compared to $130.9 million a year ago.

On a GAAP basis, net income for the fiscal 2020 third quarter was $4.4 million compared with net income of $4.8 million in the fiscal 2019 third quarter.

On a GAAP basis, fully diluted net income per share remained at $0.07 in the fiscal 2020 third quarter compared to the same period a year ago. On a non-GAAP basis, fully diluted earnings per share for the fiscal 2020 third quarter was $0.23 compared to $0.20 in the third quarter a year ago.

Cash flow from operations was $23.6 million in the fiscal 2020 third quarter compared to $18.4 million for the same period a year ago.  Free cash flow was $17.0 million compared to $12.7 million in the same period a year ago.  

“Our third fiscal quarter of FY20 was another solid operating quarter which saw further enhancements in client satisfaction, two significant and successful client events, and three acquisitions which position us well to own the patient experience and drive growth in behavioral health,” said Rusty Frantz, president and chief executive officer of NextGen Healthcare.

Fiscal 2020 Financial Outlook

The Company is narrowing their outlook for fiscal 2020 and now expects:

• Revenue of between $541 million and $547 million versus the previous range of $540 million to $550 million

• Non-GAAP EPS of between $0.80 and $0.84 versus the previous range of $0.79 to $0.85

Conference Call Information

NextGen Healthcare will host a conference call to discuss its fiscal 2020 third quarter operating results on Thursday, January 23, 2020 at 5:00 PM ET (2:00 PM PT). Shareholders and interested participants may listen to a live broadcast of the conference call by dialing 866-750-8947 or 720-405-1352 for international callers, and

referencing participant code 9868886 approximately 15 minutes prior to the call. A recording of the live webcast will be available on investor.nextgen.com after the call. It will be archived for 90 days until April 23, 2020.

About NextGen Healthcare, Inc

We empower the transformation of ambulatory care—partnering with medical, behavioral and dental providers in their journey to value-based care to make healthcare better for everyone. We go beyond EHR and PM. Our integrated solutions help increase clinical productivity, enrich the patient experience, and ensure healthy financial outcomes. We believe in better. Learn more at nextgen.com, and follow us on Facebook, Twitter, LinkedIn and Instagram.

Media Contact:
NextGen Healthcare
Monica Golden
O: (949) 237-6082

C: (949) 547-3864
mgolden@nextgen.com

or

Investor Contact:

Westwicke Partners

Bob East or Asher Dewhurst

Westwicke Partners

443-213-0500

SAFE HARBOR PROVISIONS FOR FORWARD-LOOKING STATEMENTS

This news release may contain forward-looking statements within the meaning of the federal securities laws, including but not limited to, statements regarding future events, developments in the healthcare sector and regulatory framework, the Company's future performance, as well as management's expectations, beliefs, intentions, plans, estimates or projections relating to the future (including, without limitation, statements concerning revenue, net income, and earnings per share). Risks and uncertainties exist that may cause the results to differ materially from those set forth in these forward-looking statements. Factors that could cause the anticipated results to differ from those described in the forward-looking statements and additional risks and uncertainties are set forth in Part I, Item A of our most recent Annual Report on Form 10-K and subsequently filed Quarterly Reports on Form 10-Q, including but not limited to: the volume and timing of systems sales and installations; length of sales cycles and the installation process; the possibility that products will not achieve or sustain market acceptance; seasonal patterns of sales and customer buying behavior; impact of incentive payments under The American Recovery and Reinvestment Act on sales and the ability of the Company to meet continued certification requirements; uncertainties related to the future impact of U.S. tax reform; the impact of governmental and regulatory agency investigations; the development by competitors of new or superior technologies; the timing, cost and success or failure of new product and service introductions, development and product upgrade releases; undetected errors or bugs in software; product liability; changing economic, political or regulatory influences in the health-care industry; changes in product-pricing policies; availability of third-party products and components; competitive pressures including product offerings, pricing and promotional activities; the Company's ability or inability to attract and retain qualified personnel; possible regulation of the Company's software by the U.S. Food and Drug Administration; changes of accounting estimates and assumptions used to prepare the prior periods' financial statements; disruptions caused by acquisitions of companies, products, or technologies; and general economic conditions. A significant portion of the Company's quarterly sales of software product licenses and computer hardware is concluded in the last month of a fiscal quarter, generally with a concentration of such revenues earned in the final ten business days of that month. Due to these and other factors, the Company's revenues and operating results are very difficult to forecast. A major portion of the Company's costs

and expenses, such as personnel and facilities, are of a fixed nature and, accordingly, a shortfall or decline in quarterly and/or annual revenues typically results in lower profitability or losses. As a result, comparison of the Company's period-to-period financial performance is not necessarily meaningful and should not be relied upon as an indicator of future performance. These forward-looking statements speak only as of the date hereof. The Company undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.

