California (State or other jurisdiction of incorporation or organization) 18111 Von Karman Avenue, Suite 800, Irvine, California (Address of principal executive offices) | 95-2888568 (IRS Employer Identification No.) 92612 (Zip Code) |
(949) 255-2600 (Registrant’s telephone number, including area code) |
Large accelerated filer þ | Accelerated filer o |
Non-accelerated filer o (Do not check if a smaller reporting company) | Small reporting company o |
Emerging growth company o |
Item | Page | |
PART I. FINANCIAL INFORMATION | ||
Item 1. | ||
Item 3. | ||
Item 4. | ||
PART II. OTHER INFORMATION | ||
Item 1. | ||
Item 1A. | ||
Item 3. | ||
Item 4. | ||
Item 5. | ||
Item 6. | ||
September 30, 2017 | March 31, 2017 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 26,553 | $ | 37,673 | |||
Restricted cash and cash equivalents | 6,488 | 4,916 | |||||
Accounts receivable, net | 81,712 | 83,407 | |||||
Inventory | 147 | 158 | |||||
Income taxes receivable | 2,871 | 2,679 | |||||
Prepaid expenses and other current assets | 15,369 | 17,969 | |||||
Total current assets | 133,140 | 146,802 | |||||
Equipment and improvements, net | 27,681 | 27,426 | |||||
Capitalized software costs, net | 21,024 | 13,607 | |||||
Deferred income taxes, net | 10,289 | 11,265 | |||||
Intangibles, net | 86,746 | 69,213 | |||||
Goodwill | 216,530 | 185,898 | |||||
Other assets | 18,650 | 19,010 | |||||
Total assets | $ | 514,060 | $ | 473,221 | |||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 6,813 | $ | 4,618 | |||
Deferred revenue | 52,285 | 52,383 | |||||
Accrued compensation and related benefits | 17,602 | 24,513 | |||||
Income taxes payable | — | 405 | |||||
Other current liabilities | 31,913 | 46,775 | |||||
Total current liabilities | 108,613 | 128,694 | |||||
Deferred revenue, net of current | 1,191 | 1,394 | |||||
Deferred compensation | 6,438 | 6,629 | |||||
Line of credit | 55,000 | 15,000 | |||||
Other noncurrent liabilities | 17,315 | 16,461 | |||||
Total liabilities | 188,557 | 168,178 | |||||
Commitments and contingencies (Note 13) | |||||||
Shareholders' equity: | |||||||
Common stock | |||||||
$0.01 par value; authorized 100,000 shares; issued and outstanding 63,685 and 62,455 shares at September 30, 2017 and March 31, 2017, respectively | 637 | 625 | |||||
Additional paid-in capital | 237,110 | 228,549 | |||||
Accumulated other comprehensive loss | (457 | ) | (358 | ) | |||
Retained earnings (1) | 88,213 | 76,227 | |||||
Total shareholders' equity | 325,503 | 305,043 | |||||
Total liabilities and shareholders' equity | $ | 514,060 | $ | 473,221 |
Three Months Ended September 30, | Six Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Revenues: | |||||||||||||||
Software license and hardware | $ | 14,267 | $ | 17,182 | $ | 27,067 | $ | 31,971 | |||||||
Software related subscription services | 24,988 | 21,490 | 48,894 | 41,365 | |||||||||||
Total software, hardware and related | 39,255 | 38,672 | 75,961 | 73,336 | |||||||||||
Support and maintenance | 41,693 | 38,974 | 82,809 | 76,981 | |||||||||||
Revenue cycle management and related services | 21,002 | 20,936 | 42,405 | 41,989 | |||||||||||
Electronic data interchange and data services | 22,998 | 21,613 | 46,310 | 43,737 | |||||||||||
Professional services | 7,659 | 6,971 | 16,044 | 13,328 | |||||||||||
Total revenues | 132,607 | 127,166 | 263,529 | 249,371 | |||||||||||
Cost of revenue: | |||||||||||||||
Software license and hardware | 4,848 | 6,427 | 10,221 | 13,547 | |||||||||||
Software related subscription services | 10,699 | 8,675 | 21,129 | 17,762 | |||||||||||
Total software, hardware and related | 15,547 | 15,102 | 31,350 | 31,309 | |||||||||||
Support and maintenance | 7,435 | 7,036 | 15,058 | 13,604 | |||||||||||
Revenue cycle management and related services | 14,853 | 14,359 | 30,214 | 28,590 | |||||||||||
Electronic data interchange and data services | 13,574 | 12,807 | 26,732 | 25,570 | |||||||||||
Professional services | 7,346 | 6,693 | 14,570 | 13,739 | |||||||||||
Total cost of revenue | 58,755 | 55,997 | 117,924 | 112,812 | |||||||||||
Gross profit | 73,852 | 71,169 | 145,605 | 136,559 | |||||||||||
Operating expenses: | |||||||||||||||
Selling, general and administrative | 40,977 | 42,790 | 83,954 | 83,371 | |||||||||||
Research and development costs, net | 19,527 | 18,292 | 39,516 | 36,516 | |||||||||||
Amortization of acquired intangible assets | 2,012 | 2,617 | 4,059 | 5,321 | |||||||||||
Restructuring costs | — | 701 | — | 4,454 | |||||||||||
Total operating expenses | 62,516 | 64,400 | 127,529 | 129,662 | |||||||||||
Income from operations | 11,336 | 6,769 | 18,076 | 6,897 | |||||||||||
Interest income | 12 | 1 | 21 | 9 | |||||||||||
Interest expense | (840 | ) | (803 | ) | (1,517 | ) | (1,816 | ) | |||||||
Other income (expense), net | 15 | (55 | ) | (7 | ) | (142 | ) | ||||||||
Income before provision for income taxes | 10,523 | 5,912 | 16,573 | 4,948 | |||||||||||
Provision for income taxes | 2,493 | 1,925 | 4,647 | 1,608 | |||||||||||
Net income | $ | 8,030 | $ | 3,987 | $ | 11,926 | $ | 3,340 | |||||||
Other comprehensive income: | |||||||||||||||
Foreign currency translation, net of tax | (85 | ) | 29 | (99 | ) | (93 | ) | ||||||||
Unrealized gain on marketable securities, net of tax | — | — | — | 10 | |||||||||||
Comprehensive income | $ | 7,945 | $ | 4,016 | $ | 11,827 | $ | 3,257 | |||||||
Net income per share: | |||||||||||||||
Basic | $ | 0.13 | $ | 0.06 | $ | 0.19 | $ | 0.05 | |||||||
Diluted | $ | 0.13 | $ | 0.06 | $ | 0.19 | $ | 0.05 | |||||||
Weighted-average shares outstanding: | |||||||||||||||
Basic | 63,513 | 61,658 | 63,077 | 61,420 | |||||||||||
Diluted | 63,530 | 62,052 | 63,089 | 61,704 |
Six Months Ended September 30, | |||||||
2017 | 2016 | ||||||
Cash flows from operating activities: | |||||||
Net income | $ | 11,926 | $ | 3,340 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation | 5,374 | 5,106 | |||||
Amortization of capitalized software costs | 2,571 | 4,819 | |||||
Amortization of other intangibles | 11,267 | 11,378 | |||||
Amortization of debt issuance costs | 538 | 538 | |||||
Loss on disposal of equipment and improvements | 45 | 175 | |||||
Provision for bad debts | 3,868 | 1,969 | |||||
Provision for inventory obsolescence | 36 | 224 | |||||
Share-based compensation | 5,132 | 3,177 | |||||
Deferred income taxes | 18 | 180 | |||||
Excess tax deficiency from share-based compensation | 346 | — | |||||
Change in fair value of contingent consideration | — | 5,830 | |||||
Restructuring costs | — | 701 | |||||
Changes in assets and liabilities, net of amounts acquired: | |||||||
Accounts receivable | (120 | ) | 13,649 | ||||
Inventory | (25 | ) | (22 | ) | |||
Accounts payable | 1,323 | (5,834 | ) | ||||
Deferred revenue | (929 | ) | (5,572 | ) | |||
Accrued compensation and related benefits | (7,302 | ) | (4,179 | ) | |||
Income taxes | (348 | ) | 17,213 | ||||
Deferred compensation | (191 | ) | 437 | ||||
Other assets and liabilities | 4,565 | 3,256 | |||||
Net cash provided by operating activities | 38,094 | 56,385 | |||||
Cash flows from investing activities: | |||||||
Additions to capitalized software costs | (9,624 | ) | (5,319 | ) | |||
Additions to equipment and improvements | (5,423 | ) | (4,989 | ) | |||
Proceeds from sales and maturities of marketable securities | — | 9,291 | |||||
Payments for acquisitions, net of cash acquired | (58,892 | ) | — | ||||
Net cash used in investing activities | (73,939 | ) | (1,017 | ) | |||
