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NextGen's (NXGN) Q3 Earnings Beat Estimates, Bookings Up Y/Y

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NextGen Healthcare, Inc reported third-quarter fiscal 2019 adjusted earnings of 20 cents per share, up from 15 cents reported in the year-ago quarter. Under ASC 605, the company registered pro forma adjusted earnings of 18 cents per share. Notably, both the metrics exceeded the Zacks Consensus Estimate of 15 cents.

Revenues totaled $130.9 million, down 0.6% year over year. Under ASC 605, revenues for the fiscal third quarter summed $130.3 millionon a pro forma basis. The Zacks Consensus Estimate stands at $130.8 million.

Bookings Update

Per management, this Zacks Rank #3 (Hold) company witnessed consistent momentum in quarterly bookings, which improved 8% year over year to $32.8 million in the reported quarter. Management stated that the company’s growing pipeline and coveted RCM (Revenue Cycle Management) services platform mainly drove bookings.

However, bookings decreased on a sequential basis.

Segment Details

The company reported third-quarter fiscal 2019 revenues under the following segments:

Total Recurring revenues grossed $117.4 million, down 1.3% from the year-ago quarter’s figure.

Meanwhile, total Software, hardware and other non-recurring revenues came in at $13.42 million, up 5.5% on a year-over-year basis. This uptick was driven by large professional consulting engagements.

Gross Margin

In the quarter under review, gross profit totaled $69.2 million, down 1.3% from the prior-year quarter’s tally. Gross margin was 52.9%, down 30 basis points (bps). Per management, the company shifted away from high margin maintenance revenues toward the lower margin services.

Fiscal 2019 View

For fiscal 2019, NextGen expects revenues of $525-$535 million, in line with the previously-issued guidance. The Zacks Consensus Estimate for revenues is pegged at $530.4 million, which is within the current guidance.        

Full-year earnings per share is expected between 72 cents and 76 cents, higher than the previous projection of 70 cents and 74 cents.

Summing Up

NexGen ended the fiscal third quarter on a positive note, with adjusted earnings exceeding the Zacks Consensus Estimate.

NextGen rides on Software, hardware and other non-recurring unit. Management presently foresees solid growth prospects in the RCM pipeline as well.

Moreover, the NextGen population health analytics suite and NextGen mobile platform registered significant growth. Solid bookings too deserves a mention. For investors’ notice, the company expects high-single digit revenue growth by fiscal 2020, mirroring strong leverage in 2021 and 2022 as well. For fiscal 2022, the company expects 20% operating margin.

However, the plummeting gross profit is a negative. Sluggishness in the recurring revenue segment in recent times adds to the woes. Additionally, NextGen faces stiff rivalry in the MedTech space.

Upcoming Releases

A few better-ranked stocks in the broader medical space are BioTelemetry, Inc. (BEAT - Free Report) , ABIOMED, Inc. and DexCom, Inc. (DXCM - Free Report) .

BioTelemetry is expected to release fourth-quarter 2018 results on Feb 28. The Zacks Consensus Estimate for adjusted earnings per share is pegged at 42 cents and the same for revenues is $103.02 million. The stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

ABIOMED is expected to release fourth-quarter fiscal 2018 results on Jan 31. The Zacks Consensus Estimate for the quarter’s adjusted earnings per share is pegged at 94 cents and for revenues it stands at $200.6 million. The stock has a Zacks Rank #2 (Buy).

DexCom is slated to release fourth-quarter 2018 results on Jan 26. The Zacks Consensus Estimate for fourth-quarter adjusted EPS is pinned at 14 cents and for revenues it stands at $330.6 million. The stock carries a Zacks Rank of 2.

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