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, 2022

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 21, 2022 was 67,604,797 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, 2022

	Item	Page
	PART I.  FINANCIAL INFORMATION
Item 1.	Financial Statements.	3
	Unaudited Condensed Consolidated Balance Sheets as of September 30, 2022 and March 31, 2022	3
	Unaudited Condensed Consolidated Statements of Net Income (Loss) and Comprehensive Income (Loss) for the six months ended September 30, 2022 and 2021	4
	Unaudited Statements of Condensed Consolidated Stockholders’ Equity for the six months ended September 30, 2022 and 2021	5
	Unaudited Condensed Consolidated Statements of Cash Flows for the six months ended September 30, 2022 and 2021	6
	Notes to Unaudited Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	25
Item 3.	Quantitative and Qualitative Disclosures about Market Risk.	37
Item 4.	Controls and Procedures.	37
	PART II.  OTHER INFORMATION
Item 1.	Legal Proceedings.	38
Item 1A.	Risk Factors.	38
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	38
Item 3.	Defaults Upon Senior Securities.	38
Item 4.	Mine Safety Disclosure.	38
Item 5.	Other Information.	38
Item 6.	Exhibits.	39
	Signatures	40

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, 2022			March 31, 2022
ASSETS
Current assets:
Cash and cash equivalents	$	70,728		$	59,829
Restricted cash and cash equivalents		7,580			6,918
Accounts receivable, net		76,948			76,057
Contract assets		25,474			25,157
Income taxes receivable		3,052			6,507
Prepaid expenses and other current assets		34,363			37,102
Total current assets		218,145			211,570
Equipment and improvements, net		7,398			9,120
Capitalized software costs, net		49,791			43,958
Operating lease assets		5,197			11,316
Deferred income taxes, net		19,128			19,259
Contract assets, net of current		1,595			1,910
Intangibles, net		19,739			24,303
Goodwill		267,212			267,212
Other assets		38,933			39,026
Total assets	$	627,138		$	627,674
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	12,414		$	9,125
Contract liabilities		62,498			61,280
Accrued compensation and related benefits		28,113			48,736
Income taxes payable		172			99
Operating lease liabilities		7,095			8,089
Other current liabilities		58,320			53,533
Total current liabilities		168,612			180,862
Deferred compensation		6,981			7,230
Operating lease liabilities, net of current		5,147			11,934
Other noncurrent liabilities		4,556			4,570
Total liabilities		185,296			204,596
Commitments and contingencies (Note 16)
Shareholders' equity:
Common stock, $0.01 par value; authorized 100,000 shares; 70,351 shares and 69,245 shares issued at September 30, 2022 and March 31, 2022, respectively; 67,605 shares and 67,075 shares outstanding at September 30, 2022 and March 31, 2022, respectively		704			692
Treasury stock, at cost, 2,746 shares and 2,170 shares at September 30, 2022 and March 31, 2022, respectively		(45,752	)		(35,874	)
Additional paid-in capital		343,809			329,917
Accumulated other comprehensive loss		(1,942	)		(1,909	)
Retained earnings		145,023			130,252
Total shareholders' equity		441,842			423,078
Total liabilities and shareholders' equity	$	627,138		$	627,674

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

3

NEXTGEN HEALTHCARE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF NET INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS)

(In thousands, except per share data)

(Unaudited)

	Three Months Ended September 30,						Six Months Ended September 30,
	2022			2021			2022			2021
Revenues:
Recurring	$	143,503		$	135,609		$	283,262		$	267,990
Software, hardware, and other non-recurring		15,940			13,677			29,483			27,380
Total revenues		159,443			149,286			312,745			295,370
Cost of revenue:
Recurring		65,039			57,119			127,283			114,279
Software, hardware, and other non-recurring		10,797			7,610			21,473			15,107
Amortization of capitalized software costs and acquired intangible assets		6,744			7,969			13,878			16,053
Total cost of revenue		82,580			72,698			162,634			145,439
Gross profit		76,863			76,588			150,111			149,931
Operating expenses:
Selling, general and administrative		44,886			63,891			93,920			112,377
Research and development costs, net		20,857			18,518			42,652			37,839
Amortization of acquired intangible assets		705			881			1,410			1,762
Impairment of assets		805			1,195			1,329			1,577
Restructuring costs		321			—			321			539
Total operating expenses		67,574			84,485			139,632			154,094
Income (loss) from operations		9,289			(7,897	)		10,479			(4,163	)
Interest income		74			17			120			29
Interest expense		(325	)		(320	)		(655	)		(637	)
Other income (expense), net		10,292			(12	)		10,287			(34	)
Income (loss) before provision for (benefit of) income taxes		19,330			(8,212	)		20,231			(4,805	)
Provision for (benefit of) income taxes		5,707			(1,441	)		5,460			(882	)
Net income (loss)	$	13,623		$	(6,771	)	$	14,771		$	(3,923	)
Other comprehensive income (loss):
Foreign currency translation, net of tax		(5	)		50			(33	)		12
Comprehensive income (loss)	$	13,618		$	(6,721	)	$	14,738		$	(3,911	)
Net income (loss) per share:
Basic	$	0.20		$	(0.10	)	$	0.22		$	(0.06	)
Diluted	$	0.20		$	(0.10	)	$	0.22		$	(0.06	)
Weighted-average shares outstanding:
Basic		67,806			67,406			67,698			67,291
Diluted		68,422			67,406			68,353			67,291

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, 2022
									Additional					Accumulated Other			Total
	Common Stock					Treasury			Paid-in			Retained		Comprehensive			Shareholders'
	Shares			Amount		Stock			Capital			Earnings		Income			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 income:
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

	Six Months Ended September 30, 2021
							Additional						Accumulated Other			Total
	Common Stock				Treasury		Paid-in			Retained			Comprehensive			Shareholders'
	Shares		Amount		Stock		Capital			Earnings			Income (Loss)			Equity
Balance, March 31, 2021		67,069	$	671	$	-	$	304,263		$	128,634		$	(1,924	)	$	431,644
Common stock issued under stock plans, net of shares withheld for taxes		293		3		—		(2,301	)		—			—			(2,298	)
Stock-based compensation		—		—		—		6,412			—			—			6,412
Components of other comprehensive income:
Translation adjustments		—		—		—		—			—			(38	)		(38	)
Net income		—		—		—		—			2,848			—			2,848
Balance, June 30, 2021		67,362		674		—		308,374			131,482			(1,962	)		438,568
Common stock issued under stock plans, net of shares withheld for taxes		1,032		10		—		(1,804	)		—			—			(1,794	)
Stock-based compensation		—		—		—		5,223			—			—			5,223
Components of other comprehensive loss:
Translation adjustments		—		—		—		—			—			50			50
Net loss		—		—		—		—			(6,771	)		—			(6,771	)
Balance, September 30, 2021		68,394		684		—		311,793			124,711			(1,912	)		435,276

5

NEXTGEN HEALTHCARE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Six Months Ended September 30,
	2022			2021
Cash flows from operating activities:
Net income (loss)	$	14,771		$	(3,923	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Amortization of capitalized software costs		10,725			11,617
Amortization of debt issuance costs		254			254
Amortization of other intangibles		4,564			6,198
Deferred income taxes		—			29
Depreciation		2,646			3,781
Excess tax deficiency (benefit) from share-based compensation		(434	)		640
Gain on disposition of Commercial Dental assets		(10,296	)		—
Impairment of assets		1,329			1,577
Loss on disposal of equipment and improvements		74			77
Loss on foreign currency exchange rates		7			—
Non-cash operating lease costs		1,682			3,087
Provision for bad debts		600			679
Share-based compensation		17,453			11,635
Changes in assets and liabilities:
Accounts receivable		(1,527	)		4,874
Contract assets		(2	)		(1,055	)
Accounts payable		3,153			1,108
Contract liabilities		1,739			643
Accrued compensation and related benefits		(20,422	)		(16,321	)
Income taxes		3,934			(9,324	)
Deferred compensation		(249	)		655
Operating lease liabilities		(4,097	)		(5,360	)
Other assets and liabilities		7,892			9,608
Net cash provided by operating activities		33,796			20,479
Cash flows from investing activities:
Additions to capitalized software costs		(18,416	)		(11,713	)
Additions to equipment and improvements		(1,426	)		(1,685	)
Proceeds from disposition of Commercial Dental assets		11,253			—
Net cash used in investing activities		(8,589	)		(13,398	)
Cash flows from financing activities:
Proceeds from issuance of shares under employee plans		2,575			1,109
Repurchase of common stock		(9,878	)		—
Payments for taxes related to net share settlement of equity awards		(6,124	)		(5,201	)
Net cash used in financing activities		(13,427	)		(4,092	)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash		(219	)		—
Net increase in cash, cash equivalents, and restricted cash		11,561			2,989
Cash, cash equivalents, and restricted cash at beginning of period		66,747			78,575
Cash, cash equivalents, and restricted cash at end of period	$	78,308		$	81,564
Supplemental disclosures of cash flow information:
Cash paid for income taxes	$	1,963		$	7,827
Cash refunds from income taxes		9			19
Cash paid for interest		190			190
Cash paid for amounts included in the measurement of operating lease liabilities		4,533			5,914
Operating lease assets obtained in exchange for operating lease liabilities		—			197
Accrued purchases of equipment and improvements		144			201

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	9
Note 3	Accounts Receivable	11
Note 4	Fair Value Measurements	12
Note 5	Leases	12
Note 6	Business Disposition	14
Note 7	Goodwill	14
Note 8	Intangible Assets	14
Note 9	Capitalized Software Costs	15
Note 10	Line of Credit	16
Note 11	Composition of Certain Financial Statement Captions	16
Note 12	Income Taxes	18
Note 13	Earnings Per Share	18
Note 14	Stockholders' Equity	19
Note 15	Concentration of Credit Risk	22
Note 16	Commitments, Guarantees and Contingencies	23
Note 17	Restructuring Costs	24
Note 18	Subsequent Event	24

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 “we,” “us,” or “our” as used herein refers collectively to the Company, unless otherwise stated. All intercompany accounts and transactions have been eliminated.

Basis of Presentation.  The accompanying unaudited condensed consolidated financial statements as of September 30, 2022 and for the three and six months ended September 30, 2022 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, 2022. 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.

Certain prior period amounts have been reclassified to conform to current period presentation. 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.  We evaluate our estimates and assumptions 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. Our estimates and assumptions consider the potential economic implications of COVID-19 on our critical and significant accounting estimates.

Recently Adopted Accounting Pronouncements.  Recently adopted accounting pronouncements are discussed below or in the notes, where applicable.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”). ASU 2020-04 provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments in ASU 2020-04 apply only to contracts, hedging relationships, and other transactions that reference the London Interbank Offered Rate ("LIBOR") or another reference rate expected to be discontinued because of reference rate reform. In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848): Scope (“ASU 2021-01”), which clarifies the application of certain optional expedients and exceptions. Topic 848 may be applied prospectively through December 31, 2022. The adoption of Topic 848 did not have a material impact on our condensed consolidated financial statements as our amended and restated revolving credit agreement contains provisions to accommodate the replacement of the existing LIBOR-based rate with a successor Secured Overnight Financing Rate (“SOFR”) based rate upon a triggering event.

In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805) - Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU 2021-08”).  Under current GAAP, an acquirer generally recognizes assets acquired and liabilities assumed in a business combination, including contract assets and contract liabilities arising from revenue contracts with customers and other similar contracts that are accounted for in accordance with ASU 2016-10, Revenue from Contracts with Customers (Topic 606), at fair value on the acquisition date. ASU 2021-08 requires acquiring entities to apply Topic 606 to recognize and measure contract assets and contract liabilities in a business combination. ASU 2021-08 is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The amendments in ASU 2021-08 should be applied prospectively to business combinations occurring on or after the effective date of the amendments. Early adoption is permitted, including adoption in an interim period.  We have elected to early adopt this guidance as of July 1, 2022. The adoption of this guidance did not have an impact on our condensed consolidated financial statements for the six months ended September 30, 2022 as no business combination activities occurred during this period.

Recent Accounting Standards Not Yet Adopted.  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.

8

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 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,
	2022		2021		2022		2021
Recurring revenues:
Subscription services	$	43,416	$	41,139	$	86,175	$	79,423
Support and maintenance		38,150		39,004		77,288		77,490
Managed services		31,055		28,207		61,700		56,115
Transactional and data services		30,882		27,259		58,099		54,962
Total recurring revenues		143,503		135,609		283,262		267,990
Software, hardware, and other non-recurring revenues:
Software license and hardware		7,916		8,068		14,115		15,282
Other non-recurring services		8,024		5,609		15,368		12,098
Total software, hardware and other non-recurring revenues		15,940		13,677		29,483		27,380
Total revenues	$	159,443	$	149,286	$	312,745	$	295,370

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

9

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, 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.

As of September 30, 2021, the aggregate amount of transaction price related to remaining unsatisfied or partially unsatisfied performance obligations over the respective noncancelable contract term was approximately $531,800, of which we expect to recognize approximately 10% as services are rendered or goods are delivered, 52% over the next 12 months, and the remainder thereafter.

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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 condensed 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 condensed 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, 2022 and 2021, we recognized $17,521 and $17,607, 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, 2022 and 2021, we recognized $35,245 and $35,388, 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 $34,069 as of September 30, 2022, of which $12,011 is classified as current and included as prepaid expenses and other current assets and $22,058 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, 2022 and 2021, we recognized $3,634 and $3,056, respectively, of commissions expense. During the six months ended September 30, 2022 and 2021, we recognized $7,121 and $5,982, 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 condensed consolidated statements of net income (loss) and comprehensive income (loss).

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, 2022			March 31, 2022
Accounts receivable, gross	$	80,803		$	79,945
Allowance for credit losses		(3,855	)		(3,888	)
Accounts receivable, net	$	76,948		$	76,057

The following table represents the changes in the allowance for credit losses, as of and for the three months ended September 30, 2022:

Balance as of June 30, 2022	$	(3,937	)
Additions charged to costs and expenses		(359	)
Deductions		441
Balance as of September 30, 2022	$	(3,855	)

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The following table represents the changes in the allowance for credit losses, as of and for the six months ended September 30, 2022:

Balance as of March 31, 2022	$	(3,888	)
Additions charged to costs and expenses		(600	)
Deductions		633
Balance as of September 30, 2022	$	(3,855	)

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, 2022 and March 31, 2022:

	Balance At		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Unobservable Inputs
	September 30, 2022		(Level 1)		(Level 2)		(Level 3)
ASSETS
Cash and cash equivalents (1)	$	70,728	$	70,728	$	—	$	—
Restricted cash and cash equivalents		7,580		7,580		—		—
	$	78,308	$	78,308	$	—	$	—

	Balance At		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Unobservable Inputs
	March 31, 2022		(Level 1)		(Level 2)		(Level 3)
ASSETS
Cash and cash equivalents (1)	$	59,829	$	59,829	$	—	$	—
Restricted cash and cash equivalents		6,918		6,918		—		—
	$	66,747	$	66,747	$	—	$	—

⁽¹⁾ Cash equivalents consist primarily of money market funds.

There are no assets or liabilities accounted for utilizing unobservable inputs (Level 3) or measured at fair value using significant other observable inputs (Level 2), as of September 30, 2022.

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. 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.

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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. We have certain insignificant short-term leases with an initial term of twelve months or less that are not recorded in our condensed consolidated balance sheets. Operating right-of-use lease assets are classified as operating lease assets on our condensed 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 (loss) and comprehensive income (loss). Total operating lease costs were $708 and $1,685 for the three months ended September 30, 2022 and 2021, respectively. Total operating lease costs were $1,650 and $3,549 for the six months ended September 30, 2022 and 2021, respectively.

Components of operating lease costs are summarized as follows:

	Three Months Ended September 30,						Six Months Ended September 30,
	2022			2021			2022			2021
Operating lease costs	$	788		$	1,602		$	1,737		$	3,435
Short-term lease costs		—			2			—			8
Variable lease costs		160			204			334			361
Less: Sublease income		(240	)		(123	)		(421	)		(255	)
Total operating lease costs	$	708		$	1,685		$	1,650		$	3,549

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

	Three Months Ended September 30,				Six Months Ended September 30,
	2022		2021		2022		2021
Cash paid for amounts included in the measurement of operating lease liabilities	$	2,225	$	2,950	$	4,533	$	5,914
Operating lease assets obtained in exchange for operating lease liabilities		—		197		-		197

We have operating lease agreements for our offices in the United States and India with lease periods expiring between 2022 and 2025. As of September 30, 2022, our operating leases had a weighted average remaining lease term of 2.0 years and a weighted average discount rate of 4.1%. Future minimum aggregate lease payments under operating leases as of September 30, 2022 are summarized as follows:

For the year ended March 31,
2023 (remaining six months)	$	4,384
2024		4,631
2025		3,204
2026		529
Total future lease payments		12,748
Less interest		(506	)
Total lease liabilities	$	12,242

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,

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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.

In the three and six months ended September 30, 2021, we vacated portions of certain leased locations and recorded impairments of $1,195 and $1,577, respectively, to our right-of-use assets and certain related fixed assets associated with the vacated locations, or portions thereof, in Irvine and Fairport based on projected sublease rental income and estimated sublease commencement dates.

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.

6. Business Disposition

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 preliminary gain on disposition of $10,296 in our condensed consolidated statement of net income (loss) and comprehensive income (loss) 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.

7. 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, 2022 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 as of September 30, 2022 and March 31, 2022 was $267,212.

8. Intangible Assets

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

	September 30, 2022
	Customer Relationships			Trade Names			Software Technology			Total
Gross carrying amount	$	39,200		$	250		$	38,500		$	77,950
Accumulated amortization		(31,209	)		(141	)		(26,861	)		(58,211	)
Net intangible assets	$	7,991		$	109		$	11,639		$	19,739
	March 31, 2022
	Customer Relationships			Trade Names			Software Technology			Total
Gross carrying amount	$	39,200		$	250		$	49,000		$	88,450
Accumulated amortization		(29,824	)		(116	)		(34,207	)		(64,147	)
Net intangible assets	$	9,376		$	134		$	14,793		$	24,303

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Amortization expense related to customer relationships and trade names recorded as operating expenses in the condensed consolidated statements of net income (loss) and comprehensive income (loss) was $705 and $881 for the three months ended September 30, 2022 and 2021, respectively. Amortization expense related to software technology recorded as cost of revenue was $1,373 and $2,218 for the three months ended September 30, 2022 and 2021, respectively.

Amortization expense related to customer relationships and trade names recorded as operating expenses in the condensed consolidated statements of net income (loss) and comprehensive income (loss) was $1,410 and $1,762 for the six months ended September 30, 2022 and 2021, respectively. Amortization expense related to software technology recorded as cost of revenue was $3,154 and $4,436 for the six months ended September 30, 2022 and 2021, respectively.

During the three months ended September 30, 2022, we retired $10,500 of fully amortized software technology related to our Entrada acquisition.

The following table summarizes the remaining estimated amortization of definite-lived intangible assets as of September 30, 2022:

	Estimated Remaining Amortization Expense
	Operating Expense		Cost of Revenue		Total
For the year ended March 31,
2023 (remaining six months)	$	1,410	$	2,000	$	3,410
2024		2,279		3,573		5,852
2025		1,846		3,573		5,419
2026		1,377		2,251		3,628
2027		631		242		873
2028 and beyond		557		-		557
Total	$	8,100	$	11,639	$	19,739

9. Capitalized Software Costs

Our capitalized software costs are summarized as follows:

	September 30, 2022			March 31, 2022
Gross carrying amount	$	119,037		$	110,155
Accumulated amortization		(69,246	)		(66,197	)
Net capitalized software costs	$	49,791		$	43,958

Amortization expense related to capitalized software costs was $5,371 and $5,751 for the three months ended September 30, 2022 and 2021, respectively, and is recorded as cost of revenue in the condensed consolidated statements of net income (loss) and comprehensive income (loss).

Amortization expense related to capitalized software costs was $10,725 and $11,617 for the six months ended September 30, 2022 and 2021, respectively.

During the six months ended September 30, 2022, we retired $6,745 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, 2022. 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,
2023 (remaining six months)	$	15,200
2024		19,600
2025		10,400
2026		4,591
Total	$	49,791

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10. 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. The Credit Agreement contains provisions to accommodate the replacement of the existing LIBOR-based rate with a SOFR based rate upon a triggering event.

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.

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, 2022.

As of September 30, 2022 and March 31, 2022, we had no outstanding loans and $300,000 of unused credit under the Credit Agreement.

Interest expense related to the Credit Agreement was $198 and $193 for the three months ended September 30, 2022 and 2021, respectively. Amortization of deferred debt issuance costs was $127 and $127 for the three months ended September 30, 2022 and 2021, respectively.

Interest expense related to the Credit Agreement was $401 and $383 for the six months ended September 30, 2022 and 2021, respectively. Amortization of deferred debt issuance costs was $254 and $254 for the six months ended September 30, 2022 and 2021, respectively.

11. Composition of Certain Financial Statement Captions

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

	September 30, 2022		March 31, 2022
Cash and cash equivalents	$	70,728	$	59,829
Restricted cash and cash equivalents		7,580		6,918
Cash, cash equivalents, and restricted cash	$	78,308	$	66,747

Prepaid expenses and other current assets are summarized as follows:

	September 30, 2022		March 31, 2022
Prepaid expenses	$	20,640	$	24,229
Capitalized commissions costs		12,011		11,698
Other current assets		1,712		1,175
Prepaid expenses and other current assets	$	34,363	$	37,102

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Equipment and improvements are summarized as follows:

	September 30, 2022			March 31, 2022
Computer equipment	$	36,692		$	36,293
Internal-use software		19,537			19,001
Leasehold improvements		11,117			13,227
Furniture and fixtures		7,998			9,579
Equipment and improvements, gross		75,344			78,100
Accumulated depreciation and amortization		(67,946	)		(68,980	)
Equipment and improvements, net	$	7,398		$	9,120

Other assets are summarized as follows:

	September 30, 2022		March 31, 2022
Capitalized commission costs	$	22,058	$	21,654
Deposits		6,539		5,793
Debt issuance costs		2,067		2,006
Other noncurrent assets		8,269		9,573
Other assets	$	38,933	$	39,026

Accrued compensation and related benefits are summarized as follows:

	September 30, 2022		March 31, 2022
Accrued vacation	$	11,969	$	11,785
Accrued bonus		9,966		27,311
Deferred payroll taxes		3,806		3,817
Accrued commissions		2,012		5,353
Accrued payroll and other		360		470
Accrued compensation and related benefits	$	28,113	$	48,736

Other current and noncurrent liabilities are summarized as follows:

	September 30, 2022		March 31, 2022
Accrued hosting costs	$	13,836	$	12,510
Care services liabilities		7,580		6,918
Customer credit balances and deposits		6,540		4,622
Accrued EDI expense		6,098		2,168
Sales returns reserves and other customer liabilities		5,716		5,725
Accrued employee benefits and withholdings		3,895		3,535
Accrued consulting and outside services		3,102		4,799
Accrued self insurance expense		2,777		2,208
Accrued outsourcing costs		2,670		2,264
Accrued legal expense		1,405		1,439
Accrued taxes payable		506		540
Accrued royalties		336		3,557
Other accrued expenses		3,859		3,248
Other current liabilities	$	58,320	$	53,533
Uncertain tax positions	$	4,183	$	4,196
Other liabilities		373		374
Other noncurrent liabilities	$	4,556	$	4,570

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12. Income Taxes

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 benefit for income taxes was $1,441 in the three months ended September 30, 2021, reflecting an effective tax rate benefit of 17.5%.

The provision of income taxes in the six months ended September 30, 2022 was $5,460, reflecting an effective tax rate benefit of 27.0%. The benefit for income taxes in the six months ended September 30, 2021 was $882, reflecting an effective tax rate benefit of 18.4%.

The increase in the effective tax rate for the three and six months ended September 30, 2022 compared to the corresponding prior periods was primarily due to the net benefit of discrete items related to stock based compensation in the current period compared to prior year.

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 $6,433 and $6,112 related to various federal, state, and local income tax matters as of September 30, 2022 and March 31, 2022, 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 2018. With a few exceptions, we are no longer subject to state or local income tax examinations for tax years before fiscal year ended 2017. 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.

Inflation Reduction Act of 2022

Changes in tax law and rates may affect recorded deferred tax assets and liabilities and our effective tax rate in the future. On August 16, 2022, the United States government enacted the Inflation Reduction Act of 2022 that includes changes to the United States corporate income tax system, including a fifteen percent minimum tax based on “adjusted financial statement income,” which is effective for tax years beginning after December 31, 2022, and a one percent excise tax on repurchases of stock after December 31, 2022. We are continuing to evaluate the Inflation Reduction Act and its requirements, as well as its application to our business. 

