NextGen Healthcare, Inc.

Welcome to the NextGen Healthcare Fiscal 2024 First Quarter Results Conference Call. Hosting the call today from NextGen are David Seitz, President and Chief Executive Officer, and Jamie Arnold, Chief Financial Officer. Today's call is being recorded. All lines have been placed in a listen-only mode. The floor will be open for questions following the presentation. If you'd like to ask a question at that time, please press star, then the number one on your telephone keypad. And if at any point your question has been answered, you may remove yourself from the queue by pressing star 2. We ask that you please pick up your handset to allow for optimal sound quality. Lastly, if you require operator assistance, please press star 0. At this time, I'd 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 Q&A part of the call. These statements are based on management's current expectations and assumptions and are subject to risks and uncertainties. Facts that may cause actual results to materially differ from expectations are detailed in our earnings release and SEC filings. 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 Sides.

Thank you, James, and welcome, everyone, to our fiscal 2024 first quarter earnings call. I'm pleased to report solid top and bottom line results to start the new fiscal year. Building on the momentum created during fiscal 2023, the company executed across all fronts and is well positioned to deliver double digit revenue growth, create operating leverage, and demonstrate effective capital management. This quarter was a testament to the strength of our business and the investments we've made to position the company for future growth. We're living our mission as the partner and trusted advisor to the practices we serve, which create strong retention, the right to cross-sell solutions, and net new client wins. Our integrated platform is clearly differentiated in the market and meaningfully addresses client concerns related to financial sustainability, position experience, interoperability, and staffing constraints. The commercial team continues to execute well. Our value proposition when serving attractive markets such as behavioral health and integrated care is clearly resonating. given 28% of our overall bookings came from net new clients with flagship wins in the space. The foundation to Crossbell's success is ensuring our clients are leveraging the latest offerings we have, and I'm pleased to announce that the majority of our provider clients are on the latest and secure certified version of our product, and we have a clear line of sight to closing out the remainder. Because we were the first and remain a leader in this transition, we believe that positions thus well further accelerate surround solution adoption and scale. Our existing clients continue to adopt our surround solutions, which helps them optimize their financial performance and clinical outcomes, resulting in a clear return on investment and high growth across our diverse recurring revenue streams. We saw strong momentum in patient volumes, which led to higher demand in the quarter than originally planned in our transaction and data revenue line, specifically our patient pay offerings. This is a great example where we've created an integrated experience for our clients, leveraging our top-ranked practice management system in partnership with a leading payer in the payment space. And finally, we saw acceleration in our business model transition, shifting from a license and maintenance-based model to a subscription managed service or transaction-based model, which best aligns with how we deliver value to our clients today. This transition continues to lessen our exposure to the lumpiness that comes with perpetual software licenses, which we've modeled a ramp down aligned with what we saw in the first quarter. Now I'd like to cover the progress we're making as we invest in innovation. I mentioned in our last call that we're continuing to invest and create new organic solutions in several areas, such as data and analytics, interoperability, and value-based care, which is key to delivering on our growth agenda. We've made good progress over the quarter in advancing all these initiatives. We continue our investment in the Enterprise Data Cloud in partnership with AWS and Snowflake to deliver a broad set of data solutions to our customers. Working with them, we've started to unlock the value of our clients' data along a few dimensions, including the ability to access and visualize clinical data for those using health quality measures. we found through our advanced practice intelligence and benchmarking capabilities that next-gen customers outperformed the national average in 27 of 32 CMS clinical quality measures. This is just one of many opportunities we have to leverage our core platform and help clients thrive as broader reimbursement models evolve. We completed several deals this last quarter with pharma and life sciences companies to support advanced clinical research studies. which expands beyond our current data partnerships. Working with our clients and partners, we're excited about the potential to open the aperture to include new specialties with a focus on high-value research studies. I'm also excited for the opportunity we see in interoperability, specifically in supporting global clients who also have scaled needs. We are now GDPR compliant, which gives us the ability to market leading solutions like MirthConnect for use in over 40 countries. And finally, touching on value-based care, we have been partnering with clients seeking to 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 system of use remains a differentiating capability for enabling providers to take on risk. That's why I'm excited to announce that for the 2024 CMS enrollment period, We've successfully enrolled approximately 200 providers in Medicare Shared Savings ACOs, representing nearly 30,000 attributed lives. These providers are using NextGen's leading population health analytics solutions and wraparound services to improve care quality and generate significant savings. Now turning to scale in our journey to deliver operating leverage. We see opportunity to further optimize our operating model, ensuring we have the right capabilities in place to deliver growth at scale for years to come. Focusing on cost of sales, we've made investments in the past to support the Cures Upgrades effort and deliver growth in professional services. As we near the end of the upgrade cycle and fall into a predictable service cadence, we have plans in place to reduce our reliance on third-party staff augmentation, optimize our own billable utilization, and redeploy upgrade resources to new value creation initiatives. These actions will start to be apparent in the back half of our fiscal year as our cost of sales as a percentage of revenue supporting maintenance, professional services, and managed services begins to moderate. Looking at operating expense, we've always been buff on how we invest in growth-oriented functions like R&D, sales, and marketing, while rationalizing our G&A expense. We've evolved our product development group to a more modern, agile model which should improve delivery speed and quality while also maximizing capacity without significantly growing the organization. We continue to leverage sales development representatives to improve our client acquisition costs with higher lead to sales conversions on a more favorable cost basis. And when looking at the back office function, we've been investing in systems and automation to even further streamline how we support the business going forward. We also aim to improve the leverage we get from the vendors and strategic partners we work with. One I want to call out is our collaboration with Amazon Web Services, as we successfully transitioned our colo operations for next-gen office into a secure and extensible AWS environment back in May of this calendar year. We see potential to expand partnerships like this beyond the product and into the commercial setting, taking advantage of their marketplace, and bringing offerings into new segments and geographies where these partners already have an established channel. I want to close by providing an update on the GSI acquisition. The integration's on track, and our unified sales and marketing team had a great start to the year. We exceeded our first quarter sales targets, and we're excited for the opportunity to get in front of even more clients as we plan to host over 200 attendees at our Leaders in Rheumatology conference. but we will deepen our relationships with new and prospective clients and partners. What's exciting about the acquisition is it further strengthens our position in the health data arena. In collaboration with our NextGen Insights team, we're actively pursuing new and expanded agreements with health data partners, which will drive future revenue growth at an attractive margin. And with that, I'd like to turn the call over to Jamie to provide an update on the financials. Jamie?