Shareholders of the Irvine, Calif.-based NextGen Healthcare Inc. on Wednesday backed the company’s preferred slate of board candidates, turning away a push from founder and former CEO Sheldon Razin to retain his board seat and bring on a number of allies.
Razin has been sparring with NextGen Chairman Jeffrey Margolis and other directors about the health tech company’s strategies and investment priorities. The Margolis group, which includes newly hired President and CEO David Sides, contends Razin’s tenure as chairman was marked by poor investment decisions and an erosion of NextGen’s customer base. (Razin was CEO of NextGen, which was founded as Quality Systems, from its founding nearly 50 years ago until 1999 and was its board chair until 2015.) They say a multi-year effort to right the ship is starting to show results and were backed during the proxy fight by the three best-known institutional shareholder advisory firms.
In a release Wednesday, NextGen said its investors had approved many of the company-backed proposals on the agenda of its annual shareholders’ meeting, most notably the election of its nine board nominees and the elimination of cumulative voting in the election of directors. New to the board after the vote are Sides and Darnell Dent, who runs a management consulting and governance services company and is a past CEO of FirstCare Health Plans. Their election comes just a few months after NextGen’s directors added to their ranks Geraldine McGinty, a faculty member at Weill Cornell Medicine in New York City, and former Walgreens Boots Alliance human resources chief Pamela Puryear. (James Malone, who had been a director since 2013, announced this summer he would retire at the end of Wednesday’s meeting.)
“We appreciate the perspectives stakeholders have shared throughout this process,” NextGen said in its release. “Like us, shareholders see opportunities to further accelerate growth and value creation, and we are committed to doing just that. […] With the annual meeting behind us, we now turn our full attention to the business.”
In its statement, the company also gave a nod Razin’s contributions to its growth since he founded the company in 1974 and said he will be recognized as its chairman emeritus. In a statement of his own, Razin struck a conciliatory tone.
"I am proud of the growth and market expansion that the company has achieved, and wish NextGen Healthcare’s board of directors and management team success going forward," he said. "NextGen Healthcare has an outstanding portfolio of products and services that have transformed ambulatory care. With the appointment of the company’s new CEO, David Sides, and the talented and dedicated team across the organization, I believe NextGen Healthcare is well positioned to build on its market leadership."
Shareholders on Wednesday did not approve proposals regarding executive compensation practices, growing to 15% from 10% the threshold for investors to call a special meeting – Razin controls about 15% of the company – and giving directors the ability to solely fill board vacancies or set the board’s size.
Shares of NextGen (Ticker: NXGN) were up slightly Wednesday afternoon. They have lost about 25 percent of their value in 2021, which has pushed NextGen’s market capitalization below $1 billion.