13. 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,
	2022		2021			2022		2021
Earnings per share — Basic:
Net income (loss)	$	13,623	$	(6,771	)	$	14,771	$	(3,923	)
Weighted-average shares outstanding — Basic		67,806		67,406			67,698		67,291
Net income (loss) per common share — Basic	$	0.20	$	(0.10	)	$	0.22	$	(0.06	)
Earnings per share — Diluted:
Net income (loss)	$	13,623	$	(6,771	)	$	14,771	$	(3,923	)
Weighted-average shares outstanding		67,806		67,406			67,698		67,291
Effect of potentially dilutive securities		616		—			655		—
Weighted-average shares outstanding — Diluted		68,422		67,406			68,353		67,291
Net income (loss) per common share — Diluted	$	0.20	$	(0.10	)	$	0.22	$	(0.06	)

The computation of diluted net income (loss) per share does not include 26 and 697 options to acquire shares of common stock for the three months ended September 30, 2022 and September 30, 2021, respectively, because their inclusion would have an anti-dilutive effect on net income (loss) per share.

The computation of diluted net income (loss) per share does not include 23 and 254 options to acquire shares of common stock for the six months ended September 30, 2022 and September 30, 2021, respectively, because their inclusion would have an anti-dilutive effect on net income (loss) per share.

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14. Stockholders’ Equity

Equity Incentive Plans

In October 2005, our shareholders approved a stock option and incentive plan (the “2005 Plan”) under which 4,800,000 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, unrestricted stock, restricted stock units, performance shares, performance units (including performance options) and other share-based awards. The 2005 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 2005 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 2005 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 2005 Plan, awards under the 2005 Plan will fully vest under certain circumstances. The 2005 Plan expired on May 25, 2015. As of September 30, 2022, there were 34,100 outstanding options under the 2005 Plan.

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. The Amended 2015 Plan provides that our employees and directors may, at the discretion of the 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, 2022, there were 1,332,613 outstanding options, 2,713,042 outstanding shares of restricted stock awards, certain outstanding performance stock unit awards as described further below, and 1,181,861 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 are 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. As of September 30, 2022, there were 724,835 outstanding shares of restricted stock awards, 425,666 outstanding performance stock unit awards, and 141,699 shares available for future grant under the Inducement Plan.

Stock-Based Compensation

The following table summarizes total share-based compensation expense included in the condensed consolidated statements of net income (loss) and comprehensive income (loss) for the three and six months ended September 30, 2022 and 2021:

	Three Months Ended September 30,						Six Months Ended September 30,
	2022			2021			2022			2021
Costs and expenses:
Cost of revenue	$	951		$	554		$	1,514		$	1,058
Research and development costs		1,655			1,110			3,238			2,153
Selling, general and administrative		6,081			3,559			12,701			8,424
Total share-based compensation		8,687			5,223			17,453			11,635
Income tax benefit		(2,078	)		(1,151	)		(4,123	)		(2,733	)
Decrease in net income	$	6,609		$	4,072		$	13,330		$	8,902

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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.

Stock Options

The following table summarizes the stock option transactions during the six months ended September 30, 2022:

				Weighted-		Weighted-
				Average		Average		Aggregate
				Exercise		Remaining		Intrinsic
	Number of			Price		Contractual		Value
	Shares			per Share		Life (years)		(in thousands)
Outstanding, March 31, 2022		1,453,739		$	14.80		2.9	$	8,886
Exercised		(85,026	)		14.64		1.8		440
Expired		(2,000	)		15.99
Outstanding, September 30, 2022		1,366,713		$	14.81		2.4	$	4,020
Vested and expected to vest, September 30, 2022		1,365,730		$	14.81		2.4	$	4,017
Exercisable, September 30, 2022		1,360,463		$	14.81		2.4	$	4,003

Share-based compensation expense related to stock options was $13 and $290 for the three months ended September 30, 2022 and 2021, respectively. Share-based compensation expense related to stock options was $79 and $999 for the six months ended September 30, 2022 and 2021, respectively.

Non-vested stock option award activity during the six months ended September 30, 2022 is summarized as follows:

				Weighted-
				Average
				Grant-Date
	Number of			Fair Value
	Shares			per Share
Outstanding, March 31, 2022		50,382		$	6.98
Vested		(44,132	)		7.12
Outstanding, September 30, 2022		6,250		$	5.96

The total fair value of options vested during the six months ended September 30, 2022 and 2021 was $314 and $1,461, respectively.

Restricted Stock Awards

Restricted stock awards activity during the six months ended September 30, 2022 is summarized as follows:

				Weighted-
				Average
				Grant-Date
	Number of			Fair Value
	Shares			per Share
Outstanding, March 31, 2022		3,242,763		$	15.30
Granted		1,361,471			17.79
Vested		(1,024,872	)		15.17
Canceled		(141,485	)		16.50
Outstanding, September 30, 2022		3,437,877		$	16.27

Share-based compensation expense related to restricted stock awards was $6,372 and $3,889 for the three months ended September 30, 2022 and 2021, respectively. Share-based compensation expense related to restricted stock awards was $12,651 and $10,347 for the six months ended September 30, 2022 and 2021, 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.

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As of September 30, 2022, $45,116 of total unrecognized compensation costs related to restricted stock awards is expected to be recognized over a weighted-average period of 2.0 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 $7,114 and $5,540 for the three months ended September 30, 2022 and 2021, respectively. The total fair value of restricted stock awards vested as of the vesting dates were $18,205 and $14,210 for the six months ended September 30, 2022 and 2021, respectively.

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, 2022 and 2021 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, 2022 and 2021 were 142,751 and 100,226, 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, 2022 and 2021 were 345,263 and 277,544, 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 23, 2018, the Compensation Committee of the Board approved 248,140 performance stock unit awards to be granted to certain executives and non-executive members of the executive leadership team, of which no shares are currently outstanding and no shares were ultimately earned or issued during the performance period. Approximately 34% of the performance stock units were tied to our cumulative 3-year total shareholder return, 33% were tied to our fiscal year 2021 revenue, and 33% were tied to our fiscal year 2021 adjusted earnings per share goals, each as specifically defined in the equity award agreements. The number of shares to be issued was to vary between 50% and 200% of the number of performance stock units depending on performance, and no such shares were to be issued if threshold performance was not achieved. The weighted-average grant date fair value of the awards was $17.84 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 and earnings per share targets.  

On December 26, 2019 and January 27, 2020, the Compensation Committee of the Board approved a total of 279,587 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 2021 revenue goal and 20% are tied to the Company’s fiscal year 2022 revenue goal. Performance stock unit awards funded for fiscal year 2021 and fiscal year 2022 revenue performance will be modified for cumulative 3-year total shareholder return (“TSR”) on the three-year grant anniversary, which is also the cliff vest date. The number of shares to be issued may vary between 42.5% and 172.5% of the number of 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 $16.02 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 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-

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average grant date fair value of the award was $10.52 per share. During the three months ended September 30, 2022, 24,334 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.  During the three months ended September 30, 2022, 33,998 units were earned and issued as shares.

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. Share-based compensation expense related to the performance stock units and awards was $915 and a benefit of $42 for three and six months ended September 30, 2021, respectively. The benefit recognized in the prior year period was primarily due to the cancellation of awards associated with the resignation of our former Chief Executive Officer.

As of September 30, 2022, $7,705 of total estimated unrecognized compensation costs related to performance stock units and awards is expected to be recognized over a weighted-average period of 1.7 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. As of September 30, 2022, we have issued 976,892 shares under the Purchase Plan and 3,023,108 shares are available for future issuance.

Share-based compensation expense recorded for the employee share purchase plan was $130 and $129 for the three months ended September 30, 2022 and 2021, respectively. Share-based compensation expense recorded for the employee share purchase plan was $349 and $330 for the six months ended September 30, 2022 and 2021, 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. 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. Share repurchases under the program 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 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.

During the three months ended September 30, 2022, we repurchased 428,297 shares of common stock for a total of $7,373 at a weighted-average share repurchase price of approximately $17.21.  As of September 30, 2022, $14,303 remained available for share repurchases pursuant to the Company’s share repurchase program.

15. Concentration of Credit Risk

We had cash deposits at United States banks and financial institutions which exceeded federally insured limits at September 30, 2022. 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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16. 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 have experienced legal claims by clients regarding product and contract disputes, by other third parties asserting that we have infringed their intellectual property rights, by current and former employees regarding certain employment matters and by certain shareholders. We believe that these claims are without merit and intend to defend against them vigorously; however, we could incur substantial costs and diversion of management resources defending any such claim, even if we are ultimately successful in the defense of such matter. Litigation is inherently uncertain and always difficult to predict.

Additionally, we are subject to the regulation and oversight of various federal and state governmental agencies that enforce fraud and abuse programs related to the submission of fraudulent claims for reimbursement from governmental payers. We have received, and from time to time may receive, inquiries or subpoenas from federal and state agencies. Under the False Claims Act (“FCA”), private parties have the right to bring qui tam, or “whistleblower,” suits against entities that submit, or cause to be submitted, fraudulent claims for reimbursement. Qui tam or whistleblower actions initiated under the FCA may be pending but placed under seal by the court to comply with the FCA’s requirements for filing such suits. As a result, they could lead to proceedings without our knowledge. We refer you to the discussion of regulatory and litigation risks within “Item 1A. Risk Factors” appearing in our most recent Annual Report on Form 10-K for the fiscal year ended March 31, 2022 (“Annual Report”).

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. After the court sustained our demurrer to the initial complaint, Hussein filed an amended complaint on April 25, 2014. 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 has 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 are currently briefing the various appeals.  We expect the California State Court of Appeal for the Fourth Appellate District, Division Three, to hear arguments and issue its ruling on the various appeals in 2023.

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Other Regulatory and Litigation Matters

Commencing in April 2017, we have received requests for documents and information from the United States Attorney's Office for the District of Vermont and other government agencies in connection with an investigation concerning the certification we obtained for our software under the United States Department of Health and Human Services' Electronic Health Record (EHR) Incentive Program. The requests for information relate to, among other things: (a) data used to determine objectives and measures under the Meaningful Use (MU) and the Physician Quality Reporting System (PQRS) programs, (b) our EHR product and its performance, including defects that relate to patient safety or meaningful use certifications, (c) the software code used in certifying our EHR software and information, and (d) marketing programs and payments provided for the referral of EHR business. We continue to respond to the government’s requests and are engaged in discussions on the status and potential resolution of their ongoing investigation. Recently the United States Attorney’s Office informed NextGen of the existence of a sealed qui tam lawsuit concerning the issues NextGen has been discussing with their Office.  NextGen does not have a copy of the lawsuit because it remains under seal.  

This investigation and the sealed qui tam lawsuit may lead to future requests for information and ultimately litigation of the existing and potentially additional claims by or on behalf of the United States against NextGen, which themselves may lead to material damages, penalties, fines, judgments, or other liabilities. In addition, our responses to these and any future requests and the defense of any litigation will require time and effort, which will result in additional cost to us. At this time, we are unable to estimate the probability of the outcome of this matter or the range of reasonably possible loss, if any. However, the unfavorable resolution of this matter could have a material adverse effect on our business, results of operations, financial condition or cash flows.

Given the highly-regulated nature of our industry, we may, from time to time, be subject to subpoenas, requests for information, or investigations from various government agencies. It is our practice to respond to such matters in a cooperative, thorough and timely manner.

17. Restructuring Costs

During the three and six months ended September 30, 2022, we recorded restructuring costs of $321, consisting of payroll-related costs, such as severance, outplacement costs, and continuing healthcare coverage, associated with the involuntary separation of employees pursuant to a one-time benefit arrangement, within operating expenses in our consolidated statements of net income (loss) and comprehensive income (loss). The payroll-related costs were substantially paid as of September 30, 2022.

During the six months ended September 30, 2021, we recorded restructuring costs of $539 within operating expenses in our condensed consolidated statements of net income (loss) and comprehensive income (loss). The payroll-related costs were substantially paid as of September 30, 2021.

18.  Subsequent Event

On October 25, 2022, our Board of Directors 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.

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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 ("Report") 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 the impact of the COVID-19 pandemic and measures taken in response thereto, as well as our product development plans, business strategies, future operations, financial condition and prospects, share repurchases, developments in and the impacts of government regulation and legislation and market factors influencing our results. 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 continue to develop new products and increase systems sales in markets characterized by rapid technological evolution, consolidation, and competition from larger, better-capitalized competitors. Many other economic, competitive, governmental and technological factors could affect our ability to achieve our goals, and interested persons are urged to review any risks that may be described in “Item 1A. Risk Factors” as set forth herein and other risk factors appearing in our most recent Annual Report on Form 10-K for the fiscal year ended March 31, 2022 (“Annual Report”), as supplemented by additional risk factors, if any, in our interim filings on our Quarterly Reports on Form 10-Q, 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. Each of the terms “NextGen Healthcare,” “NextGen,” “we,” “us,” “our,” or the “Company” as used throughout this Report refers collectively to NextGen Healthcare, Inc. and its wholly-owned subsidiaries, unless otherwise indicated.

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 healthcare practices to manage the risk and complexity of delivering care in the United States healthcare system. Our combination of technological breadth, depth, and domain expertise makes us 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 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. With the addition of behavioral health to our medical and oral health capabilities, we continue to extend our 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, and 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.

Our Vision, Mission and Strategy

NextGen Healthcare’s vision is 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 but do so recognizing that the entire healthcare ecosystem needs to work in concert to achieve the quadruple aim… “to improved patient experience, improved 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 both the essential, integrated, delivery platform and the most trusted advisor for the ambulatory practices of the future.  To that end, we primarily serve organizations that provide or orchestrate care in

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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 continue investing in our current capabilities as well as building and/or acquiring 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. The integration of these acquired technologies has made NextGen Healthcare’s solutions among the most comprehensive in the market. Further, we are also actively innovating our business models and exploring new high-growth market domains as we extend our position as the essential, integrated, delivery platform and trusted impact partner for the ambulatory practices of the future.

Market Opportunity, and Trends

The scale and scope of the healthcare industry continues to expand. Annual United States healthcare spend today represents nearly $4.1 trillion and ~20% of GDP.  A significant portion of this spend is directed towards the treatment of chronic conditions and administering 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 Influence – 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 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.    

3. Consumerism – Consumers are increasingly directing their own healthcare and are expecting greater levels of access, convenience, and experience personalization.  Beyond tailoring healthcare interactions to their needs and preferences, they also expect much 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 becomes 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 KLAS-ranked platform solution provider, is driving greater levels of efficiency and experience 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 Health Information Exchanges (“HIE’s”), with over 170 million patient records passing over our network of almost 2.8 million directory addresses.

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• 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 (“EHR”), 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 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 focuses 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.

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 incorporates 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. One of these solutions, our practice management offering, NextGen® Enterprise PM, was recognized as the #1 Practice Management Solution (11-75 Physicians) for four consecutive years – 2019, 2020, 2021 and 2022 Best in KLAS Report.

• 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, which was recognized as the #1 Small Practice Ambulatory EMR/PM (<10 Physicians) in the 2022 Best in KLAS Report.

• 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.    

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Figure 1:  NextGen Healthcare Solutions Domains

Results of Operations

The following table sets forth the percentage of revenue represented by each item in our condensed consolidated statements of net income (loss) for the three and six months ended September 30, 2022 and 2021 (certain percentages below may not sum due to rounding):

	Three Months Ended September 30,						Six Months Ended September 30,
	2022			2021			2022			2021
Revenues:
Recurring		90.0	%		90.8	%		90.6	%		90.7	%
Software, hardware, and other non-recurring		10.0			9.2			9.4			9.3
Total revenues		100.0			100.0			100.0			100.0
Cost of revenue:
Recurring		40.8			38.3			40.7			38.7
Software, hardware, and other non-recurring		6.8			5.1			6.9			5.1
Amortization of capitalized software costs and acquired intangible assets		4.2			5.3			4.4			5.4
Total cost of revenue		51.8			48.7			52.0			49.2
Gross profit		48.2			51.3			48.0			50.8
Operating expenses:
Selling, general and administrative		28.2			42.8			30.0			38.0
Research and development costs, net		13.1			12.4			13.6			12.8
Amortization of acquired intangible assets		0.4			0.6			0.5			0.6
Impairment of assets		0.5			0.8			0.4			0.5
Restructuring costs		0.2			0.0			0.1			0.2
Total operating expenses		42.4			56.6			44.6			52.2
Income (loss) from operations		5.8			(5.3	)		3.4			(1.4	)
Interest income		0.0			0.0			0.0			0.0
Interest expense		(0.2	)		(0.2	)		(0.2	)		(0.2	)
Other income (expense), net		6.5			0.0			3.3			0.0
Income (loss) before provision for (benefit of) income taxes		12.1			(5.5	)		6.5			(1.6	)
Provision for (benefit of) income taxes		3.6			(1.0	)		1.7			(0.3	)
Net income (loss)		8.5	%		(4.5	)%		4.7	%		(1.3	)%

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Revenues

The following table presents our disaggregated revenues for the three and six months ended September 30, 2022 and 2021 (in thousands):

	Three Months Ended September 30,						Six Months Ended September 30,
	2022			2021			2022			2021
Recurring revenues:
Subscription services	$	43,416		$	41,139		$	86,175		$	79,423
Support and maintenance		38,150			39,004			77,288			77,490
Managed services		31,055			28,207			61,700			56,115
Transactional and data services		30,882			27,259			58,099			54,962
Total recurring revenues		143,503			135,609			283,262			267,990
Software, hardware, and other non-recurring revenues:
Software license and hardware		7,916			8,068			14,115			15,282
Other non-recurring services		8,024			5,609			15,368			12,098
Total software, hardware and other non-recurring revenues		15,940			13,677			29,483			27,380
Total revenues	$	159,443		$	149,286		$	312,745		$	295,370
Recurring revenues as a percentage of total revenues		90.0	%		90.8	%		90.6	%		90.7	%

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.

Beginning in fiscal year 2023, in order to align the presentation of disaggregated revenue with the manner in which management reviews such information, we revised our presentation of disaggregated revenues by major revenue categories 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 Electronic Data Interchange (“EDI”) and data services category. The prior period presentation of revenues disaggregated by our major revenue categories and by occurrence above have been reclassified to conform to current year presentation.

Consolidated revenue for the three months ended September 30, 2022 increased $10.2 million compared to the prior year period due to a $7.9 million increase in recurring revenues and a $2.3 million increase in software, hardware and other non-recurring revenues. The increase in recurring revenues was driven by a $3.6 million increase in transactional and data services, $2.8 million increase in managed services, and a $2.3 million increase in subscription services, partially offset by a $0.8 million decrease in support and maintenance. The increase in transactional and data services revenue was primarily driven by higher revenues from our patient pay services. The increase in managed services revenue was primarily due to an increase in hosting services and revenue cycle management (“RCM”) services revenues associated with higher recent bookings. The increase in subscription services was primarily due to higher revenues associated with NextGen Office, NextGen Enterprise surround solutions such as virtual visits and interoperability, which is part of the NextGen Insights portfolio, due to higher recent bookings. Support and maintenance decreased primarily due to net client attrition and our continued shift to subscription-based solutions. The increase in software, hardware, and other non-recurring revenues was primarily due to higher professional services revenue from more hours incurred and projects completed in the current year period.

Consolidated revenue for the six months ended September 30, 2022 increased $17.4 million compared to the prior year period due to a $15.3 million increase in recurring revenues and a $2.1 million increase in software, hardware and other non-recurring revenues. The increase in recurring revenues was driven by a $6.8 million increase in subscription services, $5.6 million increase in managed services, $3.1 million in transactional and data services, offset by a $0.2 million decrease in support and maintenance. The increase in subscription services was primarily due to higher subscriptions of our NextGen Office and Insights solutions, including interoperability, virtual visits, mobile, financial analytics, and NextGen Enterprise solutions, due to higher recent bookings. The increase in managed services revenue was primarily due to an increase in hosting services and RCM services revenues associated with higher recent bookings. The increase in transactional and data services revenue was primarily driven by higher revenues from our patient pay services. Support and maintenance decreased primarily due to net client attrition and our continued shift to subscription-based solutions. The increase in software, hardware, and other non-recurring revenues was primarily due to higher professional services revenue from more hours incurred and projects completed in the current year period.

Bookings reflect the estimated annual value of our executed contracts, adjusted to include the effect of pre-acquisition bookings if applicable, and are believed to provide a broad indicator of the general direction and progress of the business. Total bookings were $37.4 million and $39.1 million for the three months ended September 30, 2022 and 2021, respectively. The decrease is primarily

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due to lower bookings of professional services and subscriptions of NextGen Office and mobile, partially offset by higher bookings of patient pay services and RCM services.

Total bookings were $76.6 million and $73.4 million for the six months ended September 30, 2022 and 2021, respectively. The increase is due to higher bookings of patient pay services and RCM services, partially offset by lower bookings of professional services and subscriptions of mobile, virtual visits, NextGen Office, and population health.

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 months ended September 30, 2022 and 2021 (in thousands):

	Three Months Ended September 30,						Six Months Ended September 30,
	2022			2021			2022			2021
Cost of revenue:
Recurring	$	65,039		$	57,119		$	127,283		$	114,279
Software, hardware, and other non-recurring		10,797			7,610			21,473			15,107
Amortization of capitalized software costs and acquired intangible assets		6,744			7,969			13,878			16,053
Total cost of revenue	$	82,580		$	72,698		$	162,634		$	145,439
Gross profit	$	76,863		$	76,588		$	150,111		$	149,931
Gross margin %		48.2	%		51.3	%		48.0	%		50.8	%

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, hosting service costs, third party software costs and royalties, and other costs directly associated with delivering our products and services. Refer to Note 8, "Intangible Assets" and Note 9, "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 $0.6 million for the three months ended September 30, 2022 and 2021, respectively. Share-based compensation expense included in cost of revenue was $1.5 million and $1.1 million for the six months ended September 30, 2022 and 2021, respectively.

Gross profit for the three months ended September 30, 2022 was $76.9 million compared $76.6 million in the prior year due to an $10.2 million increase in revenues as discussed above, offset by a $9.9 million increase in cost of revenue primarily associated with the higher revenues. Our gross margin decreased to 48.2% for the three months ended September 30, 2022 compared 51.3% in the prior year period.

Gross profit for the six months ended September 30, 2022 was $150.1 million compared to $149.9 million in the prior year period due to a $17.4 million increase in revenues as discussed above, offset by a $17.2 million increase in cost of revenue associated with the higher revenues. Our gross margin decreased to 48.0% for the six months ended September 30, 2022 compared to 50.8% in the prior year period.

The increase in cost of revenue for the three and six months ended September 30, 2022 compared to the prior year period was primarily due to higher costs of patient pay services directly associated with higher recent revenues and bookings. Other recurring cost of revenue, including subscription services and managed services costs, also increased driven by higher revenues and bookings, resulting in higher hosting costs, higher third-party costs, and higher salaries and benefits from increased employee headcount associated with delivering our software solutions and services. EDI and data services costs also increased as revenues increased over the prior year period. 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 accelerate Spring’21 migration. These increases in cost of revenue were partially offset by lower amortization of capitalized software costs and acquired intangible assets, as noted above.

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Our gross margin for the three and six months ended September 30, 2022 compared to the prior year period decreased primarily due to increased investments in professional services as we accelerate Spring’21 migration and a shift in product mix to higher 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, 2022 and 2021 (in thousands):

	Three Months Ended September 30,						Six Months Ended September 30,
	2022			2021			2022			2021
Selling, general and administrative	$	44,886		$	63,891		$	93,920		$	112,377
Selling, general and administrative, as a percentage of revenue		28.2	%		42.8	%		30.0	%		38.0	%

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 $6.1 million and $3.6 million for the three months ended September 30, 2022 and 2021, respectively. Share-based compensation expense included in selling, general and administrative expenses was $12.7 million and $8.4 million for the six months ended September 30, 2022 and 2021, respectively. Refer to Note 14, "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 decreased $19.0 million and $18.5 million in the three and six months ended September 30, 2022 compared to the prior year. The decrease in expense from the prior year periods were primarily driven by higher legal and related costs for our shareholder litigation matter incurred in the prior year period, including a $11.4 million payment related to the indemnification of certain expenses related to the Hussein matter. Selling, general and administrative expense in the prior year periods also included approximately $7.4 million of incremental proxy contest expenses associated with our prior year annual shareholders’ meeting. Partially offsetting the decrease in expense were higher personnel costs from our annual merit increases, higher share-based compensation expense noted above, higher commissions expense, and increased travel, conferences, and conventions costs as these activities resume.

