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NextGen Healthcare (NXGN) Beats on Q3 Earnings, Ups FY22 View

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·4 min read
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NextGen Healthcare, Inc. NXGN delivered adjusted earnings per share (“EPS”) of 24 cents in the third quarter of fiscal 2022, down 7.7% year over year. The figure, however, surpassed the Zacks Consensus Estimate by 14.3%.

GAAP EPS in the quarter was 8 cents, reflecting a stupendous surge of 700% from the year-earlier figure.

Revenue Details

NextGen registered revenues of $149.7 million in the fiscal third quarter, up 5.6% year over year. The figure surpassed the Zacks Consensus Estimate by 2.5%.

Segment Details

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

Total Recurring revenues (89.8% of total revenues) were $134.5 million, up 4.9% from the year-ago quarter.

Total Software, hardware and other non-recurring revenues (10.2% of total revenues) amounted to $15.2 million, up 12.7% 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 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 3.7% to $83.7 million. However, adjusted gross margin contracted 105 basis points (bps) to 55.9%.

Selling, general and administrative expenses fell 3.5% to $47.2 million. Research and development expenses went up 6.6% year over year to $19.4 million. Adjusted operating expenses of $66.6 million dipped 0.8% year over year.

Adjusted operating profit totaled $17.1 million, reflecting a 25.8% uptick from the prior-year quarter. Adjusted operating margin in the fiscal third quarter expanded 183 bps to 11.4%.

Financial Position

NextGen exited the third quarter of fiscal 2022 with cash and cash equivalents of $49.4 million compared with $75.3 million at the end of fiscal second quarter.

Cumulative net cash flow from operating activities at the end of the third quarter of fiscal 2022 was $36.6 million compared with $75.9 million a year ago.

In October 2021, NextGen’s management approved a $60-million share repurchase program. In the reported quarter, the company purchased approximately 2.2 million shares, worth $35.9 million, in the open market.

Fiscal 2022 Guidance

NextGen has raised its financial outlook for fiscal 2022.

The company now projects revenues in the range of $591-$595 million (up from the previously guided range of $584-$590 million). The Zacks Consensus Estimate for the same is pegged at $588.1 million.

Adjusted EPS is now projected in the band of 96 cents-$1.00 (up from the prior guidance of 90-96 cents). The Zacks Consensus Estimate for the same stands at 95 cents.

Our Take

NextGen exited the third quarter of fiscal 2022 with better-than-expected results. Solid uptick in top line, along with strength in both revenue sources of the company, is encouraging. Robust increase in Subscription services revenues in the quarter on the back of solid demand for NGE software-as-a-service and Virtual Visit solutions are encouraging. Expansion in adjusted operating margin bodes well. The provision of an upbeat financial outlook for the year also raises optimism.

On the flip side, year-over-year decline in adjusted EPS is disappointing. Contraction of adjusted gross margin is worrying. NextGen faces intense competition in the MedTech space, raising our apprehensions.

Zacks Rank and Key Picks

NextGen Healthcare currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks that are supposed to report earnings soon are Cerner Corporation CERN, Catalent, Inc. CTLT and AMN Healthcare Services, Inc. AMN.

The Zacks Consensus Estimate for Cerner’s fourth-quarter 2021 adjusted EPS is currently pegged at 88 cents. The consensus estimate for fourth-quarter 2021 revenues is pegged at $1.49 billion. The company currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Cerner has an estimated long-term growth rate of 12.8%. CERN’s earnings yield of 4% compare favorably with the industry’s negative yield.

Catalent currently has a Zacks Rank #2. The Zacks Consensus Estimate for its second-quarter fiscal 2022 adjusted EPS is currently pegged at 84 cents. The consensus estimate for fiscal second-quarter revenues is pinned at $1.16 billion.

Catalent has an estimated long-term growth rate of 16.9%. CTLT’s earnings yield of 3.8% compare favorably with the industry’s negative yield.

AMN Healthcare currently flaunts a Zacks Rank #1. The Zacks Consensus Estimate for its fourth-quarter 2021 adjusted EPS is currently pegged at $2.58. The consensus estimate for its revenues stands at $1.28 billion.

AMN Healthcare has an estimated long-term growth rate of 16.2%. AMN’s earnings yield of 6.9% compare favorably with the industry’s 1.1%.


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