Q2 2023 NextGen Healthcare Inc Earnings Call

[music].

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It is now my pleasure to turn today's program over to James Hammer Smith, Senior Vice President of Finance and IR.

Sir please 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 factors that may cause actual results to materially differ from expectations are detailed in our earnings release.

And the SEC filings.

This call will also reference certain non-GAAP financial measures information about non-GAAP financial measures, including reconciliation 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 Sipes.

Thank you James.

Time flies.

It's hard to believe I recently passed the one year anniversary as CEO of Nextgen.

So it's hard to believe that we are more than halfway through fiscal year 2023.

Let me start by saying that we have improved confidence and due to our consistent execution and client results. We are increasing our outlook for the remainder of the year.

Updating guidance implies that we will have made up for the loss revenue and earnings from the commercial dental divestiture, we announced last call.

In my prepared remarks today, I will touch on three areas supporting our positive outlook.

Number one our ability to execute.

To our clients.

Three our approach to capital allocation.

Let's start with execution.

Bookings were solid for the quarter with five flagship flagship deals over $1 million net.

Net new client wins accounted for approximately 20% of total bookings because our differentiated value proposition aligns with the needs of integrated care organizations federally qualified health care organizations behavioral health.

<unk> biology, and orthopedic practices.

These clients are purchasing multiple solutions at once and we continue to have success selling the surround into the base.

As a reminder, our surround solutions include the patient experience platform patient pay virtual visits.

Mobile population and financial analytics.

Managed cloud services and revenue cycle management.

We remain on track to achieve our target of $100 million in contracted annualized recurring revenue for surround solutions by the end of fiscal year 2024.

Client adoption of patient payment engagement solutions as materialize faster than originally planned.

A testament to the investments, we're making to modernize our revenue cycle capabilities in providing end to end solution for managing payments coding and clearinghouse services.

We believe there is real upside here, which should lead to increased penetration into the base.

As the first EMR to be 20, <unk> century Cures Act certified we've made investments in our upgrade center of excellence tooling.

Tooling and automation and best practices to support our clients as they migrate to the latest version.

We're pleased to announce that as of today, we are nearing 400, Nextgen enterprise clients live on the latest curious compliant version.

All ahead of the submission deadline.

We believe this provides a timely competitive advantage, especially as it relates to the smaller end of the market.

Is why we're also very excited to announce that we have received confirmation of Cures Act certification for our Nextgen office solution.

Our base is the ability to be compliant more than a year before the deadline, giving them ample time to upgrade without undue pressure.

We can now turn our attention fully to deliver on next generation improvements for the provider experience. While others are working on are still working on certification.

Our pipeline is strong with net new prospects.

Sizable cross sell and inside the base expansion opportunity.

The underlying strength of our commercial team.

Aren't working set of opportunities and solid client retention supports our confidence that growth will further accelerate in the fiscal second half.

Which carries into fiscal 2024, given the recurring nature of our business.

Now moving on to our clients.

We are strongly encouraged by the engagement we've seen our base there.

Truly want us to win.

In September we added an executive roadshow for the top leaders in our organization, including myself.

I spent the month on the road meeting with over 100 clients to understand their practice strategy challenges and opportunities for us to serve as their strategic adviser.

This was also a great opportunity for us to both listen insurer own vision strategy and multi year Road map.

These conversations reaffirmed.

We are focused on solving the top issues faced by the market.

And just under two weeks nearly 2000 client leaders will convene in Nashville to kick off our annual user group meeting.

The event will be in person for the first time since 2019 and enthusiasm is high.

The theme of <unk> 22, better health care outcomes for all embodies our company vision.

We intend to partner with our clients and help them improve.

Improve patient engagement reduced physicians physician burnout target higher risk patients to close gaps in care.

Assume risk and value based care models exchange and utilize meaningful health data and achieve better financial outcomes.

We plan on showcasing results from our Nextgen community health collaborative where a group of highly innovative clients.

Partnered with us to leverage Nexgen is vast data pool representing.

The largest footprint of community health.

<unk> data assembled today.

We've launched insights as a service on the back of our enterprise data cloud to streamline outcomes reporting and benchmarking of clinical quality and operational measures for members of the collaborative to inform best practices and truly drive results.

Speaking of results.

We'll also be discussing the Medicare shared savings results.

A group of Nextgen, ACO clients, who utilize our value based care solutions.

These clients are able to generate $81 million in total Medicare savings and $41 million and shared savings.