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, 2022 and 2021 (in thousands):

	Three Months Ended September 30,						Six Months Ended September 30,
	2022			2021			2022			2021
Gross expenditures	$	30,275		$	24,693		$	61,068		$	49,552
Capitalized software costs		(9,418	)		(6,175	)		(18,416	)		(11,713	)
Research and development costs, net	$	20,857		$	18,518		$	42,652		$	37,839
Research and development costs, as a percentage of revenue		13.1	%		12.4	%		13.6	%		12.8	%
Capitalized software costs as a percentage of gross expenditures		31.1	%		25.0	%		30.2	%		23.6	%

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.

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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 (loss) and comprehensive income (loss), and ultimately also affects the future amortization of our previously capitalized software development costs. Refer to Note 9, "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 $1.7 million and $1.1 million for the three months ended September 30, 2022 and 2021, respectively. Share-based compensation expense included in research and development costs was $3.2 million and $2.2 million for the six months ended September 30, 2020 and 2021, respectively.

Net research and development costs for the three months ended September 30, 2022 increased $2.3 million compared to the prior year period due to $5.6 million higher gross expenditures, offset by $3.3 million higher capitalization of software costs.

Net research and development costs for the six months ended September 30, 2022 increased $4.8 million compared to the prior year period due to $11.5 million higher gross expenditures, offset by $6.7 million higher capitalization of software costs.

The increase in gross expenditures in the three and six months ended September 30, 2022 compared to the prior year was primarily driven by an increase in consulting costs, as well as higher personnel costs due to our annual merit increases and increased headcount. 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, 2022 and 2021 (in thousands):

	Three Months Ended September 30,				Six Months Ended September 30,
	2022		2021		2022		2021
Amortization of acquired intangible assets	$	705	$	881	$	1,410	$	1,762

Amortization of acquired intangible assets included in operating expense consists of the amortization related to our customer relationships and trade names intangible assets acquired as part of our business combinations. Refer to Note 8, "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 for the three and six months ended September 30, 2022 decreased $0.2 million and $0.4 million, respectively compared to the prior year period due to lower amortization of the customer relationships intangible assets associated with Medfusion and HealthFusion as these assets are amortized under the accelerated method of amortization.

Restructuring Costs and Impairment of Assets

During the three and six months ended September 30, 2022, we recorded restructuring costs of $0.3 million, consisting of payroll-related costs, such as severance, outplacement costs, and continuing healthcare coverage, associated with the involuntary separation of employees pursuant to a one-time benefit arrangement, within operating expenses in our consolidated statements of net income (loss) and comprehensive income (loss). The payroll-related costs were substantially paid as of September 30, 2022.

During the six months ended September 30, 2021, we recorded restructuring costs of $0.5 million within operating expenses in our condensed consolidated statements of net income (loss) and comprehensive income (loss). The payroll-related costs were substantially paid as of September 30, 2021.

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.

In the three and six months ended September 30, 2021, we vacated portions of certain leased locations and recorded impairments of $1.2 million and $1.6 million, respectively, to our right-of-use assets and certain related fixed assets associated with the vacated

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locations, or portions thereof, in Irvine and Fairport based on projected sublease rental income and estimated sublease commencement dates.

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 expense for the three and six months ended September 30, 2022 and 2021 (in thousands):

	Three Months Ended September 30,						Six Months Ended September 30,
	2022			2021			2022			2021
Interest income	$	74		$	17		$	120		$	29
Interest expense		(325	)		(320	)		(655	)		(637	)
Other income (expense), net		10,292			(12	)		10,287			(34	)

Interest expense relates to our revolving credit agreement and the related amortization of deferred debt issuance costs. Refer to Note 10, “Line of Credit” of our notes to condensed consolidated financial statements included elsewhere in this Report for additional information.

The changes in interest expense are primarily caused by fluctuations in outstanding balances under our revolving credit agreement and the related amortization of debt issuance costs. As of September 30, 2022 and September 30, 2021, we had no outstanding balances under the revolving credit agreement. Interest income is earned from funds in our money market accounts. The fluctuation of other income and expense compared to the prior year period are primarily due to changes to the India foreign exchange rates.

The change in other income (expense), net is due to the $10.3 million gain from our disposition of our Commercial Dental assets. Refer to Note 6, "Business Dispositions" of our notes to condensed consolidated financial statements included elsewhere in this Report for additional information.

Provision for (Benefit of) Income Taxes

The following table presents our provision for (benefit of) income taxes for the three and six months ended September 30, 2022 and 2021 (in thousands):

	Three Months Ended September 30,						Six Months Ended September 30,
	2022			2021			2022			2021
Provision for (benefit of) income taxes	$	5,707		$	(1,441	)	$	5,460		$	(882	)
Effective tax (benefit) rate		29.5	%		17.5	%		27.0	%		18.4	%

The increase in the effective tax rate for the three and six months ended September 30, 2022 compared to the prior periods was primarily due to the net benefit of discrete items related to stock based compensation in the current period compared to prior year.

Liquidity and Capital Resources

The following table presents selected financial statistics and information for the six months ended September 30, 2022 and 2021 (in thousands): 

	Six Months Ended September 30,
	2022		2021
Cash and cash equivalents	$	70,728	$	75,303
Unused portion of revolving credit agreement (1)		300,000		300,000
Total liquidity	$	370,728	$	375,303
Net income (loss)	$	14,771	$	(3,923	)
Net cash provided by operating activities	$	33,796	$	20,479

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⁽¹⁾ As of September 30, 2022, we had no outstanding loans under our $300.0 million revolving credit agreement.

We had no outstanding borrowings under our revolving credit agreement as of September 30, 2022, March 31, 2022, and September 30, 2021. 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, and our revolving credit agreement.

We believe that our cash and cash equivalents balance as of September 30, 2022, together with our cash flows from operating activities and liquidity provided by our revolving credit agreement, will be sufficient to meet our working capital and capital expenditure requirements for the next twelve months.

The extent to which COVID-19 and other macroeconomic factors may impact our business, financial results, cash flows, and liquidity requirements depend on numerous evolving factors including, but not limited to, the magnitude and duration of COVID-19; the impact on our employees; worldwide macroeconomic conditions, including interest rates, employment rates, and health insurance coverage; and governmental and business reactions to the pandemic and other macroeconomic factors. We continue to monitor the broader implications of the global COVID-19 pandemic and other macroeconomic factors and may take further actions that we determine are in the best interests of our employees, customers, partners, suppliers, and shareholders.

Cash and Cash Equivalents

As of September 30, 2022, our cash and cash equivalents balance of $70.7 million compares to $59.8 million as of March 31, 2022 and $75.3 million as of September 30, 2021.

We may continue to use a portion of our funds as well as available financing from our revolving credit agreement, to the extent permissible, for share repurchases, future acquisitions, or other similar business activities, although the specific timing and amount of funds to be used is not currently determinable. We intend to expend some of our available funds for the development 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 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.

Cash Flows from Operating Activities

The following table summarizes our condensed consolidated statements of cash flows for the six months ended September 30, 2022 and 2021 (in thousands):

	Six Months Ended September 30,
	2022			2021
Net income (loss)	$	14,771		$	(3,923	)
Non-cash expenses		28,604			39,574
Cash from net income, as adjusted	$	43,375		$	35,651
Change in contract assets and liabilities, net		1,737			(412	)
Change in accounts receivable		(1,527	)		4,874
Change in all other assets and liabilities		(9,789	)		(19,634	)
Net cash provided by operating activities	$	33,796		$	20,479

For the six months ended September 30, 2022, cash provided by operating activities increased $13.3 million compared to the prior year period, primarily due to $7.7 million higher cash from net income, as adjusted for a $11.0 million decrease in non-cash expenses, $9.8 million increase in cash from changes in other assets and liabilities, and an increase in cash of $2.1 million from net changes in contract assets and liabilities, partially offset by a $6.4 million decrease in cash from changes in accounts receivable. Net income increased $18.7 million compared to the prior year period, as described in the sections above. Non-cash expenses decreased primarily due to a $10.3 million gain from the disposition of our Commercial Dental assets reflected in the current year period. The increase in cash from changes in other assets and liabilities is primarily due to changes in our income tax assets and liabilities, including our FIN 48 tax liability, and changes in accounts payable due to timing of invoice payments, partially offset by a decrease in cash from higher payments of cash incentive bonuses compared to the prior year due to a higher rate of bonus achievement for the prior fiscal year. The increase in cash from changes in net contract assets and liabilities was primarily due to higher invoicing associated with higher bookings and sales volume and our annual CPI fee increases. The decrease in cash from changes in accounts receivable is primarily due to significant efforts in the prior year period to resolve aged balances and improve collections resulting in a larger decrease in our account receivable balances during the prior year period.

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Cash Flows from Investing Activities

Net cash used in investing activities for the six months ended September 30, 2022 was $8.6 million compared with $13.4 million in the prior year period. The decrease in net cash used in investing activities is primarily due to $11.3 million in cash proceeds from the disposition of our Commercial Dental assets, partially offset by higher additions to capitalized software in the current period.

Cash Flows from Financing Activities

Net cash used in financing activities for the six months ended September 30, 2022 was $13.4 million compared with $4.1 million cash used in financing activities in the prior year period. The increase in cash used in financing activities is primarily due to $9.9 million in share repurchases in the current period and higher payments for taxes related to net share settlement of equity awards, partially offset by higher proceeds from the issuance of shares under our employee equity plans in the six months ended September 30, 2022.

Contractual Obligations

Debt

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.

As of September 30, 2022, we had no outstanding borrowings under the Credit Agreement. Refer to Note 10, “Line of Credit” of our notes to condensed consolidated financial statements included elsewhere in this Report for additional information.

Non-cancelable Operating Leases

As of September 30, 2022, the total amount of future lease payments under operating leases was $12.7 million, of which $7.4 million is short-term. Our operating leases have a weighted average remaining lease term of 2.0 years. Included in our total future lease payments are $9.3 million of remaining lease obligations for vacated properties, of which $6.1 million is short-term. Remaining lease obligations for vacated properties relates to certain locations, including Cary, Brentwood, North Canton, Fairport and portions of Atlanta, Horsham, St. Louis, Hunt Valley, and Bangalore that we have vacated as part of our reorganization efforts and are actively marketing for sublease. Refer to Note 5, “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 $2.1 million due in future periods under non-cancelable subleases.

Purchase Obligations

As of September 30, 2022, we had minimum purchase commitments of $177.5 million related to payments due under certain non-cancelable agreements to purchase goods and services, of which $21.9 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.

During the three months ended September 30, 2022, we repurchased 428,297 shares of common stock for a total of $7.4 million at a weighted-average share repurchase price of approximately $17.21.  As of September 30, 2022, $14.3 million remained available for share repurchases pursuant to the Company’s share repurchase program.

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Deferred Compensation

Deferred compensation liability was $7.0 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 $7.0 million.

Income Taxes

We have an uncertain tax position liability of $4.4 million as of September 30, 2022, for which timing of expected payments is not determinable.

Off-Balance Sheet Arrangements

During the six 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.

New 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, 2022.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

As of September 30, 2022, we were subject to minimal market risk on our cash and cash equivalents as we maintained our balances in very liquid funds with maturities of 90 days or less at the time of purchase.

As of September 30, 2022, we had no outstanding loans under our revolving 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 LIBOR-based rate for one month Eurodollar deposits plus 1%, and (b) for Eurodollar loans, the LIBOR-based rate for one, two, three or six months (as selected by the Company) Eurodollar deposits plus, 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 Eurodollar loans. Accordingly, we are exposed to interest rate risk, primarily changes in LIBOR (including the transition away from LIBOR), due to our loans under the revolving credit agreement. Refer to Note 10, “Line of Credit” of our notes to condensed consolidated financial statements included elsewhere in this Report for additional information.

As of September 30, 2022, 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, 2022, 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, 2022, 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.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

The information required by Item 1 is incorporated herein by reference from Note 16, “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.

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		50,000	$	17.19		50,000	$	20,809
August 1 -31		291,565	$	17.22		291,565	$	15,795
September 1 - 30		86,732	$	17.22		86,732	$	14,303
Total		428,297				428,297

⁽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. All share repurchases were made under this publicly announced program.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. MINE SAFETY DISCLOSURES.

Not Applicable.

ITEM 5. OTHER INFORMATION.

None.

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ITEM 6. EXHIBITS.

			Incorporated by Reference
Exhibit Number	Exhibit Description	Filed Herewith	Form	Exhibit	Filing Date
10.1	NextGen Healthcare Director Compensation Plan (As Amended and Restated Effective August 17, 2022)	X
10.2	NextGen Healthcare Deferred Compensation Plan for Non-Employee Directors	X
10.3	NextGen Healthcare Form of Indemnification Agreement (Effective October 13, 2021)	X
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 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 September 30, 2022, 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.

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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 25, 2022	By:	/s/ David Sides
		David Sides
		Chief Executive Officer (Principal Executive Officer)
Date: October 25, 2022	By:	/s/ James R. Arnold, Jr.
		James R. Arnold, Jr.
		Chief Financial Officer (Principal Financial Officer)
Date: October 25, 2022	By:	/s/ David Ahmadzai
		David Ahmadzai
		Chief Accounting Officer (Principal Accounting Officer)

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EX-10.1

Exhibit 10.1

NextGen Healthcare Director Compensation Plan

(As Amended and Restated Effective August 17, 2022)

Non-employee members of the board of directors (the “Board”) of NextGen Healthcare, Inc. (the “Company”) shall receive cash and equity compensation as set forth in this Director Compensation Plan (this “Plan”).  The cash and equity compensation described in this Plan shall be paid or be made, as applicable, automatically and without further action of the Board, to each member of the Board who is not an employee of the Company or any parent or subsidiary of the Company who is entitled to receive such cash or equity compensation, unless such non-employee director declines the receipt of such cash or equity compensation by written notice to the Company.  This Plan shall remain in effect until it is revised or rescinded by further action of the Board.  This Plan may be amended, modified or terminated by the Board at any time in its sole discretion. The terms and conditions of this Plan shall supersede any prior cash and/or equity compensation arrangements for service as a member of the Board between the Company and any of its non-employee directors.  Capitalized terms used herein without definition shall have the meanings given to such terms in the Company’s Amended and Restated 2015 Equity Incentive Plan (such plan, or any successor plan, the “Equity Plan”).

The following compensation shall be paid for eachapproximately 12-month period beginning on each annual meeting of shareholders during the term of this Plan and ending on the next occurring annual meeting of shareholders (each, a “Board Term”).

	Employee Director	Non-Employee Director (Base)	Nominating & Governance Committee Chairperson/ Member (Additional)*	Compensation Committee Chairperson/Member (Additional)*	Audit Committee Chairperson/Member (Additional)*	Board Chair (Additional)
Annual Cash Retainer  Compensation	$0	$90,000	$12,000/ $5,000	$15,000/ $7,500	$20,000/ $10,000	$40,000
Value of Restricted Stock	$0	$165,000	--	--	--	$40,000

*Committee Chairpersons receive both the Chairperson and Member annual retainers.

1. Cash Compensation.  The cash compensation provided in the table above shall be paid quarterly in arrears.

Prior to the date of each annual meeting of shareholders, each non-employee director may make a valid election (a “Restricted Stock Election”) to elect to receive all or a portion of any cash compensation payable to such director during the next occurring Board Term in the form of shares of Restricted Stock. If a non-employee director makes a valid Restricted Stock Election, the Company will issue to such director such additional number of shares of Restricted Stock as is equal to the cash compensation subject to the Restricted Stock Election, divided by the Fair Market Value on the date

of grant.  Such Restricted Stock shall vest as set forth in Section 2below; provided, however, that any Restricted Stock issued pursuant to a Restricted Stock Election for the Board Term commencing at the 2022 annual meeting of shareholders shall vest as to (a) such portion of the Restricted Stock that relates to cash retainers that would otherwise have been payable to the director during 2022 on December 31, 2022, and (b) as to the remaining Restricted Stock on the date set forth in Section 2 below.  The Restricted Stock issuable pursuant to this Section 1 may also be subject to a Deferral Election pursuant to Section 2.

Any Restricted Stock Election must be made no later than the expiration of the election period established by the Board which, for any Board Term commencing on or after January 1, 2023, shall end no later than December 31 of the calendar year immediately preceding the calendar year in which the Board Term begins. Notwithstanding the foregoing, each non-employee director shall be eligible to make a Restricted Stock Election for the Board Term commencing at the 2022 annual meeting of shareholders provided such election is made no later than the day prior to the 2022 annual meeting of shareholders.

For the avoidance of doubt, a non-employee director whose initial appointment to the Board occurs other than on the date of an annual meeting may not make a Restricted Stock Election until the election period that occurs following such initial appointment.

Any Restricted Stock Election must comply with all rules established from time to time by the Board, including any insider trading policy or similar policy.

2. Equity Compensation.  Each director is to be awarded restricted shares of the Company’s common stock (“Restricted Stock”) upon the effective date of the director’s election, re-election, or appointment to the Board and equivalent to the value amounts set forth in the table above. The shares of Restricted Stock will be valued at the price of the Company’s common stock at the close of trading on the effective date of the director’s election, re-election, or appointment to the Board. Grants to new directors appointed other than at the Company’s annual shareholder meeting will have value prorated based on the lesser of (a) time until the next annual shareholder meeting, or (b) time until the anniversary of the preceding annual shareholder meeting.  The Restricted Stock awards will be granted automatically and without further action by the Board.

The Restricted Stock will be issued according to the standard form of the Company’s approved restricted stock agreement and pursuant to the Company’s then-current equity incentive plan and will vest on the date that is the earlier of (a) one year from the date of grant, or (b) the date of the Company’s next annual meeting of shareholders following the director’s election or re-election to the Board. Prorated grants made to directors appointed other than at the Company’s annual shareholder meeting will vest upon the sooner to occur of (a) the next annual shareholder meeting, or (b) the anniversary of the prior annual shareholder meeting.  

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Vesting of the Restricted Stock will be accelerated in the event of the director’s death or Disability, or upon a Change in Control of the Company (each as defined in the Equity Plan). In addition, in the event of a meeting of the Company’s shareholders immediately following which a non-employee director is no longer a member of the Board because he or she have not been nominated for re-election or have not been re-elected by the Company’s shareholders, the vesting of such director’s Restricted Stock will be accelerated in full; provided, however, that if such director’s failure to be nominated or re-elected for service on the Board is a result of, in whole or in part, his or her misconduct or failure to fulfill his or her responsibilities or fiduciary duties as a director, which shall be determined by the Board in its sole discretion, the foregoing accelerated vesting shall not apply.

Each non-employee director may make a valid election (a “Deferral Election”) to defer receipt of all or any portion of the Restricted Stock in accordance with the terms of the NextGen Healthcare, Inc. Deferred Compensation Plan for Non-Employee Directors (the “Deferred Compensation Plan”). If a non-employee director makes a valid Deferral Election, the Company will not issue such deferred shares to the director on the grant date and will instead credit to his or her Deferred Compensation Account (as defined in the Deferred Compensation Plan) an equal amount of Deferred Stock Units (as defined in the Deferred Compensation Plan).  The Deferred Stock Units related to such deferred shares shall vest as provided in this Plan and shall be subject to all of the terms and conditions of the Deferred Compensation Plan and paid at the time(s) set forth in the Deferred Compensation Plan. Any Deferral Election must be made no later than the expiration of the election period established by the Board which, for any Board Term commencing on or after January 1, 2023, shall end no later than December 15 of the calendar year immediately preceding the calendar year in which the Board Term begins or, if later, within 30 days of a non-employee director’s initial appointment to the Board, but only with respect to compensation earned after the date of the election. Notwithstanding the foregoing, each non-employee director shall be eligible to make a Deferral Election for the Board Term commencing at the 2022 annual meeting of shareholders provided such election is made no later than the day prior to the 2022 annual meeting of shareholders.

Any election must comply with all rules established from time to time by the Board, including any insider trading policy or similar policy.

All awards of Restricted Stock will be issued under the Equity Plan.

3. Reimbursement of Expenses. The Company shall reimburse each non-employee director for their reasonable business expenses incurred in connection with the performance of their duties, including reasonable travel and other expenses incurred by the non-employee director to attend Board and committee meetings. Each non-employee director shall provide to the Company such receipts and other records related to such reimbursable expenses as the Company may require.  To the extent that any reimbursement provides for a deferral of compensation under Section 409A of the Internal Revenue Code, (a) the amount eligible for reimbursement in one

3

calendar year may not affect the amount eligible for reimbursement in any other calendar year; (b) the right to reimbursement is not subject to liquidation or exchange for another benefit; and (c) any such reimbursement of an expense must be made on or before the last day of the calendar year following the calendar year in which the expense was incurred.

4. Stock Ownership Guidelines.  Directors are subject to a stock ownership guideline to hold shares of the Company’s common stock (to include common stock purchased on the open market, unvested Restricted Stock, vested or unvested deferred shares, and shares owned by immediate family members or trusts) valued in an amount equal to at least four times the value of the director’s annual cash retainer compensation. Current directors are expected to satisfy this ownership guideline by the fifth annual shareholder meeting after they joined the Board, or, if later, within five years of any increase to the annual director cash retainer amount. New directors are expected to satisfy this ownership guideline by the fifth annual shareholder meeting after they join the Board.  Compliance with the stock ownership guideline shall be measured annually on a date determined in the Board’s discretion.  Noncompliance with the guideline within a specified period will not result in sanctions; however, in such cases, a director is expected to hold all after-tax profit shares after the vesting of equity awards until the director has achieved compliance (i.e., share sales by a director who is not in compliance with the guidelines at the end of a compliance period shall be limited to sales necessary for tax purposes).  

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EX-10.2

EXHIBIT 10.2

NEXTGEN HEALTHCARE, INC.

DEFERRED COMPENSATION PLAN FOR NON-EMPLOYEE DIRECTORS

1.Purpose and Effective Date.  The purpose of this Plan is to provide the non-employee members of the Board of Directors (the “Board”) of NextGen Healthcare, Inc., a Delaware corporation, and its successors (the “Company”) with an opportunity to defer payment of all or a portion of their annual restricted stock awards, including restricted stock awards issued in lieu of cash compensation.  The Plan shall be effective as of [____] (the “Effective Date”).

2.Definitions. The following terms shall have the meanings given in this section unless a different meaning is clearly implied by the context:

(a)“Board Term” means each approximate 12-month period commencing on the date of each Company's annual meeting of shareholders at which Board members are elected or appointed for the year.

(b)“Change in Control” shall have the same meaning as defined in the Equity Plan as in effect on the Effective Date; provided, that, for purposes of the Plan, in no event will a Change in Control be deemed to have occurred if the transaction is not also a “change in control event” under Section 409A of the Code.

(c)“Common Stock” means the common stock of the Company.

(d)“Compensation Committee” means the Compensation Committee of the Board.

(e)“Deferred Compensation Account” means an account maintained for each director who makes a deferral election as described in Section 4.

(f)“Deferred Stock Unit” means a Stock Unit that is received by a participant pursuant to this Plan and provides for the deferred receipt compensation.

(g)“Disability” means (i) a permanent and total disability under Section 22(e)(3) of the Internal Revenue Code of 1986, as amended, or (ii) if a non-employee director shall become physically or mentally incapacitated or disabled or otherwise unable fully to discharge his or her duties to the Company, including as a result of illness, for a period of 30 consecutive calendar days or such other period of time as determined by either the Board or the director in good faith, provided that, in the case of each of clauses (i) and (ii), such disability, incapacity or illness also qualifies as a “disability” for purposes of Section 409A.

(h)“Equity Plan” means the Company’s 2015 Equity Incentive Plan, as it may be amended or restated from time to time, or, to the extent applicable, any future or successor equity compensation plan of the Company

(i)“Fair Market Value” means “Fair Market Value” as defined in the Equity Plan.

(j)“Plan” means the NextGen Healthcare, Inc. Deferred Compensation Plan for Non-Employee Directors.

(k)“Plan Administrator” means the Compensation Committee or its designee.

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(l)“Restricted Stock” means “Restricted Stock” as defined in the Equity Plan and granted to a director for serving as a member of Board.    

(m)“Section 409A” means Section 409A of the Internal Revenue Code of 1986, as amended.

(n)“Separation from Service” means a “separation from service” within the meaning of Section 409A.

(o)“Stock Unit” means an economic unit equal in value to one share (or fraction thereof) of Common Stock.                            

3.Eligibility.  All members of the Board who are not employees of the Company or any subsidiary of the Company shall be eligible to participate in the Plan.

4. Election to Defer Restricted Stock.

(a)Manner and Amount of Deferral Election.  A participant may elect to defer receipt of all or a specified portion of his or her Restricted Stock by giving written notice on an election form provided by the Plan Administrator specifying the amount of the deferral.  A participant’s election to defer is irrevocable and may not be changed, except as may be provided in the election form.

