Welcome to the NextGen Healthcare Fiscal 2022 Second Quarter Financial Results Conference Call. Hosting the call today from NextGen is David Sides, President and Chief Executive Officer, Jamie Arnold, Executive Vice President and Chief Financial Officer, and Matthew Scalo, Vice President of Investor Relations. Today's call is being recorded. Now I will turn the call over to Matthew Scalo. Okay. Thanks operator. Before we start, I'd like to remind everyone that comments made on this call may include statements that are forward-looking within the meaning of the federal securities laws, including, but without limitation, statements related to anticipated industry trends, the company's plans, future performance, products, perspectives, and strategies. Risks and uncertainties exist that may cause results to differ materially from those expressed in forward-looking statements, including, among others, those risks set forth in the company's public filings with the U.S. Securities and Exchange Commission, including the discussion under the heading Risk Factors in the company's most recent annual report on Form 10-K and any other subsequent quarterly report on Form 10-Q. Any forward-looking statements speak only as of today. The company expressly disclaims any intent or obligation to update these forward-looking statements. Our remarks on today's call include both our earnings results and guidance, which contain certain non-GAAP financial measures. For our earnings results, the GAAP financial measures most directly comparable to each non-GAAP financial measure used or discussed, and a reconciliation of the differences between each non-GAAP financial measure and the comparable GAAP financial measure can be found within our latest quarterly earnings release that was filed with the SEC and is posted to the investor relations section of our website. This release also provides qualitative descriptions of how we have calculated non-GAAP financial measures contained in our guidance. At this time, I would like to turn the call over to our new President and CEO, David Sides. Thank you Matt, and thank you to everyone participating on the call today. In the month or so since I joined NextGen, I've spoken with many of you, but for those who I haven't already talked with, I wanna share how excited I am to join a company with great products, loyal customers, and a team focused on client success. All of which is manifested in the strong results we produced in our fiscal second quarter. Well done, team. Let me start by sharing why I joined NextGen. I've spent many years in executive roles in this exciting industry. I've watched NextGen's progress with interest from a distance, and I found the company's rapid rise in product quality and reputation, as reflected in improving KLAS Research scores, was quite impressive, as it is difficult to turn around customer perception. Once I engaged in the CEO search process, I learned that this rapid turnaround was driven largely by insightful long-term investments made by the current leadership team. That NextGen addresses attractive markets with a well-defined strategy and an enhanced ability to execute through both its commercial capabilities and expanding portfolio solutions. Finally, with a constant focus on enabling and improving the interaction between the healthcare provider and consumers, the company has a solid foundation to support accelerating growth. All of this makes me quite bullish about our opportunity. Now, let me tell you what I have been doing since joining the company. I've met with every member of the board and the leadership team, as well as many of our team members at all levels of the organization. I've spent time with a wide range of clients, and I participated in many of our discussions with investors as the company prepared for its annual shareholder meeting on October 13th. From these encounters, I wanted to share a few observations. First, the NextGen team, from the board to the front line, is first class, and I'm especially excited about the new members of our board and the expanding breadth of experiences and insights they bring to an already diverse and experienced board. They add human capital, retail health, care, and clinical expertise. I believe our engaged board will be vital to shaping NextGen's future direction. I'm encouraged by the depth of the experience and capabilities of the executive leadership team as well, as their attitude and focus on doing what is best for our clients, employees, and shareholders. We have a great culture throughout the organization, and I look forward to promoting the same high level of dedication and focus in everything we do. Many ways, whether in terms of size, specialty, or mission, but what they have in common is that they are putting their trust in NextGen, and we know we have to earn their trust every day. From my ongoing client discussions, I can't emphasize how strongly these providers want NextGen Healthcare to succeed, which includes winning in the market. In the quarter just ended, we continued to win business against all competitors, big and small. In fact, over the last six years, this was a record bookings quarter and includes a handful of transactions valued over $1 million each. Our clients also shared that their healthcare providers continue to seek ways to produce better outcomes for their patients. Our clients share their insights into where this industry is headed, which in turn helps shape our long-term strategy and future