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Why Is Nextgen Healthcare (NXGN) Down 6.1% Since Last Earnings Report?

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It has been about a month since the last earnings report for Nextgen Healthcare (NXGN - Free Report) . Shares have lost about 6.1% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Nextgen Healthcare due for a breakout? 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 catalysts.

NextGen Earnings Lag Estimates in Q1, Revenues Down Y/Y

NextGen reported first-quarter fiscal 2020 adjusted earnings per share of 16 cents, down 15.8% from the year-ago quarter. The metric also lagged the Zacks Consensus Estimate of 20 cents.

Revenues of the company totaled $131.9 million, down 1% year over year, also below the Zacks Consensus Estimate of $136 million.

Bookings Update

Bookings for the quarter came in at $31.7 million, up 9% from the year-ago quarter’s figure and in line with the company’s expectations.

Segment Details

The company reported first-quarter fiscal 2020 revenues under the following segments:

Total Recurring revenues grossed $119.4 million, down 0.5% from the year-ago quarter’s figure.

Meanwhile, total Software, hardware and other non-recurring revenues came in at $12.4 million, down 5.9% on a year-over-year basis. Per management, this reflects headwinds in the managed services and software areas.

Margin

In the quarter under review, gross profit totaled $66.6 million, down 6.6% from the prior-year quarter’s tally. Gross margin was 50.5%, down 310 basis points (bps). Per management, the decline was caused by a drop in the top line.

Adjusted operating income in the fiscal first quarter was $69.7 million, up 4.9% year over year. Operating margin, as a percentage of revenues, was 52.8%, up 290 bps.

Fiscal 2020 View

For fiscal 2020, NextGen expects revenues between $536 million and $550 million, lower than the earlier provided range of $543 million and $559 million.

Full-year earnings per share are expected between 82 cents and 90 cents, compared with the previous view of 86 cents and 94 cents.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended downward during the past month. The consensus estimate has shifted -8.18% due to these changes.

VGM Scores

At this time, Nextgen Healthcare has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% 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. It's no surprise Nextgen Healthcare has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.


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