Cash flows from financing activities: | |||||||
Proceeds from line of credit | 50,000 | — | |||||
Principal repayments on line of credit | (10,000 | ) | (57,000 | ) | |||
Payment of contingent consideration related to acquisitions | (18,817 | ) | — | ||||
Proceeds from issuance of shares under employee plans | 4,320 | 702 | |||||
Cancellation of shares related to tax withholdings for vesting of equity awards | (778 | ) | — | ||||
Net cash provided by (used in) financing activities | 24,725 | (56,298 | ) | ||||
Net decrease in cash and cash equivalents | (11,120 | ) | (930 | ) | |||
Cash and cash equivalents at beginning of period | 37,673 | 27,176 | |||||
Cash and cash equivalents at end of period | $ | 26,553 | $ | 26,246 |
Six Months Ended September 30, | |||||||
2017 | 2016 | ||||||
Supplemental disclosures of cash flow information: | |||||||
Cash paid for income taxes | $ | 5,396 | $ | 3,977 | |||
Cash refunds from income taxes | 713 | 19,762 | |||||
Cash paid for interest | 933 | 1,443 | |||||
Non-cash investing and financing activities: | |||||||
Tenant improvement allowance from landlord | $ | 1,442 | $ | 3,094 | |||
Unpaid additions to equipment and improvements | 117 | 488 |
On April 14, 2017, we acquired Entrada in a transaction summarized as follows: | |||||||
Fair value of net assets acquired | $ | 35,293 | $ | — | |||
Cash paid, net of cash acquired | (33,856 | ) | — | ||||
Liabilities assumed | $ | 1,437 | $ | — |
On August 16, 2017, we acquired EagleDream in a transaction summarized as follows: | |||||||
Fair value of net assets acquired | $ | 27,895 | $ | — | |||
Cash paid, net of cash acquired | (25,036 | ) | — | ||||
Liabilities assumed | $ | 2,859 | $ | — |
Three Months Ended September 30, | Six Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Costs and expenses: | |||||||||||||||
Cost of revenue | $ | 290 | $ | 166 | $ | 427 | $ | 315 | |||||||
Research and development costs, net | 513 | 334 | 874 | 417 | |||||||||||
Selling, general and administrative | 2,288 | 1,418 | 3,831 | 2,445 | |||||||||||
Total share-based compensation | 3,091 | 1,918 | 5,132 | 3,177 | |||||||||||
Income tax benefit | (1,144 | ) | (695 | ) | (1,860 | ) | (1,107 | ) | |||||||
Decrease in net income | $ | 1,947 | $ | 1,223 | $ | 3,272 | $ | 2,070 |
Balance at | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Unobservable Inputs (Level 3) | ||||||||||||
September 30, 2017 | |||||||||||||||
ASSETS | |||||||||||||||
Cash and cash equivalents (1) | $ | 26,553 | $ | 26,553 | $ | — | $ | — | |||||||
Restricted cash and cash equivalents | 6,488 | 6,488 | — | — | |||||||||||
$ | 33,041 | $ | 33,041 | $ | — | $ | — |
Balance at | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Unobservable Inputs (Level 3) | ||||||||||||
March 31, 2017 | |||||||||||||||
ASSETS | |||||||||||||||
Cash and cash equivalents (1) | $ | 37,673 | $ | 37,673 | $ | — | $ | — | |||||||
Restricted cash and cash equivalents | 4,916 | 4,916 | — | — | |||||||||||
$ | 42,589 | $ | 42,589 | $ | — | $ | — | ||||||||
LIABILITIES | |||||||||||||||
Contingent consideration related to acquisitions (2) | $ | 18,817 | $ | — | $ | 18,817 | $ | — | |||||||
$ | 18,817 | $ | — | $ | 18,817 | $ | — |
Initial purchase price | $ | 34,000 | |
Preliminary working capital and other adjustments | (42 | ) | |
Total preliminary purchase price | $ | 33,958 |
April 14, 2017 | |||
Preliminary fair value of the net tangible assets acquired and liabilities assumed: | |||
Acquired cash and cash equivalents | $ | 102 | |
Accounts receivable, net | 1,835 | ||
Prepaid expense and other current assets | 145 | ||
Equipment and improvements, net | 134 | ||
Capitalized software costs, net | 364 | ||
Deferred income taxes, net | 1,041 | ||
Accounts payable | (639 | ) | |
Accrued compensation and related benefits | (120 | ) | |
Deferred revenues | (234 | ) | |
Other liabilities | (444 | ) | |
Total preliminary net tangible assets acquired and liabilities assumed | 2,184 | ||
Preliminary fair value of identifiable intangible assets acquired: | |||
Goodwill | 16,374 | ||
Software technology | 10,500 | ||
Customer relationships | 3,300 | ||
Trade name | 1,600 | ||
Total preliminary identifiable intangible assets acquired | 31,774 | ||
Total preliminary purchase price | $ | 33,958 |
Initial purchase price | $ | 26,000 | |
Preliminary working capital and other adjustments | (391 | ) | |
Total preliminary purchase price | $ | 25,609 |
August 16, 2017 | |||
Preliminary fair value of the net tangible assets acquired and liabilities assumed: | |||
Acquired cash and cash equivalents | $ | 573 | |
Accounts receivable | 217 | ||
Prepaid expense and other current assets | 20 | ||
Accounts payable | (115 | ) | |
Accrued compensation and related benefits | (271 | ) | |
Deferred revenues | (394 | ) | |
Deferred income taxes, net | (1,957 | ) | |
Other liabilities | (122 | ) | |
Total preliminary net tangible assets acquired and liabilities assumed | (2,049 | ) | |
Preliminary fair value of identifiable intangible assets acquired: | |||
Goodwill | 14,258 | ||
Software technology | 12,800 | ||
Customer relationships | 600 | ||
Total preliminary identifiable intangible assets acquired | 27,658 | ||
Total preliminary purchase price | $ | 25,609 |
September 30, 2017 | |||||||||||||||
Customer Relationships | Trade Name and Contracts | Software Technology | Total | ||||||||||||
Gross carrying amount | $ | 54,450 | $ | 7,080 | $ | 91,110 | $ | 152,640 | |||||||
Accumulated amortization | (32,349 | ) | (2,770 | ) | (30,775 | ) | (65,894 | ) | |||||||
Net intangible assets | $ | 22,101 | $ | 4,310 | $ | 60,335 | $ | 86,746 |
March 31, 2017 | |||||||||||||||
Customer Relationships | Trade Name and Contracts | Software Technology | Total | ||||||||||||
Gross carrying amount | $ | 50,550 | $ | 5,480 | $ | 67,810 | $ | 123,840 | |||||||
Accumulated amortization | (28,972 | ) | (2,088 | ) | (23,567 | ) | (54,627 | ) | |||||||
Net intangible assets | $ | 21,578 | $ | 3,392 | $ | 44,243 | $ | 69,213 |
Amortization Expense Recorded As: | |||||||||||
Operating Expense | Cost of Revenue | Total | |||||||||
For the year ended March 31, | |||||||||||
2018 (remaining six months) | 3,874 | 8,256 | 12,130 | ||||||||
2019 | 5,577 | 16,511 | 22,088 | ||||||||
2020 | 4,580 | 16,511 | 21,091 | ||||||||
2021 | 3,731 | 12,628 | 16,359 | ||||||||
2022 | 2,593 | 4,840 | 7,433 | ||||||||
2023 and beyond | 6,056 | 1,589 | 7,645 | ||||||||
Total | $ | 26,411 | $ | 60,335 | $ | 86,746 |
September 30, 2017 | March 31, 2017 | ||||||
Gross carrying amount | $ | 111,180 | $ | 104,948 | |||
Accumulated amortization | (90,156 | ) | (91,341 | ) | |||
Net capitalized software costs | $ | 21,024 | $ | 13,607 |
For the year ended March 31, | |||
2018 (remaining six months) | $ | 4,700 | |
2019 | 9,100 | ||
2020 | 4,700 | ||
2021 | 2,524 | ||
Total | $ | 21,024 |
September 30, 2017 | March 31, 2017 | ||||||
Accounts receivable, gross | $ | 90,753 | $ | 93,377 | |||
Sales return reserve | (6,413 | ) | (7,213 | ) | |||
Allowance for doubtful accounts | (2,628 | ) | (2,757 | ) | |||
Accounts receivable, net | $ | 81,712 | $ | 83,407 |
September 30, 2017 | March 31, 2017 | ||||||
Prepaid expenses | $ | 13,651 | $ | 14,884 | |||
Other current assets | 1,718 | 3,085 | |||||
Prepaid expenses and other current assets | $ | 15,369 | $ | 17,969 |
September 30, 2017 | March 31, 2017 | ||||||
Computer equipment | $ | 26,120 | $ | 22,014 | |||