33% increase compared to the prior year.

We're just starting to unlock the power of Nextgen insights and I am excited to share more about our progress as we get closer to fiscal year 'twenty four.

Lastly, moving on to our capital deployment effort.

We continue to manage capital in a disciplined and thoughtful manner.

Last quarter, we announced the divestiture of our commercial dental business, which we considered a non core part of our portfolio.

This helped to strengthen our balance sheet and provided us with increased flexibility to pursue attractive acquisition opportunities.

As of today, we have effectively transitioned the core dental operations to the new owner.

And our team is now solely focused on our core strategy.

Moving to integrated needs of the ambulatory care market.

When we look at buy build partner or purchase to focus on return on invested capital, where we not only look at traditional mergers and acquisitions, but also leveraged strategic business development partners, where we're able to generate an attractive return.

Our corporate development pipeline is active as we continue to look opportunistically at M&A as a means of broadening our portfolio.

Expanding our share of wallet.

Gaining market share unlocking new markets, assessing new capabilities and driving efficiencies through vertical integration.

Today, we announced an update an extension to our share repurchase program, allowing the company to continue returning capital to the shareholders.

This is just one of many examples of how the refreshed board and management team are acting on the lessons learned from the proxy contest just one year ago.

Now I'll turn to Jamie to provide details on the financials Jamie.

Thank you David.

Turning to the second quarter financial results.

Bookings came in at 37 4 million down 4% from the same period a year ago.

But largely in line with our expectations for the first half of the year given the difficult comparison Q.

Q2, FY 'twenty two.

New client wins accounted for approximately 20% of bookings this quarter and we continue to see strong demand for our solutions.

Total revenue of $159 million in the quarter increased 7% year over year.

Recurring revenue accounted for $143 5 million or 90% of total revenue.

And grew two 6% year over year due to strong performance in transactional and data services and managed services.

And especially patient pay and cloud managed cloud services offerings.

I want to remind our listeners that the prior year financial results included a full quarter of commercial dental operations compared to one one months this quarter.

On a pro forma basis, our total revenue would have increased approximately five sorry, approximately 8% and recurring revenue would have increased 7%.

Nonrecurring revenue of $15 9 million increased by 17% over the last year, where we saw strong growth from nonrecurring services, which were up 43% year over year.

We expect this revenue line will continue to show strong growth throughout the remainder of the year.

Software and hardware revenues will continue to be lumpy on a quarter by quarter basis, but are expected to be flat to declining in aggregate.

Gross margin of 48, 2% was down 310 basis points compared to the same quarter last year, but up 40 basis points compared to the prior quarter.

Trends, which we discussed on last quarter's call is due to a combination of several factors, including investments in our upgrades center of excellence and products mix shift.

Margin improvement will continue to be a focus and spend related to upgrades should start to moderate in fiscal year 'twenty four.

Turning to operating expenses.

G&A of $44 9 million decreased by 30% compared to last year, when the company incurred significant expense related to the proxy contest and other legal matters.

Net R&D expense of $20 9 million, which represents 13% of total revenue increased $2 3 million or 13% from a year ago as we continue to invest across our three domains.

We had a GAAP revenue.

Sorry, we had a GAAP tax provision of $5 7 million this quarter with a GAAP effective tax rate of 29, 5%.

Our non-GAAP tax rate remains at 20%.

On a GAAP basis Q2 fully diluted net income per share was <unk> 20.

Compared to a net loss of <unk> 10 per share in the fiscal second quarter of 2022.

Note that.

Q2.

Fiscal 'twenty three benefited from the sale of commercial dental.

On a non-GAAP basis fully diluted earnings per share for the fiscal second quarter of 2023 was 25.

Compared to 29, <unk> in the year ago quarter.

This result was modestly ahead of our first quarter commentary and consensus.

Turning to the balance sheet, we ended the fiscal second quarter with $70 7 million in cash and equivalents and no balance outstanding on our line of credit.

Free cash flow for the quarter was $28 1 million.

We purchased 428000 shares this quarter.

407.

At an average cost of $17 21 per share.

Since the authorization of our share repurchase program in the fiscal third quarter of 2022, we have purchased a total of two seven.

7 million shares.

$445 8 million at an average cost of $16 66 per share.

As mentioned in our earnings release.

We have updated the share repurchase program by extending the term and increasing the authorized amount by $100 million.

Therefore, the company will be allowed to purchase an additional $114 million of its shares outstanding through March of 2025.

