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NextGen's (NXGN) Shares Rise on Potential Acquisition Rumors
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NextGen Healthcare’s shares rose almost 6.2% on Monday, followed by another 3.3% gain in after-hours trading. The strong uptick can be attributed to the interest of private equity firm, Thomas Bravo, in acquiring NextGen.
Shares of the company have risen 2.9% year to date compared with the industry’s 31.3% growth. The S&P 500 Index has gained 18.6% in the same time frame.
Per a Bloomberg report, Thomas Bravo is in the advanced stage of discussion to acquire health records software company, NextGen. A deal may be announced by Thomas Bravo as early as this week. However, the Bloomberg reported also noted that a final decision is yet to be reached.
Image Source: Zacks Investment Research
NextGen offers software that helps in automating and streamlining administrative functions required for operating a medical, dental or hospital practice. Its segments also provide software products that automate patient records (replace paper format) in physician practices, community health centers and hospital settings. The company operates remotely and does not maintain headquarters.
Per another report from Reuters, NextGen has been exploring options that include a sale of the company. Reportedly, the company has hired investment bank Morgan Stanley as an advisory to seal a deal with potential buyers.
The healthcare sector has seen more deals as companies seek to grow and save costs, and private equity firms invest in an industry that has usually done well in economic downturns. Per the Reuters report, total healthcare deals globally were valued at $187.8 billion in the first half of 2023. A key competitor of NextGen — Cerner Corp — was acquired by Oracle last year for $28 billion.
Why NextGen?
NextGen’s portfolio includes tightly integrated solutions that deliver on ambulatory healthcare imperatives, including consumerism, digitization, risk allocation, regulatory influence, and integrated care and health equity. There’s a continued benefit from strong demand for NextGen solutions that include hospitals, electronic health record (EHR) and practice management (PM). NextGen’s Inpatient Clinicals, Lab and Patient Portal EHR solutions have been driving the top line. Sales have witnessed a CAGR of 4.2% in the past five years. The company’s top-line growth showed resilience among the COVID-19 crisis, implying its sustainability over long term.
Although current macro headwinds including inflationary pressure are putting pressure on NextGen’s earnings, they are anticipated to improve meaningfully going forward. The company’s earnings per share is estimated to improve 11.2% year over year in fiscal 2023 and 19% in the following year.
In July, NextGen reported first-quarter fiscal 2024 results, wherein it registered a solid uptick in the top and bottom lines, along with strength in both Recurring and Non-recurring revenues. Robust increases in Subscription services, Managed services and Transactional and data services revenues in the quarter were also seen. An improvement in Other non-recurring services revenues was recorded.
Notable Developments
In August, NextGen announced the expansion of its existing alliance with innovator of the market-leading Patient Success Platform — Luma Health — to provide artificial intelligence (AI)-enhanced solutions for patient communications to clients using NextGen Enterprise electronic health records (EHR) program.
Last month, NXGN announced that Community Reach Center had chosen NextGen Enterprise EHR and NextGen Enterprise PM to address mental health, substance abuse and primary care needs across the Denver area. The center will also leverage NextGen Behavioral Health Suite, NextGen Virtual Visits, NextGen Mobile and NextGen Managed Cloud Services.
The same month, NextGen announced that Kymera Independent Physicians’ multi-specialty group selected NextGen Enterprise EHR to expand access to care while increasing clinical productivity, improving patient experience and ensuring healthy financial outcomes.
Some better-ranked stocks in the broader medical space are Align Technology (ALGN - Free Report) , HealthEquity, Inc. (HQY - Free Report) and McKesson Corporation (MCK - Free Report) .
ALGN’s earnings surpassed estimates in two of the trailing four quarters and missed twice, delivering an average negative surprise of 1.76%. The company’s shares have risen 77.8% year to date compared with the industry’s 14.1% growth.
HealthEquity, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 22%. HQY’s earnings surpassed estimates in three of the trailing four quarters and missed once, delivering an average surprise of 9.1%.
The company’s shares have rallied 7.8% year to date against the industry’s 9.4% decline.
McKesson, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 10.7%. MCK’s earnings surpassed estimates in three of the trailing four quarters and missed once, delivering an average surprise of 8.1%.
The stock has rallied 9.9% year to date compared with the industry’s 14.1% growth.
