NextGen Healthcare, Inc.

Welcome to the NextGen Healthcare Fiscal 2023 Fourth 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 Q&A part of the call. These statements are based on management's current expectations and assumptions and are subject to risks and uncertainties. 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 reconciliation to U.S. GAAP, can also 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 Sides.

Thank you, James. And thank you to all who have joined the call today. I will start today's call by covering some of the more notable accomplishments in our fiscal fourth quarter, then review our performance for the fiscal year, and finally provide an outlook on why we are excited for fiscal year 2024 before turning the call over to Jamie to take you through the financial commentary. We will then close the call and open it up for questions. Starting with fourth quarter accomplishments, The team continues to execute well, which resulted in solid performance to end the fiscal year. Bookings grew both year over year and sequentially, which means another new quarterly bookings record. We continue to see strong demand inside the base for our surround solutions and interoperability capabilities. Our ability to serve integrated care organizations, we need a single platform that combines both medical and behavioral health continues to differentiate us in the market, leading to more flagship wins. Revenue came in better than expected for the quarter, resulting in 18% year-over-year growth for the company. While subscriptions showed significant growth as expected with the acquisition of TSI, we also were pleased that revenue cycle management saw an increase in collections, and our transactional and data services were ahead of plan. Furthermore, perpetual license sales came in above our prior six-quarter trend and our expectations. We had the opportunity to spend time with both current and prospective clients at Vibe and HIMSS the last two months. We approached these industry trade shows to validate our areas of focus and investment. Clients are looking for EHR-powered workflows that enable care beyond traditional practice settings. mobile tools that allow doctors to treat patients wherever they may be, and increased focus on equitable patient access and provider well-being. From an interoperability perspective, FHIR and integrations with social determinants of health content and social services continue to be a repeating thing. These are all key areas that we are investing in, which will position us nicely in the market. We also see opportunities in healthcare IT to partner with leading tech players to accelerate innovation and unlock new business models. At Vive, we hosted a joint event with Snowflake and AWS, which had over 200 attendees. One example of these partnerships was the launch of MirthCloud Connect, a cloud-based solution that provides interoperability as a managed service, leveraging our market-leading MirthConnect interoperability engine and our partnership with AWS. The new offering is designed to help solve clinical data exchange challenges faced by large physician networks and health technology vendors. From an operations standpoint, we continue to invest in building a scalable infrastructure to facilitate growth. The team is focused on process improvement, identifying areas where we can leverage technology systems and automation to improve our own operating model. One recent example was the decision to consolidate multiple HR, payroll, and recruiting systems to a single integrated global platform. Now I'd like to take a moment to provide a brief update on a security-related matter that occurred during the quarter. At the end of March, we were alerted to suspicious activity involving our next-gen office system. As a reminder, this is our small physician office system and is a tenth the size of our next-gen enterprise system. which has the bulk of our client base. We executed our internal response procedures, engaged the support of leading outside cyber experts, and notified law enforcement. Following our forensic investigation, we determined that an unknown third party gained unauthorized access to a limited set of personal information stored on a NextGen office system. Based on our investigation, this did not include patient health or medical information. At the end of April, we notified impacted NGO providers and their patients, as well as state regulatory authorities. As you know from our discussion on our last earnings call, we also experienced an incident in January. We continue to work with independent experts to ascertain whether personal information has been impacted, and to the extent the detailed analysis reveals that personal information has been impacted, we will notify individuals accordingly. Security in all its forms is and will continue to be a top priority for next-gen healthcare. While we have determined that the recent incident was the result of stolen client credentials from sources and incidents unrelated to next-gen, we are taking action to further strengthen our security with the help of our independent experts. I will close my comments on the quarter by discussing our progress on the integration of PSI, the first acquisition the company has done in several years. It's on track and going well. We're making the investments we said we'd make, which includes ramping up dedicated sales resourcing and demand generation, migrating from a co-location facility to AWS in the cloud, and continuing the base upgrade to the latest CURE-certified version. We remain encouraged by the opportunity it represents, not just with NextGen Enterprise, but also with NextGen Insights and the data potential. Now to reflect on the full year. We've made significant progress on the long-term goals we outlined last May, which include building a path to deliver double-digit revenue growth, investing to create operating leverage, and demonstrating disciplined capital management. Here are some key accomplishments I'd like to highlight. Bookings came in aligned with our plan, growing 9% year-over-year with net new client wins, contributing about 25% of total bookings. while continuing to cross-sell our surround solutions. Revenue for the year grew 9.5%, which was a combination of turning bookings into revenue and maintaining strong client retention, which has been further accelerated by the TSI acquisition. We were one of the first to achieve Cures Act certification and invested in the Upgrade Center of Excellence to give our clients predictability and best practices throughout their upgrade process. We became a remote-first organization, reducing our facility and carbon footprint, while also improving the employee experience, which was recognized by Forbes and Newsweek America for the second year in a row. We divested our commercial dental assets, which further focused the company on our core mission, and we raised capital through a convertible, which provides us access to dry powder at a favorable cost. Feels like a full year, lining us up to achieve our long-term financial goals. Looking forward to next year and the strategic drivers that will lead to sustainable growth, fiscal year 24 will be about commercial execution and continuing to invest in innovation, which will carry momentum into fiscal year 25 and beyond. I'd like to talk about some of the areas we are investing in to deliver sustained organic growth. We will continue to scale our investment in the enterprise data cloud in partnership with AWS and Snowflake. to deliver a broad set of data solutions to our customers. We will work with our clients to unlock the value of their own data and make it seamless to integrate with third-party data and test new monetization models. This will ultimately become a flywheel for innovation, improving our speed to market and ability to impact client outcomes. I'm also excited for the opportunity we see in interoperability. both the migration to a fully managed interoperability as a service in the cloud, as well as the ability to support international clients who also have scaled needs. We will be focused on enhancing our value-based care analytics capabilities and clinical operation support to help providers achieve superior quality and financial outcomes when participating in ACOs and other alternative payment models. We believe the ability to deliver insights at the point of care through the provider's current systems of use, like the EHR, will be a differentiating capability for enabling providers to take on risk. And finally, we will continue to focus on removing friction out of the physician experience with investments in mobility and voice enablement. I'm confident that with our strong position in the market, our highly engaged and committed client base, and these new organic growth initiatives, we can sustain mid to high single-digit revenue growth, which provides a solid foundation to layer on inorganic effort to reach our 10% plus revenue growth target. Touching on M&A, our corporate development team is busy building and maintaining an active pipeline of opportunities. We see opportunity to further accelerate growth, especially related to next-gen insights so the right acquisition could gain access to new capabilities and solutions we can sell back into our well-established commercial channel. And, of course, we will continue to be prudent when considering strategic and financial fit during the M&A process. And with that, I'd like to turn the call over to Jamie to provide an update on the financials. Jamie?