I want to call your attention to an update in the ongoing regulatory investigation.

Noted in our disclosure in the 10-Q, we filed today.

The United States' Attorney's office recently informed us of the existence of a sealed qui Tam lawsuit concerning the issues. We have been discussing with their office, we've not seen a copy of the lawsuit because it remains under seal.

And because of the investment investigation is ongoing we cannot discuss it beyond what we have described in our disclosure.

Now to our updated fiscal 2023 financial guidance.

As noted in the press release, we are increasing our prior guidance for the above planned revenue growth performance.

We now expect fiscal 2023 total revenue to be in the range of $630 million to $640 million.

Which represents a year over year growth of six 5% at the midpoint.

Moving to adjusted EBITDA, we are increasing our guidance range to between $110 million and $115 million.

In our fiscal non-GAAP EPS is now in a range between 93 and 99 cents.

In closing I am pleased with the continued momentum and diversified growth we generated in the quarter.

We will continue to focus on growth as we can.

Our internal and external capital deployment to drive long term shareholder value.

And now let me turn the call back to David for closing comments.

Thank you Jamie.

Nextgen continues to execute with a focus on driving growth for both us and our clients and we're making the investments required to deliver long term profitability and scale.

Our overall positive outlook reflects the tailwind we created by solely focusing on ambulatory care.

Our resilient business model and our focus on driving shareholder value.

In summary.

I am pleased with this quarter's results.

I am incredibly proud of the commitment and care shown by the Nextgen family.

Close to each other and to our clients.

This concludes my comments and let's move on to questions operator.

Thank you Sir.

At this time, if you would like to ask a question. Please press the star and <unk> on your Touchtone phone.

You may remove yourself from the queue at any time by pressing star Q.

Once again that is star one to ask a question.

And our first question will come from Stephanie Davis with SBB Securities. Your line is open.

Hey, guys. Thank you for taking my question Congrats on a really strong quarter. So first the question that supplies.

I'd love to hear a little bit more about going with zions data exchange strengths with Stephen Byrd.

That's been a sweep area of the world for a while.

Thanks, Stephanie.

The data strength could be a number of factors that are in that line there.

Adi, where we're seeing volumes pick up like we've talked about in prior calls above pre pandemic levels our data business.

In our payments business, which is kind of part of Adi. So that that line item is one reason we broke it out as we think it will grow well in the next couple of years.

And so.

We're seeing the first this is the first quarter that we've broken that out.

We expect that to grow well as we move forward.

Is that a particular end market that youre focused on me and Danny.

Or is this a function of where we are competing.

Our legacy platform.

Thank you Dan.

I would say it's more we're getting we've combined these assets together in a way that makes it easy for our clients.

Take uptake these assets up by these assets.

And by bringing them together.

However to sell them.

Relatively quickly and they turned to revenue more quickly as well.

As we kind of.

Package multiple things together and get a larger sale at once.

Thank you. Our next question will come from Jack Wallace with Guggenheim. Your line is open.

Okay. Thanks for taking my questions and congrats on another strong quarter.

And just to follow up on Stephanie's question.

There was a.

Relationships that consolidation of the pain patient pay portion relationship now forgetting the name of the.

Your question was there any benefit from just a more coherent go to market.

With that service.

Net of having three internal solutions now you've got one.

And then I had a couple of follow ups.

Yes, yes, that's a great question, sorry, if I didn't answer that well Stephanie thanks for the follow up Jack.

We've combined these together.

So we can get a larger share of wallet and have integrated solution. So to your point instead of selling three point solutions were coming forward and said, we'll take care of all of these these functions for you.

Integrated so it's easy to implement for us so.

I spent time, both from a marketing perspective, putting these together getting our pricing and packaging right, which is one reason, we're seeing good uptake and from an engineering perspective, we've made it easy to send a single interface through.

To get to these benefits instead of implementing all three of them separately, which would be slower.

That value realization for the client and it's slower for us to get the revenue to come online. So.

We've simplified both.

Youre seeing the results of that as we go to market.

In this in this line item.

Got you that's helpful.

And then it was I wanted to ask little bit about the data inside the business and.

What it would mean for Nextgen to get QA Cheyenne status in.

In terms of is this going to be a.

Tam expansion event is this going to <unk> and <unk>.

Acceleration of go to market.

And then what is the and the impact of getting access to incremental sources of data.

In terms of again.

Powering analytics and helping your customers.

With there.

The risk based contracts.

