CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS


This Quarterly Report on Form 10-Q ("Report") and certain information
incorporated herein by reference contain forward-looking statements within the
"safe harbor" provisions of the Private Securities Litigation Reform Act of
1995. All statements included or incorporated by reference in this Report, other
than statements that are purely historical, are forward-looking statements.
Words such as "anticipate," "expect," "intend," "plan," "believe," "seek,"
"estimate," "will," "should," "would," "could," "may," and similar expressions
also identify forward-looking statements. These forward-looking statements
include, without limitation, discussions of the impact of the COVID-19 pandemic
and measures taken in response thereto, as well as our product development
plans, business strategies, future operations, financial condition and
prospects, share repurchases, developments in and the impacts of government
regulation and legislation and market factors influencing our results. Our
expectations, beliefs, objectives, intentions and strategies regarding our
future results are not guarantees of future performance and are subject to risks
and uncertainties, both foreseen and unforeseen, that could cause actual results
to differ materially from results contemplated in our forward-looking
statements. These risks and uncertainties include, but are not limited to, our
ability to continue to develop new products and increase systems sales in
markets characterized by rapid technological evolution, consolidation, and
competition from larger, better-capitalized competitors. Many other economic,
competitive, governmental and technological factors could affect our ability to
achieve our goals, and interested persons are urged to review any risks that may
be described in "Item 1A. Risk Factors" as set forth herein and other risk
factors appearing in our most recent Annual Report on Form 10-K for the fiscal
year ended March 31, 2022 ("Annual Report"), as supplemented by additional risk
factors, if any, in our interim filings on our Quarterly Reports on Form 10-Q,
as well as in our other public disclosures and filings with the Securities and
Exchange Commission ("SEC"). Because of these risk factors, as well as other
variables affecting our financial condition and results of operations, past
financial performance may not be a reliable indicator of future performance and
historical trends should not be used to anticipate results or trends in future
periods. We assume no obligation to update any forward-looking statements. You
are cautioned not to place undue reliance on forward-looking statements, which
speak only as of the date of the filing of this Report. Each of the terms
"NextGen Healthcare," "NextGen," "we," "us," "our," or the "Company" as used
throughout this Report refers collectively to NextGen Healthcare, Inc. and its
wholly-owned subsidiaries, unless otherwise indicated.

This management's discussion and analysis of financial condition and results of
operations ("MD&A") is provided as a supplement to the condensed consolidated
financial statements and notes thereto included elsewhere in this Report in
order to enhance your understanding of our results of operations and financial
condition and should be read in conjunction with, and is qualified in its
entirety by, the condensed consolidated financial statements and related notes
thereto included elsewhere in this Report. Historical results of operations,
percentage margin fluctuations and any trends that may be inferred from the
discussion below are not necessarily indicative of the operating results for any
future period.

Company Overview

NextGen Healthcare is a leading provider of innovative, cloud-based, healthcare
technology solutions that empower healthcare practices to manage the risk and
complexity of delivering care in the United States healthcare system. Our
combination of technological breadth, depth, and domain expertise makes us a
preferred solution provider and trusted advisor for our clients. In addition to
highly configurable core clinical and financial capabilities, our portfolio
includes tightly integrated solutions that deliver on ambulatory healthcare
imperatives, including consumerism, digitization, risk allocation, regulatory
influence, and integrated care and health equity.

We serve clients across all 50 states. Over 100,000 providers use NextGen
Healthcare solutions to deliver care in nearly every medical specialty in a wide
variety of practice models including accountable care organizations ("ACOs"),
independent physician associations ("IPAs"), managed service organizations
("MSOs"), Veterans service organizations ("VSOs"), and dental service
organizations ("DSOs"). Our clients range from some of the largest and most
progressive multi-specialty groups in the country to sole practitioners with a
wide variety of business models. With the addition of behavioral health to our
medical and oral health capabilities, we continue to extend our share not only
in federally qualified health centers ("FQHCs") but also in the growing
integrated care market.

Our company was incorporated in California in 1974. Previously named Quality
Systems, Inc., we changed our corporate name to NextGen Healthcare, Inc. in
September 2018, and in 2021, we changed our state of incorporation to Delaware.
As a remote-first company, we no longer maintain a principal executive office.
Our principal website is www.nextgen.com. We operate on a fiscal year ending on
March 31.

Our Vision, Mission and Strategy


NextGen Healthcare's vision is better healthcare outcomes for all. We strive to
achieve this vision by delivering innovative solutions and insights aimed at
creating healthier communities. We focus on improving care delivered in
ambulatory settings but do so recognizing that the entire healthcare ecosystem
needs to work in concert to achieve the quadruple aim… "to improved patient
experience, improved provider experience, improve the health of a population,
and reduce per capita health care costs."

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Our long-term strategy is to position NextGen Healthcare as both the essential,
integrated, delivery platform and the most trusted advisor for the ambulatory
practices of the future. To that end, we primarily serve organizations that
provide or orchestrate care in ambulatory settings and do so across diverse
practice sizes, specialties, care modalities, and business models. These
customers include conventional practices as well as new market entrants.

We plan to continue investing in our current capabilities as well as building
and/or acquiring new capabilities. In October 2019, we acquired Topaz
Information Systems, LLC for its behavioral health solutions. In December 2019,
we acquired Medfusion, Inc. for its Patient Experience Platform capabilities
(i.e., patient portal, self-scheduling, and patient pay) and OTTO Health, LLC
for its virtual care solutions, notably telemedicine. In November 2022, we
acquired TSI Healthcare, LLC ("TSI") for its purpose-built clinical content and
differentiated service offerings, which expands the addressable market served by
our Enterprise domain, including new specialties, such as rheumatology,
pulmonology and cardiology. The integration of these acquired technologies has
made NextGen Healthcare's solutions among the most comprehensive in the market.
Further, we are also actively innovating our business models and exploring new
high-growth market domains as we extend our position as the essential,
integrated, delivery platform and trusted impact partner for the ambulatory
practices of the future.