offerings. Our dedication to the ambulatory healthcare provider and their patients is unwavering, and we will continue to strive to help physicians be physicians again. Finally, our shareholders. Ongoing investor engagement is important at NextGen, and we are acting on this feedback. At our recent annual shareholder meeting, investors sent a vote of confidence in the board, this leadership team, and our growth strategy. Shareholders approved the plan to re-incorporate NextGen Healthcare in Delaware, an important step for the company's future, particularly considering how much the company has paid out in litigation costs in fiscal second quarter alone. On corporate governance and aligning pay for performance, the board is taking action to eliminate certain roles, like the chairman emeritus board seat and the associated fees, as well as eliminating meeting fees. As for our fiscal year 2022 executive equity grants, the comp committee approved performance shares with vesting tied solely to increased shareholder value. We also clearly heard the need to deliver shareholder value. I know I speak for the entire leadership team when I say we take our responsibilities as stewards of shareholder capital seriously, and we continually strive to generate long-term shareholder value. We also heard the request to return excess capital to shareholders. We want to do so in a tax-efficient way, so the board approved a share repurchase program. Jamie will provide more details in his section coming up. With the goal of applying shareholder value and appreciating shareholder value in mind, I'm already applying my experience and a fresh set of eyes to the entire company. As I review the company's product offerings and pipeline, I see considerable assets that with focus, investment, and execution, can unlock the full potential of NextGen Healthcare. We will continue to drive adoption of solutions addressing the provider and the consumer, what we call the surround solutions, to drive significant growth from this high-value offering for the foreseeable future. I also see potential opportunities to further unlock value by more effectively pointing certain of our assets toward attractive high-growth markets, which potentially offer significant return on investment. While it's a bit too early to provide details today, the growth potential is exciting. I look forward to discussing these opportunities at a more appropriate time. Before I turn the call over to Jamie, I want to provide an update on Spring '21. At the Investor Day in March, the company spent considerable time reviewing the benefits of the enterprise Spring '21 upgrade. I understand the excitement and value around this program. Upgrading both the enterprise system and a new Patient Experience Platform together is a first for the company and our clients. Plus, NextGen is approaching this program in a new way, adding significant resources and working closer with our clients than ever before. Our early adopter phases provided an opportunity to discover and overcome obstacles that typically arise in a real-world setting before rolling out to the entire install base. Working closely with our early adopters, challenges have been identified and resolved. We've established an Upgrades Center of Excellence, which provides our clients with both resources and best practices in order to accelerate the upgrade process and ensure an excellent experience for Spring '21 and all future upgrades. Approximately 40% of our target clients have signed up to implement Spring '21, indicating that our clients are anxious to move onto our patient experience platform, what we call PXP. As you may recall, PXP will help the client simplify and streamline the process of adding incremental surround products as needed. We believe that interest in our PXP platform is a strong signal to future cross-sell opportunities. We are confident in achieving our target $100 million of incremental contracted annual recurring revenue from our surround solutions by the end of fiscal year 2024. Spring '21 is a multiyear program, and we plan to provide future progress updates, but at a less regular cadence than quarterly. Instead, I would point our investors to our quarterly revenue lines, such as the positive trends in our high-margin recurring revenue and subscription revenue growth. With that, I'll ask our CFO, Jamie Arnold, to provide the important details. Thank you David. It's great to welcome you aboard. Let's begin with a few operational highlights. Bookings came in at $39.1 million in the quarter, up 25% on a year-over-year basis and 14% quarter-over-quarter. We believe this momentum speaks to the advantages of our solutions in certain medical specialties and the attractiveness of the breadth of our solutions. For another quarter in a row, new client wins accounted for over 25% of bookings. Additionally, I'm pleased to report we closed a handful of 7-figure deals in the quarter, spanning both existing and new clients. One example is a California-based multi-specialty group with over 1,200 providers serving over 120,000 patients across many centers. They recognized how our comprehensive offering supports their varied medical specialties as well as their need for integrated virtual visit capabilities. We look forward to supporting this client and their mission going forward. Now on to the fiscal second quarter financial results. Starting with total revenue, the company generated $149.3 million, an increase of 7% year-over-year. Of this