It's a great question and it's part of our insights business. So one of the things that we think is really powerful for from a client perspective.

Back to this to bring them faster speed to value. So we would help control the endpoints.

From next Gen to next Gen and to other.

Things like pharmacies or other things that are on the network. So.

Just talking to a client last week federal.

Federally qualified health center in there.

We're.

Working through when the new pharmacy.

Opens on their in their town. After then to work and it takes them a month or two to get that set up in the Walgreens has been opened for months. So their consumers are unhappy that they are waiting to get that data.

Through so.

What we are.

Able to do then with the queue NSA hope you want that pharmacy, we've already got it in the next practice it opens or where do you need to operate and we can do that.

So we're facilitating that data and we also think theres an opportunity with all of that data to then do other tools on top of it like you mentioned for value based care because now we know not just the data that's flowing through our client systems, but where are the referral patterns, where his data moving to which pharmacy how can we.

Make things more efficient.

We think over time. This is more forward looking but over time there'll be opportunities for us because of the extensibility of that platform to add on applications.

On top of that you had network that will bring value.

To our clients and to two others in the healthcare ecosystem.

Thank you.

Our next question will come from Sean Dodge with RBC capital markets. Your line is open.

Yes.

Good afternoon.

And then maybe on the guidance if you could just bridge for us.

You raised the revenue by $8 million at the midpoint and EBITDA target is up by about $1 million again at the midpoint.

<unk> dropped through.

The lack of drop through from higher revenue and EBITDA is that being affected by.

Jamie the mix shift you referenced or is it just as simple as there's more reinvesting or maybe a little bit more cost inflation than than you had initially expected.

It's a combination of the mix shift as well as there is some investment in terms of bringing these revenue streams online.

Our EBIT margin it might have been $1 six compared to one <unk>.

It wasn't too far off.

Sure Okay Fair point.

And then.

Maybe maybe just broadly on end market activity, we've heard from other vendors selling into providers that fit because of pressures or distractions related to the macro economy that buying decisions are being delayed sales cycles are longer.

David based on your comments it doesn't sound like that's what you all are seeing so maybe if you could comment on any change in sales pipeline pace of buying decisions.

Thanks.

Thanks.

I think of that more happening on the hospital side of the healthcare system.

Where I think they are really challenged on the on the staffing.

Shortages, especially of nurses and the inflationary wage pressure.

On labor because of those shortages.

When we talk to hospitals.

We don't do very often but when we do it does seem like they are pulling back on their capital spend because their opex has increased so much.

Contrast that with the average physician office, where there hasnt really been any change in capex there still in the same office.

And in fact, Theyre seeing volumes increase and for US those staffing shortages can be a tailwind for our managed services business, which you see has grown nicely this quarter as well.

Where they may want us to host the application for them in the cloud or they're looking at revenue cycle outsourcing services. So.

We're seeing a different dynamic.

But to comment on the pipeline, we're seeing a strong growing pipeline.

And still feel really good about the growth this year.

Thank you.

Our next question will come from George Hill with Deutsche Bank. Your line is open.

Good evening, guys and thanks for taking the question and David My questions, probably the opposite side of Sean's question, though it may also be focused a little bit more upmarket, we're hearing a lot of discussion around <unk>.

Omar vendors trying to take price in the current environment and I guess, just as you think about kind of whether it's new clients of renewals I guess can you talk about what youre seeing in the pricing environment.

You guys have the opportunity to take price, whether youre seeing competitors take price.

I have a quick follow up if you don't mind.

Yes, that's a good question in this environment. So we've raised prices earlier this year, we raise them on an annual basis.

We might even talked about it on the call, but CPI at the time, it's hard to believe but CPI back in January was only $4 one.

<unk> for the prior year.

I don't think any of US expect that's where it's going to be in January of next year, when we get to that next pricing milestone.

But our contracts allow us to price through that capability.

We are seeing in the market some competitors raise prices by.

Fairly healthy amounts.

We see that as an opportunity for us to gain market share at a price that still works for us.

One of the reasons is where some of the investments we're making are trying to lower our operating expenses. So that we have room for that.

Ed.

Yes, so I think.

That could be an opportunity we will probably raise prices, where we're contractually are allowed to.

Just like we did this year.

But.

From the overall environment I think.

Theres not a lot of resistance to price increases so far that we've seen it's been fairly elastic.

Okay. That's helpful. And then just a quick follow up is on the expansion of the share repurchase opportunity or share repurchase authorization.

