NextGen Healthcare reports $6.1M in profits, announces Topaz acquisition

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NextGen Healthcare posted $6.1 million in profits in its second quarter of fiscal 2020. (Getty/monsitj)

NextGen Healthcare posted $6.1 million in profits in its second quarter of fiscal 2020, a drop from earnings of $13.1 million in the same quarter last year, the EHR vendor reported Wednesday. 

The Irvine, California-based healthcare technology company also reported $134.3 million in revenue, up 3% compared to the same quarter of 2019, but missing Wall Street forecasts. According to the Times Union, analysts surveyed by Zacks Investment Research expected $134.4 million.

Still, in an earnings call, Rusty Frantz, president and CEO of NextGen Healthcare, said the company had a "solid" second quarter delivering revenue growth and positive free cash flow. Cash flow from operations was $23.8 million in the fiscal 2020 second quarter compared to $11.9 million for the same period a year ago. Free cash flow was $17.1 million compared to $5.5 million in the same period a year ago, the company reported.

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NextGen also announced the acquisition of Topaz Information Solutions, which expands the company's capabilities to behavioral health providers and will support planned growth in that market, company executives said.

Behavioral health and integrated care technology solutions are key strategic areas of growth for NextGen and will enable the company to better serve large federally qualified health center clients as well as its growing base of behavioral health clients, officials said. 

RELATED: NextGen CEO says regulatory environment impacting providers' health IT spending

Franz said NextGen had an "exceptional" second quarter in 2019 with strong quarterly bookings, growing 39% year over year.

He also said he expects NextGen's year-end bookings to be slightly "muted" compared to last year's 14% bookings growth. The company is projecting revenues of between $536 million and $550 million for the full fiscal year 2020.

"The fact that we overachieved on that makes me comfortable with our full-year guidance," NextGen Chief Financial Officer Jamie Arnold said during the earnings call.

The company's strong bookings were bolstered by cross-selling, revenue cycle management (RCM) traction, multiple "all-in" deals and competitive displacements, Frantz said.

The company's RCM services platform drove one-third of the bookings in the quarter, he said.

The company also is focused on expanding its population health capabilities. In September, the company announced a deal with University Hospitals Health System to implement its population health solution. The health system operates 18 hospitals, more than 50 health centers and outpatient facilities and over 200 physician offices throughout northern Ohio.

RELATED: Health IT Roundup—HHS opens cybersecurity center; NextGen adjusts guidance after revenues fall

The NextGen solution integrates with most electronic health records (EHRs) and health information exchanges while also ingesting claims data from a wide range of payers, Frantz said.

"We can interoperate across a multi-EHR platform system and then deliver actionable information to drive activity from a population health standpoint. That's positioning us in a unique space in a part of the market that is as much as an agnostic opportunity than an extension of a single EHR," Frantz said.

In January, NextGen partnered with Allscripts’ Veradigm business to enable data exchange between providers and health plans, insurance companies, laboratories and research organizations. The company reported electronic data interchange revenue increased 3% year over year, largely due to the Veradigm deal.

As NextGen has focused on its population health and data sharing capabilities, this has boosted its competitive position and has led to some providers switching from other vendors to NextGen's EHR systems, Frantz said.

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