total, recurring revenue accounted for $135.6 million or 91% of the total, and was driven by strong performances across all lines. Software subscription services at $41.1 million in the fiscal second quarter is now clearly our largest revenue category, delivering growth at 12% year-over-year. This stronger than expected growth reflects that our clients continue to adopt our surround solutions like telehealth and mobile to better engage their patients and improve the patient provider experience. Managed services revenue of $29.5 million grew 13% due to continued growth in our managed cloud services and continued strength in revenue cycle management. Q2 client encounter volumes were stronger than we initially expected as the impact from the Delta variant waned throughout the quarter. EDI and data generated $26 million in revenue this fiscal second quarter, up 6% over the year ago period as transaction volumes continued to improve. Software maintenance and support revenue of $39 million was slightly up over the year-prior year period, due largely to a one-time benefit recognized in the quarter. Non-recurring revenue of $13.7 million decreased 4% over the same quarter last year, with software revenue coming in strong based on a couple of large transactions, offset by slight decline in services. Gross margin of 51.3% represents an increase year-over-year and quarter-over-quarter of 110 and 50 basis points respectively. This improvement reflects a reduction in amortization of acquisition-related software technology, a revenue mix shift offset partially as we add staff to support the Spring '21 rollout. Now turning to operating expenses. SG&A of $63.9 million increased by $21.9 million compared to a year ago due to increased costs associated with the shareholder dispute and related cost. Net R&D of $18.5 million grew 5% over the year-ago period and represents 12% of total revenue. Net R&D spend reflects increased gross spend due to project timing and slightly lower capitalization, which increases net R&D expense. Our GAAP tax rate was approximately 17.5%, with a non-GAAP tax rate of 20%. On a GAAP basis, Q2 fully diluted net loss per share was -$0.10 compared to net income of $0.16 per share in the fiscal second quarter of 2021. On a non-GAAP basis, fully diluted earnings per share for the fiscal second quarter of 2022 was $0.29 compared to $0.30 in the year ago quarter. Turning to the balance sheet, we ended fiscal second quarter with $75.3 million in cash and equivalents, and no balance outstanding on our line of credit. DSOs in the quarter were 44 days, a decrease of 2 days from the previous quarter. Free cash flow this quarter was $13.3 million. Impressive, considering that we paid $11.4 million associated with the Hussein lawsuit. We expect a lingering impact from the proxy contest in the fiscal third quarter and partial repayment of pandemic related employer tax deferral. Free cash flow generation should return to historical levels for the fourth quarter of fiscal year 2022. In addition to this afternoon's earnings release, we also announced board approval to purchase up to $60 million of our stock. This new program represents a strategic use of the company's cash while retaining sufficient flexibility to fund ongoing and future investments in the business. We maintain a disciplined approach to capital allocation where we believe we can drive the greatest value for our shareholders. This new program underscores our confidence in our balance sheet and strong cash flow generation. We believe our positive business momentum provides us with ample capacity to return cash to shareholders while continuing to execute on our growth strategy. Now to our fiscal 2022 financial guidance. As noted in the press release, we are raising our fiscal 2022 revenue guidance to a range of $584 million-$590 million. The fiscal second quarter's performance was clearly strong and well balanced, and the impact of the Delta variant was less impactful than feared. However, as we discussed last quarter, there are approximately 5 fewer business days in the back half of the fiscal year compared to the front half, and patient visit volumes are historically lower in the fiscal fourth quarter due to deductibles resets, which will have an impact on our managed services and EDI. Those of you that have followed the story for some time know that the potential timing of a few large software transactions can impact any single quarter's performance. Over time, the trend typically smooths out. With strong fiscal second quarter performance, we now expect subscription services revenue to grow approximately 10% for the full fiscal year. Gross margins for fiscal 2022 will continue to reflect the increased personnel cost associated with Spring '21 upgrade process and slightly higher amortization of previously capitalized R&D. As noted in prior calls, we are making ongoing investments in sales and demand generation to continue our commercial momentum and making investments in R&D to enhance our offerings. These investments will accelerate throughout the remainder of this fiscal year, and yet we are raising our non-GAAP guidance to a range of $0.90-$0.96 per share. In closing, I am pleased with the overall momentum and diversified growth we generated in the quarter. NextGen is making the right investments to drive total revenue growth long term. Now let me turn the call back to David for closing comments. Thanks Jamie. Again, an excellent performance this quarter driven by