It's great that you guys are buying back stock here I guess I would just love to hear your comments on what Youre seeing in the M&A environment and kind of asset prices, given where the market is right now and whether you whether you guys feel like youre seeing interesting opportunities in the M&A market or should we take the expansion of the authorization is that kind of slim pickings out there.

I wouldn't.

The two just due to the cash flow generation capability, that's in the business.

<unk> had a good cash generation quarter last quarter, but to your question we are seeing.

Asset prices become more realistic I think that's partially because at the high end of.

High yield debt, it's difficult to get that instrument placed in this up interest rate environment.

For private equity and others. So we have less kind of natural competitors in the market.

So we're bullish on the ability to go do.

Acquisitions.

At the same time last year was when we had authorized this original share repurchase so it naturally came up and we looked at our forward cash needs and said, let's just authorizes for a little bit longer.

And then the last time and that kind of roughly equate it to the same amount. So I think youll see.

Similar kind of spend will be opportunistic, but our preferred use of capital is for acquisitions.

Thank you.

Our next question will come from Jessica <unk> with Piper Sandler Your line is open.

Hi, Thank you so much for taking my questions.

So I think we were interested to know on the enterprise side you. Obviously, the first to achieve that the cares Act certification in March of 'twenty two.

So in the first six or so months of that certification how did the your head start kind of convert to net new share.

Thank you said, 20% of bookings were net new customers, but just how much of that was related to the enterprise EHR.

Yes, Thanks, Jessica welcome to the call as well. So appreciate the question and your joining.

The.

The perspective of where we are in that in that cycle.

Through a lot of our base.

<unk>.

A third of the basis now on that on that version.

And the net new it's not showing up yet as much as we'd like.

And what I mean by that is I think people are hoping that the government see theyre going to delay that penalties from next December or that.

They are their current provider will come through at the end and be compliant and what we talk to clients about is that even if they became compliant and three or four months to get through all of the upgrades of their base is going to be difficult.

So we feel good about our position and in fact, we have discussions with potential clients around rather than upgrade with your current well switching on the same timeline and youll have certainty.

Because with hundreds of clients on the on the Cures Act certified version.

You have less risk than if you're in the first 50 clients take the upgrade from someone else. So.

I think we should see tailwind from that if the government delays it may spread it out over a time period, but otherwise we're really happy with our positioning then frees up our R&D resources to work on.

More exciting things like provider experience or patient experience, our new adjacent products.

Got it. Thank you that makes a lot of sense and then just my quick follow up would be.

Where are you guys today in terms of the portfolio review any any sort of guidance on when that might be complete.

And thanks for having me back on the call.

Yes for sure.

So we're not we're through reviewing the portfolio there'll be.

Talking about the last time no further divestitures that we see it at this time.

And on the from a surround sound perspective, we're on track to Jimmy mentioned it in his in his piece, but the portfolio is doing well we've sold about $47 million of the $100 million. So far we're about halfway to our goal and we're about halfway there timeline wise. So we feel good about that piece too. We think we have the right assets.

And they're resonating in the market and selling well.

Thank you.

Our next question will come from Jalan Justin with Truest. Your line is open.

Thank you and thanks for taking my questions a quick follow up on Sean's question earlier around the macro environment disciplined from Audi, implying that we should not be reading much into this new client bookings slightly declining from 25% last quarter. It was 20% this quarter and staying on the same topic that on wage inflation tight.

Labor market as you think about your own employee base.

Has been Europe , and bright attention and effort in this environment, how do you deflecting any wage inflation impact in your outlook.

Thank you Andre and welcome to the call as well.

I appreciate the question. So yes to your first question, if I answer and one we're not seeing any.

Slowdown in sales or growth, even though we're just a little off from them.

25%, where we'd like to be.

Yes.

This was the most large.

Over $1 million sales, we had five of them this quarter that we've ever had.

So that's really good.

The downside of having really large deals as they are lumpy and so youll see that.

Some of those deals are in this next quarter, but we feel good about the full year number and our progress there.

With regard to our own.

Our unemployed.

That's in our number already so we've baked in.

That.

Increased earlier this year when we started the fiscal year.

We're looking at next year and the following year end.

Thinking about worst case scenario, if you're having to do 8% increases each of the next two years, what kinds of adjustments do we need to make in the business to be sure we hit our both our growth and profitability growth goals.

We think those are achievable so.

We are seeing some of that wage inflation.

Maybe pointed out as well that we do have a good portion of our work forces outside of the U S and India.