Market Opportunity, and Trends


The scale and scope of the healthcare industry continues to expand. Annual
United States healthcare spend today represents nearly $4.1 trillion and ~20% of
GDP. A significant portion of this spend is directed towards the treatment of
chronic conditions and administering an increasingly complex system with diverse
stakeholders. While there are several convergent market forces reshaping the
healthcare industry landscape, we are focused on six trends we believe will
materially impact the markets we participate in and our customer value
proposition:

1.

Regulatory Influence - Medicare and Medicaid continue to expand and represent
approximately a third of covered lives. Further, the 21st Century Cures Act
("Cures Act") certification requirements and impending changes by Centers for
Medicare & Medicaid Services ("CMS") to Medicare reimbursement and shared
savings programs parameters (i.e., MIPS, MSSP and telehealth programs) represent
continued and escalating regulatory requirements in the healthcare industry
broadly and the shape of primary healthcare. Considering these regulatory and
market-based changes, many ambulatory practices have come to place a very high
value on partnering with vendors that stay ahead of these regulatory and
industry changes

2.

Risk Reallocation - As healthcare shifts away from defined benefit models
towards defined contribution, employers, payors, providers and consumers are
increasingly evaluating models to share and reallocate risk. In 2020, nearly 40%
of all healthcare payments representing over 75% of all covered lives flowed
through an alternative payment model. While Medicare Advantage related payments
led the charge with over 55% of payments tied to alternative models, a plurality
of commercial payors are also leveraging value-based provider arrangements to
incent care quality standards and reduce health disparities. For providers,
effective participation in these models requires a full view of the patient
population's clinical and cost data and robust financial management solutions
and services to navigate multiple contract types.

3.

Consumerism - Consumers are increasingly directing their own healthcare and are
expecting greater levels of access, convenience, and experience personalization.
Beyond tailoring healthcare interactions to their needs and preferences, they
also expect much greater transparency about the costs for visits, medications,
and procedures. Accompanied by a significant shift of care from inpatient to
lower cost outpatient settings and virtual modes, healthcare is poised to
becomes increasingly 'retail-like' and will place unique demands on practices
and care providers who need comprehensive engagement platforms to attract,
retain and engage patients through their complete health journey

4.

New Modalities and Coordinated Team Based Care – Untethered from physical
clinics and desktops, care is now being delivered in “boundless” venues by
multiple, coordinated care providers.

5.

Meaningful Interoperability & Digitization – Greater levels of data exchange,
automation, Artificial Intelligence (AI) and speech enabled workflows.

6.

Integrated Care and Health Equity – Integrated, whole-person health continues to
trend strongly as evidenced by FQHCs/CHCs receiving Health Resources and
Services Administration
(“HRSA”) funding to drive integrated medical,
behavioral, and oral health. Public sector and private investment in
understanding and addressing social determinants of health and improving
community health are growing.


NextGen Healthcare is well positioned to play a key role in guiding our clients
through short-term and long-term changes that impact healthcare in the United
States and is committed to helping them deliver better outcomes.

Our Value Proposition

NextGen Healthcare’s value proposition to our clients can be summarized by the
four “I’s” as follows:

Integration - Delivering a broad and highly integrated set of solutions and
end-user experiences. NextGen Healthcare, a top KLAS-ranked platform solution
provider, is driving greater levels of efficiency and experience for practices.
Our clients

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value the full breadth of our solution offering and seamless integration into
their clinical workflows. This integration is an important determinant of our
success.

Interoperability - Building seamlessly connected data and human networks across
ambulatory healthcare. NextGen Healthcare's Interoperability solutions help
create a frictionless environment where those that need important healthcare
data can rapidly find and utilize it. For example, NextGen Healthcare powers
over a third of all United States Health Information Exchanges ("HIE's"), with
over 170 million patient records passing over our network of almost 2.8 million
directory addresses.

Insights - Providing intelligence at the point of care to enable better health
and financial decision-making. We are helping our clients move from being data
rich to insight rich. By providing intelligence, through innovative solutions
that take data out of electronic health records ("EHR"), normalize, cleanse, and
present it back as usable data pipelines, NextGen Healthcare can help optimize
prescription guidance, care gap reviews, billing quality, practice variance,
etc. and insert it directly into clinician's workflows in order to facilitate
sound clinical and financial decisions when serving patients.

Impact – Delivering and shaping outcomes in all aspects of our solutions and
service. NextGen Healthcare is pivoting towards becoming a true performance
partner for our clients and is evidenced by proactively helping manage
performance and outcomes for our clients.


NextGen Healthcare delivers value to our clients in several ways. Our solutions
enable our clients to address current needs while preparing for the needs of the
future including expanding access to health services, enhancing the coordination
and management of care, and optimizing patient outcomes while also ensuring the
sustainability of their practices. Specifically, we offer a range of solutions
to allow clinicians to practice anywhere and in new and innovative collaboration
models.

NextGen Healthcare provides integrated cloud-based solutions and services that
align with our client’s strategic imperatives. Ultimately, this value is
reflected in the overall insights and impact delivered to the client. The
foundation for our integrated ambulatory care platform is a core of our
industry-leading EHR and practice management (“PM”) systems that support
clinical, financial and patient engagement activities.


We optimize the core with an automation and workflow layer that gives our
clients control over how platform capabilities are implemented to drive their
desired outcomes. The workflow layer includes mobile and voice-enabled
capabilities proven to reduce physician burden. Recognizing that engaged
patients are key to positive outcomes, our patient experience platform enables
our clients to create personalized care experiences that enhance trust and drive
patient loyalty. Further, we support the advances in integrated care that
focuses on the whole person with solutions supporting behavioral and oral
health. Our cloud-based population health and analytics engine allows our
clients to improve results in both fee-for-service and fee-for-value
environments.

In support of extensibility, we surround the core with open, web-based
application programming interfaces ("APIs") to drive the secure exchange of
health and patient data with connected health solutions. Our commitment to
interoperability, defragmenting care and our experience powering many of the
nation's HIE's places us in a unique position to enable our clients to leverage
this technology to lower the cost of care and improve the patient and provider
experience by providing an integrated community patient record.