Internal-use software | 13,290 | 13,053 | |||||
Furniture and fixtures | 12,025 | 10,472 | |||||
Leasehold improvements | 17,258 | 16,360 | |||||
Equipment and improvements, gross | 68,693 | 61,899 | |||||
Accumulated depreciation and amortization | (41,012 | ) | (34,473 | ) | |||
Equipment and improvements, net | $ | 27,681 | $ | 27,426 |
September 30, 2017 | March 31, 2017 | ||||||
Professional services | $ | 22,084 | $ | 21,889 | |||
Software license, hardware and other | 11,579 | 12,680 | |||||
Support and maintenance | 10,203 | 9,691 | |||||
Software related subscription services | 8,419 | 8,123 | |||||
Deferred revenue | $ | 52,285 | $ | 52,383 |
September 30, 2017 | March 31, 2017 | ||||||
Payroll, bonus and commission | $ | 8,869 | $ | 15,836 | |||
Vacation | 8,733 | 8,677 | |||||
Accrued compensation and related benefits | $ | 17,602 | $ | 24,513 |
September 30, 2017 | March 31, 2017 | ||||||
Care services liabilities | $ | 6,488 | $ | 4,957 | |||
Customer credit balances and deposits | 3,964 | 4,124 | |||||
Accrued consulting and outside services | 3,006 | 2,496 | |||||
Accrued self insurance expense | 2,502 | 1,697 | |||||
Accrued EDI expense | 2,469 | 2,490 | |||||
Deferred rent and lease obligations | 2,275 | 2,427 | |||||
Accrued outsourcing costs | 1,678 | 1,588 | |||||
Accrued legal expense | 1,245 | 853 | |||||
User group meeting deposits | 1,157 | — | |||||
Accrued hosting costs | 951 | 401 | |||||
Accrued royalties | 721 | 2,033 | |||||
Employee benefit plan withholdings | 671 | 739 | |||||
Sales tax payable | 494 | 448 | |||||
Contingent consideration and other liabilities related to acquisitions | — | 18,817 | |||||
Other accrued expenses | 4,292 | 3,705 | |||||
Other current liabilities | $ | 31,913 | $ | 46,775 | |||
Deferred rent and lease obligations | $ | 11,660 | $ | 11,402 | |||
Uncertain tax positions | 5,305 | 4,762 | |||||
Other liabilities | 350 | 297 | |||||
Other noncurrent liabilities | $ | 17,315 | $ | 16,461 |
Three Months Ended September 30, | Six Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Earnings per share — Basic: | |||||||||||||||
Net income | $ | 8,030 | $ | 3,987 | $ | 11,926 | $ | 3,340 | |||||||
Weighted-average shares outstanding — Basic | 63,513 | 61,658 | 63,077 | 61,420 | |||||||||||
Net income per common share — Basic | $ | 0.13 | $ | 0.06 | $ | 0.19 | $ | 0.05 | |||||||
Earnings per share — Diluted: | |||||||||||||||
Net income | $ | 8,030 | $ | 3,987 | $ | 11,926 | $ | 3,340 | |||||||
Weighted-average shares outstanding | 63,513 | 61,658 | 63,077 | 61,420 | |||||||||||
Effect of potentially dilutive securities | 17 | 394 | 12 | 284 | |||||||||||
Weighted-average shares outstanding — Diluted | 63,530 | 62,052 | 63,089 | 61,704 | |||||||||||
Net income per common share — Diluted | $ | 0.13 | $ | 0.06 | $ | 0.19 | $ | 0.05 |
Number of Shares | Weighted- Average Exercise Price per Share | Weighted- Average Remaining Contractual Life (years) | Aggregate Intrinsic Value (in thousands) | ||||||||||
Outstanding, April 1, 2017 | 2,885,415 | $ | 15.41 | 6.2 | $ | 3,150 | |||||||
Granted | 334,000 | 16.03 | 7.7 | ||||||||||
Exercised | (216,405 | ) | 16.62 | 6.2 | $ | 119 | |||||||
Forfeited/Canceled | (310,775 | ) | 17.75 | 5.1 | |||||||||
Outstanding, September 30, 2017 | 2,692,235 | $ | 16.44 | 6.0 | $ | 4,012 | |||||||
Vested and expected to vest, September 30, 2017 | 2,440,400 | $ | 16.64 | 5.9 | $ | 2,885 | |||||||
Exercisable, September 30, 2017 | 921,280 | $ | 20.10 | 4.6 | $ | 768 |
Three Months Ended September 30, | Six Months Ended September 30, | ||||||
2017 | 2016 | 2017 | 2016 | ||||
Expected term | 5.6 years | 6.6 years | 5.6 - 5.7 years | 6.0 - 6.6 years | |||
Expected volatility | 37.2% | 36.9% | 37.2% - 37.7% | 36.9% - 37.4% | |||
Expected dividends | —% | —% | —% | —% | |||
Risk-free rate | 1.9% | 1.2% | 1.9% | 1.2% - 1.5% |
Option Grant Date | Number of Shares | Exercise Price | Vesting Terms (1) | Expiration | |||||||
June 13, 2017 | 249,000 | $ | 16.37 | Four years | June 13, 2025 | ||||||
May 24, 2017 | 60,000 | $ | 14.57 | Four years | May 24, 2025 | ||||||
August 4, 2017 | 25,000 | $ | 16.13 | Four years | August 4, 2025 |
Non-Vested Number of Shares | Weighted- Average Grant-Date Fair Value per Share | ||||||
Outstanding, April 1, 2017 | 2,073,295 | $ | 5.09 | ||||
Granted | 334,000 | 6.11 | |||||
Vested | (430,190 | ) | 4.86 | ||||
Forfeited/Canceled | (206,150 | ) | 4.57 | ||||
Outstanding, September 30, 2017 | 1,770,955 | $ | 4.98 |
Number of Shares | Weighted- Average Grant-Date Fair Value per Share | ||||||
Outstanding, April 1, 2017 | 902,948 | $ | 12.92 | ||||
Granted | 1,081,374 | 15.57 | |||||
Vested | (288,304 | ) | 12.57 | ||||
Canceled | (77,016 | ) | 13.81 | ||||
Outstanding, September 30, 2017 | 1,619,002 | $ | 14.79 |
• | Focus on the ambulatory client segment. In October 2015, we sold our former Hospital Solutions division to focus on our core ambulatory clients. Further, a recent operational reorganization better allows us to serve the needs of our ambulatory clients through a simpler, more nimble, and focused organization. We believe it is essential to protect, build and sell new capabilities within our ambulatory client segment. We are focused on our core by increasing quality and the serviceability of our solutions. We intend to continue to enhance the capabilities of our NextGen Ambulatory flagship product. At the same time, we intend to expand the capability of the highly scalable, pure cloud-based and mobile-enabled MediTouch® platform. |
• | Platform as a service. With the introduction of our API 2.0 framework and our continued leverage of the Mirth interoperability platform, we will continue our evolution to plug and play extensibility and information sharing that allows our customers to innovate and deploy high-fidelity extensions to our core applications without the costs, risks (security, performance, etc.) or complexity commonly associated with direct binding. We have also introduced platform-enabled automation capabilities to empower our clients to drive cost out of their processes while supporting their needs to implement the highly personalized workflows that are required to support value based care. Our acquisition of Entrada and its cloud-based, mobile application in April 2017 demonstrates our commitment to innovation that becomes essential for practitioners by improving their clinical productivity with documentation support services that seamlessly integrate into their electronic health record. We believe there is significant opportunity to extend the solutions we offer existing and new clients through value-added services such as RCM and EDI. |
• | Population health software and services. We are migrating into applications, analytics and services that will enable our clients to proactively manage the health of patient populations. We are establishing strong development partnerships with our most innovative customers who are actively participating in shared-risk contracts, and working together with them to create progressive population health capabilities. We support extraordinary information sharing capabilities vital to managing patient populations through our interoperability offerings. |
Three Months Ended September 30, | Six Months Ended September 30, | ||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||
Revenues: | |||||||||||
Software license and hardware | 10.8 | % | 13.5 | % | 10.3 | % | 12.8 | % | |||