Sure.

Inflation.

The overall is a little bit reasonable.

Tamped down.

Opportunity to still cost shift if we need to and so we have levers to be sure that we are.

Being as productive as possible with our with our salaries.

Okay. That's helpful. Just a quick follow up.

Follow up question that on the EBITDA in the quarter are clearly.

Margins came in much better than expectation some nice sequential step up as well anything in particular to call out in terms of any base of investments talk sense in any of the expenses in the quarter compared to your expectations. It seems like R&D expense went down sequentially. So any any color there.

There was.

Just with.

Sure.

With last year.

Last quarter there is a.

A little bit on the margin, where you get a little bit of toggling of expenses for things like benefits I mentioned this last time.

It was down relative to last quarter, but we're talking a fairly negligible amount.

I'm trying to think if theres more software, perhaps this quarter.

A little more software revenue this quarter, but there is nothing that jumps out.

To me.

I'm trying to think.

Okay.

That's it straight down the middle for the most part.

Thank you.

Once again that is star one to ask a question.

Next we have a question from Jack Wallace with Guggenheim. Your line is open.

Thanks for the follow up.

Last quarter, there was some discussion about.

The implementation team, maybe being a little bit.

Behind in terms of hiring.

Where are we.

With regards to implementation team that I think there was also.

Contract labor in the R&D line that would have burned off this quarter.

Or is that.

Was this a fully clean quarter in terms of contract labor or is there still may be a <unk>.

<unk> stepped down from any contribution quarter over quarter.

Yes, thanks for the question.

Contact contract labor at all.

Still be in the numbers.

So that one will continue and then move around just as we get projects completed over time it will reduce.

As we get through some of these onetime projects like <unk>.

Moving something to the cloud entirely.

Our own implementation of internal software to make ourselves more productive that we've talked about before.

As far as the professional services.

We're feeling good about that hiring we have stepped that up we've taken some concepts like.

Hiring 20 people at a time and doing a mask on boarding into that group and thats been really productive to have these kind of velocity classes.

And we will continue that as a way to go.

Get those skill sets ramped up quickly and then allocate them into.

And to the professional services or our backlog continues to grow so we've got a backlog to work through this highly visible we've gone through it.

It's all real so that's really encouraging and youll continue to see.

A reasonable growth in the professional services.

<unk> on a nonrecurring basis as we work through projects.

Okay. That's helpful. Thank you.

Thank you.

Our next question will come from Anne Samuel with Jpmorgan. Your line is open.

Hey, guys. Thanks for the question my follow up on Jessica's question, but interoperability.

Maybe you could talk a little bit about what is drop dead look like next December other competitors arent certified and how are you messaging competitively around that.

Yes.

The.

What does it look like as it looks like it's going to be penalties right. So that youll start to pay penalties as a provider if youre not.

Certified and then the other potential problem as you can.

Have people.

Tumors are others say youre not giving me my data you are blocking my data in my interoperability.

<unk>.

We will see how that test out, but certainly the government.

<unk> intends to enforce penalties.

And.

We're ready so our clients will be ready.

We believe this interoperability we think it actually hit the fragments healthcare and is one way to reduce the price of health care.

No.

Our view is that the government will continue to move forward with us because the law was written in 2015, so they gave providers and people such as our software providers in the.

Physicians eight years to comply.

The government has already issued things from CMS, saying no.

After seven years, we expect you to be able to demonstrate this and I think thats fairly reasonable.

So we'll see how it plays out but I think competitively.

Play out if others arent able to get them there.

People switch at some point, if their suppliers that can't afford to make the investments and meeting regulatory hurdles.

That's really helpful color and I guess, maybe just a follow up to that you had said previously that you were kind of the first to get.

I'm curious certified have you seen anyone else move to do that or are you still.

The only one.

There is another so you can look on the chapel on the government chapel website.

There is one one other that's out there now.

So far it's just us.

A lot of market share more on the hospital side, but.

You don't really everyone should be right I'm kind of surprised that people are are so slow to adopt the standard.

We'll see.

Competitive advantage for us and we'll use it as we can.

Thank you.

That does conclude our question and answer session and I would now like to pass it back to David for any additional or closing remarks.

Thank you again for your interest in Nextgen healthcare really appreciate the questions and we.

We had a really good quarter.

We'll talk to you again next quarter. Thanks.

Thank you ladies and gentlemen, this does conclude today's teleconference and we appreciate your participation you may disconnect at any time.

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