the entire organization. I wanna reiterate how pleased I am to join NextGen during this exciting period. We have terrific long-standing relationships with our clients and continue to win new clients every quarter. With our current solutions, I see significant untapped potential in our addressable markets. With a focus on commercial execution, NextGen will drive accelerating and profitable revenue growth. I look forward to leading the execution of our long-term strategic growth plan and accelerating the company's momentum. Let me close by summarizing my first NextGen shareholder letter issued earlier this month. Why I joined the company is because NextGen has the right leadership that puts clients and employees above all else, the right strategy that has the company addressing attractive market opportunities, a reinvigorated and growing commercial team, differentiated solutions that add real value to our clients, and we've made investments that position the company to win. All of that adds up to driving accelerating and profitable revenue growth, up to double digits in the next few years. It's an exciting time, and I hope you'll join us as we continue to execute on our strategic initiatives. This concludes my comments. Let's move to questions. Operator? Thank you. At this time, if you'd like to ask a question, please press the star and one keys on your telephone keypad. Keep in mind, you may remove yourself from the question queue at any time by pressing the pound key. In the interest of time, please limit yourself to two questions and one follow-up question. Again, to ask a question today, please press the star and one keys on your touch tone telephone keypad. We'll take our first question from Jeff Garro with Piper Sandler. Please go ahead. Hi, good afternoon. Congrats on the quarter and congrats on your first call here as CEO, David. Thanks Jeff. Thanks for taking the question. Let me start with a set on the Spring '21 release. How does that 40% adoption metric stand versus expectations? You know, given the description of the early adopter phase, has that rollout cadence changed? Then lastly, David, just curious if there's any opportunities or changes on this rollout that you've identified since coming on board. Thanks Jeff. For Spring '21, I think the 40% that are signed up is to our expectation. We're ramping up, so we've in our early adopter done a very broad representative group. Lots of different specialties, different sizes, complexities. We feel like it's really representative of what we'll see moving forward. Now we're scaling up, and we're playing a more active role than we have in the past, where instead of saying, "Here's some new software upgrade when you want," we're helping really guide our clients through the upgrade process and make it very repeatable, kind of standardized so that we and they benefit when we have all of our clients on a single platform, so that for our engineering and our product organization, you can assume a more homogeneous environment. You'll see us ramp up our spend on the kind of services side as we set up our center of excellence to really scale this through the base. I think that there's a lot of opportunity here for us. I think kind of tracking where we are in that progress, we'll give updates, but not something we need to do necessarily quarterly. It's more of an internal metric. I think the one that we're excited about is that we're still on track for the $100 million of Surround that we're selling as you see in our bookings growth of 25%. Excellent. That's all really helpful. Maybe I'll give my second question on the bookings results that you mentioned and maybe in one area in particular. You know, from recent releases, it seems like you're having strong momentum with FQHCs. I'm curious what's been driving that success and how much opportunity remains with FQHCs or other providers that might also benefit from integrated medical and behavioral platforms? That's a good question. What's driving our success is the breadth of our offering and ability to meet those centers' needs. Also, obviously, the additional funding by the federal government is helpful as you know, during COVID, these centers became extremely important to you know, the consumers we serve and our country. That's been a tailwind for us. We've specialized in these centers for some time. We're very good at them. I'm actually meeting a CEO for dinner tonight from a FQHC, and really excited to see how we're doing there and how we can continue to expand and serve both those clients and the consumers that they serve, you know, better going forward. Great. Thank you. We'll take our next question from Steve Halper with Cantor. Please go ahead. Your line is open. Hi, you know, two questions. When you think about the new clients, you know, 25% of the bookings, what do you think are the, you know, strong points relative to the competitive, you know, environment and why you're winning that level of new business? Thanks Steve. I think that we focused somewhat on which specialties do we really have deep content, really good outcomes, where we can drive for those specialties outsized results compared to our competitors. As we've mentioned in the prepared remarks, we've won from everyone. Think of any of our competitors, no matter how big or small, we're winning market share in the market. I think it's because our product is really good, really strong. Our team supports clients in the relationships, and we're focused on how can we