Software related subscription services | 18.8 | 16.9 | 18.6 | 16.6 | |||||||
Total software, hardware and related | 29.6 | 30.4 | 28.8 | 29.4 | |||||||
Support and maintenance | 31.4 | 30.6 | 31.4 | 30.9 | |||||||
Revenue cycle management and related services | 15.8 | 16.5 | 16.1 | 16.8 | |||||||
Electronic data interchange and data services | 17.3 | 17.0 | 17.6 | 17.5 | |||||||
Professional services | 5.8 | 5.5 | 6.1 | 5.3 | |||||||
Total revenues | 100.0 | 100.0 | 100.0 | 100.0 | |||||||
Cost of revenue: | |||||||||||
Software license and hardware | 3.7 | 5.1 | 3.9 | 5.4 | |||||||
Software related subscription services | 8.1 | 6.8 | 8.0 | 7.1 | |||||||
Total software, hardware and related | 11.7 | 11.9 | 11.9 | 12.6 | |||||||
Support and maintenance | 5.6 | 5.5 | 5.7 | 5.5 | |||||||
Revenue cycle management and related services | 11.2 | 11.3 | 11.5 | 11.5 | |||||||
Electronic data interchange and data services | 10.2 | 10.1 | 10.1 | 10.3 | |||||||
Professional services | 5.5 | 5.3 | 5.5 | 5.5 | |||||||
Total cost of revenue | 44.3 | 44.0 | 44.7 | 45.2 | |||||||
Gross profit | 55.7 | 56.0 | 55.3 | 54.8 | |||||||
Operating expenses: | |||||||||||
Selling, general and administrative | 30.9 | 33.6 | 31.9 | 33.4 | |||||||
Research and development costs, net | 14.7 | 14.4 | 15.0 | 14.6 | |||||||
Amortization of acquired intangible assets | 1.5 | 2.1 | 1.5 | 2.1 | |||||||
Restructuring costs | — | 0.6 | — | 1.8 | |||||||
Total operating expenses | 47.1 | 50.6 | 48.4 | 52.0 | |||||||
Income from operations | 8.5 | 5.3 | 6.9 | 2.8 | |||||||
Interest expense | (0.6 | ) | (0.6 | ) | (0.6 | ) | (0.7 | ) | |||
Other income (expense), net | — | — | — | (0.1 | ) | ||||||
Income before provision for income taxes | 7.9 | 4.6 | 6.3 | 2.0 | |||||||
Provision for income taxes | 1.9 | 1.5 | 1.8 | 0.6 | |||||||
Net income | 6.1 | % | 3.1 | % | 4.5 | % | 1.3 | % |
Three Months Ended September 30, | Six Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Revenues: | |||||||||||||||
Software license and hardware | $ | 14,267 | $ | 17,182 | $ | 27,067 | $ | 31,971 | |||||||
Software related subscription services | 24,988 | 21,490 | 48,894 | 41,365 | |||||||||||
Total software, hardware and related | 39,255 | 38,672 | 75,961 | 73,336 | |||||||||||
Support and maintenance | 41,693 | 38,974 | 82,809 | 76,981 | |||||||||||
Revenue cycle management and related services | 21,002 | 20,936 | 42,405 | 41,989 | |||||||||||
Electronic data interchange and data services | 22,998 | 21,613 | 46,310 | 43,737 | |||||||||||
Professional services | 7,659 | 6,971 | 16,044 | 13,328 | |||||||||||
Total revenues | $ | 132,607 | $ | 127,166 | $ | 263,529 | $ | 249,371 |
Three Months Ended September 30, | Six Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Total cost of revenue | $ | 58,755 | $ | 55,997 | $ | 117,924 | $ | 112,812 | |||||||
Gross profit | 73,852 | 71,169 | 145,605 | 136,559 | |||||||||||
Gross margin % | 55.7 | % | 56.0 | % | 55.3 | % | 54.8 | % |
Three Months Ended September 30, | Six Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Selling, general and administrative | $ | 40,977 | $ | 42,790 | $ | 83,954 | $ | 83,371 | |||||||
Selling, general and administrative, as a percentage of revenue | 30.9 | % | 33.6 | % | 31.9 | % | 33.4 | % |
Three Months Ended September 30, | Six Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Gross expenditures | $ | 23,903 | $ | 20,663 | $ | 49,140 | $ | 41,835 | |||||||
Capitalized software costs | (4,376 | ) | (2,371 | ) | (9,624 | ) | (5,319 | ) | |||||||
Research and development costs, net | $ | 19,527 | $ | 18,292 | $ | 39,516 | $ | 36,516 | |||||||
Research and development costs, as a percentage of revenue | 14.7 | % | 14.4 | % | 15.0 | % | 14.6 | % | |||||||
Capitalized software costs as a percentage of gross expenditures | 18.3 | % | 11.5 | % | 19.6 | % | 12.7 | % |
Three Months Ended September 30, | Six Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Amortization of acquired intangible assets | $ | 2,012 | $ | 2,617 | $ | 4,059 | $ | 5,321 |
Three Months Ended September 30, | Six Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Interest income | $ | 12 | $ | 1 | $ | 21 | $ | 9 | |||||||
Interest expense | (840 | ) | (803 | ) | (1,517 | ) | (1,816 | ) | |||||||
Other expense, net | 15 | (55 | ) | (7 | ) | (142 | ) |
Three Months Ended September 30, | Six Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Provision for income taxes | $ | 2,493 | $ | 1,925 | $ | 4,647 | $ | 1,608 | |||||||
Effective tax rate | 23.7 | % | 32.6 | % | 28.0 | % | 32.5 | % |
Three Months Ended September 30, | Six Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Net income | $ | 8,030 | $ | 3,987 | $ | 11,926 | $ | 3,340 | |||||||
Net income per share: | |||||||||||||||
Basic | $ | 0.13 | $ | 0.06 | $ | 0.19 | $ | 0.05 | |||||||
Diluted | $ | 0.13 | $ | 0.06 | $ | 0.19 | $ | 0.05 |
Six Months Ended September 30, | |||||||
2017 | 2016 | ||||||
Cash and cash equivalents | $ | 26,553 | $ | 26,246 | |||
Unused portion of revolving credit agreement(1) | 195,000 | 202,000 | |||||
Total liquidity | $ | 221,553 | $ | 228,246 | |||
Net income | $ | 11,926 | $ | 3,340 | |||
Net cash provided by operating activities | $ | 38,094 | $ | 56,385 |
Six Months Ended September 30, | |||||||
2017 | 2016 | ||||||
Net income | $ | 11,926 | $ | 3,340 | |||
Non-cash expenses | 29,195 | 34,097 | |||||
Cash from net income, as adjusted | $ | 41,121 | $ | 37,437 | |||
Change in other assets and liabilities | (3,027 | ) | 18,948 | ||||
Net cash provided by operating activities | $ | 38,094 | $ | 56,385 |
For the year ended March 31, | |||||||||||||||||||||
Contractual Obligations | Total | 2018 (remaining six months) | 2019 | 2020 | 2021 | 2022 | 2023 and beyond | ||||||||||||||
Operating lease obligations | $ | 58,040 | $ | 4,331 | $ | 8,759 | $ | 8,437 | $ | 8,407 | $ | 8,120 | $ | 19,986 | |||||||
Remaining lease obligations for vacated properties (1) | 5,309 | 1,197 | 1,413 | 794 | 816 | 551 | 538 | ||||||||||||||
Line of credit obligations (Note 7) | 55,000 | — | — | — | 55,000 | — | — | ||||||||||||||
Purchase commitments (2) | $ | 2,863 | $ | 313 | $ | 1,250 | $ | 1,300 | $ | — | $ | — | $ | — | |||||||
Total | $ | 121,212 | $ | 5,841 | $ | 11,422 | $ | 10,531 | $ | 64,223 | $ | 8,671 | $ | 20,524 |
Exhibit Number | Exhibit Description | Filed Herewith |
10.1 | ||
10.2 | ||
31.1 | X | |
31.2 | X | |
32.1 | X | |
101.INS** | XBRL Instance | |
101.SCH** | XBRL Taxonomy Extension Schema | |
101.CAL** | XBRL Taxonomy Extension Calculation | |
101.DEF** | XBRL Taxonomy Extension Definition | |
101.LAB** | XBRL Taxonomy Extension Label | |
101.PRE** | XBRL Taxonomy Extension Presentation | |
** XBRL information is furnished and not filed or a part of a registration statement or prospectus for purposes of section 11 or 12 of the Securities and Exchange Act of 1933, as amended, is deemed not filed for purposes of section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise is not subject to liability under these section. |
QUALITY SYSTEMS, INC. | |||
Date: | October 26, 2017 | By: | /s/ John R. Frantz |
John R. Frantz | |||
Chief Executive Officer (Principal Executive Officer) | |||
Date: | October 26, 2017 | By: | /s/ James R. Arnold |
James R. Arnold | |||
Chief Financial Officer (Principal Financial Officer) |
1. | I have reviewed this Quarterly Report on Form 10-Q of Quality Systems, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | October 26, 2017 | By: | /s/ John R. Frantz |
