IRVINE, Calif.–(BUSINESS WIRE<\/a>)– \n***\n<\/p>\n \nDear Fellow Shareholder,\n<\/p>\n \nWe believe NextGen Healthcare, Inc. (\u201cNextGen Healthcare\u201d or the \u201cCompany\u201d) is at a pivotal crossroads following years of anemic growth, eroding margins, poor corporate governance, questionable acquisitions and sustained underperformance. We contend that under the leadership of Chairman Jeffrey Margolis and his allies, the Board of Directors (the \u201cBoard\u201d or the \u201cMargolis Board\u201d) has abandoned the spirit of innovation and open-mindedness that has always been at the heart of the business. We contend that continuing to allow these individuals to maintain boardroom control will lead NextGen Healthcare further down a path to irreversible value destruction. This is why we are seeking to elect four highly-qualified director candidates \u2013 including new independent nominees Kenneth H. Fearn and Ruby Sharma \u2013 at the Annual Meeting of Shareholders (the “Annual Meeting”) now scheduled to be held on October 13, 2021.\n<\/p>\n \nAlthough the Margolis Board is waging a low-road campaign to smear us, while brazenly misrepresenting the Company\u2019s past six years of underperformance, we urge you to see through this smokescreen. We believe that the Margolis Board is desperately trying to divert attention away from its perpetual failure to create long-term value for shareholders. The fact is that a dollar invested in NextGen Healthcare on the day Mr. Margolis became Chairman in 2015 is worth practically the same today.\n<\/p>\n \nIt is important to underscore that our campaign is not about obtaining control or reinstating a dividend. This election contest is about resetting the balance of power in what has been a dysfunctional and insular boardroom for far too long. We believe shareholders can help breathe new life into the Board and position the Company for long-term success by voting on the BLUE<\/span> Proxy Card <\/b>to:\n<\/p>\n \nWe view the Margolis Board\u2019s reactionary entrenchment maneuvers as a clear attempt to restrict shareholders\u2019 ability to have input on the Company\u2019s governance. If Mr. Margolis and the three directors we are seeking to replace are so confident in their records, we contend that they would not assume such an anti-shareholder posture. We suspect that these entrenched directors are well aware that their performance in the boardroom has not earned them re-election on the merits. They seem to be focused on sustaining lofty director fees without providing any assurance that the Company\u2019s business performance will improve under their continued leadership.\n<\/p>\n WE BELIEVE THE MARGOLIS BOARD\u2019S LEADERSHIP CANNOT OUTRUN ITS RECORD OF PRESIDING OVER DISMAL FINANCIAL PERFORMANCE<\/i><\/b><\/p>\n \nWhile the Margolis Board\u2019s most recent letter boasts of purported accomplishments, it conspicuously omits any mention of shareholder returns. We assume this is due to the fact that the Company\u2019s share price has dramatically underperformed the broader market, industry indices and the majority of peers since Mr. Margolis was appointed Chairman in November 2015. This alarming underperformance has occurred over every relevant time horizon under Mr. Margolis\u2019 leadership.\n<\/p>\n \n\u00a0\n<\/p>\n<\/td>\n 1-Year 3-Year 5-Year Margolis \nRussell 2000\n<\/p>\n<\/td>\n \n37.04%\n<\/p>\n<\/td>\n \n30.90%\n<\/p>\n<\/td>\n \n83.93%\n<\/p>\n<\/td>\n \n93.39%\n<\/p>\n<\/td>\n<\/tr>\n \nS&P SmallCap 600 Health Care\n<\/p>\n<\/td>\n \n35.04%\n<\/p>\n<\/td>\n \n32.18%\n<\/p>\n<\/td>\n \n150.30%\n<\/p>\n<\/td>\n \n161.48%\n<\/p>\n<\/td>\n<\/tr>\n \nS&P SmallCap 600 Information Technology\n<\/p>\n<\/td>\n \n47.53%\n<\/p>\n<\/td>\n \n63.10%\n<\/p>\n<\/td>\n \n131.19%\n<\/p>\n<\/td>\n \n166.04%\n<\/p>\n<\/td>\n<\/tr>\n \nNextGen Healthcare\n<\/p>\n<\/td>\n \n9.21%\n<\/p>\n<\/td>\n \n-32.06%\n<\/p>\n<\/td>\n \n29.80%\n<\/p>\n<\/td>\n \n2.67%\n<\/p>\n<\/td>\n<\/tr>\n Note: Returns run through 8\/19\/21. <\/i><\/p>\n<\/td>\n<\/tr>\n<\/table>\n \nIn contrast, the Company\u2019s share price appreciated more than 1,150% during the Razin chairmanship.1<\/sup> Even Mr. Margolis acknowledged this accomplishment in 2015, when he publicly stated the following: \u201c[i]t is an honor to follow Shelly Razin in the role of chairman [\u2026] I admire his accomplishments as an inspirational founder and look forward to garnering his wisdom as chairman emeritus.\u201d2<\/sup><\/p>\n \nThe reality is that Mr. Margolis inherited a strong business that had a sizable cash position, minimal debt and high-performing operations. As one can see by reviewing NextGen Healthcare\u2019s performance since Mr. Margolis took the reins of the Company, the entrenched directors have failed to build on the platform they were handed.\n<\/p>\n WE BELIEVE MR. MARGOLIS AND THE COMPANY\u2019S REMAINING ENTRENCHED DIRECTORS ARE WED TO A FAILED STRATEGY THAT IS NOT GENERATING RESULTS<\/i><\/b><\/p>\n \nWe encourage shareholders to see through the Margolis Board\u2019s recent contention that it has spent the past six years addressing \u201clegacy business problems.\u201d The truth is NextGen Healthcare has devoted the past several years to executing a strategy that included allocating more than $200 million to largely non-accretive acquisitions. We believe shareholders should closely scrutinize the Margolis Board\u2019s so-called transformation strategy, particularly in light of the fact that the Company\u2019s share price was higher in early 2016 \u2013 before this acquisition spree began \u2013 than it is today.