NextGen Healthcare (NYSE:NXGN) Q1 2021 Earnings Conference Call - Final Transcript
Jul 30, 2020 • 05:00 pm ET
ability to move more purposely and aggressively towards subscription and recurring revenue, we showed our ability to remain financially strong, while continuing to play offense and we've demonstrated that our solution is robust, future-facing and highly differentiated. Looking forward, however, we still see the macro environment is being too unpredictable for us to be comfortable providing guidance. That being said, we wanted to give you a view to how we are currently modeling the impact to visit volume as the primary macro dynamic. Currently, we have been seeing roughly 90% volume, though as COVID has accelerated recently, we've seen a slight downtick into the high '80s. However, we believe that volume will be relatively stable to improving as people have learned how to interact with their providers in the COVID world both virtually and in-person.
Therefore, we have modeled it as averaging between 90% to 95% over the last three quarters of our financial year. And naturally, this will continue to have some impact on our volume baselines. We also expect demand in the independent ambulatory space to be slightly delayed, slowing bookings a bit through the financial year as our clients return to normal financial operations at higher patient volume. As we continue through FY '21, we expect to see the continued market shift of bookings in the subsequent revenue from perpetual to subscription. As stated, this will have a near-term downward effect on gross margin, while increasing future [Technical Issues] of revenue.
And finally, looking forward, we'll see favorability of another approximately $0.04 of temporary cost reduction in Q2, sunsetting beginning in Q3. In closing, it's an honor to be a part of a team doing great things for healthcare during such a critical time and to support the front lines of care. So also, I'm honored to continue to lead our team on a multi-year journey as an increasingly diverse and inclusive organization as we strive to be a great place, where everyone feels like they can be their best self, can belong, can have a great future and a little fun along the way, regardless of who that best self is. We will keep making progress as we do with everything that we set our minds to. As I sit here, five years and 30 days and doing amazing tenure in the best job I could ever ask for, I'm grateful for the continuing opportunity. Stay safe out there. And let's open it up for questions.