Finally, to ensure our clients get maximum value from our solutions, we have
augmented our technology with key services aligned with their needs, helping to
ensure they reach their organizational goals. We partner with our clients to
optimize their information technology ("IT") operations, enhance revenue cycle
processes across fee-for-service and fee-for-value models, service line
expansion and operations, as well as advise on long-term strategy.

Positioning NextGen Healthcare for Growth. As NextGen Healthcare applies this
value proposition framework across the ambulatory care market, we incorporate
some or all our current solution offerings within three broad domains
illustrated in Figure 1 below:

Enterprise - The Enterprise domain is both the largest and incorporates our
broadest portfolio of solutions (e.g., clinical, financial, and patient
engagement solution portfolios) provided to ambulatory care practices that
incorporate 10 or more healthcare providers. One of these solutions, our
practice management offering, NextGen® Enterprise PM, was recognized as the #1
Practice Management Solution (11-75 Physicians) for four consecutive years -
2019, 2020, 2021 and 2022 Best in KLAS Report.

Office - The Office domain reflects almost all solutions (software solutions and
adjacent services) provided to an ambulatory care practice that incorporates
fewer than 10 healthcare providers. Our main offering in this group is a
cloud-based, multi-tenant SaaS EHR and PM solution, called NextGen® Office,
which was recognized as the #1 Small Practice Ambulatory EMR/PM (<10 Physicians)
in the 2022 Best in KLAS Report.

Insights - The Insights domain incorporates solutions that address
interoperability, data and analytics, and value-based care. Previously described
as population health and connected health, the Insights solutions portfolio is
offered to clients across both our Enterprise and Office domains as well as
additional ambulatory healthcare stakeholders addressing connectivity or
value-based care needs. NextGen is highlighting this domain as a reflection of
its overall importance and high future growth potential.

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Figure 1: NextGen Healthcare Solutions Domains

                     [[Image Removed: img75245657_0.jpg]]

Results of Operations


The following table sets forth the percentage of revenue represented by each
item in our condensed consolidated statements of net income for the three and
nine months ended December 31, 2022 and 2021 (certain percentages below may not
sum due to rounding):

                                             Three Months Ended December 31,              Nine Months Ended December 31,
                                              2022                     2021                2022                    2021
Revenues:
Recurring                                           91.9 %                   89.8 %              91.0 %                  90.4 %
Software, hardware, and other
non-recurring                                        8.1                     10.2                 9.0                     9.6
Total revenues                                     100.0                    100.0               100.0                   100.0
Cost of revenue:
Recurring                                           41.4                     38.8                40.9                    38.7
Software, hardware, and other
non-recurring                                        7.1                      5.3                 7.0                     5.2
Amortization of capitalized software
costs and acquired intangible assets                 4.2                      5.5                 4.4                     5.4
Total cost of revenue                               52.7                     49.6                52.2                    49.3
Gross profit                                        47.3                     50.4                47.8                    50.7
Operating expenses:
Selling, general and administrative                 28.5                     31.6                29.5                    35.9
Research and development costs, net                 12.1                     13.0                13.1                    12.9
Amortization of acquired intangible
assets                                               0.6                      0.6                 0.5                     0.6
Impairment of assets                                 0.2                      0.0                 0.3                     0.4
Restructuring costs                                  0.0                      0.0                 0.1                     0.1
Total operating expenses                            41.4                     45.1                43.5                    49.8
Income from operations                               5.9                      5.3                 4.2                     0.9
Interest income                                      0.9                      0.0                 0.3                     0.0
Interest expense                                    (1.4 )                   (0.2 )              (0.6 )                  (0.2 )
Other income (expense), net                          0.0                      0.0                 2.2                     0.0
Income before provision for income
taxes                                                5.5                      5.2                 6.1                     0.7
Provision for income taxes                           0.6                      1.7                 1.4                     0.4
Net income                                           4.8 %                    3.5 %               4.8 %                   0.3 %




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Revenues

The following table presents our disaggregated revenues for the three and nine
months ended December 31, 2022 and 2021 (in thousands):


                                           Three Months Ended December
                                                       31,                    Nine Months Ended December 31,
                                              2022             2021             2022                  2021
Recurring revenues:
Subscription services                      $   45,850       $   41,158     $       132,025       $       120,581
Support and maintenance                        37,382           38,246             114,670               115,736
Managed services                               32,963           27,521              94,663                83,636
Transactional and data services                32,525           27,571              90,624                82,533
Total recurring revenues                      148,720          134,496             431,982               402,486

Software, hardware, and other
non-recurring revenues:
Software license and hardware                   5,258            8,920              19,373                24,202
Other non-recurring services                    7,899            6,305              23,267                18,403
Total software, hardware and other
non-recurring revenues                         13,157           15,225              42,640                42,605

Total revenues                             $  161,877       $  149,721     $       474,622       $       445,091

Recurring revenues as a percentage of
total revenues                                   91.9 %           89.8 %              91.0 %                90.4 %



We generate revenue from sales of licensing rights and subscriptions to our
software solutions, hardware and third-party software products, support and
maintenance, managed services, transactional and data services, and other
non-recurring services, including implementation, training, and consulting
services performed for clients who use our products.


Beginning in fiscal year 2023, in order to align the presentation of
disaggregated revenue with the manner in which management reviews such
information, we revised our presentation of disaggregated revenues by major
revenue categories to reclassify revenues related to patient pay services and
certain other services from the managed services category into the transactional
and data services category, which replaced the prior Electronic Data Interchange
("EDI") and data services category. The prior period presentation of revenues
disaggregated by our major revenue categories and by occurrence above have been
reclassified to conform to current year presentation.