\n<\/p>\n \nWe believe the following points are especially notable:3<\/sup><\/p>\n \nShareholders have also suffered due to the Margolis Board\u2019s failure to consider alternative strategies for creating value. Rather than engage with shareholders on an ongoing basis to solicit constructive feedback, the Margolis Board has continually focused on deals. We also believe the Margolis Board has been outright dismissive when it comes to considering a strategy that prioritizes organic growth and margin expansion because it does not know how to implement a plan like that. Fortunately, we do. We have done it before at NextGen Healthcare and at other companies, and we can work to achieve these outcomes at the Company going forward.\n<\/p>\n WE BELIEVE MR. MARGOLIS AND THE COMPANY\u2019S REMAINING ENTRENCHED DIRECTORS ARE RESPONSIBLE FOR DISMAL CORPORATE GOVERNANCE<\/i><\/b><\/p>\n \nThe Margolis Board\u2019s recent attempts to initiate entrenchment maneuvers and manipulate the corporate machinery reflect its apparent disregard for sound governance. We hope shareholders recognize that the Margolis Board only decided to pursue a reincorporation in Delaware and eliminate cumulative voting following our nominations, suggesting to us that these were reactionary tactics designed to protect entrenched directors. We contend that a board of directors truly concerned with good governance would not be seeking to ram through a reincorporation that would:\n<\/p>\n \nWe also find it troubling that the same directors now attacking us and claiming to be champions of diversity spent most of the past six years disregarding the need for more female and minority representation in the boardroom. We cannot help but deem these recent claims as disingenuous and reactionary.\n<\/p>\n \nUnfortunately, the Margolis Board\u2019s governance failures extend well beyond the aforementioned areas. Mr. Margolis has fostered an imperial boardroom culture that stifles debate and punishes dissension. This insular posture led the Margolis Board to ignore our calls for better succession planning prior to Chief Executive Officer Rusty Franz\u2019s recent departure. The absence of a viable succession plan created a power vacuum, which has been filled by an Oversight Committee that includes just Messrs. Margolis and Barbarosh. We fail to see how it is good governance for the Margolis Board\u2019s Chairman and Vice Chairman to further consolidate their power after failing to fulfill their most fundamental duty to keep a functioning management team in place. Moreover, we are very concerned that the Board\u2019s ongoing search for a Chief Executive Officer is a hollow process intended to lay the groundwork for appointing an internal candidate already beholden to Mr. Margolis and his unjustified largesse.\n<\/p>\n \nIt is also noteworthy that the Margolis Board\u2019s Compensation Committee facilitated a highly-questionable pivot away from thoughtful performance-based share vesting for executives in favor of straight grants and other ineffective grants measured against the Company\u2019s budget. We believe this formula disincentivized management from focusing on organic growth and innovation. The Margolis Board also continued to authorize large bonuses and share grants to executives during years in which shareholders incurred losses.\n<\/p>\n WE URGE OUR FELLOW SHAREHOLDERS TO VOTE ON THE BLUE<\/span> PROXY CARD TO ELECT OUR SLATE AND RESET THE BALANCE OF POWER IN THE BOARDROOM<\/i><\/b><\/p>\n \nAs noted, we are seeking to elect four individuals to NextGen Healthcare\u2019s nine-member Board. We want to reset the balance of power in the boardroom \u2013 not obtain control of the Board.\n<\/p>\n \nOur four-member slate includes aligned, experienced and thoughtful individuals. The two of us will be focused on stabilizing the business and reinstituting good governance before stepping off at the right time for the Company in the coming years. Mr. Fearn and Ms. Sharma are focused on establishing long-term improvements across areas such as capital allocation, governance and strategic planning. They are the future leaders that the Company so desperately needs.\n<\/p>\n \nNotably, our slate has specific ideas that it intends to champion in the boardroom, if elected. These include:\n<\/p>\n \nIf shareholders vote to elect our slate and remove the entrenched directors at the Annual Meeting, we are confident that a refreshed Board will be able to have an open debate about the aforementioned initiatives. There is no need to continue to roll the dice on leadership that holds a minimal number of shares and has failed to deliver any meaningful value for six years.\n<\/p>\n \nThank you for your engagement and support. We shall endeavor to keep you informed as we advance our efforts to achieve constructive change atop NextGen Healthcare.\n<\/p>\n \nSincerely,\n<\/p>\n
\nSheldon Razin, who collectively with Lance Rosenzweig and the other participants in his solicitation (collectively, the \u201cRazin Group\u201d) owns approximately 15.2% of the outstanding common shares of NextGen Healthcare, Inc. (NASDAQ: NXGN) (\u201cNextGen Healthcare\u201d or the \u201cCompany\u201d), today filed a definitive proxy statement with the U.S. Securities and Exchange Commission in connection with the Company\u2019s Annual Meeting of Shareholders scheduled for October 13, 2021. Messrs. Razin and Rosenzweig also sent the below letter to shareholders. The Razin Group urges shareholders to vote on the BLUE<\/span> Proxy Card<\/b> to elect its four-member slate to the Company\u2019s nine-member Board.\n<\/p>\n\n
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