John R. Frantz | |||
Chief Executive Officer | |||
(Principal Executive Officer) |
1. | I have reviewed this Quarterly Report on Form 10-Q of Quality Systems, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | October 26, 2017 | By: | /s/ James R. Arnold |
James R. Arnold | |||
Chief Financial Officer | |||
(Principal Financial Officer) |
1. | the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
2. | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: | October 26, 2017 | By: | /s/ John R. Frantz |
John R. Frantz | |||
Chief Executive Officer | |||
(Principal Executive Officer) | |||
Date: | October 26, 2017 | By: | /s/ James R. Arnold |
James R. Arnold | |||
Chief Financial Officer | |||
(Principal Financial Officer) |
Document and Entity Information - shares |
6 Months Ended | |
---|---|---|
Sep. 30, 2017 |
Oct. 24, 2017 |
|
Document and Entity Information [Abstract] | ||
Entity Registrant Name | QUALITY SYSTEMS, INC | |
Entity Central Index Key | 0000708818 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2017 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | Q2 | |
Current Fiscal Year End Date | --03-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 63,671,536 |
Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares shares in Thousands |
Sep. 30, 2017 |
Mar. 31, 2017 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Common stock, par value (in usd per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 100,000 | 100,000 |
Common stock, shares issued | 63,685 | 62,455 |
Common stock, shares outstanding | 63,685 | 62,455 |
Consolidated Statements of Income (Loss) (Unaudited) - USD ($) shares in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Revenues: | ||||
Software license and hardware | $ 14,267,000 | $ 17,182,000 | $ 27,067,000 | $ 31,971,000 |
Software related subscription services | 24,988,000 | 21,490,000 | 48,894,000 | 41,365,000 |
Total software, hardware and related | 39,255,000 | 38,672,000 | 75,961,000 | 73,336,000 |
Support and maintenance | 41,693,000 | 38,974,000 | 82,809,000 | 76,981,000 |
Revenue cycle management and related services | 21,002,000 | 20,936,000 | 42,405,000 | 41,989,000 |
Electronic data interchange and data services | 22,998,000 | 21,613,000 | 46,310,000 | 43,737,000 |
Professional services | 7,659,000 | 6,971,000 | 16,044,000 | 13,328,000 |
Total revenues | 132,607,000 | 127,166,000 | 263,529,000 | 249,371,000 |
Cost of revenue: | ||||
Software license and hardware | 4,848,000 | 6,427,000 | 10,221,000 | 13,547,000 |
Software related subscription services | 10,699,000 | 8,675,000 | 21,129,000 | 17,762,000 |
Total software, hardware and related | 15,547,000 | 15,102,000 | 31,350,000 | 31,309,000 |
Support and maintenance | 7,435,000 | 7,036,000 | 15,058,000 | 13,604,000 |
Revenue cycle management and related services | 14,853,000 | 14,359,000 | 30,214,000 | 28,590,000 |
Electronic data interchange and data services | 13,574,000 | 12,807,000 | 26,732,000 | 25,570,000 |
Professional services | 7,346,000 | 6,693,000 | 14,570,000 | 13,739,000 |
Total cost of revenue | 58,755,000 | 55,997,000 | 117,924,000 | 112,812,000 |
Gross profit | 73,852,000 | 71,169,000 | 145,605,000 | 136,559,000 |
Operating expenses: | ||||
Selling, general and administrative | 40,977,000 | 42,790,000 | 83,954,000 | 83,371,000 |
Research and development costs, net | 19,527,000 | 18,292,000 | 39,516,000 | 36,516,000 |
Amortization of acquired intangible assets | 2,012,000 | 2,617,000 | 4,059,000 | 5,321,000 |
Restructuring costs | 0 | 701,000 | 0 | 4,454,000 |
Total operating expenses | 62,516,000 | 64,400,000 | 127,529,000 | 129,662,000 |
Income from operations | 11,336,000 | 6,769,000 | 18,076,000 | 6,897,000 |
Interest Income, Other | 12,000 | 1,000 | 21,000 | 9,000 |
Interest expense | (840,000) | (803,000) | (1,517,000) | (1,816,000) |
Other income (expense), net | 15,000 | (55,000) | (7,000) | (142,000) |
Income before provision for income taxes | 10,523,000 | 5,912,000 | 16,573,000 | 4,948,000 |
Provision for income taxes | 2,493,000 | 1,925,000 | 4,647,000 | 1,608,000 |
Net income | 8,030,000 | 3,987,000 | 11,926,000 | 3,340,000 |
Foreign currency translation, net of tax | (85,000) | 29,000 | (99,000) | (93,000) |
Unrealized gain on marketable securities, net of tax | 0 | 0 | 0 | 10,000 |
Comprehensive income | $ 7,945,000 | $ 4,016,000 | $ 11,827,000 | $ 3,257,000 |
Net income per share: | ||||
Basic (in usd per share) | $ 0.13 | $ 0.06 | $ 0.19 | $ 0.05 |
Diluted (in usd per share) | $ 0.13 | $ 0.06 | $ 0.19 | $ 0.05 |
Weighted-average shares outstanding: | ||||
Basic (in usd per share) | 63,513 | 61,658 | 63,077 | 61,420 |
Diluted (in usd per share) | 63,530 | 62,052 | 63,089 | 61,704 |
Summary of Significant Accounting Policies |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Principles of Consolidation. The consolidated financial statements include the accounts of Quality Systems, Inc. and its wholly-owned subsidiaries (collectively, the “Company”). Each of the terms “we,” “us,” or “our” as used herein refers collectively to the Company, unless otherwise stated. All intercompany accounts and transactions have been eliminated. Business Segments. We have determined that the Company operates in one segment as of June 30, 2017. We have made such determination by first identifying our Chief Executive Officer as our chief operating decision maker ("CODM") and considering the measures used by our CODM to allocate resources. Our CODM utilizes consolidated revenue and consolidated operating results to assess performance and make decisions about allocation of resources. Previously, through the end of fiscal year 2017, we operated under two reportable segments, consisting of the Software and Related Solutions segment and the RCM and Related Services segment, which was consistent with the disaggregated financial information used and evaluated by our CODM to assess performance and make decisions about the allocation of resources. However, as part of our reorganization efforts that were substantially complete as of the end of fiscal year 2017, our internal organizational structure whereby certain functions that formerly existed within each individual operating segment has continued to evolve. Our former Chief Operating Officer was previously responsible for leading the operations of our former RCM and Related Services business while our former Chief Client Officer led our client success organization, consisting of the Software and Related Solutions business and other functions, such as sales and marketing. Upon the resignation of our former Chief Operating Officer in April 2017 and concurrent appointment of our former Chief Client Officer as Chief Operating Officer, our entire portfolio of software and services were aligned under our new Chief Operating Officer in an effort to provide our clients with an even more simplified experience and more effectively deliver a consolidated financial solution to our clients, rather than components of a solution. As a result of such changes in our internal organization structure, the CODM now operates the Company as a single functional organization. The CODM measures company-wide performance by reviewing consolidated revenue and operating results and evaluates the impact of allocating resources to overall profit and margins on a consolidated basis. Basis of Presentation. The accompanying