A month has gone by since the last earnings report for Nextgen Healthcare . Shares have added about 2.3% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Nextgen Healthcare due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
NextGen Q3 Earnings Fall Shy of Estimates, Revenues Top
NextGen delivered adjusted earnings per share of 26 cents in the third quarter of fiscal 2023, up 8.3% year over year. However, the figure lagged the Zacks Consensus Estimate by a penny.
Our projection of adjusted earnings per share was 26 cents, which matched the company’s reported figure.
GAAP earnings per share in the quarter was 12 cents, up 50% year over year.
Revenue Details
NextGen registered revenues of $161.9 million in the fiscal third quarter, up 8.1% year over year. The figure surpassed the Zacks Consensus Estimate by 1.1%.
The fiscal third-quarter revenue compares to our estimate of $158.1 million.
Segment Details
NextGen generates revenues from two sources, namely, Recurring revenues, and Software, hardware and other non-recurring revenues.
Total Recurring revenues were $148.7 million, up 10.6% from the year-ago quarter’s figure. Excluding the impact of the TSI acquisition, NextGen’s organic growth from recurring revenue was 8%, primarily driven by strong performances in transactional and data services and managed services.
This figure compares to our Recurring revenues’ fiscal third-quarter projection of $143 million.
Subscription services revenues in the fiscal third quarter amounted to $45.9 million, up 11.4% from the prior-year period’s level. Managed services revenues amounted to $32.9 million, up 19.8%, whereas Transactional and data services revenues amounted to $32.5 million, up 17.9% from the prior-year period’s level. Support and maintenance revenues amounted to $37.4 million, down 2.3%.
This figure compares to our fiscal third-quarter projections of $43.7 million, $30.8 million, $28.5 million and $40.1 million, respectively.
Total Software, hardware and other non-recurring revenues amounted to $13.2 million, down 13.6% on a year-over-year basis. Lower software license and hardware revenues primarily dented segmental revenues.
This figure compares to our segmental fiscal third-quarter projection of $15.1 million.
Software license and hardware revenues amounted to $5.3 million, down 41.1%, whereas Other non-recurring services revenues amounted to $7.9 million, up 25.3% year over year.
This figure compares to our fiscal third-quarter projections of $8.2 million and $6.9 million, respectively.
Margins
In the quarter under review, NextGen’s adjusted gross profit fell 0.5% to $83.3 million. Adjusted gross margin contracted 444 basis points (bps) to 51.5%.
Selling, general and administrative expenses fell 2.2% to $46.2 million. Research and development expenses climbed 1.2% year over year to $19.6 million. Adjusted operating expenses of $65.8 million fell 1.2% year over year.
Adjusted operating profit totaled $17.5 million, reflecting a 2.5% uptick from the prior-year quarter. Adjusted operating margin in the fiscal third quarter contracted 59 bps to 10.8%.
Financial Position
NextGen exited third-quarter fiscal 2023 with cash and cash equivalents of $241.6 million compared with $70.7 million at the end of the fiscal second quarter.
Cumulative net cash provided by operating activities at the end of third-quarter fiscal 2023 was $35.9 million compared with net cash provided by operating activities of $36.6 million a year ago.
Fiscal 2023 Guidance
NextGen has included the TSI acquisition and the convertible note issuance in its financial outlook for fiscal 2023.
NextGen now projects revenues in the range of $642 million-$650 million, up from the earlier projection of $630 million-$640 million for the full fiscal year. The Zacks Consensus Estimate for the same is pegged at $639.9 million.
Adjusted earnings per share is continued to be projected in the band of 93-99 cents for the full fiscal year. The Zacks Consensus Estimate for the same stands at 98 cents.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision flatlined during the past month.
The consensus estimate has shifted -6.14% due to these changes.
VGM Scores
At this time, Nextgen Healthcare has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Nextgen Healthcare has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Nextgen Healthcare (NXGN) Up 2.3% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Nextgen Healthcare . Shares have added about 2.3% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Nextgen Healthcare due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
NextGen Q3 Earnings Fall Shy of Estimates, Revenues Top
NextGen delivered adjusted earnings per share of 26 cents in the third quarter of fiscal 2023, up 8.3% year over year. However, the figure lagged the Zacks Consensus Estimate by a penny.
Our projection of adjusted earnings per share was 26 cents, which matched the company’s reported figure.
GAAP earnings per share in the quarter was 12 cents, up 50% year over year.
Revenue Details
NextGen registered revenues of $161.9 million in the fiscal third quarter, up 8.1% year over year. The figure surpassed the Zacks Consensus Estimate by 1.1%.
The fiscal third-quarter revenue compares to our estimate of $158.1 million.
Segment Details
NextGen generates revenues from two sources, namely, Recurring revenues, and Software, hardware and other non-recurring revenues.
Total Recurring revenues were $148.7 million, up 10.6% from the year-ago quarter’s figure. Excluding the impact of the TSI acquisition, NextGen’s organic growth from recurring revenue was 8%, primarily driven by strong performances in transactional and data services and managed services.
This figure compares to our Recurring revenues’ fiscal third-quarter projection of $143 million.
Subscription services revenues in the fiscal third quarter amounted to $45.9 million, up 11.4% from the prior-year period’s level. Managed services revenues amounted to $32.9 million, up 19.8%, whereas Transactional and data services revenues amounted to $32.5 million, up 17.9% from the prior-year period’s level. Support and maintenance revenues amounted to $37.4 million, down 2.3%.
This figure compares to our fiscal third-quarter projections of $43.7 million, $30.8 million, $28.5 million and $40.1 million, respectively.
Total Software, hardware and other non-recurring revenues amounted to $13.2 million, down 13.6% on a year-over-year basis. Lower software license and hardware revenues primarily dented segmental revenues.
This figure compares to our segmental fiscal third-quarter projection of $15.1 million.
Software license and hardware revenues amounted to $5.3 million, down 41.1%, whereas Other non-recurring services revenues amounted to $7.9 million, up 25.3% year over year.
This figure compares to our fiscal third-quarter projections of $8.2 million and $6.9 million, respectively.
Margins
In the quarter under review, NextGen’s adjusted gross profit fell 0.5% to $83.3 million. Adjusted gross margin contracted 444 basis points (bps) to 51.5%.
Selling, general and administrative expenses fell 2.2% to $46.2 million. Research and development expenses climbed 1.2% year over year to $19.6 million. Adjusted operating expenses of $65.8 million fell 1.2% year over year.
Adjusted operating profit totaled $17.5 million, reflecting a 2.5% uptick from the prior-year quarter. Adjusted operating margin in the fiscal third quarter contracted 59 bps to 10.8%.
Financial Position
NextGen exited third-quarter fiscal 2023 with cash and cash equivalents of $241.6 million compared with $70.7 million at the end of the fiscal second quarter.
Cumulative net cash provided by operating activities at the end of third-quarter fiscal 2023 was $35.9 million compared with net cash provided by operating activities of $36.6 million a year ago.
Fiscal 2023 Guidance
NextGen has included the TSI acquisition and the convertible note issuance in its financial outlook for fiscal 2023.
NextGen now projects revenues in the range of $642 million-$650 million, up from the earlier projection of $630 million-$640 million for the full fiscal year. The Zacks Consensus Estimate for the same is pegged at $639.9 million.
Adjusted earnings per share is continued to be projected in the band of 93-99 cents for the full fiscal year. The Zacks Consensus Estimate for the same stands at 98 cents.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision flatlined during the past month.
The consensus estimate has shifted -6.14% due to these changes.
VGM Scores
At this time, Nextgen Healthcare has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Nextgen Healthcare has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.