A corporate name change was the easiest part of NextGen Healthcare Inc.’s reinvention over the past three years, even though it may have gotten the most attention, according to Chief Executive Rusty Frantz.
“Why do it, why NextGen, why now?” has been a common line of questioning over the few weeks, since the company—previously Quality Systems Inc.—announced that it would be changing its name, Frantz told the Business Journal last month.
The short answer to the questions, he said, was that the Sept. 7 name change marks the end of a multiyear restructuring effort for the Irvine-based healthcare services company, which makes software that doctors and dentists use to manage their practices.
The company’s products digitalize patients’ health records and help with appointments, billing, referrals, insurance claims, cash flow, collections and sharing of electronic medical records, among other things.
The restructuring efforts resulted in the shedding of some business lines and also included an acquisition push, with more than $220 million in deals completed over that time, boosting the company’s software offerings.
The efforts also involved a cultural change at the company, which was incorporated in 1974 by Sheldon Razin, a forerunner in the developing market for electronic medical records and one of Orange County’s wealthiest businesspeople.
Growth Phase
NextGen has completed the bulk of its transformation, and is “now in growth phase,” Frantz said, noting that the company recently beefed up its sales force, which now stands at about 70.
The company, in the Lakeshore Towers office complex near John Wayne Airport, employs about 300 people in Irvine, and 2,800 overall.
The company’s shares now trade on the Nasdaq under the NXGN ticker; it has a market value of about $1.2 billion. Its shares are up some 20% over the past year.
Razin, NextGen’s chairman emeritus, still owns more than 10 million shares of the company’s stock, which is valued at nearly $200 million.
Culture Change
Frantz took over the chief executive position in June 2015, replacing Steven Plochocki, who retired after seven years in the position.
Prior to joining the company, Frantz was senior vice president and general manager of the global dispensing division of medical device company CareFusion, a subsidiary of Franklin Lakes, N.J.-based Becton Dickinson (NYSE: BDX).
He said he found an organization that had lost its way.
It had “lost contact with [its] client base and really lost the ability to innovate as an organization,” Frantz said. “It had somewhat [of] a toxic culture from years of [a] very top-down [management style].”
To counteract that, the company announced plans a few years ago to eliminate its silo-structured business units “in favor of a more streamlined, functional-based organization structure.” More than 100 job cuts were made as part of the switch.
Another big change: a decision to refocus efforts on ambulatory care clients, which largely consist of doctor offices, clinics, urgent care centers, and surgery centers.
That meant shedding Quality Systems’ hospital solutions group, which was sold in 2015 to QuadraMed Affinity Corp. of Plano, Texas on undisclosed terms.
The ambulatory care offerings in turn were boosted in 2016 through the acquisition of San Diego-based HealthFusion Holdings Inc. for $165 million. The software developer provides cloud-based electronic records management for physician practices.
NextGen made two additional acquisitions last year, adding Nashville, Tenn.-based Entrada Inc. in April for $34 million and EagleDream Health Inc. in August for $26 million.
For NextGen, the Entrada deal added mobile functionality—its mobile app integrates with multiple clinical platforms and all major electronic health records systems—and the EagleDream buy enables it to provide analytics and actionable intelligence to better manage patients and improve engagement.
NextGen plans to roll out updated software integrating technologies it acquired through Entrada and EagleDream this year, and will have two new releases next year.
EagleDream founder Dr. Betty Rabinowitz was named chief medical officer of NextGen this past spring.
Frantz said he chose Rabinowitz to fill the role because of her clinical expertise as a physician.
He added that there are a lot of healthcare software developers out there, and that the key to drive adoption is to “make it affordable, scalable and use data to increase workflow and satisfaction.”
Competitors of NextGen include Epic Systems Corp. and Cerner Corp. (Nasdaq: CERN).
COO Change
The company doesn’t plan to expand much in personnel beyond recent efforts at building its sales team, Frantz said.
“The goal is to be more and more efficient,” he said. “We’ve shown we can build solutions … right now it’s really about execution.”
At least one more C-suite exec should be coming onboard in the coming weeks.
The company disclosed in mid-September that Chief Operating Officer and Executive Vice President Scott Bostick, a former CareFusion executive like Frantz who joined NextGen in 2016, resigned.
A replacement has not been named.