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NextGen's (NXGN) Shares Rise on Potential Acquisition Rumors
NextGen Healthcare’s shares rose almost 6.2% on Monday, followed by another 3.3% gain in after-hours trading. The strong uptick can be attributed to the interest of private equity firm, Thomas Bravo, in acquiring NextGen.
Shares of the company have risen 2.9% year to date compared with the industry’s 31.3% growth. The S&P 500 Index has gained 18.6% in the same time frame.
Per a Bloomberg report, Thomas Bravo is in the advanced stage of discussion to acquire health records software company, NextGen. A deal may be announced by Thomas Bravo as early as this week. However, the Bloomberg reported also noted that a final decision is yet to be reached.
Image Source: Zacks Investment Research
NextGen offers software that helps in automating and streamlining administrative functions required for operating a medical, dental or hospital practice. Its segments also provide software products that automate patient records (replace paper format) in physician practices, community health centers and hospital settings. The company operates remotely and does not maintain headquarters.
Per another report from Reuters, NextGen has been exploring options that include a sale of the company. Reportedly, the company has hired investment bank Morgan Stanley as an advisory to seal a deal with potential buyers.
The healthcare sector has seen more deals as companies seek to grow and save costs, and private equity firms invest in an industry that has usually done well in economic downturns. Per the Reuters report, total healthcare deals globally were valued at $187.8 billion in the first half of 2023. A key competitor of NextGen — Cerner Corp — was acquired by Oracle last year for $28 billion.
Why NextGen?
NextGen’s portfolio includes tightly integrated solutions that deliver on ambulatory healthcare imperatives, including consumerism, digitization, risk allocation, regulatory influence, and integrated care and health equity. There’s a continued benefit from strong demand for NextGen solutions that include hospitals, electronic health record (EHR) and practice management (PM). NextGen’s Inpatient Clinicals, Lab and Patient Portal EHR solutions have been driving the top line. Sales have witnessed a CAGR of 4.2% in the past five years. The company’s top-line growth showed resilience among the COVID-19 crisis, implying its sustainability over long term.
Although current macro headwinds including inflationary pressure are putting pressure on NextGen’s earnings, they are anticipated to improve meaningfully going forward. The company’s earnings per share is estimated to improve 11.2% year over year in fiscal 2023 and 19% in the following year.
In July, NextGen reported first-quarter fiscal 2024 results, wherein it registered a solid uptick in the top and bottom lines, along with strength in both Recurring and Non-recurring revenues. Robust increases in Subscription services, Managed services and Transactional and data services revenues in the quarter were also seen. An improvement in Other non-recurring services revenues was recorded.
Notable Developments
In August, NextGen announced the expansion of its existing alliance with innovator of the market-leading Patient Success Platform — Luma Health — to provide artificial intelligence (AI)-enhanced solutions for patient communications to clients using NextGen Enterprise electronic health records (EHR) program.
Last month, NXGN announced that Community Reach Center had chosen NextGen Enterprise EHR and NextGen Enterprise PM to address mental health, substance abuse and primary care needs across the Denver area. The center will also leverage NextGen Behavioral Health Suite, NextGen Virtual Visits, NextGen Mobile and NextGen Managed Cloud Services.
The same month, NextGen announced that Kymera Independent Physicians’ multi-specialty group selected NextGen Enterprise EHR to expand access to care while increasing clinical productivity, improving patient experience and ensuring healthy financial outcomes.
NEXTGEN HEALTHCARE, INC Price
NEXTGEN HEALTHCARE, INC price | NEXTGEN HEALTHCARE, INC Quote
Zacks Rank & Stocks to Consider
NextGen currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space are Align Technology (ALGN - Free Report) , HealthEquity, Inc. (HQY - Free Report) and McKesson Corporation (MCK - Free Report) .
Align Technology, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 17.5%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
ALGN’s earnings surpassed estimates in two of the trailing four quarters and missed twice, delivering an average negative surprise of 1.76%. The company’s shares have risen 77.8% year to date compared with the industry’s 14.1% growth.
HealthEquity, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 22%. HQY’s earnings surpassed estimates in three of the trailing four quarters and missed once, delivering an average surprise of 9.1%.
The company’s shares have rallied 7.8% year to date against the industry’s 9.4% decline.
McKesson, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 10.7%. MCK’s earnings surpassed estimates in three of the trailing four quarters and missed once, delivering an average surprise of 8.1%.
The stock has rallied 9.9% year to date compared with the industry’s 14.1% growth.