drive outcomes together with them. That's getting out. I think, you know, being best in class helps. We've worked on that over several years to improve the solution set, and you're seeing the result of those investments come through when we're winning greater than 25% of our bookings as brand new clients to the firm. Steve, this is Jamie. Let me add on to that is as you've heard us discuss previously, a couple of years ago, we established or we separated our sales organization between sales that focus outside the base versus the sales organization that works with existing clients. I think that focus and all the way up through the leadership level has added to our success here. Great. Then on the share repurchase, I think it's a great way to deploy capital, but at the same time, what do you think the sources of the funds are to use that to effect that share repurchase? I mean, your company's debt-free, would the board consider adding some leverage to effect that share repurchase? Yes. Steve, as we reported, we have $75 million cash on hand. We had a nice cash generation quarter, and we will continue. We have had discussions with the board about leverage and, you know, right as we kick off the program, I don't envision us drawing on the line or, but it is something that we've discussed with the board. Great. Thanks. We'll take our next question. I'm sorry. I wanted to further, even though Steve didn't ask the question directly, is that in our, as we were considering or discussing with the board the share buyback, we did discuss how to balance the share buyback with our growth. That was something I suspect, Steve, it is embedded in your question that you were asking me, which is we feel like that we can handle the share buyback and continue our investment in growth. All right, our next question comes from Anne Samuel with JP Morgan. Please go ahead. Your line is open. Hi, guys. Thanks for taking the question, and David, congrats and welcome. You spoke to opportunities for investment to unlock value going forward, and I know it's early for you to talk about what areas those might be, but was wondering, should we think about that as incremental investment or maybe repurposing of current expense dollars? Thanks. Thanks, Anne. I would think about it a couple ways, from a where we're thinking about investing. Obviously, in R&D, research and development, new solutions, bringing new products to market to capture additional market share. We also have opportunities to invest in services, whether it's services to speed the rollout of Spring '21 or traditional services like our revenue cycle management services, our managed cloud services. We're seeing good uptick there from a sales perspective and think there's further that we can move in both of those to generate additional revenue. Then commercial, right? Our commercial team, growing those teams for further growth. Those are kind of the three large buckets we're thinking through. As Jamie mentioned, we're generating free cash flow, so we can, you know, be thoughtful on how we use that cash to further those investments. There could be, as, you know, from time to time, inorganic growth through, M&A. We'll, you know, all three of those we'll think about build, buy, partner, what's the best way to market, and what's the best return, as we think about those investments. That's really helpful color. Thank you. Maybe just one for Jamie. You know, despite the really strong results in the quarter, you guys only raised your guidance by a penny on the bottom line, and I was just wondering, you know, how do we think about cadence in the back half of expenses and, you know, did anything shift out of Q2 into the back half? Thanks. Anne, it's a good question, and I think it ties into your first question because the investments that David was talking about really are continuation of some of what we did in Q2. Some of the investments we've talked about at the end of Q1 are extending through Q3 and Q4. You should expect to see the cost continuing to increase the operating cost in Q3 and Q4, as well as there will be a small increment up in our cost of sales because we've added services people to help with the upgrade to Spring '21. You will see, and that is why we, you know, kind of ties to your question. There is incremental investment over what we were making in Q1 and Q2, which is why we didn't increase the EPS guidance any more than we did. Great. Thanks guys. We'll take our next question from Stephanie Davis with SVB Leerink. Please go ahead. Your line is open. Hey, guys. Thank you for taking my question. Congrats on a solid print. David, congrats on quiet entrance. Big move. Thank you Stephanie. You've already touched on this a bit in the prepared remarks, but I did wanna dig in a little bit more on your decision to move to NextGen, just because there's been enormous amount of health tech CEO seat availability, not just in EHR, but really across the board. Given your history in EHRs, what made you think this was the right time and the right opportunity to go back to an EHR as opposed to some of the other, maybe arguably sexier areas of digital health? Thanks for the question, Stephanie. I always liked ambulatory. It mainly, if you think about the moves out of the hospital to ambulatory surgery centers, and if you think about a consumer's health journey, they're almost always working with their own physician. They're, you know, spending very little time on the inpatient side. As you think about the ways