NextGen Healthcare, Inc.

Welcome to NextGen Healthcare Fiscal 2023 Third Quarter Results Conference Call. Hosting the call today from NextGen are David Sides, President and Chief Executive Officer, and Jamie Arnold, Chief Financial Officer. Today's call is being recorded. All lines have been placed on listen-only mode. The floor will be open for your questions following the presentation. If you would like to ask a question at that time, please press star then the number one on your telephone keypad. If at any point your question has been answered, you may remove yourself from the queue by pressing star two. We ask that you please pick up your handset to allow for optimal sound quality. Lastly, if you require operator assistance, please press star zero. At this time, I would like to turn the call over to James Hammerschmidt, Senior Vice President of Finance and Investor Relations of NextGen. James, you may begin.

Thank you, operator. Before we start, please note that we will be making forward-looking statements during the presentation and the QA part of the call. These statements are based on management's current expectations and assumptions and are subject to risks and uncertainty. Factors that may cause actual results to materially differ from expectations are detailed in our earnings release and SEC filing. This call will also reference certain non-GAAP financial measures. Information about non-GAAP financial measures, including reconciliations to U.S. GAAP, can be found in our earnings release, which is available on our investor relations website. At this time, I'd like to turn the call over to our President and CEO, David Seid.

Thank you, James. In May of last year, we described our multi-year journey to deliver double-digit revenue growth, operating leverage, and disciplined capital management. And I'm pleased to report strong execution and solid results across all three fronts in the quarter. But before I go into my prepared remarks, I'd like to address an important topic. On January 6th, we became aware of unauthorized access to a limited part of the NextGen network. Upon investigation, we learned the company was the target of a sophisticated cyber attack. We immediately executed our internal response procedures and contained the threat, secured our network, and have returned to normal operations. Our forensic review is ongoing, and to date we have not uncovered any evidence of access to or exfiltration of client or patient data. Based on our investigation to date, this incident impacted select administrative non-client files within our network. In total, this affected less than 1% of the devices used by our employees. Out of an abundance of caution, as soon as we noticed the threat, we severed connectivity to some systems and notified clients who were impacted in a timely manner. the vast majority of clients continue to operate as usual without any disruption. Those systems have all been securely restored and operations have returned to normal. While unfortunate, we are happy to note that previous investments in cybersecurity paid off. We will continue to invest in keeping our systems safe and secure for our employees, clients, and the patients they serve. Now back to our progress in the quarter, I'd like to start with growth. Our integrated solution creates a foundation to deliver insights at the point of care, which allows for us to partner with clients to improve outcomes. This differentiation is resonating in the market, especially among leading integrated care organizations looking for a holistic platform to deliver medical, behavioral, and dental care. Our bookings in the quarter reflect this differentiation, where despite the macroeconomic environment, we continue to see success in gaining new logos and cross-selling our surround solutions. There were six deals over $1 million, spanning both inside and outside the base. Bookings from net new clients represented approximately 30% of sales in the quarter, bringing our full year average back above 25%. We continue to see opportunity to help our clients address the problems they face in today's environment, such as staffing shortages, wage increases, and higher patient volumes. These challenges create demand for our managed cloud services, revenue cycle, and patient engagement solutions as our clients look to gain practice efficiencies and improve financial outcomes while continuing to deliver quality care. These factors, in addition to strong client retention, have resulted in continued growth acceleration across our diverse revenue streams. This is especially clear in our recurring revenues, which is been building momentum and exceeded 10% growth in the quarter. While our commercial efforts are focused on delivering growth in fiscal year 23, our solutions and development organization are innovating to build new offerings that drive growth in fiscal year 24 and beyond. We believe there's tremendous opportunity to expand our platform, especially when we look at the patient intake process and other front-end offerings that are currently in early testing with clients. We see strong proof points that our solutions are delivering value and a clear return on investment. I look forward to updating you all on the progress the team is making when we approach the start of our new fiscal year. Moving on to our operations and investments we're making to scale. Our ability to deliver operating leverage starts with the foundation of our employees and our culture. We just recently conducted our annual vote survey, that is voice of the employee, which measures employee engagement across 14 dimensions. I'm pleased to say employment engagement has increased for the sixth year in a row and is well above the benchmark, with strong improvement in culture, working environment, and client focus. We've been thoughtful in managing our headcount throughout the year, from the expansion of our sales development rep program, creating the upgrade center of excellence, and moving to a remote-first, work-from-anywhere organization which allows us to access talent pools on a global scale while minimizing our facility footprint. The company is focused on making investments and taking the actions required to show operating leverage. We will continue to optimize our resource mix, rationalize vendor spend, and rethink processes and technologies to improve our productivity as we close out the final quarter of fiscal year 23. Now turning to our capital allocation effort, We believe total shareholder return is enhanced by taking a disciplined and deliberate approach to capital acquisition and deployment. Our strategy is focused on investing in innovation, accelerating growth through M&A, and returning capital to shareholders through opportunistic buybacks. Following our last earnings call, we raised $275 million in convertible debt and concurrently purchased approximately 2.1 million shares for $40 million as part of the offering. These proceeds, in addition to our cash generation and credit facility, provide ample capital to execute on our inorganic growth agenda. We also announced the acquisition of TSI Healthcare, a longstanding partner in the first acquisition the company has done in almost three years. TSI expands the addressable market served by our enterprise domain, unlocking new attractive specialties such as cardiology, rheumatology, and pulmonology. The company provides purpose-built clinical content and a differentiated service offering, which when paired with our strong commercial channel, will drive long-term sustainable top line and bottom line growth. Given the similarities in culture and in the line strategy, I'm pleased to say the integration effort is going well as we start making foundational investments back into the business. Looking forward, we maintain an active M&A pipeline and will continue to assess future acquisitions especially as it relates to capabilities that accelerate our effort behind next-gen insights. We believe data, analytics, and value-based care enablement will continue to be an attractive opportunity for the company to pursue. Lastly, I'd like to acknowledge the passing of NextGen Healthcare's founder, Sheldon Raisin. Billy was an intensely passionate and entrepreneurial innovator. By digitizing health records and automating workflows decades before the HITECH Act mandated the use of EHRs, Shelley has improved the lives of thousands of clients, tens of thousands of providers, and millions of patients. He will be missed. And building upon his legacy, the company is more focused than ever to innovate and deliver better health care outcomes for all. And now, I'll turn the call over to Jamie to provide details on our financial performance in the corridor. Jamie?