(b)Time of Election.  Elections to defer the Restricted Stock shall be made at the following times:

(i)A director may elect to defer Restricted Stock at such time or times during the calendar year as permitted by the Plan Administrator.  Except as expressly permitted by the Plan Administrator and specified in a deferral election form in a manner that complies with Section 409A, such election shall be effective for Restricted Stock granted in the following calendar year.

(ii)A nominee for election to director (who is not at the time of nomination a sitting director and was not previously eligible to participate in this Plan) may elect to defer Restricted Stock no later than 30 days after the date of the director’s commencement of services as a director.  Such deferral election shall be effective for Restricted Stock granted following the later of (A) the date of the director’s commencement of services as a director, and (B) the date an irrevocable election form is filed with the Company.

(c)Duration of Deferral Election.  Unless otherwise specified in a deferral election form in a manner permitted by the Plan Administrator, a deferral election will only apply to one Board Term.  A participant must make a new deferral election with respect to each Board Term that the participant decides to defer Restricted Stock.  

5.Deferred Compensation Accounts.  The Company shall establish on its books and records a Deferred Compensation Account for each participant, as provided below.

(a)Crediting of Restricted Stock.  Deferred Restricted Stock shall be credited to the participant’s Deferred Compensation Account in an equal amount of Deferred Stock Units.  The Deferred Stock Units related to such deferred Restricted Stock shall be subject to the same vesting or other forfeiture restrictions that would have otherwise applied to such Restricted Stock.  In the event the participant forfeits Deferred Stock Units in accordance with the foregoing, the participant’s Deferred Compensation Account shall be debited for the number of Deferred Stock Units forfeited.  

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(b)Dividend Equivalents.  Each Deferred Stock Unit credited to a participant’s Deferred Compensation Account shall carry with it a right to receive dividend equivalents in respect of the share of Common Stock underlying such Deferred Stock Unit.  Dividend equivalents shall be paid to participants in cash on the Company’s applicable dividend payment date based on the number of Deferred Stock Units, whether vested or unvested, held in the director’s Deferred Compensation Account on the applicable Company record date. The dividend equivalent right associated with a Deferred Stock Unit shall remain outstanding until the delivery to the participant of the share of Common Stock underlying such Deferred Stock Unit.

(c)Adjustment of Deferred Stock Units.  If the number of outstanding shares of Common Stock is increased or decreased or the shares of Common Stock are changed into or exchanged for a different number or kind of stock or other securities of the Company on account of any recapitalization, reclassification, stock split, reverse split, combination of stock, exchange of stock, stock dividend, or other distribution payable in capital stock, or other increase or decrease in such stock effected without receipt of consideration by the Company occurring after the Effective Date, the Plan Administrator will make appropriate adjustments to (i) the number and kind of shares of Common Stock for which Deferred Stock Units are outstanding, and (ii) the number of Deferred Stock Units credited to each participant’s Deferred Compensation Account.

6. Payment of Deferred Compensation.

(a)Distributions. Payment from the Deferred Stock Units shall be made in one lump sum on the earliest to occur of:

(i) within 90 days following the participant’s Separation From Service;

(ii) immediately prior to, on or within 30 days following a Change in Control;

(iii) within 90 days following the participant’s Disability;

(iv) the date of an In-Service Distribution (as defined below),if the participant has made an applicable election to receive an In-Service Distribution; and

(v) the participant’s death.

Notwithstanding anything to the contrary in the Plan, if on the date of the participant’s Separation from Service, the participant is a “specified employee” within the meaning of Section 409A, the payment will occur on the later to occur of (x) the scheduled distribution date and (y) the first day of the seventh month following the date of the participant’s Separation from Service or, if earlier, the date of the participant’s death.

(b)Scheduled In-Service Distributions. A participant may elect to receive payment from the Deferred Stock Units while the participant is still a member of the Board (an “In-Service Distribution”) in a lump sum within 90 days following the date that is five (5) years following the last day of the applicable Board Term, or on as such other date as may be determined in the discretion of the Plan Administrator. Any desired In-Service Distribution must be separately elected for each Board Term’s elective deferrals and such elections will be irrevocable, except as may be provided in the election form.  

(c)Medium of Payment.  Payments from the Deferred Compensation Account shall be made in whole shares of Common Stock for each whole Deferred Stock Unit, and in cash for any

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fractional Deferred Stock Unit; provided, that, the Company may choose in its discretion to pay the participant cash in lieu of all or a portion of the shares of Common Stock.Deferred Stock Units issued to and shares of Common Stock paid to participants under the Plan shall be issued and paid from the Equity Plan.

7.Unfunded Promise to Pay; No Segregation of Funds or Assets.  Nothing in this Plan shall require the segregation of any assets of the Company or any type of funding by the Company, it being the intention of the parties that the Plan be an unfunded arrangement for federal income tax purposes.  No participant shall have any rights to or interest in any specific assets or shares of Common Stock by reason of the Plan, and any participant’s rights to enforce payment of the obligations of the Company hereunder shall be those of a general creditor of the Company.  

8.Nonassignability; Beneficiary Designation.  The right of a participant to receive any unpaid portion of the participant’s Deferred Compensation Account shall not be assigned, transferred, pledged or encumbered or subjected in any manner to alienation or anticipation.  However, in the event of a participant’s death, the Company will pay the unpaid portion of the participant’s Deferred Compensation Account to the participant’s designated beneficiaries.  If the participant fails to complete a valid beneficiary designation, the participant’s beneficiary will be his or her estate.

9.Administration.  The Plan will be administered under the supervision of the Plan Administrator.  The Plan Administrator will prescribe guidelines and forms for the implementation and administration of the Plan, interpret the terms of the Plan, and make all other substantive decisions regarding the operation of the Plan.  The Plan Administrator’s decisions in its administration of the Plan are conclusive and binding on all persons. 

10.Construction.  The Plan is intended to comply with Section 409A and any regulations and guidance thereunder and shall be interpreted and operated in accordance with such intent.  Notwithstanding anything to the contrary in the Plan, neither the Company, its affiliates, the Board, nor the Committee will have any obligation to take any action to prevent the assessment of any excise tax or penalty on any participant under Section 409A, and neither the Company, its affiliates, the Board, nor the Committee will have any liability to any participant for such tax or penalty.  The laws of the State of Delaware shall govern all questions of law arising with respect to the Plan, without regard to the choice of law principles of any jurisdiction, except where the laws governing the Plan are preempted by the laws of the United States.  The Plan is intended to be construed so that participation in the Plan will be exempt from Section 16(b) of the Securities Exchange Act of 1934, as amended, pursuant to regulations and interpretations issued from time to time by the Securities and Exchange Commission.  If any provision of the Plan is held to be illegal or void, such illegality or invalidity shall not affect the remaining provisions of the Plan, but shall be fully severable, and the Plan shall be construed and enforced as if the illegal or invalid provision had never been inserted.  This document constitutes the entire Plan, and supersedes any prior oral or written agreements on the subject matter hereof.

11.Claw-back.  All awards of Deferred Stock Units under the Plan will be subject to mandatory repayment by the participant to the Company to the extent the participant is, or in the future becomes, subject to any Company or affiliate “claw-back” or recoupment policy that is adopted to comply with the requirements of any applicable law, rule, regulation or otherwise, or any law, rule, or regulation that imposes mandatory recoupment, under circumstances set forth in such law, rule or regulation.

12.Amendment and Termination.  The Board may amend, suspend, or terminate the Plan at any time and for any reason.  No amendment, suspension, or termination will, without the consent of the participant, materially impair rights or obligations under any Deferred Stock Units previously awarded to the participant under the Plan, except as provided below.  The Board may terminate the Plan and

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distribute the Deferred Compensation Accounts to participants in accordance with and subject to the rules of Treas. Reg. Section 1.409A-3(j)(4)(ix), or successor provisions, and any generally applicable guidance issued by the Internal Revenue Service permitting such termination and distribution. 

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EX-10.3

eXHIBIT 10.3

INDEMNIFICATION AGREEMENT

This Indemnification Agreement (“Agreement”) is made as of _____________ by and between NextGen Healthcare, Inc., a Delaware corporation (the “Company”), and ______________ (“Indemnitee”).  This Agreement supersedes and replaces any and all previous agreements between the Company and Indemnitee covering the subject matter of this Agreement.  

RECITALS

WHEREAS, the Board of Directors of the Company (the “Board”) believes that highly competent persons have become more reluctant to serve publicly-held corporations as directors or officers or in other capacities unless they are provided with adequate protection through insurance or adequate indemnification against inordinate risks of claims and actions against them arising out of their service to and activities on behalf of the corporation;

WHEREAS, the Board has determined that, in order to attract and retain qualified individuals, the Company will attempt to maintain on an ongoing basis, at its sole expense, liability insurance to protect persons serving the Company and its subsidiaries from certain liabilities.  Although the furnishing of such insurance has been a customary and widespread practice among United States-based corporations and other business enterprises, the Company believes that, given current market conditions and trends, such insurance may be available to it in the future only at higher premiums and with more exclusions.  At the same time, directors, officers, and other persons in service to corporations or business enterprises are being increasingly subjected to expensive and time-consuming litigation relating to, among other things, matters that traditionally would have been brought only against the Company or business enterprise itself.  The Certificate of Incorporation of the Company (the “Certificate of Incorporation”) permit, and the Bylaws of the Company (the “Bylaws”) require, indemnification of the officers and directors of the Company.  Indemnitee may also be entitled to indemnification pursuant to the General Corporation Law of the State of Delaware (the “DGCL”).  The Bylaws and the DGCL expressly provide that the indemnification provisions set forth therein are not exclusive, and thereby contemplate that contracts may be entered into between the Company and members of the Board, officers and other persons with respect to indemnification;

WHEREAS, the uncertainties relating to such insurance and to indemnification may increase the difficulty of attracting and retaining such persons;

WHEREAS, the Board has determined that the increased difficulty in attracting and retaining such persons is detrimental to the best interests of the Company and its stockholders and that the Company should act to assure such persons that there will be increased certainty of such protection in the future;

WHEREAS, it is reasonable, prudent and necessary for the Company contractually to obligate itself to indemnify, and to advance expenses on behalf of, such persons to the fullest extent

permitted by applicable law so that they will serve or continue to serve the Company free from undue concern that they will not be so indemnified;

WHEREAS, this Agreement is a supplement to and in furtherance of the Bylaws and any resolutions adopted pursuant thereto, as well as any rights of Indemnitees under any directors’ and officers’ liability insurance policy, and this Agreement shall not be deemed a substitute therefor, nor to diminish or abrogate any rights of Indemnitee thereunder; and

WHEREAS, Indemnitee does not regard the protection available under the Bylaws and insurance as adequate in the present circumstances, and may not be willing to serve or continue to serve as an officer or director without adequate protection, and the Company desires Indemnitee to serve or continue to serve in such capacity. Indemnitee is willing to serve, continue to serve and to take on additional service for or on behalf of the Company on the condition that Indemnitee be so indemnified.

NOW, THEREFORE, in consideration of the premises and the covenants contained herein, the Company and Indemnitee do hereby covenant and agree as follows:

Section 1.Services to the Company.  Indemnitee agrees to serve as a [director and/or officer] of the Company.  Indemnitee may at any time and for any reason resign from such position (subject to any other contractual obligation or any obligation imposed by operation of law), in which event the Company shall have no obligation under this Agreement to continue Indemnitee in such position.  This Agreement shall not be deemed an employment contract between the Company (or any of its subsidiaries or any Enterprise) and Indemnitee.  Indemnitee specifically acknowledges that Indemnitee’s employment with the Company (or any of its subsidiaries or any Enterprise), if any, is at will, and the Indemnitee may be discharged at any time for any reason, with or without cause, except as may be otherwise provided in any written employment contract between Indemnitee and the Company (or any of its subsidiaries or any Enterprise), other applicable formal severance policies duly adopted by the Board, or, with respect to service as a director or officer of the Company, by the Certificate of Incorporation, the Bylaws, and the DGCL.  The foregoing notwithstanding, this Agreement shall continue in force after Indemnitee has ceased to serve as a director of the Company, as provided in Section 16 hereof.

Section 2.Definitions.  As used in this Agreement:

(a)References to “agent” shall mean any person who is or was a director, officer, or employee of the Company or a subsidiary of the Company or other person authorized by the Company to act for the Company, to include such person serving in such capacity as a director, officer, employee, fiduciary or other official of another corporation, partnership, limited liability company, joint venture, trust or other enterprise at the request of, for the convenience of, or to represent the interests of the Company or a subsidiary of the Company.

(b)A “Change in Control” shall be deemed to occur upon the earliest to occur after the date of this Agreement of any of the following events:

i.Acquisition of Stock by Third Party.  Any Person (as defined below) is or becomes the Beneficial Owner (as defined below), directly or indirectly, of securities of the Company representing thirty percent (30%) or more of the combined voting power of the

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Company’s then outstanding securities unless the change in relative Beneficial Ownership of the Company’s securities by any Person results solely from a reduction in the aggregate number of outstanding shares of securities entitled to vote generally in the election of directors;

ii.Change in Board of Directors.  During any period of two (2) consecutive years (not including any period prior to the execution of this Agreement), individuals who at the beginning of such period constitute the Board, and any new director (other than a director designated by a person who has entered into an agreement with the Company to effect a transaction described in Sections 2(b)(i), 2(b)(iii) or 2(b)(iv)) whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute at least a majority of the members of the Board;

iii.Corporate Transactions.  The effective date of a merger or consolidation of the Company with any other entity, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the Surviving Entity) more than 50% of the combined voting power of the voting securities of the Surviving Entity outstanding immediately after such merger or consolidation and with the power to elect at least a majority of the board of directors or other governing body of such Surviving Entity;

iv.Liquidation.  The approval by the stockholders of the Company of a complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets; and

v.Other Events.  There occurs any other event of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or a response to any similar item on any similar schedule or form) promulgated under the Exchange Act (as defined below), whether or not the Company is then subject to such reporting requirement.

For purposes of this Section 2(b), the following terms shall have the following meanings:

(A)“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended from time to time.

(B)“Person” shall have the meaning as set forth in Sections 13(d) and 14(d) of the Exchange Act; provided, however, that Person shall exclude (i) the Company, (ii) any trustee or other fiduciary holding securities under an employee benefit plan of the Company, and (iii) any entity owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company.  

(C)“Beneficial Owner” shall have the meaning given to such term in Rule 13d-3 under the Exchange Act; provided,

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however, that Beneficial Owner shall exclude any Person otherwise becoming a Beneficial Owner by reason of the stockholders of the Company approving a merger of the Company with another entity.

(d)“Surviving Entity” shall mean the surviving entity in a merger or consolidation or any entity that controls, directly or indirectly, such surviving entity.

(c)“Corporate Status” describes the status of a person who is or was a director, trustee, partner, managing member, officer, employee, agent or fiduciary of the Company or of any other corporation, limited liability company, partnership or joint venture, trust or other enterprise which such person is or was serving at the request of the Company.

(d)“Disinterested Director” shall mean a director of the Company who is not and was not a party to the Proceeding in respect of which indemnification is sought by Indemnitee.

(e)“Enterprise” shall mean the Company and any other corporation, limited liability company, partnership, joint venture, trust or other enterprise of which Indemnitee is or was serving at the request of the Company as a director, officer, trustee, partner, managing member, employee, agent or fiduciary.

(f)“Expenses” shall include all reasonable attorneys’ fees, retainers, court costs, transcript costs, fees and other costs of experts and other professionals, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, any federal, state, local or foreign taxes imposed on Indemnitee as a result of the actual or deemed receipt of any payments under this Agreement, ERISA excise taxes and penalties, and all other disbursements, obligations or expenses of the types customarily incurred in connection with, or as a result of, prosecuting, defending, preparing to prosecute or defend, investigating, being or preparing to be a deponent or witness in, or otherwise participating in, a Proceeding.  Expenses also shall include (i)Expenses incurred in connection with any appeal resulting from any Proceeding, including without limitation the premium, security for, and other costs relating to any cost bond, supersedeas bond, or other appeal bond or its equivalent, (ii) Expenses incurred in connection with recovery under any directors’ and officers’ liability insurance policies maintained by the Company, regardless of whether Indemnitee is ultimately determined to be entitled to such indemnification, advancement or Expenses or insurance recovery, as the case may be, and (iii) for purposes of Section 14(d) only, Expenses incurred by Indemnitee in connection with the interpretation, enforcement or defense of Indemnitee’s rights under this Agreement, the Certificate of Incorporation, the Bylaws or under any directors’ and officers’ liability insurance policies maintained by the Company, by litigation or otherwise.  The parties agree that for the purposes of any advancement of Expenses for which Indemnitee has made written demand to the Company in accordance with this Agreement, all Expenses included in such demand that are certified by affidavit of Indemnitee’s counsel as being reasonable in the good faith judgment of such counsel shall be presumed conclusively to be reasonable.  Expenses, however, shall not include amounts paid in settlement by Indemnitee or the amount of judgments or fines against Indemnitee.

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(g)“Independent Counsel” shall mean a law firm, or a member of a law firm, that is experienced in matters of corporation law and neither presently is, nor in the past five years has been, retained to represent:  (i) the Company or Indemnitee in any matter material to either such party (other than with respect to matters concerning the Indemnitee under this Agreement, or of other indemnitees under similar indemnification agreements), or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder.  Notwithstanding the foregoing, the term “Independent Counsel” shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee’s rights under this Agreement.  The Company agrees to pay the reasonable fees and expenses of the Independent Counsel referred to above and to fully indemnify such counsel against any and all Expenses, claims, liabilities and damages arising out of or relating to this Agreement or its engagement pursuant hereto.

(h)The term “Proceeding” shall include any threatened, pending or completed action, suit, claim, counterclaim, cross claim, arbitration, mediation, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing or any other actual, threatened or completed proceeding, whether brought in the right of the Company or otherwise and whether of a civil, criminal, administrative, legislative, regulatory or investigative (formal or informal) nature, including any appeal therefrom, in which Indemnitee was, is or will be involved as a party, potential party, non-party witness or otherwise by reason of Indemnitee’s Corporate Status, by reason of any action taken by Indemnitee (or a failure to take action by Indemnitee) or of any action (or failure to act) on Indemnitee’s part while acting pursuant to Indemnitee’s Corporate Status, in each case whether or not serving in such capacity at the time any liability or Expense is incurred for which indemnification, reimbursement, or advancement of Expenses can be provided under this Agreement.  If the Indemnitee believes in good faith that a given situation may lead to or culminate in the institution of a Proceeding, this shall be considered a Proceeding under this paragraph.

(i)Reference to “other enterprise” shall include employee benefit plans; references to “fines” shall include any excise tax assessed with respect to any employee benefit plan; references to “serving at the request of the Company” shall include any service as a director, officer, employee or agent of the Company which imposes duties on, or involves services by, such director, officer, employee or agent with respect to an employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a manner Indemnitee  reasonably believed to be in the best interests of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner “not opposed to the best interests of the Company” as referred to in this Agreement.

Section 3.Indemnity in Third-Party Proceedings.  The Company shall indemnify Indemnitee in accordance with the provisions of this Section 3 if Indemnitee is, or is threatened to be made, a party to or a participant in any Proceeding, other than a Proceeding by or in the right of the Company to procure a judgment in its favor.  Pursuant to this Section 3, Indemnitee shall be indemnified to the fullest extent permitted by applicable law against all Expenses, judgments, fines and amounts paid in settlement (including all interest, assessments and other charges paid or payable in connection with or in respect of such Expenses, judgments, fines and amounts paid in settlement) actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection with such Proceeding or any claim, issue or matter therein, if Indemnitee acted in good

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faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company and, in the case of a criminal Proceeding had no reasonable cause to believe that Indemnitee’s conduct was unlawful.  The parties hereto intend that this Agreement shall provide to the fullest extent permitted by law for indemnification in excess of that expressly permitted by statute, including, without limitation, any indemnification provided by the Certificate of Incorporation, the Bylaws, vote of the Company’s stockholders or disinterested directors or applicable law.

Section 4.Indemnity in Proceedings by or in the Right of the Company.  The Company shall indemnify Indemnitee in accordance with the provisions of this Section 4 if Indemnitee is, or is threatened to be made, a party to or a participant in any Proceeding by or in the right of the Company to procure a judgment in its favor.  Pursuant to this Section 4, Indemnitee shall be indemnified to the fullest extent permitted by applicable law against all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection with such Proceeding or any claim, issue or matter therein, if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company.  No indemnification for Expenses shall be made under this Section 4 in respect of any claim, issue or matter as to which Indemnitee shall have been finally adjudged by a court to be liable to the Company, unless and only to the extent that the Delaware Court (as hereinafter defined) or any court in which the Proceeding was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, Indemnitee is fairly and reasonably entitled to indemnification.

Section 5.Indemnification for Expenses of a Party Who is Wholly or Partly Successful. Notwithstanding any other provisions of this Agreement, to the fullest extent permitted by applicable law and to the extent that Indemnitee is a party to (or a participant in) and is successful, on the merits or otherwise, in any Proceeding or in defense of any claim, issue or matter therein, in whole or in part, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by or on behalf of Indemnitee in connection therewith.  If Indemnitee is not wholly successful in such Proceeding but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection with or related to each successfully resolved claim, issue or matter to the fullest extent permitted by law.  For purposes of this Section and without limitation, the termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter.

Section 6.Indemnification For Expenses of a Witness.  Notwithstanding any other provision of this Agreement, to the fullest extent permitted by applicable law and to the extent that Indemnitee is, by reason of Indemnitee’s Corporate Status, a witness, is or was made (or asked) to respond to discovery requests in any Proceeding, or otherwise asked to participate in any Proceeding to which Indemnitee is not a party, Indemnitee shall be indemnified against all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection therewith.

Section 7.Partial Indemnification.  If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or a portion of Expenses, but not,

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however, for the total amount thereof, the Company shall nevertheless indemnify Indemnitee for the portion thereof to which Indemnitee is entitled.

Section 8.Additional Indemnification.

(a)Notwithstanding any limitation in Sections 3, 4, or 5, the Company shall indemnify Indemnitee to the fullest extent permitted by applicable law if Indemnitee is, or is threatened to be made, a party to or a participant in any Proceeding (including a Proceeding by or in the right of the Company to procure a judgment in its favor) by reason of Indemnitee’s Corporate Status.

(b)For purposes of Section 8(a), the meaning of the phrase “to the fullest extent permitted by applicable law” shall include, but not be limited to:

i.to the fullest extent permitted by the provision of the DGCL that authorizes or contemplates additional indemnification by agreement, or the corresponding provision of any amendment to or replacement of the DGCL, and

ii.to the fullest extent authorized or permitted by any amendments to or replacements of the DGCL adopted after the date of this Agreement that increase the extent to which a corporation may indemnify its officers and directors.

Section 9.Exclusions.  Notwithstanding any provision in this Agreement, the Company shall not be obligated under this Agreement to make any indemnification payment in connection with any claim involving Indemnitee:

(a)for which payment has actually been made to or on behalf of Indemnitee under any insurance policy or other indemnity provision, except with respect to any excess beyond the amount paid under any insurance policy or other indemnity provision; or

(b)for (i) an accounting of profits made from the purchase and sale (or sale and purchase) by Indemnitee of securities of the Company within the meaning of Section 16(b) of the Exchange Act (as defined in Section 2(b) hereof) or similar provisions of state statutory law or common law, (ii) any reimbursement of the Company by the Indemnitee of any bonus or other incentive-based or equity-based compensation or of any profits realized by the Indemnitee from the sale of securities of the Company, as required in each case under the Exchange Act (including any such reimbursements that arise from an accounting restatement of the Company pursuant to Section 304 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), or the payment to the Company of profits arising from the purchase and sale by Indemnitee of securities in violation of Section 306 of the Sarbanes-Oxley Act) or (iii) any reimbursement of the Company by Indemnitee of any compensation pursuant to any compensation recoupment or clawback policy adopted by the Board or the compensation committee of the Board, including but not limited to any such policy adopted to comply with stock exchange listing requirements implementing Section 10D of the Exchange Act; or

(c)except as provided in Section 14(d) of this Agreement, in connection with any Proceeding (or any part of any Proceeding) initiated by Indemnitee, including any Proceeding (or any part of any Proceeding) initiated by Indemnitee against the Company or its directors,

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officers, employees or other indemnitees, unless (i) the Board authorized the Proceeding (or any part of any Proceeding) prior to its initiation, (ii) such payment arises in connection with any mandatory counterclaim or cross claim brought or raised by Indemnitee in any Proceeding (or any part of any Proceeding), or (iii) the Company provides the indemnification, in its sole discretion, pursuant to the powers vested in the Company under applicable law.