USE OF NON-GAAP FINANCIAL MEASURES

This news release contains certain non-GAAP (Generally Accepted Accounting Principles) financial measures, which are provided only as supplemental information. Investors should consider these non-GAAP financial measures only in conjunction with the comparable GAAP financial measures. These non-GAAP measures are not in accordance with or a substitute for U.S. GAAP. Pursuant to the requirements of Regulation G, the Company has provided a reconciliation of non-GAAP financial measures to the most directly comparable financial measure in the accompanying financial tables. Other companies may calculate non-GAAP measures differently than NextGen Healthcare, Inc., which limits comparability between companies. The Company believes that its presentation of non-GAAP diluted earnings per share provides useful supplemental information to investors and management regarding the Company's financial condition and results. The presentation of non-GAAP financial information is not intended to be considered in isolation or as a substitute for, or superior to, financial information prepared and presented in accordance with GAAP. The Company calculates free cash flow by as total net cash provided by operating activities, net of cash used for the additions of capitalized software costs and equipment and improvements. The Company calculates non-GAAP diluted earnings per share by excluding net acquisition costs, amortization of acquired intangible assets, amortization of deferred debt issuance costs, restructuring costs, net securities litigation defense costs and settlement, share-based compensation, impairment of assets, and other non-run-rate expenses from GAAP income before provision for income taxes.

The Company utilizes a normalized non-GAAP tax rate to provide better consistency across the interim reporting periods within a given fiscal year by eliminating the effects of non-recurring and period-specific items, which can vary in size and frequency, and which are not necessarily reflective of the Company’s longer-term operations. The normalized non-GAAP tax rate applied to each quarter of fiscal year 2019 was 22.0% and is expected to remain at 22.0% for each quarter of fiscal year 2020. The determination of this rate is based on the consideration of both historic and projected financial results. The Company may adjust its non-GAAP tax rate as additional information becomes available and in conjunction with any other significant events occur that may materially affect this rate, such as merger and acquisition activity, changes in business outlook, or other changes in expectations regarding tax regulations.

The Company’s future period guidance in this release includes adjustments for items not indicative of the Company’s core operations. Such adjustments are generally expected to be of a nature similar to those adjustments applied to the Company’s historic GAAP financial results in the determination of the Company’s non-GAAP diluted earnings per share. Such adjustments, however, may be affected by changes in ongoing assumptions and judgments as to the items that are excluded in the calculation of non-GAAP adjusted net income and adjusted diluted earnings per share, as described in this release. The exact amount and probable significance of these adjustments, including net acquisition costs, restructuring costs, net securities litigation defense costs, impairment of assets, and other non-run-rate expenses, are not currently determinable without unreasonable efforts, but may be significant. These items cannot be reliably quantified or forecasted due to the combination of their historic and expected variability. It is therefore not practicable to reconcile this non-GAAP guidance to the most comparable GAAP measures.

NEXTGEN HEALTHCARE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share data)

(Unaudited)

	Three Months Ended December 31,						Nine Months Ended December 31,
	2019			2018			2019			2018
Revenues:
Recurring	$	124,787		$	117,446		$	364,823		$	353,770
Software, hardware, and other non-recurring		12,953			13,421			39,034			40,618
Total revenues		137,740			130,867			403,857			394,388
Cost of revenue:
Recurring		52,197			47,997			153,065			143,322
Software, hardware, and other non-recurring		6,975			6,576			19,816			20,752
Amortization of capitalized software costs and acquired intangible assets		8,963			7,098			26,219			20,566
Total cost of revenue		68,135			61,671			199,100			184,640
Gross profit		69,605			69,196			204,757			209,748
Operating expenses:
Selling, general and administrative		42,841			41,304			122,015			120,169
Research and development costs, net		20,026			20,682			61,866			61,181
Amortization of acquired intangible assets		964			1,027			2,694			3,316
Impairment of assets		1,948			—			4,353			—
Restructuring costs		546			—			2,428			—
Total operating expenses		66,325			63,013			193,356			184,666
Income from operations		3,280			6,183			11,401			25,082
Interest income		30			44			145			113
Interest expense		(435	)		(720	)		(1,294	)		(2,219	)
Other income (expense), net		137			(227	)		214			384
Income before provision for (benefit of) income taxes		3,012			5,280			10,466			23,360
Provision for (benefit of) income taxes		(1,403	)		456			(1,274	)		2,794
Net income	$	4,415		$	4,824		$	11,740		$	20,566
Net income per share:
Basic	$	0.07		$	0.07		$	0.18		$	0.32
Diluted	$	0.07		$	0.07		$	0.18		$	0.32
Weighted-average shares outstanding:
Basic		65,493			64,637			65,304			64,308
Diluted		65,664			64,776			65,516			64,499

