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NextGen (NXGN) Q4 Earnings Top Estimates, Revenues Surge Y/Y

NextGen Healthcare, Inc. NXGN delivered adjusted earnings per share (EPS) of 31 cents in the fourth quarter of fiscal 2023, up 63.2% year over year. The figure topped the Zacks Consensus Estimate by 6.9%.

GAAP loss per share in the quarter was 38 cents against the prior-year period’s EPS of a penny.

Full-year adjusted EPS was 98 cents, flat compared with the end of the comparable fiscal 2022 period.

Revenue Details

NextGen registered revenues of $178.6 million in the fiscal fourth quarter, up 18% year over year. The figure surpassed the Zacks Consensus Estimate by 4.7%.

Full-year revenues were $653.2 million, reflecting a 9.5% improvement from the comparable fiscal 2022 period.

Segment Details

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

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Total Recurring revenues were $161.9 million, up 18% from the year-ago quarter’s figure. The growth was driven by a combination of revenues from the acquisition of TSI Healthcare and the acceleration of organic solutions.

This figure compares to our Recurring revenues’ fiscal fourth-quarter projection of $155.4 million.

Subscription services revenues in the fiscal fourth quarter amounted to $52 million, up 23.7% from the prior-year period’s level. This figure compares to our fiscal fourth-quarter projection of $47.5 million.

Support and maintenance revenues amounted to $38.9 million, down 2.6%. This figure compares to our quarterly projection of $42.3 million.

Managed services revenues amounted to $34.5 million, up 24.2%. This figure compares to our projection of $33.7 million.

Transactional and data services revenues amounted to $36.6 million, up 32.9% from the prior-year period’s level. This figure compares to our projection of $31.9 million.

Total Software, hardware and other non-recurring revenues amounted to $16.6 million, up 18.4% on a year-over-year basis. This figure compares to our segmental fiscal fourth-quarter projection of $15.5 million.

Software license and hardware revenues amounted to $8.5 million, up 18.8%. This figure compares to our fiscal fourth-quarter projection of $7.2 million.

Other non-recurring services revenues amounted to $8.1 million, up 18% year over year. This figure compares to our projection of $8.3 million.

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 increased 10.4% to $91.8 million. However, the adjusted gross margin contracted 355 basis points to 51.4%.

Selling, general and administrative expenses surged 66.5% to $83.3 million. Research and development expenses climbed 3.1% year over year to $20 million. Adjusted operating expenses of $103.4 million jumped 48.8% year over year.

Adjusted operating loss totaled $11.6 million against the prior-year quarter’s adjusted operating profit of $13.7 million.

Financial Position

NextGen exited fiscal 2023 with cash and cash equivalents of $98.7 million compared with $59.8 million at the end of fiscal 2022.

As of Mar 31, 2023, 70,875 shares were issued and 66,026 shares were outstanding.

Cumulative net cash provided by operating activities at fiscal 2023-end was $43.7 million compared with $53.5 million a year ago.

Fiscal 2024 Guidance

NextGen has initiated its financial outlook for fiscal 2024.

NextGen projects revenues in the range of $712 million-$722 million. The Zacks Consensus Estimate for the same is pegged at $704.6 million.

Adjusted EPS is projected in the band of $1.04-$1.11 for the full fiscal year. The Zacks Consensus Estimate for the same stands at $1.09.

Our Take

NextGen exited the fourth quarter of fiscal 2023 with better-than-expected results. The solid uptick in the top line, along with strength in both Recurring and Non-recurring revenues, were impressive. Robust increases in Subscription services, Managed services and Transactional and data services revenues in the quarter were encouraging. The improvement in both Software license and hardware and Other non-recurring services revenues was also promising. The continued integration of TSI Healthcare also looks promising for the stock.

However, NextGen’s year-over-year decline in Support and maintenance revenues was worrying. Rising operating costs leading to the contraction of the adjusted gross margin do not bode well. The company incurred an adjusted operating loss in the quarter, which further raises apprehension.

Zacks Rank and Key Picks

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

Some better-ranked stocks in the broader medical space that have announced quarterly results are Hologic, Inc. HOLX, Merit Medical Systems, Inc. MMSI and DaVita Inc. DVA.

Hologic, carrying a Zacks Rank of 2 (Buy), reported second-quarter fiscal 2023 adjusted EPS of $1.06, beating the Zacks Consensus Estimate by 20.5%. Revenues of $ $1.03 billion outpaced the consensus mark by 6.2%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Hologic has an estimated growth rate of 5.1% for fiscal 2024. HOLX’s earnings surpassed estimates in all the trailing four quarters, the average being 27.3%.

Merit Medical reported first-quarter 2023 adjusted EPS of 64 cents, beating the Zacks Consensus Estimate by 16.4%. Revenues of $297.6 million surpassed the Zacks Consensus Estimate by 5.9%. It currently carries a Zacks Rank #2.

Merit Medical has a long-term estimated growth rate of 11%. MMSI’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 20.2%.

DaVita reported first-quarter 2023 adjusted EPS of $1.58, beating the Zacks Consensus Estimate by 46.3%. Revenues of $2.87 billion surpassed the Zacks Consensus Estimate by 1.6%. It currently carries a Zacks Rank #2.

DaVita has a long-term estimated growth rate of 14.6%. DVA’s earnings surpassed estimates in three of the trailing four quarters and missed in one, the average surprise being 17.3%.

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NEXTGEN HEALTHCARE, INC (NXGN) : Free Stock Analysis Report

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