Consolidated revenue for the three months ended December 31, 2022 increased
$12.2 million compared to the prior year period due to a $14.2 million increase
in recurring revenues, offset by a $2.0 million decrease in software, hardware
and other non-recurring revenues. The increase in recurring revenues was driven
by a $5.4 million increase in managed services, $5.0 million increase in
transactional and data services, and a $4.7 million increase in subscription
services, partially offset by a $0.9 million decrease in support and
maintenance. The increase in managed services revenue was primarily due to
higher patient volumes and billings compared to the prior year, as well as an
increase in hosting services associated with higher recent bookings. The
increase in transactional and data services revenue was primarily driven by
higher transaction volumes associated with our patient pay and EDI services. The
increase in subscription services reflect the incremental revenues associated
with the acquisition of TSI and higher connected health subscriptions from
higher recent bookings. Support and maintenance decreased primarily due to net
client attrition, our continued shift to subscription-based solutions, and the
negative impact to revenues associated with the acquisition of TSI, which was
one of our value-added resellers, and the disposition of our Commercial Dental
assets, as described in Note 6, "Business Combinations and Disposals" of our
notes to condensed consolidated financial statements included elsewhere in this
Report. The decrease in software, hardware, and other non-recurring revenues was
primarily due to a decrease in software license revenue due to lower bookings,
partially offset by higher professional services revenue from more hours
incurred and projects completed in the current year period.

Consolidated revenue for the nine months ended December 31, 2022 increased $29.5
million compared to the prior year period due to an increase in recurring
revenues. Software, hardware and other non-recurring revenues was flat compared
to the prior year period. The increase in recurring revenues was driven by a
$11.4 million increase in subscription services, $11.0 million increase in
managed services, $8.1 million in transactional and data services, offset by a
$1.0 million decrease in support and maintenance. The increase in subscription
services reflect the incremental revenues associated with the acquisition of TSI
and higher subscriptions of our NextGen Office and Insights solutions, including
interoperability, virtual visits, mobile, financial analytics, and NextGen
Enterprise solutions, due to higher recent bookings. The increase in managed
services revenue was primarily due to an increase in hosting services and RCM
services revenues associated with higher recent bookings. The increase in
transactional and data services revenue was primarily driven by higher
transaction volumes associated with our patient pay and EDI services. Support
and maintenance decreased primarily due to net client attrition, our continued
shift to subscription-based solutions, and the negative impact to revenues
associated with the acquisition of TSI and the disposition of our Commercial
Dental assets. Software, hardware, and other non-recurring revenues were flat at
$42.6 million as the increased professional services revenue from more hours

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incurred and projects completed in the current year period were offset by a
decrease in software license revenue from lower bookings.


Bookings reflect the estimated annual value of our executed contracts, adjusted
to include the effect of pre-acquisition bookings if applicable, and are
believed to provide a broad indicator of the general direction and progress of
the business. Total bookings were $44.8 million and $37.7 million for the three
months ended December 31, 2022 and 2021, respectively. The increase is primarily
due to higher bookings of population health subscriptions and patient pay
services, partially offset by lower software and maintenance bookings.

Total bookings were $121.5 million and $111.2 million for the nine months ended
December 31, 2022 and 2021, respectively. The increase is due to higher bookings
of patient pay services and EDI and data services, partially offset by lower
bookings of software and maintenance and subscriptions of mobile, virtual
visits, and NextGen Office.

We continue to see overall practice volumes at healthy, pre-pandemic levels.
This reflects in our volume- and transaction-based solutions, as noted above,
and reflects an ongoing industry trend of procedure volumes migrating out of
higher cost settings, like hospitals, favoring lower cost care settings and
independent healthcare providers. We also continue to see healthy activity
levels in our current pipeline. Sales development activities, such as lead
generation and demos, indicate a positive demand environment. We have not been
significantly impacted by the current economic concerns and general market
conditions, and we continue to constructively engage prospects and our clients
to find ways to achieve better outcomes for all.

Cost of Revenue and Gross Profit


The following table presents our consolidated cost of revenue and gross profit
for the three and nine months ended December 31, 2022 and 2021 (in thousands):

                                              Three Months Ended December 31,           Nine Months Ended December 31,
                                                2022                  2021                2022                  2021
Cost of revenue:
Recurring                                  $        67,047       $        58,033     $       194,330       $       172,312
Software, hardware, and other
non-recurring                                       11,515                 7,978              32,988                23,085
Amortization of capitalized software
costs and acquired intangible assets                 6,787                 8,193              20,665                24,246
Total cost of revenue                      $        85,349       $        74,204     $       247,983       $       219,643

Gross profit                               $        76,528       $        75,517     $       226,639       $       225,448
Gross margin %                                        47.3 %                50.4 %              47.8 %                50.7 %



Cost of revenue consists primarily of compensation expense, including
share-based compensation, for personnel that deliver our products and services.
Cost of revenue also includes amortization of capitalized software costs and
acquired technology, third party consultant and outsourcing costs, costs
associated with our EDI business partners and clearinghouses, hosting service
costs, third party software costs and royalties, and other costs directly
associated with delivering our products and services. Refer to Note 8,
"Intangible Assets" and Note 9, "Capitalized Software Costs" of our notes to
condensed consolidated financial statements included elsewhere in this Report
for additional information on current period amortization of capitalized
software costs and acquired technology and an estimate of future expected
amortization.

Share-based compensation expense included in cost of revenue was $0.7 million
and $0.6 million for the three months ended December 31, 2022 and 2021,
respectively. Share-based compensation expense included in cost of revenue was
$2.3 million and $1.6 million for the nine months ended December 31, 2022 and
2021, respectively.

Gross profit for the three months ended December 31, 2022 was $76.5 million
compared to $75.5 million in the prior year due to a $12.2 million increase in
revenues as discussed above, offset by a $11.1 million increase in cost of
revenue as discussed further below. Our gross margin decreased to 47.3% for the
three months ended December 31, 2022 compared 50.4% in the prior year period.

Gross profit for the nine months ended December 31, 2022 was $226.6 million
compared to $225.4 million in the prior year period due to a $29.5 million
increase in revenues as discussed above, offset by a $28.3 million increase in
cost of revenue as discussed further below. Our gross margin decreased to 47.8%
for the nine months ended December 31, 2022 compared to 50.7% in the prior year
period.

