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NextGen (NXGN) Q1 Earnings Lag Estimates, Revenues Down Y/Y

Zacks Equity Research

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

Revenues of this Zacks Rank #3 (Hold) 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.

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

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 Slashed

For fiscal 2020, NextGen expects revenues between $536 million and $550 million, lower than the earlier provided range of $543 million and $559 million. The Zacks Consensus Estimate for revenues is pegged at $550.4 million, which is slightly above the guided range.

Full-year earnings per share are expected between 82 cents and 90 cents, compared with the previous view of 86 cents and 94 cents. The Zacks Consensus Estimate for earnings is pegged at 90 cents, which is the high end of the current guidance.

Summing Up

NextGen exited the fiscal first quarter on a dull note. The company’s Recurring and Software, hardware and other non-recurring revenues were soft in the quarter under review. Significant contraction in gross margin raises concern. A slashed guidance for fiscal 2020 raises concern as well. Additionally, NextGen faces stiff rivalry in the MedTech space.

On the bright side, the company witnessed significant deal-size growth in the quarter. Solid bookings growth in the quarter deserves a mention as well. Impressive rates of client addition have worked well for NextGen. Expansion in operating margin is an added positive.

Key Picks

A few better-ranked stocks in the broader medical space are Hologic Inc. HOLX, DENTSPLY SIRONA Inc. XRAY and Teleflex Inc. TFX.

Hologic is scheduled to release second-quarter 2019 results on Jul 31. The Zacks Consensus Estimate for the to-be-reported quarter’s adjusted EPS is pegged at 61 cents and the same for revenues stands at $834.6 million. The stock carries a Zacks Rank #2 (Buy).

DENTSPLY SIRONA is scheduled to release second-quarter 2019 results on Aug 2. The Zacks Consensus Estimate for second-quarter adjusted EPS and revenues is 62 cents and $1.03 billion, respectively. The stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here .

Teleflex is expected to release second-quarter 2019 results on Aug 1. The Zacks Consensus Estimate for adjusted EPS for the to-be-reported quarter is $2.59 and the same for revenues is pegged at $636.7 million. The stock has a Zacks Rank of 2.

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