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Nextgen Healthcare (NXGN) Up 14.1% Since Last Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for Nextgen Healthcare (NXGN - Free Report) . Shares have added about 14.1% 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 its most recent earnings report in order to get a better handle on the important drivers.

NextGen Q2 Earnings Beat, Recurring Revenues Low

NextGen Healthcare reported second-quarter fiscal 2019 adjusted earnings of 24 cents, which beat the Zacks Consensus Estimate of 19 cents. Further, earnings rose 9.1% year over year.

Revenues in the fiscal second quarter totaled $130.3 million, which missed the Zacks Consensus Estimate of $134 million. Revenues also fell 1.7% on a year-over-year basis.

Bookings Update

Per management, the company witnessed consistent momentum in quarterly bookings, which improved 39% year over year to $36.1 million in the reported quarter. Bookings increased 24% on a sequential basis.

Further, management stated that the company’s growing pipeline and coveted RCM (Revenue Cycle Management) services platform mainly drove bookings.

Segment Details

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

Total Recurring revenues grossed $116.3 million, down 2.6% from the year-ago quarter’s figure.

Total Software, hardware and other non-recurring revenues came in at $14 million, up 6.4% on a year-over-year basis driven by large professional consulting engagements.

Margins

In the quarter under review, gross profit totaled $69.2 million, down 6.3% from the prior-year quarter’s tally.

Gross margin in the quarter was 53.1%, down 260 basis points (bps).

Operating income totaled $15.5 million, which increased a significant 36.5%.

Lowers ’19 View

For fiscal 2019, NextGen Healthcare expects revenues in the range of $525-$535 million, lower than the previous guidance of $532-$548 million.

Full-year earnings per share are expected between 70 cents and 74 cents, the high end of which is lower than the previous projection of 70 cents and 78 cents.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -19.14% due to these changes.

VGM Scores

Currently, Nextgen Healthcare has an average Growth Score of C, a grade with the same score on the momentum front. Charting a somewhat similar path, 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, 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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