The increase in cost of revenue for the three and nine months ended December 31,
2022 compared to the prior year period was primarily due to higher costs of
patient pay services directly associated with higher recent revenues and
bookings. Other recurring cost of revenue, including subscription services,
managed services, and EDI and data services costs, also increased driven by
higher revenues and bookings, resulting in higher hosting costs and higher
salaries and benefits from increased employee headcount associated with
delivering our software solutions and services. Software, hardware, and other
non-recurring services

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revenue costs increased compared to the prior periods primarily due to higher
salaries and benefits from increased employee headcount and an increase in
consulting costs associated with the delivery of our professional services as we
accelerate Spring'21 migration. These increases in cost of revenue were
partially offset by lower amortization of capitalized software costs and
acquired intangible assets, as noted above.

Our gross margin for the three and nine months ended December 31, 2022 compared
to the prior year period decreased primarily due to increased investments in
professional services as we accelerate Spring'21 migration and a shift in
product mix to lower margin transactional and data services, including patient
pay services, and higher managed services, as noted above.

Selling, General and Administrative Expense

The following table presents our selling, general and administrative expense for
the three and nine months ended December 31, 2022 and 2021 (in thousands):


                                              Three Months Ended December 31,           Nine Months Ended December 31,
                                                2022                  2021                2022                  2021
Selling, general and administrative        $        46,177       $        47,238     $       140,097       $       159,615
Selling, general and administrative, as
a percentage of revenue                               28.5 %                31.6 %              29.5 %                35.9 %




Selling, general and administrative expense consists of compensation expense,
including share-based compensation, for management and administrative personnel,
selling and marketing expense, facilities costs, depreciation, professional
service fees, including legal and accounting services, legal settlements,
acquisition and transaction-related costs, and other general corporate and
administrative expenses.

Share-based compensation expense included in selling, general and administrative
expenses was $6.7 million and $5.3 million for the three months ended December
31, 2022 and 2021, respectively. Share-based compensation expense included in
selling, general and administrative expenses was $19.4 million and $13.7 million
for the nine months ended December 31, 2022 and 2021, respectively. Refer to
Note 14, "Stockholders' Equity" of our notes to condensed consolidated financial
statements included elsewhere in this Report for additional information of our
share-based awards and related incentive plans.

Selling, general and administrative expenses decreased $1.1 million in the three
months ended December 31, 2022 compared to the prior year. The decrease in
expense from the prior year period was primarily driven by lower incentive bonus
expense and lower facilities and infrastructure costs, partially offset by
increased share-based compensation expense, as noted above, higher travel,
conferences, and conventions costs, and incremental acquisition costs associated
with the acquisition of TSI.

Selling, general and administrative expenses decreased $19.5 million in the nine
months ended December 31, 2022 compared to the prior year. The decrease in
expense from the prior year period was primarily driven by higher legal and
related costs for our shareholder litigation matter incurred in the prior year
period, including a $11.4 million payment related to the indemnification of
certain expenses related to the Hussein matter and approximately $9.3 million of
incremental proxy contest expenses associated with our prior year annual
shareholders' meeting. Incentive bonus expense and facilities and infrastructure
costs also decreased compared to the prior year period, which was partially
offset by increased share-based compensation expense, as noted above, higher
travel, conferences, and conventions costs as these activities resume, higher
legal fees associated with our regulatory matter, and incremental acquisition
costs associated with the acquisition of TSI.

Research and Development Costs, net

The following table presents our consolidated net research and development
costs, capitalized software costs, and gross expenditures prior to
capitalization, for the three and nine months ended December 31, 2022 and 2021
(in thousands):


                                              Three Months Ended December 31,           Nine Months Ended December 31,
                                                2022                  2021                2022                  2021
Gross expenditures                         $        28,111       $        25,514     $        89,179       $        75,066
Capitalized software costs                          (8,490 )              (6,124 )           (26,906 )             (17,837 )

Research and development costs, net $ 19,621 $ 19,390 $ 62,273 $ 57,229


Research and development costs, as a
percentage of revenue                                 12.1 %                13.0 %              13.1 %                12.9 %
Capitalized software costs as a
percentage of gross expenditures                      30.2 %                24.0 %              30.2 %                23.8 %



Gross research and development expenditures, including costs expensed and costs
capitalized, consist of compensation expense, including share-based compensation
for research and development personnel, certain third-party consultant fees,
software maintenance costs, and other costs related to new product development
and enhancement to our existing products.

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The healthcare information systems and services industry is characterized by
rapid technological change, requiring us to engage in continuing investments in
our research and development to update, enhance and improve our systems. This
includes expansion of our software and service offerings that support
pay-for-performance initiatives around accountable care organizations, bringing
greater ease of use and intuitiveness to our software products, enhancing our
managed cloud and hosting services to lower our clients' total cost of
ownership, expanding our interoperability and enterprise analytics capabilities,
and furthering development and enhancements of our portfolio of
specialty-focused templates within our electronic health records software.

The capitalization of software development costs results in a reduction to our
reported net research and development costs. Our software capitalization rate,
or capitalized software costs as a percentage of gross expenditures, has varied
historically and may continue to vary based on the nature and status of specific
projects and initiatives in progress. Although changes in software
capitalization rates have no impact on our overall cash flows, it results in
fluctuations in the amount of software development costs that may be capitalized
or expensed up front and the amount of net research and development costs
reported in our condensed consolidated statements of net income and
comprehensive income, and ultimately also affects the future amortization of our
previously capitalized software development costs. Refer to Note 9, "Capitalized
Software Costs" of our notes to condensed consolidated financial statements
included elsewhere in this Report for additional information on current period
amortization of capitalized software costs and an estimate of future expected
amortization.

Share-based compensation expense included in research and development costs was
$1.7 million and $1.2 million for the three months ended December 31, 2022 and
2021, respectively. Share-based compensation expense included in research and
development costs was $4.9 million and $3.4 million for the nine months ended
December 31, 2022 and 2021, respectively.

Net research and development costs for the three months ended December 31, 2022
increased $0.2 million compared to the prior year period due to $2.6 million
higher gross expenditures, offset by $2.4 million higher capitalization of
software costs.

Net research and development costs for the nine months ended December 31, 2022
increased $5.0 million compared to the prior year period due to $14.1 million
higher gross expenditures, offset by $9.1 million higher capitalization of
software costs.