unaudited consolidated financial statements as of September 30, 2017 and for the three and six months ended September 30, 2017 have been prepared in accordance with the requirements of Quarterly Report on Form 10-Q and Article 10 of the Securities and Exchange Commission Regulation S-X and therefore do not include all information and notes which would be presented were such consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). These consolidated financial statements should be read in conjunction with the audited consolidated financial statements presented in our Annual Report on Form 10-K for the fiscal year ended March 31, 2017. In the opinion of management, the accompanying consolidated financial statements reflect all adjustments which are necessary for a fair statement of the results of operations and cash flows for the periods presented. The results of operations for such interim periods are not necessarily indicative of results of operations to be expected for the full year. References to amounts in the consolidated financial statement sections are in thousands, except shares and per share data, unless otherwise specified. Significant Accounting Policies. There have been no material changes to our significant accounting policies from those disclosed in our Annual Report on Form 10-K for the fiscal year ended March 31, 2017. Share-Based Compensation. The following table shows total share-based compensation expense included in the consolidated statements of comprehensive income for the three and six months ended September 30, 2017 and 2016:
Recent Accounting Standards. Recent accounting pronouncements requiring implementation in future periods are discussed below or in the notes, where applicable. In May 2017, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2017-09, Compensation–Stock Compensation (Topic 718): Scope of Modification Accounting ("ASU 2017-09"). ASU 2017-09 clarifies the changes to terms or conditions of a share-based payment award that require an entity to apply modification accounting. ASU 2017-09 is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Early application is permitted and prospective application is required. ASU 2017-09 is effective for us in the first quarter of fiscal 2019, and we currently do not expect the adoption of this new standard to have a material impact on our consolidated financial statements. In January 2017, the FASB issued ASU 2017-04, Intangibles–Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment (“ASU 2017-04”). ASU 2017-04 removes the requirement to compare the implied fair value of goodwill with its carrying amount as part of Step two of the goodwill impairment test. Instead, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value. ASU 2017-04 is effective prospectively for annual and interim periods beginning after December 15, 2019, and early adoption is permitted on goodwill impairment tests performed on testing dates after January 1, 2017. ASU 2017-04 is effective for us in the fourth quarter of fiscal 2020, and we currently do not expect the adoption of this new standard to have a material impact on our consolidated financial statements. In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business (“ASU 2017-01”). ASU 2017-01 clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. ASU 2017-01 is effective for annual periods beginning after December 15, 2017, including interim periods within those periods. Early adoption is permitted in two scenarios as identified in the new standard. ASU 2017-01 is effective for us in the first quarter of fiscal 2019, and we currently do not expect the adoption of this new standard to have a material impact on our consolidated financial statements. In November 2016, the FASB issued Accounting Standards Update ("ASU") 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (“ASU 2016-18”). ASU 2016-18 provides guidance on the classification of restricted cash and cash equivalents in the statement of cash flows. Although it does not provide a definition of restricted cash or restricted cash equivalents, it states that amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of period total amounts shown on the statement of cash flows. ASU 2016-18 is effective for interim and annual reporting periods beginning after December 15, 2017. Early adoption is permitted, including adoption in an interim period. ASU 2016-18 is effective for us in the first quarter of fiscal 2019, and we do not expect the adoption of this new standard to have a material impact on our consolidated financial statements. In October 2016, the FASB issued ASU 2016-16, Income Taxes: Intra-Entity Transfers of Assets Other Than Inventory ("ASU 2016-16"). ASU 2016-16 requires the recognition of current and deferred income taxes for intra-entity asset transfers when the transaction occurs. ASU 2016-16 is effective for interim and annual reporting periods beginning after December 15, 2017. Early adoption is permitted. ASU 2016-16 is effective for us in the first quarter of fiscal 2019, and we are currently in the process of evaluating the potential impact of adoption of this updated authoritative guidance on our consolidated financial statements. In August 2016, the FASB issued ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments. ASU 2016-15 is intended to add and clarify guidance on the classification of certain cash receipts and cash payments in the statement of cash flows to eliminate diversity in practice related to how such cash receipts and cash payments are presented and classified in the statement of cash flows. ASU 2016-15 is effective for interim and annual reporting periods beginning after December 15, 2017. Early adoption is permitted, including adoption in an interim period. ASU 2016-15 is effective for us in the first quarter of fiscal 2019, and we do not expect the adoption of this new standard to have a material impact on our consolidated financial statements. In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting ("ASU 2016-09"). ASU 2016-09 simplifies the accounting for and reporting on share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. ASU 2016-09 is effective for interim and annual reporting periods beginning after December 15, 2016, with early adoption permitted. The amendments in this update are to be applied differently upon adoption with certain amendments being applied prospectively, retrospectively and under a modified retrospective transition method. We adopted ASU 2016-09 in the first quarter of fiscal 2018. As permitted by ASU 2016-09, we have made an accounting policy election to account for forfeitures as they occur, which was adopted on a modified retrospective basis and resulted in a cumulative-effect adjustment of $0.1 million to retained earnings and additional paid-in capital as of April 1, 2017. ASU 2016-09 also eliminates additional paid-in capital pools and requires excess tax benefits and tax deficiencies to be recorded in the income statement when the awards vest or are settled, which was adopted on a prospective basis. The requirements to recognize previously unrecognized excess tax benefits on a modified retrospective basis did not have an impact on our consolidated financial statements. Upon adoption of ASU 2016-09, excess tax benefits and tax deficiencies are recognized in the income statement, and the tax effects of exercised or vested awards are treated as discrete items in the