NextGen Healthcare, Inc.

Welcome to the NextGen Healthcare Fiscal 2021 Fourth Quarter and Full Year Financial Result Conference Call. Hosting the call today from NextGen are Rusty Frenz, President and Chief Executive Officer, Jamie Arnold, Executive Vice President and Chief Financial Officer, and Matt Scalow, Vice President of Investor Relations. Today's call is being recorded, and now I will turn the call over to Matt Scalow.

Okay, thanks, Erica. And before we start, I'd like to remind everyone that the comments made on this call may include statements that are forward-looking within the meaning of the federal securities laws, including, and without limitations, 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 and 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 the 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 earning results, the GAAP financial measures most directly comparable to each non-GAAP financial measure used were 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 our call over to our President and CEO, Rusty Franz.

Thank you, Matt. It's been an unforgettable year for our healthcare provider clients, for patients, for employees, and our investors. The COVID-19 pandemic challenged and evolved how a healthcare provider engages a patient, essentially the very foundation of our healthcare system. This crisis also put NextGen employees, solutions, and culture to the test. And I'm proud to say our teams and organizations went above and beyond the call of duty, working with our clients to ensure patients could access much needed healthcare services through the beginning of part of COVID. However, as we crossed into Q2 of FY21, we once again resumed our mission to transform ambulatory care for the better, as forward-looking clients had become even more receptive and change-ready at that time than they were pre-pandemic. Even in the face of this challenging year, the company continued to accelerate, achieving new levels in client satisfaction, releasing our next major platform release on schedule, and delivering strong financial performances throughout the year. We achieved top class scores in a host of categories within the independent ambulatory space, We are now the top rated EHR provider of integrated telehealth. Our interoperability capabilities lead the industry as well. Our EHR and practice management solutions are also best in class. Every year we set our goals higher and every year we are gratified with the progress and results. And the results that we deliver for our clients are turning heads outside of our client base as well. Q4 was no exception to our run of competitive success with more than 25% of our bookings coming from new clients. Our experienced and seasoned commercial teams continue to take the next-gen experience and our integrated ambulatory platform into our competitors' clients with great success, both outside but also inside our base, and we expect that to continue. I would also highlight that we are competing and winning larger deals in the ambulatory space. I'm especially pleased to see our subscription revenue growth reach 16% this past year. Our ability to deliver even more value to the client through our surround strategy offerings that can enhance patient provider experiences is clearly resonating. We released our spring 2021 release with its integrated patient experience platform, a major milestone in our strategic multi-year drive to enable seamless and integrated patient and provider experiences, bringing our strategy to life at a time when COVID has made that strategy so much more relevant. To deliver our largest release yet with full scope and on time entirely during a pandemic is an incredible achievement by the team. And all this momentum showed up in a strong performance across all metrics through FY21, with Q1 and Q2 being chaotic and unpredictable and a much more normal back half of the year. As we moved into Q3, we messaged that we were back to our near normal run rate in the second half of the year across bookings, revenue, and expense, and that has proven itself out. Truly the tale of two halves, as I said, early in FY21, and the second half provides a nice numerical launching pad for a smooth transition into FY22, a year where we continue our march to higher revenue growth and prudently continue to accelerate investment and innovation, commercial capabilities, and efficiency to ensure we use every dollar well. Now let's shift into FY22. As we have highlighted throughout the past year, our Spring 21 platform rollout is a great opportunity for growth. Bringing the entire platform to life for a client has great value to them, but also significantly increases our revenue opportunity in each client. It's essential that we deliver not just the software, but the results that the client needs. A successful first step, spring 21, will enable them to confidently take the next step, which turns into additional bookings. To that end, we have now moved into our early adopter and client success phases, which are running in parallel. I thought I'd give a little flavor of how we are approaching it. Post general release at the end of March, we entered our early adopter phase. Clients in this phase are chosen based on how they use the system, for example, different specialties. The goal of