The increase in gross expenditures in the three and nine months ended December
31, 2022 compared to the prior year was primarily driven by an increase in
consulting costs and higher personnel costs due to our annual merit increases
and increased headcount, partially offset by lower incentive bonus expense. Our
software capitalization rate fluctuates due to differences in the nature and
status of our projects and initiatives during a given year, which affects the
amount of development costs that may be capitalized.

Amortization of Acquired Intangible Assets

The following table presents our amortization of acquired intangible assets for
the three and nine months ended December 31, 2022 and 2021 (in thousands):


                                                  Three Months Ended December 31,              Nine Months Ended December 31,
                                                  2022                      2021                2022                    2021
Amortization of acquired intangible assets   $           919           $           881     $         2,329         $         2,643




Amortization of acquired intangible assets included in operating expense
consists of the amortization related to our customer relationships, trade names,
and re-acquired rights intangible assets acquired as part of our business
combinations. Refer to Note 8, "Intangible Assets" of our notes to condensed
consolidated financial statements included elsewhere in this Report for an
estimate of future expected amortization.

Amortization of acquired intangible assets was flat for the three ended December
31, 2022 compared to the prior year period and decreased $0.3 million for the
nine months ended December 31, 2022 compared to the prior year period because
the declining amortization of the customer relationships intangible assets
associated with Medfusion and HealthFusion that are amortized under an
accelerated method of amortization were partially offset by the amortization of
customer relationships and re-acquired rights assets associated with our
acquisition of TSI.

Restructuring Costs and Impairment of Assets


During the nine months ended December 31, 2022, we recorded restructuring costs
of $0.3 million, consisting of payroll-related costs, such as severance,
outplacement costs, and continuing healthcare coverage, associated with the
involuntary separation of employees pursuant to a one-time benefit arrangement,
within operating expenses in our consolidated statements of net income and
comprehensive income. The payroll-related costs were substantially paid as of
December 31, 2022.

During the nine months ended December 31, 2021, we recorded restructuring costs
of $0.5 million within operating expenses in our condensed consolidated
statements of net income and comprehensive income. The payroll-related costs
were substantially paid as of December 31, 2021.

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In the three and nine months ended December 31, 2022 we vacated portions of
certain leased locations and recorded impairments of $0.2 million and $1.6
million, respectively, to our right-of-use assets and certain related fixed
assets associated with the vacated locations, or portions thereof, in St. Louis,
Atlanta, Horsham, Hunt Valley, Chapel Hill and Bangalore based on projected
sublease rental income and estimated sublease commencement dates and the
remeasurement of our operating lease liability associated with the modification
of our St. Louis lease and the early termination of our Horsham lease.

In the nine months ended December 31, 2021, we vacated portions of certain
leased locations and recorded impairments of $1.6 million, to our right-of-use
assets and certain related fixed assets associated with the vacated locations,
or portions thereof, in Irvine and Fairport based on projected sublease rental
income and estimated sublease commencement dates.

The impairment analyses were performed at the asset group level and the
impairment charges were estimated by comparing the fair value of each asset
group based on the expected cash flows to its respective book value. We
determined the discount rate for each asset group based on the approximate
interest rate on a collateralized basis with similar remaining terms and
payments as of the impairment date. Significant judgment was required to
estimate the fair value of each asset group and actual results could vary from
the estimates, resulting in potential future adjustments to amounts previously
recorded.

Interest and Other Income and Expense

The following table presents our interest and other income and expense for the
three and nine months ended December 31, 2022 and 2021 (in thousands):


                                            Three Months Ended December 31, 

Nine Months Ended December 31,

                                               2022                2021             2022                2021
Interest income                             $    1,530         $          50     $    1,650         $          79
Interest expense                                (2,239 )                (321 )       (2,894 )                (958 )
Other income (expense), net                        (21 )                  (9 )       10,266                   (43 )




Interest expense relates to our convertible senior notes and revolving credit
agreement, as well as the related amortization of deferred debt issuance costs.
Refer to Note 10, "Debt" of our notes to condensed consolidated financial
statements included elsewhere in this Report for additional information.

The increase in interest expense for the three and nine months ended December
31, 2022 compared to the prior year period is primarily related to the $275.0
million aggregate principal amount of 3.75% Convertible Senior Notes due 2027
that we issued on November 1, 2022, as described in more detail in Note 10,
"Debt" of our notes to condensed consolidated financial statements included
elsewhere in this Report. Interest expense changes are also caused by
fluctuations in outstanding balances under our revolving credit agreement and
the related amortization of debt issuance costs. As of December 31, 2022 and
December 31, 2021, we had no outstanding balances under the revolving credit
agreement.

Interest income is earned from funds in our money market accounts. The
fluctuation of other income and expense compared to the prior year period are
primarily due to changes to the India foreign exchange rates.


The change in other income (expense), net for the nine months ended December 31,
2022 is due to the $10.3 million gain from our disposition of our Commercial
Dental assets. Refer to Note 6, "Business Combinations and Disposals" of our
notes to condensed consolidated financial statements included elsewhere in this
Report for additional information.

Provision for Income Taxes

The following table presents our provision for income taxes for the three and
nine months ended December 31, 2022 and 2021 (in thousands):


                                           Three Months Ended December 31,              Nine Months Ended December 31,
                                            2022                     2021                2022                    2021
Provision for income taxes            $          1,019         $          2,535     $         6,479         $         1,653
Effective tax rate                                11.5 %                   32.8 %              22.3 %                  56.6 %



The decrease in the effective tax rate for the three and nine months ended
December 31, 2022 compared to the corresponding prior periods was primarily due
to the net benefit of discrete items including an increase to research and
development credits and stock based compensation.

                                       37
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Liquidity and Capital Resources

The following table presents selected financial statistics and information for
the nine months ended December 31, 2022 and 2021 (in thousands):

                                                            Nine Months Ended December 31,
                                                              2022                  2021
Cash and cash equivalents                                $       241,550       $        49,429
Unused portion of revolving credit agreement (1)                 300,000               300,000
Total liquidity                                          $       541,550       $       349,429

Net income                                               $        22,586       $         1,270
Net cash provided by operating activities                $        35,977       $        36,636




(1)

As of December 31, 2022, we had no outstanding loans under our $300.0 million
revolving credit agreement.