Section 10.Advances of Expenses.  Notwithstanding any provision of this Agreement to the contrary (other than Section 14(d)), the Company shall advance, to the extent not prohibited by law, the Expenses incurred by or on behalf of Indemnitee in connection with any Proceeding (or any part of any Proceeding) not initiated by Indemnitee or any Proceeding initiated by Indemnitee with the prior approval of the Board as provided in Section 9(c), and such advancement shall be made within thirty (30) days after the receipt by the Company of a statement or statements requesting such advances from time to time, whether prior to or after final disposition of any Proceeding.  Advances shall be unsecured and interest free.  Advances shall be made without regard to Indemnitee’s ability to repay the Expenses and without regard to Indemnitee’s ultimate entitlement to indemnification under the other provisions of this Agreement.  In accordance with Section 14(d), advances shall include any and all reasonable Expenses incurred pursuing an action to enforce this right of advancement, including Expenses incurred preparing and forwarding statements to the Company to support the advances claimed.  The Indemnitee shall qualify for advances upon the execution and delivery to the Company of this Agreement, which shall constitute an undertaking providing that the Indemnitee undertakes to repay the amounts advanced (without interest) by the Company pursuant to this Section 10, if and only to the extent that it is ultimately determined that Indemnitee is not entitled to be indemnified by the Company.  No other form of undertaking shall be required other than the execution of this Agreement.  This Section 10 shall not apply to any claim made by Indemnitee for which indemnity is excluded pursuant to Section 9.

Section 11.Procedure for Notification and Defense of Claim.

(a)Indemnitee shall notify the Company in writing of any matter with respect to which Indemnitee intends to seek indemnification or advancement of Expenses hereunder as soon as reasonably practicable following the receipt by Indemnitee of written notice thereof.  The written notification to the Company shall include a description of the nature of the Proceeding and the facts underlying the Proceeding.  To obtain indemnification under this Agreement, Indemnitee shall submit to the Company a written request, including therein or therewith such documentation and information as is reasonably available to Indemnitee and is reasonably necessary to determine whether and to what extent Indemnitee is entitled to indemnification following the final disposition of such Proceeding.  The omission by Indemnitee to notify the Company hereunder will not relieve the Company from any liability which it may have to Indemnitee hereunder or otherwise than under this Agreement, and any delay in so notifying the Company shall not constitute a waiver by Indemnitee of any rights under this Agreement.  The Secretary of the Company shall, promptly upon receipt of such a request for indemnification, advise the Board in writing that Indemnitee has requested indemnification.

(b)The Company will be entitled to participate in the Proceeding at its own expense.

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(c)The Company shall not settle any Proceeding (in whole or in part) if such settlement would impose any Expense, judgment, liability, fine, penalty or limitation on Indemnitee in respect of which Indemnitee is not entitled to be indemnified hereunder without Indemnitee’s prior written consent, which shall not be unreasonably withheld.

Section 12.Procedure Upon Application for Indemnification.

(a)Upon written request by Indemnitee for indemnification pursuant to Section 11(a), a determination, if required by applicable law, with respect to Indemnitee’s entitlement thereto shall be made in the specific case:  (i) if a Change in Control shall have occurred, by Independent Counsel in a written opinion to the Board, a copy of which shall be delivered to Indemnitee; or (ii) if a Change in Control shall not have occurred, (A) by a majority vote of the Disinterested Directors, even though less than a quorum of the Board, (B) by a committee of Disinterested Directors designated by a majority vote of the Disinterested Directors, even though less than a quorum of the Board, (C) if there are no such Disinterested Directors or, if such Disinterested Directors so direct, by Independent Counsel in a written opinion to the Board, a copy of which shall be delivered to Indemnitee or (D) if so directed by the Board, by the stockholders of the Company; and, if it is so determined that Indemnitee is entitled to indemnification, payment to Indemnitee shall be made within ten (10) days after such determination.  Indemnitee shall cooperate with the person, persons or entity making such determination with respect to Indemnitee’s entitlement to indemnification, including providing to such person, persons or entity upon reasonable advance request any documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to Indemnitee and reasonably necessary to such determination.  Any costs or Expenses (including attorneys’ fees and disbursements) incurred by or on behalf of Indemnitee in so cooperating with the person, persons or entity making such determination shall be borne by the Company (irrespective of the determination as to Indemnitee’s entitlement to indemnification) and the Company hereby indemnifies and agrees to hold Indemnitee harmless therefrom.  The Company promptly will advise Indemnitee in writing with respect to any determination that Indemnitee is or is not entitled to indemnification, including a description of any reason or basis for which indemnification has been denied.

(b)In the event the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 12(a) hereof, the Independent Counsel shall be selected as provided in this Section 12(b).  If a Change in Control shall not have occurred, the Independent Counsel shall be selected by the Board, and the Company shall give written notice to Indemnitee advising Indemnitee of the identity of the Independent Counsel so selected.  If a Change in Control shall have occurred, the Independent Counsel shall be selected by Indemnitee (unless Indemnitee shall request that such selection be made by the Board, in which event the preceding sentence shall apply), and Indemnitee shall give written notice to the Company advising it of the identity of the Independent Counsel so selected.  In either event, Indemnitee or the Company, as the case may be, may, within ten (10) days after such written notice of selection shall have been given, deliver to the Company or to Indemnitee, as the case may be, a written objection to such selection; provided, however, that such objection may be asserted only on the ground that the Independent Counsel so selected does not meet the requirements of “Independent Counsel” as defined in Section 2 of this Agreement, and the objection shall set forth with particularity the factual basis of such assertion.  Absent a proper and timely objection, the person so selected shall

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act as Independent Counsel.  If such written objection is so made and substantiated, the Independent Counsel so selected may not serve as Independent Counsel unless and until such objection is withdrawn or the Delaware Court has determined that such objection is without merit.  If, within twenty (20) days after the later of submission by Indemnitee of a written request for indemnification pursuant to Section 11(a) hereof and the final disposition of the Proceeding, no Independent Counsel shall have been selected and not objected to, either the Company or Indemnitee may petition the Delaware Court for resolution of any objection which shall have been made by the Company or Indemnitee to the other’s selection of Independent Counsel and/or for the appointment as Independent Counsel of a person selected by such court or by such other person as such court shall designate, and the person with respect to whom all objections are so resolved or the person so appointed shall act as Independent Counsel under Section 12(a) hereof.  Upon the due commencement of any judicial proceeding or arbitration pursuant to Section 14(a) of this Agreement, Independent Counsel shall be discharged and relieved of any further responsibility in such capacity (subject to the applicable standards of professional conduct then prevailing).

(c)If the Company disputes a portion of the amounts for which indemnification is requested, the undisputed portion shall be paid and only the disputed portion withheld pending resolution of any such dispute.

Section 13.Presumptions and Effect of Certain Proceedings.

(a)In making a determination with respect to entitlement to indemnification hereunder, the person or persons or entity making such determination shall, to the fullest extent not prohibited by law, presume that Indemnitee is entitled to indemnification under this Agreement if Indemnitee has submitted a request for indemnification in accordance with Section 11(a) of this Agreement, and the Company shall, to the fullest extent not prohibited by law, have the burden of proof to overcome that presumption in connection with the making by any person, persons or entity of any determination contrary to that presumption.  Neither the failure of the Company (including by its directors or Independent Counsel) to have made a determination prior to the commencement of any action pursuant to this Agreement that indemnification is proper in the circumstances because Indemnitee has met the applicable standard of conduct, nor an actual determination by the Company (including by its directors or Independent Counsel) that Indemnitee has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that Indemnitee has not met the applicable standard of conduct.

(b)Subject to Section 14(e), if the person, persons or entity empowered or selected under Section 12 of this Agreement to determine whether Indemnitee is entitled to indemnification shall not have made a determination within sixty (60) days after receipt by the Company of the request therefor, the requisite determination of entitlement to indemnification shall, to the fullest extent not prohibited by law, be deemed to have been made and Indemnitee shall be entitled to such indemnification, absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s statement not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law; provided, however, that such 60-day period may be extended for a reasonable time, not to exceed an additional thirty (30) days, if the person, persons or entity making the determination with respect to entitlement to indemnification in good faith requires such additional time for the obtaining or evaluating of documentation and/or information

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relating thereto; and provided, further, that the foregoing provisions of this Section 13(b) shall not apply (i) if the determination of entitlement to indemnification is to be made by the stockholders pursuant to Section 12(a) of this Agreement and if (A) within fifteen (15) days after receipt by the Company of the request for such determination the Board has resolved to submit such determination to the stockholders for their consideration at an annual meeting thereof to be held within seventy-five (75) days after such receipt and such determination is made thereat, or (B) a special meeting of stockholders is called within fifteen (15) days after such receipt for the purpose of making such determination, such meeting is held for such purpose within sixty (60) days after having been so called and such determination is made thereat, or (ii) if the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 12(a) of this Agreement.

(c)The termination of any Proceeding or of any claim, issue or matter therein, by judgment, order, settlement or conviction, or upon a plea of nolocontendere or its equivalent, shall not (except as otherwise expressly provided in this Agreement) of itself adversely affect the right of Indemnitee to indemnification or create a presumption that Indemnitee did not act in good faith and in a manner which Indemnitee reasonably believed to be in or not opposed to the best interests of the Company or, with respect to any criminal Proceeding, that Indemnitee had reasonable cause to believe that Indemnitee’s conduct was unlawful.

(d)For purposes of any determination of good faith, Indemnitee shall be deemed to have acted in good faith if Indemnitee’s action is based on the records or books of account of the Enterprise, including financial statements, or on information supplied to Indemnitee by the directors or officers of the Enterprise in the course of their duties, or on the advice of legal counsel for the Enterprise or on information or records given or reports made to the Enterprise by an independent certified public accountant or by an appraiser, financial advisor or other expert selected with reasonable care by or on behalf of the Enterprise.  The provisions of this Section 13(d) shall not be deemed to be exclusive or to limit in any way the other circumstances in which the Indemnitee may be deemed to have met the applicable standard of conduct set forth in this Agreement.

(e)The knowledge and/or actions, or failure to act, of any director, officer, trustee, partner, managing member, fiduciary, agent or employee of the Enterprise shall not be imputed to Indemnitee for purposes of determining the right to indemnification under this Agreement.

Section 14.Remedies of Indemnitee.

(a)Subject to Section 14(e), in the event that (i) a determination is made pursuant to Section 12 of this Agreement that Indemnitee is not entitled to indemnification under this Agreement, (ii) advancement of Expenses is not timely made pursuant to Section 10 of this Agreement, (iii) no determination of entitlement to indemnification shall have been made pursuant to Section 12(a) of this Agreement within ninety (90) days after receipt by the Company of the request for indemnification, (iv) payment of indemnification is not made pursuant to Section 5, 6 or 7 or the second to last sentence of Section 12(a) of this Agreement within ten (10) days after receipt by the Company of a written request therefor, (v) payment of indemnification pursuant to Section 3, 4 or 8 of this Agreement is not made within ten (10) days after a determination has been

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made that Indemnitee is entitled to indemnification, or (vi) the Company or any other person takes or threatens to take any action to declare this Agreement void or unenforceable, or institutes any litigation or other action or Proceeding designed to deny, or to recover from, the Indemnitee the benefits provided or intended to be provided to the Indemnitee hereunder, Indemnitee shall be entitled to an adjudication by a court of Indemnitee’s entitlement to such indemnification or advancement of Expenses.  Alternatively, Indemnitee, at Indemnitee’s option, may seek an award in arbitration to be conducted by a single arbitrator pursuant to the Commercial Arbitration Rules of the American Arbitration Association.  Indemnitee shall commence such proceeding seeking an adjudication or an award in arbitration within 180 days following the date on which Indemnitee first has the right to commence such proceeding pursuant to this Section 14(a). The Company shall not oppose Indemnitee’s right to seek any such adjudication or award in arbitration.

(b)In the event that a determination shall have been made pursuant to Section 12(a) of this Agreement that Indemnitee is not entitled to indemnification, any judicial proceeding or arbitration commenced pursuant to this Section 14 shall be conducted in all respects as a denovo trial, or arbitration, on the merits and Indemnitee shall not be prejudiced by reason of that adverse determination.  In any judicial proceeding or arbitration commenced pursuant to this Section 14 the Company shall have the burden of proving Indemnitee is not entitled to indemnification or advancement of Expenses, as the case may be.

(c)If a determination shall have been made pursuant to Section 12(a) of this Agreement that Indemnitee is entitled to indemnification, the Company shall be bound by such determination in any judicial proceeding or arbitration commenced pursuant to this Section 14, absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s statement not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law.

(d)The Company shall, to the fullest extent not prohibited by law, be precluded from asserting in any judicial proceeding or arbitration commenced pursuant to this Section 14 that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such court or before any such arbitrator that the Company is bound by all the provisions of this Agreement.  It is the intent of the Company that, to the fullest extent permitted by law, the Indemnitee not be required to incur legal fees or other Expenses associated with the interpretation, enforcement or defense of Indemnitee’s rights under this Agreement by litigation or otherwise because the cost and expense thereof would substantially detract from the benefits intended to be extended to the Indemnitee hereunder.  The Company shall, to the fullest extent permitted by law, indemnify Indemnitee against any and all Expenses and, if requested by Indemnitee, shall (within ten (10) days after receipt by the Company of a written request therefor) advance, to the extent not prohibited by law, such Expenses to Indemnitee, which are incurred by or on behalf of Indemnitee in connection with any action brought by Indemnitee for indemnification or advancement of Expenses from the Company under this Agreement or under any directors’ and officers’ liability insurance policies maintained by the Company if, in the case of indemnification, Indemnitee is wholly successful on the underlying claims; if Indemnitee is not wholly successful on the underlying claims, then such indemnification shall be only to the extent Indemnitee is successful on such underlying claims or otherwise as permitted by law, whichever is greater.

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(e)Notwithstanding anything in this Agreement to the contrary, no determination as to entitlement of Indemnitee to indemnification under this Agreement shall be required to be made prior to the final disposition of the Proceeding.

Section 15.Non-exclusivity; Survival of Rights; Insurance; Subrogation.  

(a)The rights of indemnification and to receive advancement of Expenses as provided by this Agreement (i) shall not be deemed exclusive of any other rights to which Indemnitee may at any time be entitled under applicable law, the Certificate of Incorporation, the Bylaws, any agreement, a vote of stockholders or a resolution of directors, or otherwise and (ii) shall be interpreted independently of, and without reference to, any other such rights to which Indemnitee may at any time be entitled.  No amendment, alteration or repeal of this Agreement or of any provision hereof shall limit or restrict any right of Indemnitee under this Agreement in respect of any action taken or omitted by Indemnitee in Indemnitee’s Corporate Status prior to such amendment, alteration or repeal.  To the extent that a change in Delaware law, whether by statute or judicial decision, permits greater indemnification or advancement of Expenses than would be afforded currently under the Bylaws and this Agreement, it is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the greater benefits so afforded by such change.  No right or remedy herein conferred is intended to be exclusive of any other right or remedy, and every other right and remedy shall be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise.  The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other right or remedy.

(b)To the extent that the Company maintains an insurance policy or policies providing liability insurance for directors, officers, employees, or agents of the Enterprise, Indemnitee shall be covered by such policy or policies in accordance with its or their terms to the maximum extent of the coverage available for any such director, officer, employee or agent under such policy or policies.  If, at the time of the receipt of a notice of a claim pursuant to the terms hereof, the Company has director and officer liability insurance in effect, the Company shall give prompt notice of such claim or of the commencement of a Proceeding, as the case may be, to the insurers in accordance with the procedures set forth in the respective policies.  The Company shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of the Indemnitee, all amounts payable as a result of such Proceeding in accordance with the terms of such policies.

(c)In the event of any payment made by the Company under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and take all action necessary to secure such rights, including execution of such documents as are necessary to enable the Company to bring suit to enforce such rights.

(d)The Company shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable hereunder (or for which advancement is provided hereunder) if and to the extent that Indemnitee has otherwise actually received such payment under any insurance policy, contract, agreement or otherwise.

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(e)The Company’s obligation to indemnify or advance Expenses hereunder to Indemnitee who is or was serving at the request of the Company as a director, officer, trustee, partner, managing member, fiduciary, employee or agent of any other corporation, limited liability company, partnership, joint venture, trust, employee benefit plan or other enterprise shall be reduced by any amount Indemnitee has actually received as indemnification or advancement of Expenses from such other corporation, limited liability company, partnership, joint venture, trust or other enterprise.

Section 16.Duration of Agreement.  This Agreement shall continue until and terminate upon the later of: (a) ten (10) years after the date that Indemnitee shall have ceased to serve as a director of the Company or (b) one (1) year after the final termination of any Proceeding then pending in respect of which Indemnitee is granted rights of indemnification or advancement of Expenses hereunder and of any proceeding (including any appeal thereof) commenced by Indemnitee pursuant to Section 14 of this Agreement relating thereto.  The indemnification and advancement of expenses rights provided by or granted pursuant to this Agreement shall be binding upon and be enforceable by the parties hereto and their respective successors and assigns (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business or assets of the Company), shall continue as to an Indemnitee who has ceased to be a director, officer, employee or agent of the Company or of any other Enterprise, and shall inure to the benefit of Indemnitee and Indemnitee’s spouse, assigns, heirs, devisees, executors and administrators and other legal representatives.  The Company shall require and shall cause any successor (whether direct or indirect by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of the Company to, by written agreement, expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place.

Section 17.Severability. Nothing in this Agreement is intended to require or shall be construed as requiring the Company to do or fail to do any act in violation of applicable law. If any provision or provisions of this Agreement shall be held to be invalid, illegal or unenforceable for any reason whatsoever: (a) the validity, legality and enforceability of the remaining provisions of this Agreement (including without limitation, each portion of any Section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby and shall remain enforceable to the fullest extent permitted by law; (b) such provision or provisions shall be deemed reformed to the extent necessary to conform to applicable law and to give the maximum effect to the intent of the parties hereto; and (c) to the fullest extent possible, the provisions of this Agreement (including, without limitation, each portion of any Section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested thereby.  

Section 18.Enforcement.

(a)The Company expressly confirms and agrees that it has entered into this Agreement and assumed the obligations imposed on it hereby in order to induce Indemnitee to serve as a director or officer of the Company, and the Company acknowledges that Indemnitee is relying upon this Agreement in serving or continuing to serve as a director or officer of the Company.

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(b)This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral, written and implied, between the parties hereto with respect to the subject matter hereof; provided, however, that this Agreement is a supplement to and in furtherance of the Certificate of Incorporation, the Bylaws, any directors’ and officers’ insurance maintained by the Company and applicable law, and shall not be deemed a substitute therefor, nor to diminish or abrogate any rights of Indemnitee thereunder.

Section 19.Modification and Waiver. No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by the parties hereto.  No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions of this Agreement nor shall any waiver constitute a continuing waiver.

Section 20.Notice by Indemnitee. Indemnitee agrees promptly to notify the Company in writing upon being served with any summons, citation, subpoena, complaint, indictment, information or other document relating to any Proceeding or matter which may be subject to indemnification or advancement of Expenses covered hereunder.  The failure of Indemnitee to so notify the Company shall not relieve the Company of any obligation which it may have to the Indemnitee under this Agreement or otherwise.

Section 21.Notices. All notices, requests, demands and other communications under this Agreement shall be in writing and shall be deemed to have been duly given if (a) delivered by hand and receipted for by the party to whom said notice or other communication shall have been directed, (b) mailed by certified or registered mail with postage prepaid, on the third business day after the date on which it is so mailed, (c) mailed by reputable overnight courier and receipted for by the party to whom said notice or other communication shall have been directed or (d) sent by facsimile transmission, with receipt of oral confirmation that such transmission has been received:

(a)If to Indemnitee, at the address indicated on the signature page of this Agreement, or such other address as Indemnitee shall provide to the Company.

(b)If to the Company to:

NextGen Healthcare, Inc.

3525 Piedmont Rd., NE,

Building 6, Suite 700

Atlanta, Georgia 30305

Attention: Corporate Secretary

or to any other address as may have been furnished to Indemnitee by the Company.

Section 22.Contribution. To the fullest extent permissible under applicable law, if the indemnification provided for in this Agreement is unavailable to Indemnitee for any reason whatsoever, the Company, in lieu of indemnifying Indemnitee, shall contribute to the amount incurred by Indemnitee, whether for judgments, fines, penalties, excise taxes, amounts paid or to be paid in settlement and/or for Expenses, in connection with any claim relating to an indemnifiable event under this Agreement, in such proportion as is deemed fair and reasonable in

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light of all of the circumstances of such Proceeding in order to reflect (i) the relative benefits received by the Company and Indemnitee as a result of the event(s) and/or transaction(s) giving cause to such Proceeding; and/or (ii) the relative fault of the Company (and its directors, officers, employees and agents) and Indemnitee in connection with such event(s) and/or transaction(s).

Section 23.Applicable Law and Consent to Jurisdiction.  This Agreement and the legal relations among the parties shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware, without regard to its conflict of laws rules.  Except with respect to any arbitration commenced by Indemnitee pursuant to Section 14(a) of this Agreement, the Company and Indemnitee hereby irrevocably and unconditionally (i) agree that any action or proceeding arising out of or in connection with this Agreement shall be brought only in the Court of Chancery of the State of Delaware (the “Delaware Court”), and not in any other state or federal court in the United States of America or any court in any other country, (ii) consent to submit to the exclusive jurisdiction of the Delaware Court for purposes of any action or proceeding arising out of or in connection with this Agreement, (iii) appoint, to the extent such party is not otherwise subject to service of process in the State of Delaware, irrevocably RL&F Service Corp., 920 North King Street, 2^nd Floor, Wilmington, New Castle County, Delaware 19801 as its agent in the State of Delaware as such party’s agent for acceptance of legal process in connection with any such action or proceeding against such party with the same legal force and validity as if served upon such party personally within the State of Delaware, (iv) waive any objection to the laying of venue of any such action or proceeding in the Delaware Court, and (v) waive, and agree not to plead or to make, any claim that any such action or proceeding brought in the Delaware Court has been brought in an improper or inconvenient forum.

Section 24.Identical Counterparts. This Agreement may be executed in one or more counterparts, each of which shall for all purposes be deemed to be an original but all of which together shall constitute one and the same Agreement.  Only one such counterpart signed by the party against whom enforceability is sought needs to be produced to evidence the existence of this Agreement.

Section 25.Miscellaneous. Use of the masculine pronoun shall be deemed to include usage of the feminine pronoun where appropriate.  The headings of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction thereof.

IN WITNESS WHEREOF, the parties have caused this Agreement to be signed as of the day and year first above written.