this phase is to exercise the vast majority of the workflows with a significant and representative set of clients. This will continue for a few months, and we have the clients lined up and preparing, having started this phase immediately right after general release. We've also launched the client success phase, focused on delivering our new expanded implementation experience. With this release, we are expanding our definition of client success. Our goal is not only to implement the solution effectively, but also to lead our clients in the process and organizational change efforts that truly enable them to capitalize on the system and deliver the measurable results they desire. To support this evolution, we've set up a Tiger Team environment with an aggressive goal to learn quickly and then scale to the broader organizations. In this first phase, we are focusing on quickly learning and evolving our processes and client experience. By keeping consistent teams focused on key client segments and specialties, we are quickly learning how to effectively drive results in representative clients. Once we're comfortable with the results we're seeing from clients in these two phases, we will then begin the scaling phase. Our broad organizational teams will take the baton and the learnings from the earlier phases and begin to own the entire process. We will be focusing in this phase on education, training, and client-facing culture as we begin to scale our delivery capability. As we move to the end of FY22, expect us to be implementing with great results at near full capacity. And at that point, the program just becomes the way we do things for all clients going forward through spring 21 release and beyond. We, the leadership team, have been intimately involved in the early steps of this plan. Some of us have a lot of experience, success, and some hard-learned wisdom in similar rollouts in our past. Therefore, getting the program into action, getting folks in place to lead, has been an area of focus at the highest levels of NextGen. However, as we now move into action, it's great to see the broader teams take ownership of the program and the leadership team act as oversight and guidance. This is an essential step towards scalable success delivered by the organization, not personal heroics by the leadership team. We will keep you updated as to our progress when we begin to publish success metrics in October, as by then we will have enough data to be able to talk meaningfully about trends. As we have said, our solution, our client satisfaction, and our operational effectiveness have created a great opportunity for growth that is already starting to show. When we talked at our investor day in April, we identified that by FY24, we expect to be in the 5% to 8% range for revenue growth. To that end, I've also discussed organic investments that support that growth. investments in commercial capabilities, both sales and implementation, innovation to keep our competitive edge, and efficiency to free up more capital for the first two items, commercial and innovation. As we move into FY22, expect to see expanding investment in each of these areas, as I've discussed on prior calls. From a commercial standpoint, expect us to invest more in sales and lead gen as we are seeing such good competitive success. Also expect us to invest in implementation resources to handle the spring 21 volume. From an innovation standpoint, we will accelerate key capabilities in the overall patient experience, ensuring that we support the total patient journeys, both clinical and financial. We will also continue to invest in our microservices platform and even tighter integration of our platform capabilities, both technically but also in client-facing workflows. Finally, we are always working on efficiency, and FY22 is no different. This year, we'll expand our investment in automation, notably accelerating RPA, or robotic process automation, which we're implementing both in the back office as well as in our RCM business. All of these investments are built into the FY22 plan, and I'm gratified to see the performance on the earnings line in the back half start to normalize, especially in Q4, and expect that normalized run rate to continue for the full FY22. Jamie will share the numbers. Before that, let's briefly touch on future growth. In January's message, we began to look at the next vector of growth. We're executing a great and exciting strategy, and we are well down the path on our current vector. However, as we move forward, our financial strength and operational and leadership effectiveness can be leveraged even more broadly. In March, you saw us up-level our revolver, expanding our available liquidity. This week, we announced our new Chief Growth Officer, Sheree Bellamore. Sheree brings a strong and well-known track record of leading clients on a journey to greater shareholder value. Having his strategic as well as operational capabilities on the team adds another gear to NextGen. As we move through the summer and into the fall, we will continue to evolve our strategic view and begin to plan our next steps towards even further expansion of NextGen. But until then, we're sticking to our knitting, better known as Spring 21. Now let's turn it over to Jamie for a deeper dive into the numbers.