Healthcare stock under pressure: Nextgen Healthcare Inc (NASDAQ: NXGN)

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Nextgen Healthcare Inc (NASDAQ: NXGN) stock fell over 6.9% on 24th January, 2020 (As of 10:50 am GMT-5; Source: Google finance) after the company’s third quarter of FY 20. The firm also narrowed the outlook for FY 20. Moreover, Bookings for the third quarter came in at $30.6 million as compared to $32.8 million in the same quarter last year. In addition, Software license and hardware revenue declined 22% to $7.2 million year-over-year. Non-recurring services revenue of $5.7 million increased 37% compared to a year ago on the back of growth in analytics and professional services

The company generated the operating cash flow for the third quarter of $23.6 million and NextGen generated $16.9 million in free cash flow as the cash generation capabilities allow the company to continue to retire debt. The three acquisitions in the third quarter Topaz information systems, MedFusion and OTTO Health brought the total outstanding debt up to $37 million

NXGN in the third quarter of FY 20 has reported the adjusted earnings per share of 23 cents, while reported the adjusted revenue growth of 5 percent to $137.74 million in the third quarter of FY 20

Moreover, the company’s Recurring revenue increased 6% $124.8 million compared to a year ago with increases of 10% in subscription services, 11% in managed services and 6% for electronic data interchange and data services. Recurring revenue is 91% of the total revenue slightly higher than the 90% in the prior year.

Subscription revenue increased $3.1 million to $33.2 million compared to a year ago mainly due to analytics and NextGen SAS. Support and maintenance revenue of $39.9 million, have increased 200,000 year-over-year revenue from new contracts and CPI increases offset attrition. Managed services revenue increased $2.6 million to $26.8 million compared to a year ago mainly due to growth in the hosting in RCM services but also includes approximately 1 million one-time benefit recovery from the client that the company previously preserved due to collection issues.

For fiscal 2020, the company expects revenue to be between $541 million and $547 million versus the previous range of $540 million to $550 million and Non-GAAP EPS is expected to be of between $0.80 and $0.84 versus the previous range of $0.79 to $0.85.

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