A month has gone by since the last earnings report for Nextgen Healthcare (NXGN). Shares have added about 0.6% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Nextgen Healthcare due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
NextGen Q3 Earnings Beat Estimates, Margins Pressed
NextGen reported third-quarter fiscal 2019 adjusted earnings per share of 20 cents, up from 15 cents in the year-ago quarter. Under ASC 605, the company registered pro forma adjusted earnings of 18 cents. Notably, both the metrics exceeded the Zacks Consensus Estimate of 15 cents.
Revenues totaled $130.9 million, down 0.6% year over year. Under ASC 605, revenues in the fiscal third quarter summed $130.3 million on a pro forma basis. The Zacks Consensus Estimate for the same stands at $130.8 million.
Bookings Update
Per management, the company witnessed consistent momentum in quarterly bookings, up 8% year over year to $32.8 million in the reported quarter. Management stated that the company’s growing pipeline and coveted RCM services platform mainly drove bookings.
However, bookings declined on a sequential basis.
Segment Details
The company reported third-quarter fiscal 2019 revenues under the following segments:
Total Recurring revenues grossed $117.4 million, down 1.3% from the year-ago quarter.
Meanwhile, total Software, hardware and other non-recurring revenues came in at $13.42 million, up 5.5% on a year-over-year basis. This uptick was driven by large professional consulting engagements.
Gross Margin
In the quarter under review, gross profit totaled $69.2 million, down 1.3% from the prior-year quarter’s tally. Gross margin was 52.9%, down 30 basis points (bps). Per management, the company shifted from high margin maintenance revenues to lower margin services.
Fiscal 2019 View
For fiscal 2019, NextGen expects revenues of $525-$535 million, in line with the previously-issued guidance.
Full-year earnings per share are expected between 72 cents and 76 cents, higher than the previous projection of 70 cents to 74 cents.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted -21.74% due to these changes.
VGM Scores
Currently, Nextgen Healthcare has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Nextgen Healthcare has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
NEXTGEN HEALTHCARE, INC (NXGN): Free Stock Analysis Report
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