NextGen Healthcare (NASDAQ:NXGN), Inc. NXGN is well poised for growth backed by a plethora of product launches, solid trend in electronic health record (EHR) markets and strong recurring revenue base.
Shares of NextGen Healthcare have gained 39.8% compared with the industry’s growth of 21.1% in the past three months.
The company, with a market capitalization of $926.7 million, is a developer and marketer of healthcare information systems. It anticipates earnings improvement of 8% over the next five years. Moreover, it has beaten estimates in each of the trailing four quarters by 39.5%, on average.
Q1 Earnings Snapshot
In the first quarter of fiscal 2021, total Recurring revenues were $119.5 million, up 0.1% from the year-ago quarter. Meanwhile, total Software, hardware and other non-recurring revenues amounted to $11.4 million, down 8.1% on a year-over-year basis. Adjusted operating profit came in at $5.6 million, up 24.7% year over year. Adjusted operating margin in the fiscal first quarter was 4.2%, expanding 87 basis points.
Let’s take a closer look at the factors that substantiate the company’s Zacks Rank #2 (Buy).
Solid Demand for NextGen Solutions: The company’s behavioral health suite continued to gain solid traction in the market through the fiscal first quarter.
Through the fiscal first quarter, the company continued to demonstrate the strength of its NextGen integrated ambulatory platform. In March 2020, the company announced the availability of NextGen Patient Experience Platform. This newly-available platform is likely to enable high-quality healthcare apart from driving patient engagement and outcomes.
In May, the company announced NextGen Advisors, a multi-disciplinary team of healthcare and regulatory experts who offer strategic guidance and insights for ambulatory care providers across the United States.In June, the company announced that Capital Women’s Care, an OB/GYN private practice in the mid-Atlantic region, has utilized NextGen Virtual Visits for the expansion of women’s healthcare services during the coronavirus crisis. In June, the company announced Nevada Eye Physicians, a comprehensive eye care facility in the Las Vegas area, will be utilizing NextGen Enterprise with integrated telehealth capability called NextGen Virtual Visits.
BigData-Based Electronic Health Record System: Electronic health record (EHR) services in the U.S. MedTech space have been gaining prominence.
The company’s long-term integrated platform strategy was bolstered in March 2020 with the most recent launch of NextGen Enterprise, its integrated EHR/PM core system designed to run complex and growing ambulatory practices.
Strong Recurring Revenue Base: Strong recurring revenue base has been a key catalyst. In the first quarter of fiscal 2021, total recurring revenues were $119.5 million, up 0.1% from the year-ago quarter on a 17% increase in subscription services, offset by declines of 12% in managed services, 4% in EDI and data services and 3% in maintenance and support.
Which Way Are Estimates Headed?
For fiscal 2021, the Zacks Consensus Estimate for revenues is pegged at $543.6 million, indicating a rise of 0.6% from the prior-year period. The same for earnings stands at 79 cents per share, suggesting a fall of 4.8% from the year-ago reported figure.
Other Key Picks
A few other top-ranked stocks from the broader medical space include OPKO Health OPK, Surmodics SRDX and Merit Medical Systems (NASDAQ:MMSI) MMSI.
OPKO Health’s long-term earnings growth rate is estimated at 12%. The company presently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Surmodics’ long-term earnings growth rate is estimated at 10%. The company presently carries a Zacks Rank #2.
Merit Medical Systems’ long-term earnings growth rate is estimated at 11.9%. It currently carries a Zacks Rank #2.
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