NEXTGEN HEALTHCARE, INC.INDEMNITEE


By:
Name:Name:
Office:Address:

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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 25, 2022	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 25, 2022	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, 2022 (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 25, 2022	By:	/s/ David Sides
			David Sides
			Chief Executive Officer
			(Principal Executive Officer)
Date:	October 25, 2022	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, 2022	Oct. 21, 2022
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, 2022
Amendment Flag	false
Document Fiscal Year Focus	2023
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		67,604,797

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Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Sep. 30, 2022	Mar. 31, 2022
Current assets:
Cash and cash equivalents	$ 70,728	$ 59,829
Restricted cash and cash equivalents	7,580	6,918
Accounts receivable, net	76,948	76,057
Contract assets	25,474	25,157
Income taxes receivable	3,052	6,507
Prepaid expenses and other current assets	34,363	37,102
Total current assets	218,145	211,570
Equipment and improvements, net	7,398	9,120
Capitalized software costs, net	49,791	43,958
Operating lease assets	5,197	11,316
Deferred income taxes, net	19,128	19,259
Contract assets, net of current	1,595	1,910
Intangibles, net	19,739	24,303
Goodwill	267,212	267,212
Other assets	38,933	39,026
Total assets	627,138	627,674
Current liabilities:
Accounts payable	12,414	9,125
Contract liabilities	62,498	61,280
Accrued compensation and related benefits	28,113	48,736
Income taxes payable	172	99
Operating lease liabilities	7,095	8,089
Other current liabilities	58,320	53,533
Total current liabilities	168,612	180,862
Deferred compensation	6,981	7,230
Operating lease liabilities, net of current	5,147	11,934
Other noncurrent liabilities	4,556	4,570
Total liabilities	185,296	204,596
Commitments and contingencies (Note 16)
Shareholders' equity:
Common stock, $0.01 par value; authorized 100,000 shares; 70,351 shares and 69,245 shares issued at September 30, 2022 and March 31, 2022, respectively; 67,605 shares and 67,075 shares outstanding at September 30, 2022 and March 31, 2022, respectively	704	692
Treasury stock, at cost, 2,746 shares and 2,170 shares at September 30, 2022 and March 31, 2022, respectively	(45,752)	(35,874)
Additional paid-in capital	343,809	329,917
Accumulated other comprehensive loss	(1,942)	(1,909)
Retained earnings	145,023	130,252
Total shareholders' equity	441,842	423,078
Total liabilities and shareholders' equity	$ 627,138	$ 627,674

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Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares	Sep. 30, 2022	Mar. 31, 2022
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	70,351,000	69,245,000
Common stock, shares outstanding	67,605,000	67,075,000
Treasury stock, shares	2,746,000	2,170,000

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Condensed Consolidated Statements of Net Income (Loss) and Comprehensive Income (Loss) (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Revenues:
Total revenues	$ 159,443	$ 149,286	$ 312,745	$ 295,370
Cost of revenue:
Amortization of capitalized software costs and acquired intangible assets	6,744	7,969	13,878	16,053
Total cost of revenue	82,580	72,698	162,634	145,439
Gross profit	76,863	76,588	150,111	149,931
Operating expenses:
Selling, general and administrative	44,886	63,891	93,920	112,377
Research and development costs, net	20,857	18,518	42,652	37,839
Amortization of acquired intangible assets	705	881	1,410	1,762
Impairment of assets	805	1,195	1,329	1,577
Restructuring costs	321		321	539
Total operating expenses	67,574	84,485	139,632	154,094
Income (loss) from operations	9,289	(7,897)	10,479	(4,163)
Interest income	74	17	120	29
Interest expense	(325)	(320)	(655)	(637)
Other income (expense), net	10,292	(12)	10,287	(34)
Income (loss) before provision for (benefit of) income taxes	19,330	(8,212)	20,231	(4,805)
Provision for (benefit of) income taxes	5,707	(1,441)	5,460	(882)
Net income (loss)	13,623	(6,771)	14,771	(3,923)
Other comprehensive income (loss):
Foreign currency translation, net of tax	(5)	50	(33)	12
Comprehensive income (loss)	$ 13,618	$ (6,721)	$ 14,738	$ (3,911)
Net income (loss) per share:
Basic	$ 0.20	$ (0.10)	$ 0.22	$ (0.06)
Diluted	$ 0.20	$ (0.10)	$ 0.22	$ (0.06)
Weighted-average shares outstanding:
Basic	67,806	67,406	67,698	67,291
Diluted	68,422	67,406	68,353	67,291
Recurring
Revenues:
Total revenues	$ 143,503	$ 135,609	$ 283,262	$ 267,990
Cost of revenue:
Cost of revenue excluding amortization of capitalized software costs and acquired intangible assets	65,039	57,119	127,283	114,279
Software, Hardware, and Other Non-recurring
Revenues:
Total revenues	15,940	13,677	29,483	27,380
Cost of revenue:
Cost of revenue excluding amortization of capitalized software costs and acquired intangible assets	$ 10,797	$ 7,610	$ 21,473	$ 15,107

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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, 2021		$ 431,644	$ 671			$ 304,263	$ 128,634	$ (1,924)
Balance, Shares at Mar. 31, 2021			67,069,000
Common stock issued under stock plans, net of shares withheld for taxes		(2,298)	$ 3			(2,301)
Common stock issued under stock plans, net of shares withheld for taxes, Shares			293,000
Stock-based compensation		6,412				6,412
Other comprehensive income (loss):
Translation adjustments		(38)						(38)
Net income (loss)		2,848					2,848
Balance at Jun. 30, 2021		438,568	$ 674			308,374	131,482	(1,962)
Balance, Shares at Jun. 30, 2021			67,362,000
Balance at Mar. 31, 2021		431,644	$ 671			304,263	128,634	(1,924)
Balance, Shares at Mar. 31, 2021			67,069,000
Other comprehensive income (loss):
Translation adjustments		12
Net income (loss)		(3,923)
Balance at Sep. 30, 2021		435,276	$ 684			311,793	124,711	(1,912)
Balance, Shares at Sep. 30, 2021			68,394,000
Balance at Jun. 30, 2021		438,568	$ 674			308,374	131,482	(1,962)
Balance, Shares at Jun. 30, 2021			67,362,000
Common stock issued under stock plans, net of shares withheld for taxes		(1,794)	$ 10			(1,804)
Common stock issued under stock plans, net of shares withheld for taxes, Shares			1,032,000
Stock-based compensation		5,223				5,223
Other comprehensive income (loss):
Translation adjustments		50						50
Net income (loss)		(6,771)					(6,771)
Balance at Sep. 30, 2021		435,276	$ 684			311,793	124,711	(1,912)
Balance, Shares at Sep. 30, 2021			68,394,000
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
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)
Other comprehensive income (loss):
Translation adjustments		(28)						(28)
Net income (loss)		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
Other comprehensive income (loss):
Translation adjustments		(33)
Net income (loss)		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		(428,297)	(428,000)	[2]
Other comprehensive income (loss):
Translation adjustments		$ (5)						(5)
Net income (loss)		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

[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, 2022	Sep. 30, 2021
Cash flows from operating activities:
Net income (loss)	$ 14,771	$ (3,923)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Amortization of capitalized software costs	10,725	11,617
Amortization of debt issuance costs	254	254
Amortization of other intangibles	4,564	6,198
Deferred income taxes		29
Depreciation	2,646	3,781
Excess tax deficiency (benefit) from share-based compensation	(434)	640
Gain on disposition of Commercial Dental assets	(10,296)
Impairment of assets	1,329	1,577
Loss on disposal of equipment and improvements	74	77
Loss on foreign currency exchange rates	7
Non-cash operating lease costs	1,682	3,087
Provision for bad debts	600	679
Share-based compensation	17,453	11,635
Changes in assets and liabilities:
Accounts receivable	(1,527)	4,874
Contract assets	(2)	(1,055)
Accounts payable	3,153	1,108
Contract liabilities	1,739	643
Accrued compensation and related benefits	(20,422)	(16,321)
Income taxes	3,934	(9,324)
Deferred compensation	(249)	655
Operating lease liabilities	(4,097)	(5,360)
Other assets and liabilities	7,892	9,608
Net cash provided by operating activities	33,796	20,479
Cash flows from investing activities:
Additions to capitalized software costs	(18,416)	(11,713)
Additions to equipment and improvements	(1,426)	(1,685)
Proceeds from disposition of Commercial Dental assets	11,253
Net cash used in investing activities	(8,589)	(13,398)
Cash flows from financing activities:
Proceeds from issuance of shares under employee plans	2,575	1,109
Repurchase of common stock	(9,878)
Payments for taxes related to net share settlement of equity awards	(6,124)	(5,201)
Net cash used in financing activities	(13,427)	(4,092)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash	(219)
Net increase in cash, cash equivalents, and restricted cash	11,561	2,989
Cash, cash equivalents, and restricted cash at beginning of period	66,747	78,575
Cash, cash equivalents, and restricted cash at end of period	78,308	81,564
Supplemental disclosures of cash flow information:
Cash paid for income taxes	1,963	7,827
Cash refunds from income taxes	9	19
Cash paid for interest	190	190
Cash paid for amounts included in the measurement of operating lease liabilities	4,533	5,914
Operating lease assets obtained in exchange for operating lease liabilities		197
Accrued purchases of equipment and improvements	$ 144	$ 201

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Summary of Significant Accounting Policies

6 Months Ended

Sep. 30, 2022

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 “we,” “us,” or “our” as used herein refers collectively to the Company, unless otherwise stated. All intercompany accounts and transactions have been eliminated.

Basis of Presentation.  The accompanying unaudited condensed consolidated financial statements as of September 30, 2022 and for the three and six months ended September 30, 2022 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, 2022. 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.

Certain prior period amounts have been reclassified to conform to current period presentation. 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.  We evaluate our estimates and assumptions 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. Our estimates and assumptions consider the potential economic implications of COVID-19 on our critical and significant accounting estimates.

Recently Adopted Accounting Pronouncements.  Recently adopted accounting pronouncements are discussed below or in the notes, where applicable.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”). ASU 2020-04 provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments in ASU 2020-04 apply only to contracts, hedging relationships, and other transactions that reference the London Interbank Offered Rate ("LIBOR") or another reference rate expected to be discontinued because of reference rate reform. In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848): Scope (“ASU 2021-01”), which clarifies the application of certain optional expedients and exceptions. Topic 848 may be applied prospectively through December 31, 2022. The adoption of Topic 848 did not have a material impact on our condensed consolidated financial statements as our amended and restated revolving credit agreement contains provisions to accommodate the replacement of the existing LIBOR-based rate with a successor Secured Overnight Financing Rate (“SOFR”) based rate upon a triggering event.

In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805) - Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU 2021-08”).  Under current GAAP, an acquirer generally recognizes assets acquired and liabilities assumed in a business combination, including contract assets and contract liabilities arising from revenue contracts with customers and other similar contracts that are accounted for in accordance with ASU 2016-10, Revenue from Contracts with Customers (Topic 606), at fair value on the acquisition date. ASU 2021-08 requires acquiring entities to apply Topic 606 to recognize and measure contract assets and contract liabilities in a business combination. ASU 2021-08 is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The amendments in ASU 2021-08 should be applied prospectively to business combinations occurring on or after the effective date of the amendments. Early adoption is permitted, including adoption in an interim period.  We have elected to early adopt this guidance as of July 1, 2022. The adoption of this guidance did not have an impact on our condensed consolidated financial statements for the six months ended September 30, 2022 as no business combination activities occurred during this period.

Recent Accounting Standards Not Yet Adopted.  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, 2022

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 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,
	2022		2021		2022		2021
Recurring revenues:
Subscription services	$	43,416	$	41,139	$	86,175	$	79,423
Support and maintenance		38,150		39,004		77,288		77,490
Managed services		31,055		28,207		61,700		56,115
Transactional and data services		30,882		27,259		58,099		54,962
Total recurring revenues		143,503		135,609		283,262		267,990
Software, hardware, and other non-recurring revenues:
Software license and hardware		7,916		8,068		14,115		15,282
Other non-recurring services		8,024		5,609		15,368		12,098
Total software, hardware and other non-recurring revenues		15,940		13,677		29,483		27,380
Total revenues	$	159,443	$	149,286	$	312,745	$	295,370

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, 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.

As of September 30, 2021, the aggregate amount of transaction price related to remaining unsatisfied or partially unsatisfied performance obligations over the respective noncancelable contract term was approximately $531,800, of which we expect to recognize approximately 10% as services are rendered or goods are delivered, 52% 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 condensed 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 condensed 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, 2022 and 2021, we recognized $17,521 and $17,607, 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, 2022 and 2021, we recognized $35,245 and $35,388, 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 $34,069 as of September 30, 2022, of which $12,011 is classified as current and included as prepaid expenses and other current assets and $22,058 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, 2022 and 2021, we recognized $3,634 and $3,056, respectively, of commissions expense. During the six months ended September 30, 2022 and 2021, we recognized $7,121 and $5,982, 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 condensed consolidated statements of net income (loss) and comprehensive income (loss).

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Accounts Receivable

6 Months Ended

Sep. 30, 2022

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, 2022			March 31, 2022
Accounts receivable, gross	$	80,803		$	79,945
Allowance for credit losses		(3,855	)		(3,888	)
Accounts receivable, net	$	76,948		$	76,057

The following table represents the changes in the allowance for credit losses, as of and for the three months ended September 30, 2022:

Balance as of June 30, 2022	$	(3,937	)
Additions charged to costs and expenses		(359	)
Deductions		441
Balance as of September 30, 2022	$	(3,855	)

The following table represents the changes in the allowance for credit losses, as of and for the six months ended September 30, 2022:

Balance as of March 31, 2022	$	(3,888	)
Additions charged to costs and expenses		(600	)
Deductions		633
Balance as of September 30, 2022	$	(3,855	)

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Fair Value Measurements

6 Months Ended

Sep. 30, 2022

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, 2022 and March 31, 2022:

	Balance At		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Unobservable Inputs
	September 30, 2022		(Level 1)		(Level 2)		(Level 3)
ASSETS
Cash and cash equivalents (1)	$	70,728	$	70,728	$	—	$	—
Restricted cash and cash equivalents		7,580		7,580		—		—
	$	78,308	$	78,308	$	—	$	—

	Balance At		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Unobservable Inputs
	March 31, 2022		(Level 1)		(Level 2)		(Level 3)
ASSETS
Cash and cash equivalents (1)	$	59,829	$	59,829	$	—	$	—
Restricted cash and cash equivalents		6,918		6,918		—		—
	$	66,747	$	66,747	$	—	$	—

⁽¹⁾ Cash equivalents consist primarily of money market funds.

There are no assets or liabilities accounted for utilizing unobservable inputs (Level 3) or measured at fair value using significant other observable inputs (Level 2), as of September 30, 2022.

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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Leases

6 Months Ended

Sep. 30, 2022

Leases [Abstract]

Leases

5. 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. We have certain insignificant short-term leases with an initial term of twelve months or less that are not recorded in our condensed consolidated balance sheets. Operating right-of-use lease assets are classified as operating lease assets on our condensed 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 (loss) and comprehensive income (loss). Total operating lease costs were $708 and $1,685 for the three months ended September 30, 2022 and 2021, respectively. Total operating lease costs were $1,650 and $3,549 for the six months ended September 30, 2022 and 2021, respectively.

Components of operating lease costs are summarized as follows:

	Three Months Ended September 30,						Six Months Ended September 30,
	2022			2021			2022			2021
Operating lease costs	$	788		$	1,602		$	1,737		$	3,435
Short-term lease costs		—			2			—			8
Variable lease costs		160			204			334			361
Less: Sublease income		(240	)		(123	)		(421	)		(255	)
Total operating lease costs	$	708		$	1,685		$	1,650		$	3,549

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

	Three Months Ended September 30,				Six Months Ended September 30,
	2022		2021		2022		2021
Cash paid for amounts included in the measurement of operating lease liabilities	$	2,225	$	2,950	$	4,533	$	5,914
Operating lease assets obtained in exchange for operating lease liabilities		—		197		-		197

We have operating lease agreements for our offices in the United States and India with lease periods expiring between 2022 and 2025. As of September 30, 2022, our operating leases had a weighted average remaining lease term of 2.0 years and a weighted average discount rate of 4.1%. Future minimum aggregate lease payments under operating leases as of September 30, 2022 are summarized as follows:

For the year ended March 31,
2023 (remaining six months)	$	4,384
2024		4,631
2025		3,204
2026		529
Total future lease payments		12,748
Less interest		(506	)
Total lease liabilities	$	12,242

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.

In the three and six months ended September 30, 2021, we vacated portions of certain leased locations and recorded impairments of $1,195 and $1,577, respectively, to our right-of-use assets and certain related fixed assets associated with the vacated locations, or portions thereof, in Irvine and Fairport based on projected sublease rental income and estimated sublease commencement dates.

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 Disposition

6 Months Ended

Sep. 30, 2022

Business Disposition [Abstract]

Business Disposition

6. Business Disposition

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 preliminary gain on disposition of $10,296 in our condensed consolidated statement of net income (loss) and comprehensive income (loss) 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, 2022

Goodwill And Intangible Assets Disclosure [Abstract]

Goodwill

7. 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, 2022 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 as of September 30, 2022 and March 31, 2022 was $267,212.

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Intangible Assets

6 Months Ended

Sep. 30, 2022

Goodwill And Intangible Assets Disclosure [Abstract]

Intangible Assets

8. Intangible Assets

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

	September 30, 2022
	Customer Relationships			Trade Names			Software Technology			Total
Gross carrying amount	$	39,200		$	250		$	38,500		$	77,950
Accumulated amortization		(31,209	)		(141	)		(26,861	)		(58,211	)
Net intangible assets	$	7,991		$	109		$	11,639		$	19,739
	March 31, 2022
	Customer Relationships			Trade Names			Software Technology			Total
Gross carrying amount	$	39,200		$	250		$	49,000		$	88,450
Accumulated amortization		(29,824	)		(116	)		(34,207	)		(64,147	)
Net intangible assets	$	9,376		$	134		$	14,793		$	24,303

Amortization expense related to customer relationships and trade names recorded as operating expenses in the condensed consolidated statements of net income (loss) and comprehensive income (loss) was $705 and $881 for the three months ended September 30, 2022 and 2021, respectively. Amortization expense related to software technology recorded as cost of revenue was $1,373 and $2,218 for the three months ended September 30, 2022 and 2021, respectively.

Amortization expense related to customer relationships and trade names recorded as operating expenses in the condensed consolidated statements of net income (loss) and comprehensive income (loss) was $1,410 and $1,762 for the six months ended September 30, 2022 and 2021, respectively. Amortization expense related to software technology recorded as cost of revenue was $3,154 and $4,436 for the six months ended September 30, 2022 and 2021, respectively.

During the three months ended September 30, 2022, we retired $10,500 of fully amortized software technology related to our Entrada acquisition.

The following table summarizes the remaining estimated amortization of definite-lived intangible assets as of September 30, 2022:

	Estimated Remaining Amortization Expense
	Operating Expense		Cost of Revenue		Total
For the year ended March 31,
2023 (remaining six months)	$	1,410	$	2,000	$	3,410
2024		2,279		3,573		5,852
2025		1,846		3,573		5,419
2026		1,377		2,251		3,628
2027		631		242		873
2028 and beyond		557		-		557
Total	$	8,100	$	11,639	$	19,739

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Capitalized Software Costs

6 Months Ended

Sep. 30, 2022

Research And Development [Abstract]

Capitalized Software Costs

9. Capitalized Software Costs

Our capitalized software costs are summarized as follows:

	September 30, 2022			March 31, 2022
Gross carrying amount	$	119,037		$	110,155
Accumulated amortization		(69,246	)		(66,197	)
Net capitalized software costs	$	49,791		$	43,958

Amortization expense related to capitalized software costs was $5,371 and $5,751 for the three months ended September 30, 2022 and 2021, respectively, and is recorded as cost of revenue in the condensed consolidated statements of net income (loss) and comprehensive income (loss).

Amortization expense related to capitalized software costs was $10,725 and $11,617 for the six months ended September 30, 2022 and 2021, respectively.

During the six months ended September 30, 2022, we retired $6,745 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, 2022. 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,
2023 (remaining six months)	$	15,200
2024		19,600
2025		10,400
2026		4,591
Total	$	49,791

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Line of Credit

6 Months Ended

Sep. 30, 2022

Debt Disclosure [Abstract]

Line of Credit

10. 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. The Credit Agreement contains provisions to accommodate the replacement of the existing LIBOR-based rate with a SOFR based rate upon a triggering event.

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.

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, 2022.

As of September 30, 2022 and March 31, 2022, we had no outstanding loans and $300,000 of unused credit under the Credit Agreement.

Interest expense related to the Credit Agreement was $198 and $193 for the three months ended September 30, 2022 and 2021, respectively. Amortization of deferred debt issuance costs was $127 and $127 for the three months ended September 30, 2022 and 2021, respectively.

Interest expense related to the Credit Agreement was $401 and $383 for the six months ended September 30, 2022 and 2021, respectively. Amortization of deferred debt issuance costs was $254 and $254 for the six months ended September 30, 2022 and 2021, respectively.

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Composition of Certain Financial Statement Captions

6 Months Ended

Sep. 30, 2022

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Composition of Certain Financial Statement Captions

11. Composition of Certain Financial Statement Captions

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

	September 30, 2022		March 31, 2022
Cash and cash equivalents	$	70,728	$	59,829
Restricted cash and cash equivalents		7,580		6,918
Cash, cash equivalents, and restricted cash	$	78,308	$	66,747

Prepaid expenses and other current assets are summarized as follows:

	September 30, 2022		March 31, 2022
Prepaid expenses	$	20,640	$	24,229
Capitalized commissions costs		12,011		11,698
Other current assets		1,712		1,175
Prepaid expenses and other current assets	$	34,363	$	37,102

Equipment and improvements are summarized as follows:

	September 30, 2022			March 31, 2022
Computer equipment	$	36,692		$	36,293
Internal-use software		19,537			19,001
Leasehold improvements		11,117			13,227
Furniture and fixtures		7,998			9,579
Equipment and improvements, gross		75,344			78,100
Accumulated depreciation and amortization		(67,946	)		(68,980	)
Equipment and improvements, net	$	7,398		$	9,120

Other assets are summarized as follows:

	September 30, 2022		March 31, 2022
Capitalized commission costs	$	22,058	$	21,654
Deposits		6,539		5,793
Debt issuance costs		2,067		2,006
Other noncurrent assets		8,269		9,573
Other assets	$	38,933	$	39,026

Accrued compensation and related benefits are summarized as follows:

	September 30, 2022		March 31, 2022
Accrued vacation	$	11,969	$	11,785
Accrued bonus		9,966		27,311
Deferred payroll taxes		3,806		3,817
Accrued commissions		2,012		5,353
Accrued payroll and other		360		470
Accrued compensation and related benefits	$	28,113	$	48,736

Other current and noncurrent liabilities are summarized as follows:

	September 30, 2022		March 31, 2022
Accrued hosting costs	$	13,836	$	12,510
Care services liabilities		7,580		6,918
Customer credit balances and deposits		6,540		4,622
Accrued EDI expense		6,098		2,168
Sales returns reserves and other customer liabilities		5,716		5,725
Accrued employee benefits and withholdings		3,895		3,535
Accrued consulting and outside services		3,102		4,799
Accrued self insurance expense		2,777		2,208
Accrued outsourcing costs		2,670		2,264
Accrued legal expense		1,405		1,439
Accrued taxes payable		506		540
Accrued royalties		336		3,557
Other accrued expenses		3,859		3,248
Other current liabilities	$	58,320	$	53,533
Uncertain tax positions	$	4,183	$	4,196
Other liabilities		373		374
Other noncurrent liabilities	$	4,556	$	4,570

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Income Taxes

6 Months Ended

Sep. 30, 2022

Income Tax Disclosure [Abstract]

Income Taxes

12. Income Taxes

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 benefit for income taxes was $1,441 in the three months ended September 30, 2021, reflecting an effective tax rate benefit of 17.5%.

The provision of income taxes in the six months ended September 30, 2022 was $5,460, reflecting an effective tax rate benefit of 27.0%. The benefit for income taxes in the six months ended September 30, 2021 was $882, reflecting an effective tax rate benefit of 18.4%.

The increase in the effective tax rate for the three and six months ended September 30, 2022 compared to the corresponding prior periods was primarily due to the net benefit of discrete items related to stock based compensation in the current period compared to prior year.

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 $6,433 and $6,112 related to various federal, state, and local income tax matters as of September 30, 2022 and March 31, 2022, 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 2018. With a few exceptions, we are no longer subject to state or local income tax examinations for tax years before fiscal year ended 2017. 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.

Inflation Reduction Act of 2022

Changes in tax law and rates may affect recorded deferred tax assets and liabilities and our effective tax rate in the future. On August 16, 2022, the United States government enacted the Inflation Reduction Act of 2022 that includes changes to the United States corporate income tax system, including a fifteen percent minimum tax based on “adjusted financial statement income,” which is effective for tax years beginning after December 31, 2022, and a one percent excise tax on repurchases of stock after December 31, 2022. We are continuing to evaluate the Inflation Reduction Act and its requirements, as well as its application to our business. 

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Earnings Per Share

6 Months Ended

Sep. 30, 2022

Earnings Per Share [Abstract]

Earnings Per Share

13. 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,
	2022		2021			2022		2021
Earnings per share — Basic:
Net income (loss)	$	13,623	$	(6,771	)	$	14,771	$	(3,923	)
Weighted-average shares outstanding — Basic		67,806		67,406			67,698		67,291
Net income (loss) per common share — Basic	$	0.20	$	(0.10	)	$	0.22	$	(0.06	)
Earnings per share — Diluted:
Net income (loss)	$	13,623	$	(6,771	)	$	14,771	$	(3,923	)
Weighted-average shares outstanding		67,806		67,406			67,698		67,291
Effect of potentially dilutive securities		616		—			655		—
Weighted-average shares outstanding — Diluted		68,422		67,406			68,353		67,291
Net income (loss) per common share — Diluted	$	0.20	$	(0.10	)	$	0.22	$	(0.06	)

The computation of diluted net income (loss) per share does not include 26 and 697 options to acquire shares of common stock for the three months ended September 30, 2022 and September 30, 2021, respectively, because their inclusion would have an anti-dilutive effect on net income (loss) per share.

The computation of diluted net income (loss) per share does not include 23 and 254 options to acquire shares of common stock for the six months ended September 30, 2022 and September 30, 2021, respectively, because their inclusion would have an anti-dilutive effect on net income (loss) per share.