We had no outstanding borrowings under our revolving credit agreement as of
December 31, 2022, March 31, 2022, and December 31, 2021. Our principal sources
of liquidity are our cash generated from operations, driven mostly by our net
income and working capital management, our cash and cash equivalents, as well as
our revolving credit agreement and convertible senior notes.

We believe that our cash and cash equivalents balance as of December 31, 2022,
together with our cash flows from operating activities and liquidity provided by
our debt agreements, will be sufficient to meet our working capital and capital
expenditure requirements for the next twelve months.

The extent to which COVID-19 and other macroeconomic factors may impact our
business, financial results, cash flows, and liquidity requirements depend on
numerous evolving factors including, but not limited to, the magnitude and
duration of COVID-19; the impact on our employees; worldwide macroeconomic
conditions, including interest rates, employment rates, and health insurance
coverage; and governmental and business reactions to the pandemic and other
macroeconomic factors. We continue to monitor the broader implications of the
global COVID-19 pandemic and other macroeconomic factors and may take further
actions that we determine are in the best interests of our employees, customers,
partners, suppliers, and shareholders.

Cash and Cash Equivalents


As of December 31, 2022, our cash and cash equivalents balance of $241.6 million
compares to $59.8 million as of March 31, 2022 and $49.4 million as of December
31, 2021. As described in more detail below, the increase in cash and cash
equivalents is primarily due to net proceeds from our convertible senior notes.

We may continue to use a portion of our funds as well as available financing
from our revolving credit agreement and convertible senior notes, to the extent
permissible, for share repurchases, future acquisitions, or other similar
business activities, although the specific timing and amount of funds to be used
is not currently determinable. We intend to expend some of our available funds
for the development of products complementary to our existing product line as
well as new versions of certain of our products. These developments are intended
to take advantage of more powerful technologies and to increase the integration
of our products.

Our investment policy is determined by our Board of Directors. Excess cash, if
any, may be invested in very liquid short term assets including tax exempt and
taxable money market funds, certificates of deposit and short term municipal
bonds with average maturities of 365 days or less at the time of purchase. Our
Board of Directors continues to review alternate uses for our cash including an
expansion of our investment policy and other items. Any or all of these programs
could significantly impact our investment income in future periods.

Cash Flows from Operating Activities

The following table summarizes our condensed consolidated statements of cash
flows for the nine months ended December 31, 2022 and 2021 (in thousands):

                                                            Nine Months Ended December 31,
                                                              2022                  2021
Net income                                               $        22,586       $         1,270
Non-cash expenses                                                 48,121                59,489
Cash from net income, as adjusted                        $        70,707       $        60,759
Change in contract assets and liabilities, net                     2,248                (2,770 )
Change in accounts receivable                                     (2,625 )               6,319
Change in all other assets and liabilities                       (34,353 )             (27,672 )
Net cash provided by operating activities                $        35,977       $        36,636




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For the nine months ended December 31, 2022, cash provided by operating
activities decreased $0.7 million compared to the prior year period, primarily
due to a $8.9 million decrease in cash from changes in accounts receivable and a
$6.6 million decrease in cash from changes in other assets and liabilities,
partially offset by $9.9 million higher cash from net income, as adjusted for a
$11.4 million decrease in non-cash expenses, and an increase in cash of $5.0
million from net changes in contract assets and liabilities. The decrease in
cash from changes in accounts receivable is primarily related to growth in
subscriptions and milestone invoicing from higher bookings, partially offset by
continued efforts to resolve aged balances and improve collections. The decrease
in cash from changes in other assets and liabilities is primarily due to a
decrease in cash from higher payments of cash incentive bonuses compared to the
prior year due to a higher rate of bonus achievement for the prior fiscal year,
partially offset by changes in our income tax assets and liabilities, including
our uncertain tax positions tax liability, and a decrease in rent payments
compared to the prior year period as we have early terminated a number of our
leases in the current year period. Net income increased $21.3 million compared
to the prior year period, as described in the sections above. Non-cash expenses
decreased primarily due to a $10.3 million gain from the disposition of our
Commercial Dental assets reflected in the current year period. The increase in
cash from changes in net contract assets and liabilities was primarily due to
lower software bookings and the termination of a number of RCM contracts in the
current year period, partially offset by the timing of invoicing and recognition
of annual licenses that are billed at the beginning of each year.

Cash Flows from Investing Activities


Net cash used in investing activities for the nine months ended December 31,
2022 was $65.2 million compared with $19.9 million in the prior year period. The
increase in net cash used in investing activities is primarily due to $47.5
million of cash paid (net of cash acquired) for the acquisition of TSI and a
$9.1 million increase in additions to capitalized software in the current
period, partially offset by $11.3 million in cash proceeds from the disposition
of our Commercial Dental assets.

Cash Flows from Financing Activities


Net cash provided by financing activities for the nine months ended December 31,
2022 was $212.1 million compared with $41.0 million cash used in financing
activities in the prior year period. The increase in cash provided by financing
activities is primarily due to $275.0 million in proceeds from our convertible
senior notes, net of $8.5 million in debt issuance costs, partially offset by a
$14.0 million increase in share repurchases in the current year period.

Contractual Obligations

Convertible Senior Notes


On November 1, 2022, we issued $275.0 million in aggregate principal amount of
3.75% Convertible Senior Notes due 2027 ("Notes"). The Notes were issued
pursuant to, and are governed by, an indenture, dated as of November 1, 2022,
between the Company and U.S. Bank Trust Company, National Association, as
trustee. Net proceeds from the issuance of the Notes were approximately $266.5
million, after deducting issuance costs totaling $8.5 million.

The Notes will accrue interest at a rate of 3.75% per annum, payable
semi-annually in arrears on May 15 and November 15 of each year, beginning on
May 15, 2023. The Notes will mature on November 15, 2027, unless earlier
repurchased, redeemed or converted.

