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NextGen Healthcare Q2 Earnings: Is NasdaqGS:NXGN Expensive at 165.8x Price/EPS?

in EARNINGS/INVESTING IDEAS by

NextGen Healthcare, Inc. (NasdaqGS:NXGN) is scheduled to report Q2 earnings results after markets close for trading on October 22, 2020.

The company is expected to report earnings of $0.20/share on revenue of $133 million. The consensus earnings per share (EPS) of $0.20/share is based on a poll of 14 analysts and represents a decline in eps of −15.7% over the same quarter last year, when the company reported earnings of $0.24/share.

The revenue forecast of $133 million based on a poll of 13 analysts implies a year-over-year (YoY) decline in revenue of −0.9%. Last year the company reported $134.3 million in revenue for the quarter.

Expected to report EPS contraction of −15.7% for Q2, 2021
Metric Expected Prior Year YoY Change
Revenue $133.04 $134.26 −0.9%
EPS $0.20 $0.24 −15.7%

Earnings Call Trends

Historically, management has exceeded analyst expectations 7 out of the last 8 tracked quarters, and missed expectations 1 quarters.

What are your expectations from NextGen Healthcare, Inc. for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q1, 2021 $0.08 $0.21 177.1% Beat
Q4, 2020 $0.19 $0.20 4.1% Beat
Q3, 2020 $0.20 $0.23 13.1% Beat
Q2, 2020 $0.23 $0.24 4.0% Beat
Q1, 2020 $0.21 $0.16 −22.7% Missed
Q4, 2019 $0.16 $0.23 45.0% Beat
Q3, 2019 $0.15 $0.20 29.5% Beat
Q2, 2019 $0.19 $0.24 24.5% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 30, 2020, the stock price reacted by increasing 21.1%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
July 30, 2020 $12.07 $14.62 21.1% Increase
June 1, 2020 $10.32 $10.48 1.6% Increase
January 23, 2020 $15.92 $14.58 −8.4% Decline
October 23, 2019 $15.86 $17.01 7.3% Increase

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −3.20, the model suggests that the company is not likely to be an earnings manipulator. A value of −3.20 implies a 0.1% chance of earnings manipulation.

Fundamentals And Technical Analysis

NextGen Healthcare, Inc. is currently trading at $13.50/share, down −3.3% for the day. The company is trading at approximately 73.0% of its 52-week high of $18.49/share. The company’s stock price is down −7.7% since the last earnings report and down −0.4% over the previous week.

The company’s 14 Day Relative Price Index (RSI) of 51.45 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NasdaqGS:NXGN Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 165.75 and a forward P/E multiple of 18.58.

NextGen Healthcare, Inc.’s current share price also implies a price-to-book (P/B) multiple of 2.23. The following table summarizes some other key fundamental ratios:

Data as of October 20, 2020
Metric Value
Last Reported Fiscal Period Key FY2021.Q1
Period End Date June 30, 2020
Stock Price (Current) $13.50
P/E Ratio 165.8x
P/E Ratio (Fwd) 18.6x
PEG Ratio −2.3
Total Debt / Total Capital 19.2%
Levered Free Cash Flow $81.9 million
EV / EBITDA 28.7x

Finbox

NextGen Healthcare, Inc. is a small-cap stock with a market capitalization of $900 million and a total enterprise value of $933.5 million. The company operates in the Healthcare sector and the Health Care Technology industry.

NextGen Healthcare, Inc. provides ambulatory-focused healthcare software and services solutions in the United States. The company offers NextGen Enterprise electronic health record (EHR), which stores and maintains clinical patient information; and a workflow module, prescription management, automatic document and letter generation, patient education, referral tracking, interfaces to billing and lab systems, physician alerts and reminders, and reporting and data analysis tools. Its products also comprise NextGen Enterprise PM, a practice management (PM) solution; NextGen Office, a cloud-based EHR and PM solution; NextGen Mobile; and NextGen Electronic Healthcare Transactions. In addition, it provides population health solutions, such as NextGen Population Health Analytics, NextGen Population Health Patient Care Management, and NextGen Population Health Performance Management; and patient engagement solutions comprising NextGen Patient Portal, NextGen Self Scheduling, NextGen Patient Pay, and NextGen Virtual Visits solutions. Further, the company offers NextGen Connect Integration Engine, NextGen Health Data Hub, and NextGen Share interoperability solutions; managed services, including NextGen Managed Cloud and NextGen Revenue Cycle Management Services; professional services; and client service and support. It serves managed service organizations, independent physician associations, accountable care organizations, ambulatory care centers, and community health centers through a sales force and reseller channel. The company was formerly known as Quality Systems, Inc. and changed its name to NextGen Healthcare, Inc. in September 2018. NextGen Healthcare, Inc. was founded in 1974 and is headquartered in Irvine, California.

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