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Stockholders' Equity

6 Months Ended

Sep. 30, 2022

Stockholders Equity Note [Abstract]

Stockholders' Equity

14. Stockholders’ Equity

Equity Incentive Plans

In October 2005, our shareholders approved a stock option and incentive plan (the “2005 Plan”) under which 4,800,000 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, unrestricted stock, restricted stock units, performance shares, performance units (including performance options) and other share-based awards. The 2005 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 2005 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 2005 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 2005 Plan, awards under the 2005 Plan will fully vest under certain circumstances. The 2005 Plan expired on May 25, 2015. As of September 30, 2022, there were 34,100 outstanding options under the 2005 Plan.

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. The Amended 2015 Plan provides that our employees and directors may, at the discretion of the 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, 2022, there were 1,332,613 outstanding options, 2,713,042 outstanding shares of restricted stock awards, certain outstanding performance stock unit awards as described further below, and 1,181,861 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 are 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. As of September 30, 2022, there were 724,835 outstanding shares of restricted stock awards, 425,666 outstanding performance stock unit awards, and 141,699 shares available for future grant under the Inducement Plan.

Stock-Based Compensation

The following table summarizes total share-based compensation expense included in the condensed consolidated statements of net income (loss) and comprehensive income (loss) for the three and six months ended September 30, 2022 and 2021:

	Three Months Ended September 30,						Six Months Ended September 30,
	2022			2021			2022			2021
Costs and expenses:
Cost of revenue	$	951		$	554		$	1,514		$	1,058
Research and development costs		1,655			1,110			3,238			2,153
Selling, general and administrative		6,081			3,559			12,701			8,424
Total share-based compensation		8,687			5,223			17,453			11,635
Income tax benefit		(2,078	)		(1,151	)		(4,123	)		(2,733	)
Decrease in net income	$	6,609		$	4,072		$	13,330		$	8,902

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.

Stock Options

The following table summarizes the stock option transactions during the six months ended September 30, 2022:

				Weighted-		Weighted-
				Average		Average		Aggregate
				Exercise		Remaining		Intrinsic
	Number of			Price		Contractual		Value
	Shares			per Share		Life (years)		(in thousands)
Outstanding, March 31, 2022		1,453,739		$	14.80		2.9	$	8,886
Exercised		(85,026	)		14.64		1.8		440
Expired		(2,000	)		15.99
Outstanding, September 30, 2022		1,366,713		$	14.81		2.4	$	4,020
Vested and expected to vest, September 30, 2022		1,365,730		$	14.81		2.4	$	4,017
Exercisable, September 30, 2022		1,360,463		$	14.81		2.4	$	4,003

Share-based compensation expense related to stock options was $13 and $290 for the three months ended September 30, 2022 and 2021, respectively. Share-based compensation expense related to stock options was $79 and $999 for the six months ended September 30, 2022 and 2021, respectively.

Non-vested stock option award activity during the six months ended September 30, 2022 is summarized as follows:

				Weighted-
				Average
				Grant-Date
	Number of			Fair Value
	Shares			per Share
Outstanding, March 31, 2022		50,382		$	6.98
Vested		(44,132	)		7.12
Outstanding, September 30, 2022		6,250		$	5.96

The total fair value of options vested during the six months ended September 30, 2022 and 2021 was $314 and $1,461, respectively.

Restricted Stock Awards

Restricted stock awards activity during the six months ended September 30, 2022 is summarized as follows:

				Weighted-
				Average
				Grant-Date
	Number of			Fair Value
	Shares			per Share
Outstanding, March 31, 2022		3,242,763		$	15.30
Granted		1,361,471			17.79
Vested		(1,024,872	)		15.17
Canceled		(141,485	)		16.50
Outstanding, September 30, 2022		3,437,877		$	16.27

Share-based compensation expense related to restricted stock awards was $6,372 and $3,889 for the three months ended September 30, 2022 and 2021, respectively. Share-based compensation expense related to restricted stock awards was $12,651 and $10,347 for the six months ended September 30, 2022 and 2021, 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, 2022, $45,116 of total unrecognized compensation costs related to restricted stock awards is expected to be recognized over a weighted-average period of 2.0 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 $7,114 and $5,540 for the three months ended September 30, 2022 and 2021, respectively. The total fair value of restricted stock awards vested as of the vesting dates were $18,205 and $14,210 for the six months ended September 30, 2022 and 2021, respectively.

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, 2022 and 2021 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, 2022 and 2021 were 142,751 and 100,226, 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, 2022 and 2021 were 345,263 and 277,544, 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 23, 2018, the Compensation Committee of the Board approved 248,140 performance stock unit awards to be granted to certain executives and non-executive members of the executive leadership team, of which no shares are currently outstanding and no shares were ultimately earned or issued during the performance period. Approximately 34% of the performance stock units were tied to our cumulative 3-year total shareholder return, 33% were tied to our fiscal year 2021 revenue, and 33% were tied to our fiscal year 2021 adjusted earnings per share goals, each as specifically defined in the equity award agreements. The number of shares to be issued was to vary between 50% and 200% of the number of performance stock units depending on performance, and no such shares were to be issued if threshold performance was not achieved. The weighted-average grant date fair value of the awards was $17.84 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 and earnings per share targets.  

On December 26, 2019 and January 27, 2020, the Compensation Committee of the Board approved a total of 279,587 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 2021 revenue goal and 20% are tied to the Company’s fiscal year 2022 revenue goal. Performance stock unit awards funded for fiscal year 2021 and fiscal year 2022 revenue performance will be modified for cumulative 3-year total shareholder return (“TSR”) on the three-year grant anniversary, which is also the cliff vest date. The number of shares to be issued may vary between 42.5% and 172.5% of the number of 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 $16.02 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 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. During the three months ended September 30, 2022, 24,334 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.  During the three months ended September 30, 2022, 33,998 units were earned and issued as shares.

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. Share-based compensation expense related to the performance stock units and awards was $915 and a benefit of $42 for three and six months ended September 30, 2021, respectively. The benefit recognized in the prior year period was primarily due to the cancellation of awards associated with the resignation of our former Chief Executive Officer.

As of September 30, 2022, $7,705 of total estimated unrecognized compensation costs related to performance stock units and awards is expected to be recognized over a weighted-average period of 1.7 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. As of September 30, 2022, we have issued 976,892 shares under the Purchase Plan and 3,023,108 shares are available for future issuance.

Share-based compensation expense recorded for the employee share purchase plan was $130 and $129 for the three months ended September 30, 2022 and 2021, respectively. Share-based compensation expense recorded for the employee share purchase plan was $349 and $330 for the six months ended September 30, 2022 and 2021, 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. 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. Share repurchases under the program 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 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.

During the three months ended September 30, 2022, we repurchased 428,297 shares of common stock for a total of $7,373 at a weighted-average share repurchase price of approximately $17.21.  As of September 30, 2022, $14,303 remained available for share repurchases pursuant to the Company’s share repurchase program.

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Concentration of Credit Risk

6 Months Ended

Sep. 30, 2022

Risks And Uncertainties [Abstract]

Concentration of Credit Risk

15. Concentration of Credit Risk

We had cash deposits at United States banks and financial institutions which exceeded federally insured limits at September 30, 2022. 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, 2022

Commitments And Contingencies Disclosure [Abstract]

Commitments, Guarantees and Contingencies

16. 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 have experienced legal claims by clients regarding product and contract disputes, by other third parties asserting that we have infringed their intellectual property rights, by current and former employees regarding certain employment matters and by certain shareholders. We believe that these claims are without merit and intend to defend against them vigorously; however, we could incur substantial costs and diversion of management resources defending any such claim, even if we are ultimately successful in the defense of such matter. Litigation is inherently uncertain and always difficult to predict.

Additionally, we are subject to the regulation and oversight of various federal and state governmental agencies that enforce fraud and abuse programs related to the submission of fraudulent claims for reimbursement from governmental payers. We have received, and from time to time may receive, inquiries or subpoenas from federal and state agencies. Under the False Claims Act (“FCA”), private parties have the right to bring qui tam, or “whistleblower,” suits against entities that submit, or cause to be submitted, fraudulent claims for reimbursement. Qui tam or whistleblower actions initiated under the FCA may be pending but placed under seal by the court to comply with the FCA’s requirements for filing such suits. As a result, they could lead to proceedings without our knowledge. We refer you to the discussion of regulatory and litigation risks within “Item 1A. Risk Factors” appearing in our most recent Annual Report on Form 10-K for the fiscal year ended March 31, 2022 (“Annual Report”).

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. After the court sustained our demurrer to the initial complaint, Hussein filed an amended complaint on April 25, 2014. 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 has 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 are currently briefing the various appeals.  We expect the California State Court of Appeal for the Fourth Appellate District, Division Three, to hear arguments and issue its ruling on the various appeals in 2023.

Other Regulatory and Litigation Matters

Commencing in April 2017, we have received requests for documents and information from the United States Attorney's Office for the District of Vermont and other government agencies in connection with an investigation concerning the certification we obtained for our software under the United States Department of Health and Human Services' Electronic Health Record (EHR) Incentive Program. The requests for information relate to, among other things: (a) data used to determine objectives and measures under the Meaningful Use (MU) and the Physician Quality Reporting System (PQRS) programs, (b) our EHR product and its performance, including defects that relate to patient safety or meaningful use certifications, (c) the software code used in certifying our EHR software and information, and (d) marketing programs and payments provided for the referral of EHR business. We continue to respond to the government’s requests and are engaged in discussions on the status and potential resolution of their ongoing investigation. Recently the United States Attorney’s Office informed NextGen of the existence of a sealed qui tam lawsuit concerning the issues NextGen has been discussing with their Office.  NextGen does not have a copy of the lawsuit because it remains under seal.  

This investigation and the sealed qui tam lawsuit may lead to future requests for information and ultimately litigation of the existing and potentially additional claims by or on behalf of the United States against NextGen, which themselves may lead to material damages, penalties, fines, judgments, or other liabilities. In addition, our responses to these and any future requests and the defense of any litigation will require time and effort, which will result in additional cost to us. At this time, we are unable to estimate the probability of the outcome of this matter or the range of reasonably possible loss, if any. However, the unfavorable resolution of this matter could have a material adverse effect on our business, results of operations, financial condition or cash flows.

Given the highly-regulated nature of our industry, we may, from time to time, be subject to subpoenas, requests for information, or investigations from various government agencies. It is our practice to respond to such matters in a cooperative, thorough and timely manner.

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Restructuring Costs

6 Months Ended

Sep. 30, 2022

Restructuring Costs [Abstract]

Restructuring Costs

17. Restructuring Costs

During the three and six months ended September 30, 2022, we recorded restructuring costs of $321, consisting of payroll-related costs, such as severance, outplacement costs, and continuing healthcare coverage, associated with the involuntary separation of employees pursuant to a one-time benefit arrangement, within operating expenses in our consolidated statements of net income (loss) and comprehensive income (loss). The payroll-related costs were substantially paid as of September 30, 2022.

During the six months ended September 30, 2021, we recorded restructuring costs of $539 within operating expenses in our condensed consolidated statements of net income (loss) and comprehensive income (loss). The payroll-related costs were substantially paid as of September 30, 2021.

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Subsequent Event

6 Months Ended

Sep. 30, 2022

Subsequent Events [Abstract]

Subsequent Event

18.  Subsequent Event

On October 25, 2022, our Board of Directors 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.

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Summary of Significant Accounting Policies (Policies)

6 Months Ended

Sep. 30, 2022

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 “we,” “us,” or “our” as used herein refers collectively to the Company, unless otherwise stated. All intercompany accounts and transactions have been eliminated.

Basis of Presentation

Basis of Presentation.  The accompanying unaudited condensed consolidated financial statements as of September 30, 2022 and for the three and six months ended September 30, 2022 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, 2022. 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.

Certain prior period amounts have been reclassified to conform to current period presentation. 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.  We evaluate our estimates and assumptions 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. Our estimates and assumptions consider the potential economic implications of COVID-19 on our critical and significant accounting estimates.

Recent Accounting Standards

Recently Adopted Accounting Pronouncements.  Recently adopted accounting pronouncements are discussed below or in the notes, where applicable.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”). ASU 2020-04 provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments in ASU 2020-04 apply only to contracts, hedging relationships, and other transactions that reference the London Interbank Offered Rate ("LIBOR") or another reference rate expected to be discontinued because of reference rate reform. In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848): Scope (“ASU 2021-01”), which clarifies the application of certain optional expedients and exceptions. Topic 848 may be applied prospectively through December 31, 2022. The adoption of Topic 848 did not have a material impact on our condensed consolidated financial statements as our amended and restated revolving credit agreement contains provisions to accommodate the replacement of the existing LIBOR-based rate with a successor Secured Overnight Financing Rate (“SOFR”) based rate upon a triggering event.

In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805) - Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU 2021-08”).  Under current GAAP, an acquirer generally recognizes assets acquired and liabilities assumed in a business combination, including contract assets and contract liabilities arising from revenue contracts with customers and other similar contracts that are accounted for in accordance with ASU 2016-10, Revenue from Contracts with Customers (Topic 606), at fair value on the acquisition date. ASU 2021-08 requires acquiring entities to apply Topic 606 to recognize and measure contract assets and contract liabilities in a business combination. ASU 2021-08 is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The amendments in ASU 2021-08 should be applied prospectively to business combinations occurring on or after the effective date of the amendments. Early adoption is permitted, including adoption in an interim period.  We have elected to early adopt this guidance as of July 1, 2022. The adoption of this guidance did not have an impact on our condensed consolidated financial statements for the six months ended September 30, 2022 as no business combination activities occurred during this period.

Recent Accounting Standards Not Yet Adopted.  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 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.

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. We have certain insignificant short-term leases with an initial term of twelve months or less that are not recorded in our condensed consolidated balance sheets. Operating right-of-use lease assets are classified as operating lease assets on our condensed 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, 2022

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,
	2022		2021		2022		2021
Recurring revenues:
Subscription services	$	43,416	$	41,139	$	86,175	$	79,423
Support and maintenance		38,150		39,004		77,288		77,490
Managed services		31,055		28,207		61,700		56,115
Transactional and data services		30,882		27,259		58,099		54,962
Total recurring revenues		143,503		135,609		283,262		267,990
Software, hardware, and other non-recurring revenues:
Software license and hardware		7,916		8,068		14,115		15,282
Other non-recurring services		8,024		5,609		15,368		12,098
Total software, hardware and other non-recurring revenues		15,940		13,677		29,483		27,380
Total revenues	$	159,443	$	149,286	$	312,745	$	295,370

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Accounts Receivable (Tables)

6 Months Ended

Sep. 30, 2022

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, 2022			March 31, 2022
Accounts receivable, gross	$	80,803		$	79,945
Allowance for credit losses		(3,855	)		(3,888	)
Accounts receivable, net	$	76,948		$	76,057

Summary of Changes in Allowance for Credit Losses

The following table represents the changes in the allowance for credit losses, as of and for the three months ended September 30, 2022:

Balance as of June 30, 2022	$	(3,937	)
Additions charged to costs and expenses		(359	)
Deductions		441
Balance as of September 30, 2022	$	(3,855	)

The following table represents the changes in the allowance for credit losses, as of and for the six months ended September 30, 2022:

Balance as of March 31, 2022	$	(3,888	)
Additions charged to costs and expenses		(600	)
Deductions		633
Balance as of September 30, 2022	$	(3,855	)

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Fair Value Measurements (Tables)

6 Months Ended

Sep. 30, 2022

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, 2022 and March 31, 2022:

	Balance At		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Unobservable Inputs
	September 30, 2022		(Level 1)		(Level 2)		(Level 3)
ASSETS
Cash and cash equivalents (1)	$	70,728	$	70,728	$	—	$	—
Restricted cash and cash equivalents		7,580		7,580		—		—
	$	78,308	$	78,308	$	—	$	—

	Balance At		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Unobservable Inputs
	March 31, 2022		(Level 1)		(Level 2)		(Level 3)
ASSETS
Cash and cash equivalents (1)	$	59,829	$	59,829	$	—	$	—
Restricted cash and cash equivalents		6,918		6,918		—		—
	$	66,747	$	66,747	$	—	$	—

⁽¹⁾ Cash equivalents consist primarily of money market funds.

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Leases (Tables)

6 Months Ended

Sep. 30, 2022

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,
	2022			2021			2022			2021
Operating lease costs	$	788		$	1,602		$	1,737		$	3,435
Short-term lease costs		—			2			—			8
Variable lease costs		160			204			334			361
Less: Sublease income		(240	)		(123	)		(421	)		(255	)
Total operating lease costs	$	708		$	1,685		$	1,650		$	3,549

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,
	2022		2021		2022		2021
Cash paid for amounts included in the measurement of operating lease liabilities	$	2,225	$	2,950	$	4,533	$	5,914
Operating lease assets obtained in exchange for operating lease liabilities		—		197		-		197

Summary of Future Minimum Aggregate Lease Payments Operating Leases

Future minimum aggregate lease payments under operating leases as of September 30, 2022 are summarized as follows:

For the year ended March 31,
2023 (remaining six months)	$	4,384
2024		4,631
2025		3,204
2026		529
Total future lease payments		12,748
Less interest		(506	)
Total lease liabilities	$	12,242

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Intangible Assets (Tables)

6 Months Ended

Sep. 30, 2022

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, 2022
	Customer Relationships			Trade Names			Software Technology			Total
Gross carrying amount	$	39,200		$	250		$	38,500		$	77,950
Accumulated amortization		(31,209	)		(141	)		(26,861	)		(58,211	)
Net intangible assets	$	7,991		$	109		$	11,639		$	19,739
	March 31, 2022
	Customer Relationships			Trade Names			Software Technology			Total
Gross carrying amount	$	39,200		$	250		$	49,000		$	88,450
Accumulated amortization		(29,824	)		(116	)		(34,207	)		(64,147	)
Net intangible assets	$	9,376		$	134		$	14,793		$	24,303

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, 2022:

	Estimated Remaining Amortization Expense
	Operating Expense		Cost of Revenue		Total
For the year ended March 31,
2023 (remaining six months)	$	1,410	$	2,000	$	3,410
2024		2,279		3,573		5,852
2025		1,846		3,573		5,419
2026		1,377		2,251		3,628
2027		631		242		873
2028 and beyond		557		-		557
Total	$	8,100	$	11,639	$	19,739

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Capitalized Software Costs (Tables)

6 Months Ended

Sep. 30, 2022

Research And Development [Abstract]

Capitalized Software Development Costs

Our capitalized software costs are summarized as follows:

	September 30, 2022			March 31, 2022
Gross carrying amount	$	119,037		$	110,155
Accumulated amortization		(69,246	)		(66,197	)
Net capitalized software costs	$	49,791		$	43,958

Estimated Amortization of Capitalized Software Costs

The following table presents the remaining estimated amortization of capitalized software costs as of September 30, 2022. 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,
2023 (remaining six months)	$	15,200
2024		19,600
2025		10,400
2026		4,591
Total	$	49,791

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Composition of Certain Financial Statement Captions (Tables)

6 Months Ended

Sep. 30, 2022

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, 2022		March 31, 2022
Cash and cash equivalents	$	70,728	$	59,829
Restricted cash and cash equivalents		7,580		6,918
Cash, cash equivalents, and restricted cash	$	78,308	$	66,747

Summary of Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets are summarized as follows:

	September 30, 2022		March 31, 2022
Prepaid expenses	$	20,640	$	24,229
Capitalized commissions costs		12,011		11,698
Other current assets		1,712		1,175
Prepaid expenses and other current assets	$	34,363	$	37,102

Summary of Equipment and Improvements

Equipment and improvements are summarized as follows:

	September 30, 2022			March 31, 2022
Computer equipment	$	36,692		$	36,293
Internal-use software		19,537			19,001
Leasehold improvements		11,117			13,227
Furniture and fixtures		7,998			9,579
Equipment and improvements, gross		75,344			78,100
Accumulated depreciation and amortization		(67,946	)		(68,980	)
Equipment and improvements, net	$	7,398		$	9,120

Summary of Other Assets

Other assets are summarized as follows:

	September 30, 2022		March 31, 2022
Capitalized commission costs	$	22,058	$	21,654
Deposits		6,539		5,793
Debt issuance costs		2,067		2,006
Other noncurrent assets		8,269		9,573
Other assets	$	38,933	$	39,026

Summary of Accrued Compensation and Related Benefits

Accrued compensation and related benefits are summarized as follows:

	September 30, 2022		March 31, 2022
Accrued vacation	$	11,969	$	11,785
Accrued bonus		9,966		27,311
Deferred payroll taxes		3,806		3,817
Accrued commissions		2,012		5,353
Accrued payroll and other		360		470
Accrued compensation and related benefits	$	28,113	$	48,736

Summary of Other Current and Noncurrent Liabilities

Other current and noncurrent liabilities are summarized as follows:

	September 30, 2022		March 31, 2022
Accrued hosting costs	$	13,836	$	12,510
Care services liabilities		7,580		6,918
Customer credit balances and deposits		6,540		4,622
Accrued EDI expense		6,098		2,168
Sales returns reserves and other customer liabilities		5,716		5,725
Accrued employee benefits and withholdings		3,895		3,535
Accrued consulting and outside services		3,102		4,799
Accrued self insurance expense		2,777		2,208
Accrued outsourcing costs		2,670		2,264
Accrued legal expense		1,405		1,439
Accrued taxes payable		506		540
Accrued royalties		336		3,557
Other accrued expenses		3,859		3,248
Other current liabilities	$	58,320	$	53,533
Uncertain tax positions	$	4,183	$	4,196
Other liabilities		373		374
Other noncurrent liabilities	$	4,556	$	4,570

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Earnings Per Share (Tables)

6 Months Ended

Sep. 30, 2022

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,
	2022		2021			2022		2021
Earnings per share — Basic:
Net income (loss)	$	13,623	$	(6,771	)	$	14,771	$	(3,923	)
Weighted-average shares outstanding — Basic		67,806		67,406			67,698		67,291
Net income (loss) per common share — Basic	$	0.20	$	(0.10	)	$	0.22	$	(0.06	)
Earnings per share — Diluted:
Net income (loss)	$	13,623	$	(6,771	)	$	14,771	$	(3,923	)
Weighted-average shares outstanding		67,806		67,406			67,698		67,291
Effect of potentially dilutive securities		616		—			655		—
Weighted-average shares outstanding — Diluted		68,422		67,406			68,353		67,291
Net income (loss) per common share — Diluted	$	0.20	$	(0.10	)	$	0.22	$	(0.06	)

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Stockholders' Equity (Tables)

6 Months Ended

Sep. 30, 2022

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 (loss) and comprehensive income (loss) for the three and six months ended September 30, 2022 and 2021:

	Three Months Ended September 30,						Six Months Ended September 30,
	2022			2021			2022			2021
Costs and expenses:
Cost of revenue	$	951		$	554		$	1,514		$	1,058
Research and development costs		1,655			1,110			3,238			2,153
Selling, general and administrative		6,081			3,559			12,701			8,424
Total share-based compensation		8,687			5,223			17,453			11,635
Income tax benefit		(2,078	)		(1,151	)		(4,123	)		(2,733	)
Decrease in net income	$	6,609		$	4,072		$	13,330		$	8,902

Summary of Stock Option Activity

The following table summarizes the stock option transactions during the six months ended September 30, 2022:

				Weighted-		Weighted-
				Average		Average		Aggregate
				Exercise		Remaining		Intrinsic
	Number of			Price		Contractual		Value
	Shares			per Share		Life (years)		(in thousands)
Outstanding, March 31, 2022		1,453,739		$	14.80		2.9	$	8,886
Exercised		(85,026	)		14.64		1.8		440
Expired		(2,000	)		15.99
Outstanding, September 30, 2022		1,366,713		$	14.81		2.4	$	4,020
Vested and expected to vest, September 30, 2022		1,365,730		$	14.81		2.4	$	4,017
Exercisable, September 30, 2022		1,360,463		$	14.81		2.4	$	4,003

Schedule of Employee Stock Options and Performance Based Awards by Non-vested Stock Options

Non-vested stock option award activity during the six months ended September 30, 2022 is summarized as follows:

				Weighted-
				Average
				Grant-Date
	Number of			Fair Value
	Shares			per Share
Outstanding, March 31, 2022		50,382		$	6.98
Vested		(44,132	)		7.12
Outstanding, September 30, 2022		6,250		$	5.96

Summary of Restricted Stock Awards Activity

Restricted stock awards activity during the six months ended September 30, 2022 is summarized as follows:

				Weighted-
				Average
				Grant-Date
	Number of			Fair Value
	Shares			per Share
Outstanding, March 31, 2022		3,242,763		$	15.30
Granted		1,361,471			17.79
Vested		(1,024,872	)		15.17
Canceled		(141,485	)		16.50
Outstanding, September 30, 2022		3,437,877		$	16.27

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Summary of Significant Accounting Policies - Additional Information (Details) - Accounting Standards Update 2021-08	Sep. 30, 2022
Accounting Policies [Line Items]
Change in Accounting Principle, Accounting Standards Update, Adopted [true false]	true
Change in Accounting Principle, Accounting Standards Update, Adoption Date	Jul. 01, 2022
Change in Accounting Principle, Accounting Standards Update, Immaterial Effect [true false]	true

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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, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Disaggregation Of Revenue [Line Items]
Total revenues	$ 159,443	$ 149,286	$ 312,745	$ 295,370
Subscription Services
Disaggregation Of Revenue [Line Items]
Total revenues	43,416	41,139	86,175	79,423
Support And Maintenance
Disaggregation Of Revenue [Line Items]
Total revenues	38,150	39,004	77,288	77,490
Managed Services
Disaggregation Of Revenue [Line Items]
Total revenues	31,055	28,207	61,700	56,115
Transactional And Data Services
Disaggregation Of Revenue [Line Items]
Total revenues	30,882	27,259	58,099	54,962
Recurring Revenue
Disaggregation Of Revenue [Line Items]
Total revenues	143,503	135,609	283,262	267,990
Software License and Hardware
Disaggregation Of Revenue [Line Items]
Total revenues	7,916	8,068	14,115	15,282
Other Non-recurring Services
Disaggregation Of Revenue [Line Items]
Total revenues	8,024	5,609	15,368	12,098
Software, Hardware, and Other Non-recurring
Disaggregation Of Revenue [Line Items]
Total revenues	$ 15,940	$ 13,677	$ 29,483	$ 27,380

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Revenue from Contracts with Customers - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Revenue From Contract With Customer [Line Items]
Revenue, Remaining Performance Obligation, Amount	$ 563,900	$ 531,800	$ 563,900	$ 531,800
Percentage of revenue expected to recognize as services rendered and goods delivered	9.00%	10.00%	9.00%	10.00%
Percentage of revenue expected to recognize over next 12 months	51.00%	52.00%	51.00%	52.00%
Contract liability balance or invoiced to customers	$ 17,521	$ 17,607	$ 35,245	$ 35,388
Capitalized commission costs			34,069
Commission expenses	$ 3,634	$ 3,056	7,121	$ 5,982
Prepaid Expenses And Other Current Assets
Revenue From Contract With Customer [Line Items]
Capitalized commission costs			12,011
Other Noncurrent Assets
Revenue From Contract With Customer [Line Items]
Capitalized commission costs			$ 22,058
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

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Accounts Receivable - Summary of Accounts Receivable (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Jun. 30, 2022	Mar. 31, 2022
Receivables [Abstract]
Accounts receivable, gross	$ 80,803		$ 79,945
Allowance for credit losses	(3,855)	$ (3,937)	(3,888)
Accounts receivable, net	$ 76,948		$ 76,057

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Accounts Receivable - Summary of Changes in Allowance for Credit Losses (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Sep. 30, 2022	Sep. 30, 2022	Sep. 30, 2021
Receivables [Abstract]
Balance	$ (3,937)	$ (3,888)
Additions charged to costs and expenses	(359)	(600)	$ (679)
Deductions	441	633
Balance	$ (3,855)	$ (3,855)

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Fair Value Measurements - Fair Value of Assets and Liabilities on a Recurring Basis (Details) - USD ($) $ in Thousands		Sep. 30, 2022	Mar. 31, 2022
Fair Value, Measurements, Recurring | Carrying Value
ASSETS
Cash and cash equivalents	[1]	$ 70,728	$ 59,829
Restricted cash and cash equivalents		7,580	6,918
Total		78,308	66,747
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair Value, Measurements, Recurring | Fair Value
ASSETS
Cash and cash equivalents	[1]	70,728	59,829
Restricted cash and cash equivalents		7,580	6,918
Total		78,308	66,747
Significant Other Observable Inputs (Level 2) | Fair Value, Measurements, Recurring | Fair Value
ASSETS
Cash and cash equivalents	[1]	0	0
Restricted cash and cash equivalents		0	0
Total		0	0
Unobservable Inputs (Level 3)
ASSETS
Total		0
Unobservable Inputs (Level 3) | Fair Value, Measurements, Recurring | Fair Value
ASSETS
Cash and cash equivalents	[1]	0	0
Restricted cash and cash equivalents		0	0
Total		$ 0	$ 0

[1] Cash equivalents consist primarily of money market funds.

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Fair Value Measurements - Additional Information (Details) - Unobservable Inputs (Level 3) $ in Thousands	Sep. 30, 2022 USD ($)
Business Acquisition [Line Items]
Assets	$ 0
Liabilities	$ 0

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Leases - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Lessee Lease Description [Line Items]
Total operating lease costs	$ 708	$ 1,685	$ 1,650	$ 3,549
Operating lease, weighted average remaining lease term	2 years		2 years
Operating lease, weighted average discount rate, percent	4.10%		4.10%
Lease Right of Use Assets and Property Plant and Equipment
Lessee Lease Description [Line Items]
Other asset impairment charges	$ 805	$ 1,195	$ 1,329	$ 1,577
Minimum
Lessee Lease Description [Line Items]
Lease expiration year			2022
Maximum
Lessee Lease Description [Line Items]
Lease expiration year			2025

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Leases - Summary of Components of Operating Lease Costs (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Leases [Abstract]
Operating lease costs	$ 788	$ 1,602	$ 1,737	$ 3,435
Short-term lease costs		2		8
Variable lease costs	160	204	334	361
Less: Sublease income	(240)	(123)	(421)	(255)
Total operating lease costs	$ 708	$ 1,685	$ 1,650	$ 3,549

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Leases - Supplemental Cash Flow Information Related to Operating Leases (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Leases [Abstract]
Cash paid for amounts included in the measurement of operating lease liabilities	$ 2,225	$ 2,950	$ 4,533	$ 5,914
Operating lease assets obtained in exchange for operating lease liabilities		$ 197		$ 197

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Leases - Summary of Future Minimum Aggregate Lease Payments Operating Leases (Details) $ in Thousands	Sep. 30, 2022 USD ($)
Leases [Abstract]
2023 (remaining six months)	$ 4,384
2024	4,631
2025	3,204
2026	529
Total future lease payments	12,748
Less interest	(506)
Total lease liabilities	$ 12,242

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Business Disposition - Additional Information (Details) - USD ($) $ in Thousands		6 Months Ended
	Jul. 26, 2022	Sep. 30, 2022
Business Disposition [Line Items]
Cash consideration		$ 11,253
Asset Purchase Agreement
Business Disposition [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

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Goodwill - Additional Information (Details) $ in Thousands	6 Months Ended
	Sep. 30, 2022 USD ($) segment	Mar. 31, 2022 USD ($)
Goodwill And Intangible Assets Disclosure [Abstract]
Number of operating segments | segment	1
Goodwill | $	$ 267,212	$ 267,212

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Intangible Assets - Intangible Assets, Other than Capitalized Software Development Costs (Details) - Intangible Assets Other Than Capitalized Software - USD ($) $ in Thousands	Sep. 30, 2022	Mar. 31, 2022
Finite Lived Intangible Assets [Line Items]
Gross carrying amount	$ 77,950	$ 88,450
Accumulated amortization	(58,211)	(64,147)
Net intangible assets	19,739	24,303
Customer Relationships
Finite Lived Intangible Assets [Line Items]
Gross carrying amount	39,200	39,200
Accumulated amortization	(31,209)	(29,824)
Net intangible assets	7,991	9,376
Trade Names
Finite Lived Intangible Assets [Line Items]
Gross carrying amount	250	250
Accumulated amortization	(141)	(116)
Net intangible assets	109	134
Computer Software, Intangible Asset
Finite Lived Intangible Assets [Line Items]
Gross carrying amount	38,500	49,000
Accumulated amortization	(26,861)	(34,207)
Net intangible assets	$ 11,639	$ 14,793

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Intangible Assets - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Finite Lived Intangible Assets [Line Items]
Amortization of other intangibles			$ 4,564	$ 6,198
Retired amount of fully amortized capitalized software			6,745
Customer Relationships and Trade Names | Operating Expense
Finite Lived Intangible Assets [Line Items]
Amortization of other intangibles	$ 705	$ 881	1,410	1,762
Computer Software, Intangible Asset | Entrada
Finite Lived Intangible Assets [Line Items]
Retired amount of fully amortized capitalized software	10,500
Computer Software, Intangible Asset | Cost of Revenue
Finite Lived Intangible Assets [Line Items]
Amortization of other intangibles	$ 1,373	$ 2,218	$ 3,154	$ 4,436

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Intangible Assets - Estimated Amortization of Intangible Assets with Determinable Lives (Details) - Intangible Assets Other Than Capitalized Software - USD ($) $ in Thousands	Sep. 30, 2022	Mar. 31, 2022
Finite Lived Intangible Assets [Line Items]
2023 (remaining six months)	$ 3,410
2024	5,852
2025	5,419
2026	3,628
2027	873
2028 and beyond	557
Net intangible assets	19,739	$ 24,303
Operating Expense
Finite Lived Intangible Assets [Line Items]
2023 (remaining six months)	1,410
2024	2,279
2025	1,846
2026	1,377
2027	631
2028 and beyond	557
Net intangible assets	8,100
Cost of Revenue
Finite Lived Intangible Assets [Line Items]
2023 (remaining six months)	2,000
2024	3,573
2025	3,573
2026	2,251
2027	242
Net intangible assets	$ 11,639

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Capitalized Software Costs - Capitalized Software Development Costs (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Mar. 31, 2022
Research And Development [Abstract]
Gross carrying amount	$ 119,037	$ 110,155
Accumulated amortization	(69,246)	(66,197)
Net capitalized software costs	$ 49,791	$ 43,958

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Capitalized Software Costs - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Research And Development [Abstract]
Amortization of capitalized software costs	$ 5,371	$ 5,751	$ 10,725	$ 11,617
Retired amount of fully amortized capitalized software			$ 6,745

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Capitalized Software Costs - Estimated Amortization of Capitalized Software Costs (Details) - Capitalized Software Costs $ in Thousands	Sep. 30, 2022 USD ($)
Finite Lived Intangible Assets [Line Items]
2023 (remaining six months)	$ 15,200
2024	19,600
2025	10,400
2026	4,591
Net intangible assets	$ 49,791

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Line of Credit - Additional Information (Details)			3 Months Ended		6 Months Ended
	May 17, 2022 USD ($)	Mar. 12, 2021 USD ($)	Sep. 30, 2022 USD ($)	Sep. 30, 2021 USD ($)	Sep. 30, 2022 USD ($)	Sep. 30, 2021 USD ($)	Mar. 31, 2022 USD ($)	Mar. 29, 2018 USD ($)
Line Of Credit Facility [Line Items]
Leverage ratio	4.00	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
Interest expense			198,000	$ 193,000	401,000	$ 383,000
Amortization of debt issuance costs			$ 127,000	$ 127,000	$ 254,000	$ 254,000
Revolving Credit Facility
Line Of Credit Facility [Line Items]
Maximum borrowing capacity		300,000,000						$ 300,000,000
Additional revolving credit commitments		150,000,000
Credit agreement maturity date					Mar. 12, 2026
Letter of Credit
Line Of Credit Facility [Line Items]
Maximum borrowing capacity		10,000,000
Swing-Line Loans
Line Of Credit Facility [Line Items]
Maximum borrowing capacity		$ 10,000,000

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Composition of Certain Financial Statement Captions - Summary of Cash, Cash Equivalents, and Restricted Cash (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Mar. 31, 2022	Sep. 30, 2021	Mar. 31, 2021
Cash Cash Equivalents Restricted Cash And Restricted Cash Equivalents [Abstract]
Cash and cash equivalents	$ 70,728	$ 59,829
Restricted cash and cash equivalents	7,580	6,918
Cash, cash equivalents, and restricted cash	$ 78,308	$ 66,747	$ 81,564	$ 78,575

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Composition of Certain Financial Statement Captions - Summary of Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Mar. 31, 2022
Prepaid Expense And Other Assets Current [Abstract]
Prepaid expenses	$ 20,640	$ 24,229
Capitalized commissions costs	12,011	11,698
Other current assets	1,712	1,175
Prepaid expenses and other current assets	$ 34,363	$ 37,102

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Composition of Certain Financial Statement Captions - Summary of Equipment and Improvements (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Mar. 31, 2022
Property Plant And Equipment [Line Items]
Equipment and improvements, gross	$ 75,344	$ 78,100
Accumulated depreciation and amortization	(67,946)	(68,980)
Equipment and improvements, net	7,398	9,120
Computer Equipment
Property Plant And Equipment [Line Items]
Equipment and improvements, gross	36,692	36,293
Internal-Use Software
Property Plant And Equipment [Line Items]
Equipment and improvements, gross	19,537	19,001
Furniture and Fixtures
Property Plant And Equipment [Line Items]
Equipment and improvements, gross	7,998	9,579
Leasehold Improvements
Property Plant And Equipment [Line Items]
Equipment and improvements, gross	$ 11,117	$ 13,227

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Composition of Certain Financial Statement Captions - Summary of Other Assets (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Mar. 31, 2022
Other Assets Noncurrent Disclosure [Abstract]
Capitalized commission costs	$ 22,058	$ 21,654
Deposits	6,539	5,793
Debt issuance costs	2,067	2,006
Other noncurrent assets	8,269	9,573
Other assets	$ 38,933	$ 39,026

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Composition of Certain Financial Statement Captions - Summary of Accrued Compensation and Related Benefits (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Mar. 31, 2022
Employee Related Liabilities Current [Abstract]
Accrued vacation	$ 11,969	$ 11,785
Accrued bonus	9,966	27,311
Deferred payroll taxes	3,806	3,817
Accrued commissions	2,012	5,353
Accrued payroll and other	360	470
Accrued compensation and related benefits	$ 28,113	$ 48,736

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Composition of Certain Financial Statement Captions - Summary of Other Current and Noncurrent Liabilities (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Mar. 31, 2022
Other Liabilities [Abstract]
Accrued hosting costs	$ 13,836	$ 12,510
Care services liabilities	7,580	6,918
Customer credit balances and deposits	6,540	4,622
Accrued EDI expense	6,098	2,168
Sales returns reserves and other customer liabilities	5,716	5,725
Accrued employee benefits and withholdings	3,895	3,535
Accrued consulting and outside services	3,102	4,799
Accrued self insurance expense	2,777	2,208
Accrued outsourcing costs	2,670	2,264
Accrued legal expense	1,405	1,439
Accrued taxes payable	506	540
Accrued royalties	336	3,557
Other accrued expenses	3,859	3,248
Other current liabilities	58,320	53,533
Uncertain tax positions	4,183	4,196
Other liabilities	373	374
Other noncurrent liabilities	$ 4,556	$ 4,570

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Income Taxes - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021	Mar. 31, 2022
Income Tax Disclosure [Abstract]
Provision for (benefit of) income taxes	$ 5,707	$ (1,441)	$ 5,460	$ (882)
Effective tax rate (as a percentage)	29.50%	17.50%	27.00%	18.40%
Liability for unrecognized tax benefits	$ 6,433		$ 6,433		$ 6,112
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, 2022	Jun. 30, 2022	Sep. 30, 2021	Jun. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Earnings per share — Basic:
Net income (loss)	$ 13,623	$ 1,148	$ (6,771)	$ 2,848	$ 14,771	$ (3,923)
Weighted-average shares outstanding — Basic	67,806		67,406		67,698	67,291
Net income (loss) per common share — Basic	$ 0.20		$ (0.10)		$ 0.22	$ (0.06)
Earnings per share — Diluted:
Net income (loss)	$ 13,623	$ 1,148	$ (6,771)	$ 2,848	$ 14,771	$ (3,923)
Weighted-average shares outstanding — Basic	67,806		67,406		67,698	67,291
Effect of potentially dilutive securities	616				655
Weighted-average shares outstanding — Diluted	68,422		67,406		68,353	67,291
Net income (loss) per common share — Diluted	$ 0.20		$ (0.10)		$ 0.22	$ (0.06)

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Earnings Per Share - Additional Information (Details) - shares shares in Thousands	3 Months Ended		6 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Employee Stock Options
Options excluded from the computation of diluted net income(loss) per share	26	697	23	254

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Stockholders' Equity - Additional Information (Details) - USD ($)						1 Months Ended	3 Months Ended					6 Months Ended
	Oct. 26, 2021	Sep. 20, 2021	Oct. 26, 2020	Oct. 23, 2018	Aug. 11, 2014	Jan. 27, 2020	Sep. 30, 2022		Jun. 30, 2022		Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021	Mar. 31, 2022	Oct. 31, 2021	Aug. 31, 2019	Aug. 31, 2017	Aug. 31, 2015	Oct. 31, 2005
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Outstanding stock options							1,366,713					1,366,713		1,453,739
Total share-based compensation							$ 8,687,000				$ 5,223,000	$ 17,453,000	$ 11,635,000
Fair value of options vested												$ 314,000	1,461,000
Stock repurchase program, authorized amount															$ 60,000,000
Stock repurchased during period, shares							428,297
Stock repurchased during period, value							$ 7,373,000	[1]	$ 2,505,000	[2]
Weighted-average share repurchase price							$ 17.21		$ 16.93
Stock repurchased available during period value							$ 14,303,000
Employee Stock Options
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Outstanding stock options							1,332,613					1,332,613
Total share-based compensation							$ 13,000				290,000	$ 79,000	999,000
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							2,713,042					2,713,042
Performance Stock Units
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Total unrecognized compensation costs							$ 7,705,000					$ 7,705,000
Stock option recognized over weighted average period (in years)							1 year 8 months 12 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		24,334
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]
Total share-based compensation							$ 2,172,000				915,000	$ 4,374,000	(42,000)
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	33,998
Performance Stock Unit Awards | Units Granted On October 2018
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				248,140
Percentage of shares issued, minimum				50.00%
Percentage of shares issued, maximum				200.00%
Weighted-average grant date fair value				$ 17.84
Percentage of performance stock units tied to 3-year total shareholder return				34.00%
Percentage of performance stock units tied to fiscal year 2021 revenue				33.00%
Percentage performance stock units tied to fiscal year 2021 adjusted earnings per share goals				33.00%
Performance Stock Unit Awards | Units Granted On December 2019 and January 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						279,587
Percentage of shares issued, minimum						42.50%
Percentage of shares issued, maximum						172.50%
Weighted-average grant date fair value						$ 16.02
Percentage of performance stock units tied to fiscal year 2021 revenue goal						80.00%
Percentage of performance stock units tied to fiscal year 2022 revenue goal						20.00%
Vesting period for the 3-year total shareholder return						3 years
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							3,437,877					3,437,877		3,242,763
Total share-based compensation							$ 6,372,000				3,889,000	$ 12,651,000	10,347,000
Total unrecognized compensation costs							45,116,000					$ 45,116,000
Stock option recognized over weighted average period (in years)												2 years
Stock awards vested as of vesting							$ 7,114,000				$ 5,540,000	$ 18,205,000	$ 14,210,000
Share-based compensation arrangement by share-based payment award, options, grants in period, net of forfeitures												1,361,471
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							142,751				100,226	345,263	277,544
2005 Employee Stock Option and Incentive Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Common stock reserved for issuance																			4,800,000
Outstanding stock options							34,100					34,100
2005 Employee Stock Option and Incentive Plan | Employee Stock Options
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Expiration period (in years)												10 years
Share-based compensation award plan , expiration date												May 25, 2015
2015 Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Common stock reserved for issuance															1,850,000	3,575,000	6,000,000
Common stock reserved																		11,500,000
Shares available for future grant							1,181,861					1,181,861
2015 Plan | Employee Stock Options
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Expiration period (in years)												10 years
Inducement Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Common stock reserved for issuance							1,500,000					1,500,000
Shares available for future grant							141,699					141,699
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							724,835					724,835
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							425,666					425,666
Employee Share Purchase Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Common stock reserved for issuance					4,000,000		3,023,108					3,023,108
Total share-based compensation							$ 130,000				$ 129,000	$ 349,000	$ 330,000
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							976,892					976,892

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

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

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Stockholders' Equity - Schedule of Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Costs and expenses:
Total share-based compensation	$ 8,687	$ 5,223	$ 17,453	$ 11,635
Income tax benefit	(2,078)	(1,151)	(4,123)	(2,733)
Decrease in net income	6,609	4,072	13,330	8,902
Cost of Revenue
Costs and expenses:
Total share-based compensation	951	554	1,514	1,058
Research and Development Costs
Costs and expenses:
Total share-based compensation	1,655	1,110	3,238	2,153
Selling, General and Administrative
Costs and expenses:
Total share-based compensation	$ 6,081	$ 3,559	$ 12,701	$ 8,424

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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, 2022	Mar. 31, 2022
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Number of Shares, Outstanding, Beginning	1,453,739
Number of Shares, Exercised	(85,026)
Number of Shares, Expired	(2,000)
Number of Shares, Outstanding, Ending	1,366,713	1,453,739
Vested and expected to vest, September 30, 2022	1,365,730
Exercisable, September 30, 2022	1,360,463
Weighted- Average Exercise Price per Share
Weighted-Average Exercise Price per Share, Outstanding, Beginning	$ 14.80
Weighted-Average Exercise Price per Share, Exercised	14.64
Weighted-Average Exercise Price per Share, Expired	15.99
Weighted-Average Exercise Price per Share, Outstanding, Ending	14.81	$ 14.80
Vested and expected to vest, September 30, 2022	14.81
Exercisable, September 30, 2022	$ 14.81
Weighted- Average Remaining Contractual Life (years)
Outstanding	2 years 4 months 24 days	2 years 10 months 24 days
Exercised	1 year 9 months 18 days
Vested and expected to vest, September 30, 2022	2 years 4 months 24 days
Exercisable, September 30, 2022	2 years 4 months 24 days
Aggregate Intrinsic Value
Outstanding	$ 8,886
Exercised	440
Outstanding	4,020	$ 8,886
Vested and expected to vest, September 30, 2022	4,017
Exercisable, September 30, 2022	$ 4,003

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Stockholders' Equity - Summary of Non-vested Stock Option (Details)	6 Months Ended
	Sep. 30, 2022 $ / shares shares
Share-based Compensation Arrangement by Share-based Payment Award, Options, Non-vested, Number of Shares [Roll Forward]
Non-Vested Number of Shares, Beginning Balance | shares	50,382
Non-Vested Number of Shares Vested | shares	(44,132)
Non-Vested Number of Shares, Ending Balance | shares	6,250
Share-based Compensation Arrangement by Share-based Payment Award, Options, Non-vested, Weighted Average Grant Date Fair Value [Abstract]
Weighted-Average Grant-Date Fair Value per Share, Non-vested, Beginning | $ / shares	$ 6.98
Weighted-Average Grant-Date Fair Value per Share, Vested | $ / shares	7.12
Weighted-Average Grant-Date Fair Value per Share, Non-vested, Ending | $ / shares	$ 5.96

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Stockholders' Equity - Summary of Restricted Stock Awards Activity (Details) - Restricted Stock	6 Months Ended
	Sep. 30, 2022 $ / shares shares
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of Shares Outstanding Beginning Balance | shares	3,242,763
Granted | shares	1,361,471
Vested | shares	(1,024,872)
Canceled | shares	(141,485)
Number of Shares Outstanding Ending Balance | shares	3,437,877
Weighted Average Grant-Date Fair Value per Share, Beginning of Period | $ / shares	$ 15.30
Weighted Average Grant-Date Fair Value per Share, Granted | $ / shares	17.79
Weighted Average Grant-Date Fair Value per Share, Vested | $ / shares	15.17
Weighted Average Grant-Date Fair Value per Share, Canceled | $ / shares	16.50
Weighted Average Grant-Date Fair Value per Share, End of Period | $ / shares	$ 16.27

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Commitments, Guarantees and Contingencies - Additional Information (Details)	6 Months Ended
	Sep. 30, 2022
Commitments And Contingencies Disclosure [Abstract]
Applicable program documentation period	365 days

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Restructuring Costs - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Sep. 30, 2022	Sep. 30, 2022	Sep. 30, 2021
Restructuring Costs [Abstract]
Restructuring costs	$ 321	$ 321	$ 539

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Subsequent Event - Additional Information (Details) - USD ($) $ in Thousands	Oct. 25, 2022	Oct. 31, 2021
Subsequent Event [Line Items]
Stock repurchase program, authorized amount		$ 60,000
Subsequent Event
Subsequent Event [Line Items]
Stock repurchase program, authorized amount	$ 100,000