period they occur. The provisions of ASU 2016-09 could have an impact to our future income tax expense, including increased volatility in our effective tax rate on a quarter by quarter basis due to a number of factors, including fluctuations in the stock price and the timing of stock option exercises and vesting of restricted share awards. Additionally, ASU 2016-09 addresses presentation of excess tax benefits and deficiencies and employee taxes paid related to shares withheld for tax withholdings purposes on the statement of cash flows, including a requirement to present excess tax benefits and deficiencies as an operating activity in the same manner as other cash flows related to income taxes on the statement of cash flows, which will be adopted on a prospective basis, and presentation of employee taxes paid related to shares withheld for tax withholdings purposes as a financing activity, which is consistent with our current presentation and thus did not impact our consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) (“ASU 2016-02”), which is intended to improve financial reporting about leasing transactions. The new guidance will require lessees to recognize on their balance sheets the assets and liabilities for the rights and obligations created by leases and to disclose key information about the leasing arrangements. ASU 2016-02 is effective for interim and annual periods beginning after December 15, 2018, with early adoption permitted. ASU 2016-02 is effective for us in the first quarter of fiscal 2020. We are currently in the process of evaluating the potential impact of adoption of this updated authoritative guidance on our consolidated financial statements. In May 2014, the FASB, along with the International Accounting Standards Board, issued ASU 2014-09, Revenue from Contracts with Customers ("ASU 2014-09"), which supersedes the revenue recognition requirements in ASC 605, Revenue Recognition. ASU 2014-09 provides enhancements to the quality and consistency of how revenue is reported while also improving comparability in the financial statements of companies reporting using International Financial Reporting Standards and GAAP. The core principle of this updated guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new standard also requires additional disclosure about revenue and provides improved guidance for multiple element arrangements. In July 2015 decision, the FASB issued ASU 2015-14, Deferral of Effective Date ("ASU 2015-14") to delay the effective date by one year. In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606) –Principal versus Agent Consideration ("ASU 2016-08"). In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606) - Identifying Performance Obligations and Licensing ("ASU 2016-10”). In May 2016, the FASB issued ASU 2016-11, Revenue from Contracts with Customers (Topic 606) and Derivatives and Hedging (Topic 815) – Rescission of SEC Guidance Because of ASU 2014-09 and 2014-16 ("ASU 2016-11") and ASU 2016-12, Revenue from Contracts with Customers (Topic 606) –Narrow Scope Improvements and Practical Expedients ("ASU 2016-12"). The new ASUs do not change the core principle of the guidance in Topic 606 (as amended by ASU 2014-09), but rather help to provide further interpretive clarifications on the new guidance in ASU 2014-09. ASU 2014-09, as amended by ASU 2015-14, is effective for us in the first quarter of fiscal 2019. Companies are permitted to adopt this new guidance following either a full retrospective or modified retrospective approach. We have completed our assessment of the potential impacts to our business processes, systems, and internal controls that could result from the implementation of the new revenue guidance. Based on our assessment, we currently believe that the impact on our consolidated financial statements could be material. We expect that revenue related to hardware, EDI, maintenance, and certain subscriptions would remain substantially unchanged, and we are the process of evaluating the impact of the new revenue guidance on our other revenue streams. Due to the complexity of our revenue recognition, a significant amount of work remains as we continue to evaluate all potential impacts of the new revenue guidance, and develop and implement the necessary changes to our current accounting systems, processes, and internal controls. Accordingly, our preliminary assessments are subject to change. We expect that the new revenue guidance will result in additional complexity to our revenue recognition, including the use of an increased amount of significant judgments and estimates, particularly as it relates to our RCM services revenue, as compared to our current revenue recognition. Additionally, certain incremental costs incurred to obtain contracts with customers, such as sales commissions, are within the scope of the new revenue guidance and are required to be capitalized and amortized to expense over the remaining performance periods of the contracts. Currently, our sales commission are capitalized and amortized to expense over the related period of revenue recognition. Although the amortization period of capitalized sales commissions may differ upon adoption of the new revenue guidance, we do not expect the adoption of this new revenue standard to have a material impact on our consolidated financial statements with respect to the capitalization and amortization of sales commissions. We currently expect to implement the new revenue guidance when it becomes effective for us in the first quarter of fiscal 2019 utilizing the modified retrospective transition method. Under this transition method, prior period amounts will not be adjusted and the cumulative effect from prior periods of applying the new revenue guidance will be recognized in our consolidated balance sheets as of the date of adoption, including an adjustment to retained earnings. We do not believe that any other recently issued, but not yet effective accounting standards, if adopted, would have a material impact on our consolidated financial statements. |
Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements The following tables set forth by level within the fair value hierarchy our financial assets and liabilities that were accounted for at fair value on a recurring basis at September 30, 2017 and March 31, 2017:
___________________________________ (1) Cash equivalents consist primarily of money market funds. (2) The contingent consideration liability as of March 31, 2017 relates to the acquisition of HealthFusion, which was settled during the quarter ended June 30, 2017. The measurement period of the contingent consideration liability ended on December 31, 2016, and thus the actual revenue achievement rate was utilized to compute the ending contingent consideration liability as of March 31, 2017. Accordingly, the contingent consideration liability was reflected under a Level 2 valuation hierarchy because the fair value was determined based on other significant observable inputs. We believe that the fair value of other financial assets and liabilities, including accounts receivable, accounts payable, and line of credit, approximate their respective carrying values due to their nominal credit risk. Non-Recurring Fair Value Measurements We have certain assets, including goodwill and other intangible assets, which are measured at fair value on a non-recurring basis and are adjusted to fair value only if an impairment charge is recognized. The categorization of the framework used to measure fair value of the assets is considered to be within the Level 3 valuation hierarchy due to the subjective nature of the unobservable inputs used. During the three and six months ended September 30, 2017, no adjustments were recorded. |
Business Combinations and Dispositions |
