NextGen Healthcare, Inc.

Total revenue was $178.2 million, up 16% year over year on an as-reported basis and up 13% pro forma. Recurring revenue was $163.4 million, up 17%, and represented 92% of total revenue. Subscription services revenue was $52.5 million, up 23%; transaction and data services revenue was $37.6 million, up 38%; managed services revenue was $34.8 million, up 13%; nonrecurring revenue was $14.8 million, up 10%; software revenue was $5 million and down year over year; professional services revenue was $9.9 million, up 34%. Gross margin was 44.8%, down approximately 300 basis points year over year. GAAP EPS was $0.09 versus $0.02 last year; non-GAAP EPS was $0.24 versus $0.16 last year. Bookings were $38.9 million, roughly flat year over year, with recurring bookings up 7%. Cash, cash equivalents and marketable securities ended at $226 million, with no balance on the line of credit. Free cash flow was negative $16.8 million. Full-year fiscal 2024 revenue guidance was raised to $714 million-$722 million; adjusted EBITDA and non-GAAP EPS guidance were unchanged. Management said next quarter revenue should be flattish sequentially due to one fewer business day and a one-time services benefit in the prior period, and free cash flow is expected to be negative next quarter because of the DOJ settlement before normalizing later in the year.

David Sides said the quarter showed solid top- and bottom-line execution and reinforced confidence in double-digit revenue growth, operating leverage, and capital discipline. He emphasized the company’s differentiated integrated platform, strong client retention, and cross-sell opportunity, while pointing to momentum in behavioral health, integrated care, data/analytics, interoperability, and value-based care. His tone was constructive and confident, with repeated references to a good pipeline, strong recurring visibility, and progress on the Cures transition and Surround adoption.

Jamie Arnold highlighted revenue growth, mix, and margin pressure with specific figures: revenue of $178.2 million, recurring revenue of $163.4 million, gross margin of 44.8%, GAAP EPS of $0.09, non-GAAP EPS of $0.24, and cash of $226 million. He said gross margin was down about 300 bps because of higher spend in the upgrade center of excellence and services, plus a mix shift toward lower-margin transactional/data revenue, and he expects margin improvement to start moderating toward the end of fiscal 2024. He also noted free cash flow was negative $16.8 million, expects another negative quarter due to the DOJ settlement, and said the company did not repurchase shares and still has $74.3 million remaining on its authorization.

Analysts focused on demand trends, gross margin recovery, bookings cadence, the impact of the data leak on office-space clients, M&A valuations, and the value-based care opportunity. Management said the SaaS environment remains good, the pipeline looks healthy for the quarter and year, and the office-space softness from the data leak is already recovering. On margins, management said the headwinds are roughly split between lower-margin transactional/data revenue and upgrade/services spending, and said margin improvement should come in the back half of the year as the upgrade center winds down; on cash flow, they said next quarter will be negative because of about $33 million tied to the DOJ issue, then cash conversion should improve later in the year.