NEXTGEN HEALTHCARE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except per share data)

(Unaudited)

	December 31, 2019			March 31, 2019
ASSETS
Current assets:
Cash and cash equivalents	$	26,790		$	33,079
Restricted cash and cash equivalents		5,696			1,443
Accounts receivable, net		79,731			87,459
Contract assets		12,488			13,242
Inventory		75			120
Income taxes receivable		5,485			3,682
Prepaid expenses and other current assets		23,101			20,826
Total current assets		153,366			159,851
Equipment and improvements, net		22,004			21,404
Capitalized software costs, net		39,678			37,855
Operating lease assets		34,424			—
Deferred income taxes, net		5,088			6,194
Contract assets, net of current		3,427			3,747
Intangibles, net		64,394			52,595
Goodwill		266,741			218,771
Other assets		33,773			32,478
Total assets	$	622,895		$	532,895
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	9,411		$	5,432
Contract liabilities		52,905			56,009
Accrued compensation and related benefits		25,309			25,663
Income taxes payable		—			64
Operating lease liabilities		10,323			—
Other current liabilities		38,931			41,064
Total current liabilities		136,879			128,232
Deferred compensation		6,198			5,905
Line of credit		37,000			11,000
Operating lease liabilities, net of current		39,297			—
Other noncurrent liabilities		3,765			11,812
Total liabilities		223,139			156,949
Commitments and contingencies
Shareholders' equity:
Common stock
$0.01 par value; authorized 100,000 shares; issued and outstanding 65,701 and 64,838 shares at December 31, 2019 and March 31, 2019, respectively		657			648
Additional paid-in capital		277,161			264,908
Accumulated other comprehensive loss		(1,423	)		(1,231	)
Retained earnings		123,361			111,621
Total shareholders' equity		399,756			375,946
Total liabilities and shareholders' equity	$	622,895		$	532,895

NEXTGEN HEALTHCARE, INC.

NON-GAAP FINANCIAL MEASURES

(In thousands, except per share data)

RECONCILIATION OF NON-GAAP DILUTED EARNINGS PER SHARE

	Three Months Ended December 31,				Nine Months Ended December 31,
	2019		2018		2019		2018
Income before provision for income taxes - GAAP	$	3,012	$	5,280	$	10,466	$	23,360
Non-GAAP adjustments:
Acquisition costs, net		1,636		109		2,375		2,058
Amortization of acquired intangible assets		5,646		5,315		15,951		16,180
Amortization of deferred debt issuance costs		177		177		532		532
Impairment of assets		1,948		—		4,353		—
Restructuring costs		546		—		2,428		—
Securities litigation defense costs and settlement, net of insurance		717		29		1,093		(5,407	)
Share-based compensation		4,621		4,698		13,828		11,949
Other non-run-rate expenses*		799		1,340		1,704		3,979
Total adjustments to GAAP income before provision for income taxes:		16,090		11,668		42,264		29,291
Income before provision for income taxes - Non-GAAP		19,102		16,948		52,730		52,651
Provision for income taxes		4,203		3,729		11,601		11,584
Net income - Non-GAAP	$	14,899	$	13,219	$	41,129	$	41,067
Diluted net income per share - Non-GAAP	$	0.23	$	0.20	$	0.63	$	0.64
Weighted-average shares outstanding (diluted):		65,664		64,776		65,516		64,499
* Other non-run-rate expenses for the three and nine months ended December 31, 2019 consist primarily of excess lease-related expense for vacated facilities and other costs, including retention bonuses, related to the restructuring plan. Other non-run-rate expenses for the three and nine months ended December 31, 2018 consist primarily of severance and other employee-related costs.

XML

Document and Entity Information	Jan. 23, 2020
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Jan. 23, 2020
Entity Registrant Name	NEXTGEN HEALTHCARE, INC.
Entity Central Index Key	0000708818
Entity Emerging Growth Company	false
Entity File Number	001-12537
Entity Incorporation, State or Country Code	CA
Entity Tax Identification Number	95-2888568
Entity Address, Address Line One	18111 Von Karman Avenue
Entity Address, Address Line Two	Suite 800
Entity Address, City or Town	Irvine
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	92612
City Area Code	949
Local Phone Number	255-2600
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of each class	Common Stock (Par Value $0.01)
Trading Symbol	NXGN
Security Exchange Name	NASDAQ