we can empower our doctors, the clients we serve, to do telehealth, to do remote patient monitoring, so that you can get these services from your doctor with which you already have a relationship. I think that is a trend that continues going forward and accelerates as a way to both improve access to care and reduce health inequity and drive down the cost of care because we can enable those doctors kinda operate as doctors and think about ways to improve their clinical outcomes, financial outcomes, and operational outcomes. I think NextGen has all the assets that are necessary for that transformation. It's maybe putting some of them together in a slightly different way or thinking at the next click past that of how do we take what we have and then take it to a new market. There's a lot of opportunity just in the Mirth Connect side alone. It's such a great software system that there's so much we can do with that to help with interoperability, join up records so that people have a complete health record, and then you know, think through how do you do some level of maybe even care coordination across that platform so that we defragment healthcare. We have all the tools and assets and technology you could want for that kind of problem, and I think it's an exciting place to be. Digging in one level deeper, just talking about, you know, improving outcomes, improving costs, and the read-throughs in the broader market, is it safe to say there could be some interesting risk on products in order to help folks on the ambulatory side, or is that two steps too far? No, I think it's where we are. We have a value-based care offering that's really good. We looked at recently how we've done in CMS data, and we've driven $10s of millions of shared savings for our ACO clients. And then, on the even better side, probably for how most people perceive risk, 0% downside. A hundred percent elimination of downside and a lot of upside. Thinking about that tool and that capability, how do we take that into the average physician practice and help doctors who, you know, are maybe in a small five or 10-person practice be able to have the analytics to understand their risk profile and then take that risk on? What services would we wrap around that to make that easier for them to do? For example, they can't stand up a call center to do these types of things. How can we help them with marketing to draw consumers in? How do they use telehealth to make it efficient? I think there's just a lot there, and you'll see us start to more aggressively market these solutions and then integrate them together to bring a better holistic solution to market. Awesome to hear. Looking forward to what's to come. Thank you, guys. Thank you. Thank you. As a reminder, if you'd like to ask a question, please press the star and one keys on your telephone keypad. We'll take our next question from Donald Hooker with KeyBanc. Please go ahead. Your line is open. Great. Good evening. So the bookings were obviously very strong. You had one large deal in there, this California multispecialty practice. I was curious if that deal, if there was another deal that sort of really was sort of a big contributor to bookings this quarter. I'm trying to think through what sort of the cadence of bookings that we should expect going forward. Is this kinda like the right level for quarterly bookings for you guys? Donald, this is Jamie. There were actually. The one I discussed in my comments was one of several large transactions. It was not uniquely alone as a single large transaction. I would say that if you look at the last couple of quarters, the bookings rate, you know, varies between, say, $35 and $39. I sort of put it at I don't wanna get into the position of giving guidance on bookings. But I think if you think of it in that range is kinda that $35-$39 is where we think we should be. Sometimes when, as we commented in my prepared remarks, that sometimes the license deals that come in, they tend to be a little larger, and they have a tendency to skew the results upwards. Gotcha. Okay. I apologize if I missed this, but I think, Jamie, you might have mentioned there was a one-time benefit in the support and maintenance fee line. Yes. Did I hear that correct? Can you maybe elaborate on that if I missed that? Yeah. There were actually a couple of clients that we had catch-up adjustments on maintenance invoicing, and that skewed the number higher than we would have expected otherwise. Had they, you know, just some catch-ups on the number of licenses that were being utilized. Those got caught up in the quarter. It did skew the number up for the quarter, and it was by several $ 100,000, enough to change the trend that we've been seeing, and that's why I highlighted it. Okay, super. Yeah, that's what I was trying to get at. Thank you. Thank you. Yep. Once again, if you'd like to ask a question today, please press the star and one keys on your telephone keypad. We can pause for a moment to allow any further questions to queue. There are no further questions on the line at this time. I'll return the program to your presenters for any closing remarks. This is David Sides. Thanks, everyone, for joining us today. We're excited about our results about the raise in both revenue and EPS guidance and to announce our share repurchase program. Thanks for, as always, your interest in NextGen Healthcare, and we'll talk to you again at JP Morgan and next quarter. Thanks. That concludes our call. You may now disconnect.