Approximately $10.7 million in interest payments are due within the next 12
months for our Notes. There are no required principal payments on the Notes
prior to their maturity.

Refer to Note 10, “Debt” of our notes to condensed consolidated financial
statements included elsewhere in this Report for additional information.

Line of Credit


On March 12, 2021, we entered into a $300 million second amended and restated
revolving credit agreement (the "Credit Agreement"). The Credit Agreement
matures on March 12, 2026 and the full balance of the revolving loans and all
other obligations under the Credit Agreement must be paid at that time. In
addition, we are required to prepay the revolving loan balance if at any time
the aggregate principal amount outstanding under the Credit Agreement exceeds
the aggregate commitments thereunder.

On May 17, 2022, we entered into an amendment to the Credit Agreement, which,
among other changes, provides more favorable terms and flexibility with regards
to our ability to obtain additional revolving credit commitments and/or term
loans thereunder, including amendments to the net leverage ratio and definition
of restricted payments.

On October 27, 2022, the Company entered into that certain Amendment No. 2 to
Credit Agreement (the "Second Amendment") with the Administrative Agent and the
lenders party thereto. The Second Amendment modifies the Credit Agreement to
make certain updates to the conditions restricting the making of certain
dividends, distributions, and other restricted payments by the Company so that
the Company's compliance with the net leverage ratio governor contained in such
conditions is calculated net of the net cash proceeds of the Notes issued
pursuant to the Indenture.

                                       39
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As of December 31, 2022, we had no outstanding borrowings under the Credit
Agreement.

Refer to Note 10, “Debt” of our notes to condensed consolidated financial
statements included elsewhere in this Report for additional information.

Non-cancelable Operating Leases


As of December 31, 2022, the total amount of future lease payments under
operating leases was $9.8 million, of which $4.6 million is short-term. Our
operating leases have a weighted average remaining lease term of 2.2 years.
Included in our total future lease payments are $7.3 million of remaining lease
obligations for vacated properties, of which $3.5 million is short-term.
Remaining lease obligations for vacated properties relates to certain locations,
including Cary, Brentwood, North Canton, Fairport, St. Louis and portions of
Atlanta, Horsham, Hunt Valley, Irvine, Chapel Hill and Bangalore that we have
vacated as part of our reorganization efforts and are actively marketing for
sublease. Refer to Note 5, "Leases" of our notes to consolidated financial
statements included elsewhere in this Report for additional information. The
remaining obligations have not been reduced by projected sublease rentals or by
minimum sublease rentals of $2.3 million due in future periods under
non-cancelable subleases.

Purchase Obligations

As of December 31, 2022, we had minimum purchase commitments of $160.5 million
related to payments due under certain non-cancelable agreements to purchase
goods and services, of which $32.6 million is due within the next 12 months.

Share Repurchase Program


In October 2021, the Board authorized a share repurchase program under which we
may repurchase up to $60.0 million of our outstanding shares of common stock
through March 2023. The timing and amount of any share repurchases under the
share repurchase program will be determined by our management at its discretion
based on ongoing assessments of the capital needs of the business, the market
price of our common stock and general market conditions. The program does not
obligate the Company to acquire any particular amount of our common stock, and
the share repurchase program may be suspended or discontinued at any time at our
discretion.

On October 25, 2022, our Board of Directors authorized a new share repurchase
program under which we may repurchase up to an additional $100.0 million of
outstanding shares of our common stock through March 2025.


During the three months ended December 31, 2022, we repurchased 2,103,049 shares
of common stock for a total of $40.0 million at a weighted-average share
repurchase price of approximately $19.02. As of December 31, 2022, $74.3 million
remained available for share repurchases pursuant to the Company's share
repurchase programs.

Deferred Compensation


Deferred compensation liability was $7.6 million, for which timing of future
benefit payments to employees is not determinable. To offset this liability, we
have purchased life insurance policies on some of the participants. The Company
is the owner and beneficiary of the policies and the cash values are intended to
produce cash needed to help make the benefit payments to employees when they
retire or otherwise leave the Company. The cash surrender value of the life
insurance policies for deferred compensation was $7.4 million.

Income Taxes

We have an uncertain tax position liability of $4.7 million as of December 31,
2022
, for which timing of expected payments is not determinable.

Off-Balance Sheet Arrangements

During the nine months ended, we did not have any relationships with
unconsolidated organizations, financial partnerships, or special purpose
entities that would have been established for the purpose of facilitating
off-balance sheet arrangements or other limited purposes.

New Accounting Pronouncements


Refer to Note 1, "Summary of Significant Accounting Policies" of our notes to
condensed consolidated financial statements included elsewhere in this Report
for a discussion of new accounting standards.

Critical Accounting Policies and Estimates


The discussion and analysis of our condensed consolidated financial statements
and results of operations is based upon our condensed consolidated financial
statements, which have been prepared in accordance with accounting principles
generally accepted in the United States of America ("GAAP"). The preparation of
these condensed consolidated financial statements requires

                                       40
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us to make estimates and judgments that affect our reported amounts of assets,
liabilities, revenue and expenses, and related disclosures. We base our
assumptions, estimates and judgments on historical experience, current trends,
and other factors we believe to be reasonable under the circumstances, and we
evaluate these estimates on an ongoing basis. On a regular basis, we review the
accounting policies and update our assumptions, estimates, and judgments, as
needed, to ensure that our condensed consolidated financial statements are
presented fairly and in accordance with GAAP. Actual results could differ
materially from our estimates under different assumptions or conditions. To the
extent that there are material differences between our estimates and actual
results, our financial condition or results of operations will be affected.

We describe our significant accounting policies in Note 1, "Summary of
Significant Accounting Policies," of our notes to consolidated financial
statements included in our Annual Report. We discuss our critical accounting
policies and estimates in Part II, Item 7, "Management's Discussion and Analysis
of Financial Condition and Results of Operations," of our Annual Report.

There have been no other material changes in our significant accounting policies
or critical accounting policies and estimates since the fiscal year ended March
31, 2022.

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