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NextGen Healthcare (NXGN) Q4 Earnings Miss Mark, Revenues Beat

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NextGen Healthcare, Inc. (NXGN - Free Report) delivered adjusted earnings per share (“EPS”) of 19 cents in the fourth quarter of fiscal 2022, down 9.5% year over year. The figure lagged the Zacks Consensus Estimate by a penny.

GAAP EPS in the quarter was a penny against the year-earlier loss of a penny per share.

Full-year adjusted EPS was 98 cents, flat over comparable fiscal 2021 figures. The metric lagged the Zacks Consensus Estimate by a penny.

Revenue Details

NextGen registered revenues of $ 151.3 million in the fiscal fourth quarter, up 4.9% year over year. The figure surpassed the Zacks Consensus Estimate by 0.2%.

Full-year revenues were $596.4 million, up 7.1% from the comparable fiscal 2021 figure. The metric topped the Zacks Consensus Estimate marginally by 0.1%.

Segment Details

NextGen generates revenues from two sources — Recurring revenues; and Software, hardware and other non-recurring revenues.

Total Recurring revenues (90.7% of total revenues) were $137.2 million, up 6.1% from the year-ago quarter, driven by solid performances by NextGen’s subscription services, managed services and electronic data interchange businesses.

Subscription services revenues in the fiscal fourth quarter amounted to $42.1 million, up 10% over the prior-year period, driven by demand for surround solutions.

Total Software, hardware and other non-recurring revenues (9.3% of total revenues) amounted to $14 million, down 5.3% on a year-over-year basis.

NextGen Healthcare, Inc. Price, Consensus and EPS Surprise

NextGen Healthcare, Inc. Price, Consensus and EPS Surprise

NextGen Healthcare, Inc. price-consensus-eps-surprise-chart | NextGen Healthcare, Inc. Quote

Margins

In the quarter under review, NextGen’s adjusted gross profit rose 1.4% to $83.1 million. However, adjusted gross margin contracted 190 basis points (bps) to 54.9%.

Selling, general and administrative expenses rose 2.4% to $50 million. Research and development expenses fell 9.2% year over year to $19.4 million. Adjusted operating expenses of $69.5 million declined 1.1% year over year.

Adjusted operating profit totaled $16.5 million, reflecting a 13.7% uptick from the prior-year quarter. Adjusted operating margin in the fiscal fourth quarter expanded 90 bps to 9%.

Financial Position

NextGen exited fiscal 2022 with cash and cash equivalents of $59.8 million compared with $73.3 million at the end of fiscal 2021.

Cumulative net cash flow from operating activities at the end of fiscal 2022 was $53.5 million compared with $98.5 million a year ago.

Fiscal 2023 Guidance

NextGen has initiated its financial outlook for fiscal 2023.

The company projects revenues in the range of $628-$640 million for the full fiscal year. The Zacks Consensus Estimate for the same is pegged at $633.9 million.

Adjusted EPS is projected in the band of 95 cents-$1.01. The Zacks Consensus Estimate for the same stands at 99 cents.

Our Take

NextGen exited the fourth quarter of fiscal 2022 with lower-than-expected earnings. Year-over-year decline in adjusted EPS; and Software, hardware and other non-recurring revenues is disappointing. Contraction of adjusted gross margin is worrying. NextGen faces intense competition in the MedTech space, raising our apprehensions.

On the positive side, NextGen’s revenues in the fiscal fourth quarter were better than expected. Solid uptick in the top line, along with strength in Recurring revenues, is encouraging. Robust increase in Subscription services revenues in the quarter is encouraging. Expansion in adjusted operating margin bodes well.

Zacks Rank and Stocks to Consider

NextGen Healthcare currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the broader medical space that have announced quarterly results are Omnicell, Inc. (OMCL - Free Report) , AMN Healthcare Services, Inc. (AMN - Free Report) and Masimo Corporation (MASI - Free Report) .

Omnicell, carrying a Zacks Rank #2 (Buy), reported first-quarter 2022 adjusted EPS of 83 cents, which beat the Zacks Consensus Estimate by 16.9%. Revenues of $318.8 million outpaced the consensus mark by 0.7%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Omnicell has an estimated long-term growth rate of 16%. OMCL’s earnings surpassed estimates in three of the trailing four quarters, the average surprise being 13.4%.

AMN Healthcare, sporting a Zacks Rank #1, reported first-quarter 2022 adjusted EPS of $3.49, which beat the Zacks Consensus Estimate by 7.4%. Revenues of $1.55 billion outpaced the consensus mark by 3.7%.

AMN Healthcare has an estimated long-term growth rate of 1.1%. AMN’s earnings surpassed estimates in the trailing four quarters, the average surprise being 15.6%.

Masimo reported first-quarter 2022 adjusted EPS of 93 cents, which surpassed the Zacks Consensus Estimate by 1.1%. Revenues of $304.2 million outpaced the Zacks Consensus Estimate by 3.6%. It currently carries a Zacks Rank #2.

Masimo has an earnings yield of 3.4% against the industry’s negative yield. MASI’s earnings surpassed estimates in the trailing four quarters, the average surprise being 4.4%.