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Business Combinations and Disposals | Business Combinations Entrada Acquisition On April 14, 2017, we completed our acquisition of Entrada, Inc. ("Entrada") pursuant to the terms of the Agreement and Plan of Merger, dated April 11, 2017 (the "Agreement"). Based in Nashville, TN, Entrada is a leading provider of cloud-based solutions that are reshaping the way care is delivered by leveraging the power of mobile whenever and wherever care happens. Entrada’s best-in-class mobile application integrates with multiple clinical platforms and all major electronic health record systems. Entrada enables organizations to maximize their existing technology investments while simultaneously enhancing physician and staff productivity. The acquisition of Entrada and its cloud-based, mobile application is part of our commitment to deliver systematic solutions that meet its clients' transforming work requirements to become increasingly nimble and mobile. The preliminary purchase price totaled $33,958, which included preliminary working capital and other customary adjustments. The acquisition was primarily funded by a draw against our revolving credit agreement (see Note 7). We accounted for the Entrada acquisition as a purchase business combination using the acquisition method of accounting. The preliminary purchase price was allocated to the tangible and intangible assets acquired and liabilities assumed based on their preliminary estimated fair values as of the acquisition date. The preliminary fair values of acquired assets and liabilities assumed represent management’s estimate of fair value and are subject to change if additional information, such as changes to deferred taxes and/or working capital, becomes available. We expect to finalize the purchase price allocation as soon as practicable within the measurement period, but not later than one year following the acquisition date. The preliminary estimated fair value of the acquired tangible and intangible assets and liabilities assumed were determined using multiple valuation approaches depending on the type of tangible or intangible asset acquired, including but not limited to the income approach, the excess earnings method and the relief from royalty method approach. In connection with the Entrada acquisition, we recorded $15,400 of intangible assets related to customer relationships, trade names and software technology. We are amortizing the Entrada customer relationships over 10 years and trade names and software technology over 5 years. The weighted average amortization period for the total amount of intangible assets acquired is 6.1 years. The preliminary amount of goodwill represents the excess of the preliminary purchase price over the preliminary net identifiable assets acquired and liabilities assumed. Goodwill primarily represents, among other factors, the value of synergies expected to be realized and the assemblage of all assets that enable us to create new client relationships, neither of which qualify as separate amortizable intangible assets. Goodwill arising from the acquisition of Entrada is not deductible for tax purposes and is allocated to our single reportable segment. The total preliminary purchase price for the Entrada acquisition is summarized as follows:
The pro forma effects of the Entrada acquisition would not have been material to the Company's results of operations and are therefore not presented. EagleDream Health Acquisition On August 16, 2017, we completed the acquisition of EagleDream Health, Inc. ("EagleDream") pursuant to the Agreement and Plan of Merger (the “Merger Agreement"), dated July 31, 2017. Headquartered in Rochester, NY, EagleDream is a cloud-based analytics company that drives meaningful insight across clinical, financial and administrative data to optimize practice performance. The preliminary purchase price totaled $25,609, which included preliminary working capital and other customary adjustments. The acquisition was partially funded by a draw against our revolving credit agreement (see Note 7). We accounted for the EagleDream acquisition as a purchase business combination using the acquisition method of accounting. The preliminary purchase price was allocated to the tangible and intangible assets acquired and liabilities assumed based on their preliminary estimated fair values as of the acquisition date. The preliminary fair values of acquired assets and liabilities assumed represent management’s estimate of fair value and are subject to change if additional information, such as changes to deferred taxes and/or working capital, becomes available. We expect to finalize the purchase price allocation as soon as practicable within the measurement period, but not later than one year following the acquisition date. The preliminary estimated fair value of the acquired tangible and intangible assets and liabilities assumed were determined using multiple valuation approaches depending on the type of tangible or intangible asset acquired, including but not limited to the income approach, the excess earnings method and the relief from royalty method approach. In connection with the EagleDream acquisition, we recorded $13,400 of intangible assets related to customer relationships and software technology. We are amortizing the EagleDream customer relationships over 8 years and software technology over 5 years. The weighted average amortization period for the total amount of intangible assets acquired is 5.1 years. The preliminary amount of goodwill represents the excess of the preliminary purchase price over the preliminary net identifiable assets acquired and liabilities assumed. Goodwill primarily represents, among other factors, the value of synergies expected to be realized and the assemblage of all assets that enable us to create new client relationships, neither of which qualify as separate amortizable intangible assets. Goodwill arising from the acquisition of EagleDream is not deductible for tax purposes and is allocated to our single reportable segment. The total preliminary purchase price for the EagleDream acquisition is summarized as follows:
The pro forma effects of the EagleDream acquisition would not have been material to the Company's results of operations and are therefore not presented. |
Goodwill |
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Sep. 30, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill | Goodwill We test goodwill for impairment annually during our first fiscal quarter, referred to as the annual test date. We will also test for impairment between annual test dates if an event occurs or circumstances change that would indicate the carrying amount may be impaired. We have not identified any events or circumstances as of September 30, 2017 that would require an interim goodwill impairment test. We do not amortize goodwill as it has been determined to have an indefinite useful life. The carrying amount of goodwill as of September 30, 2017 was $216,530, which reflects the acquisitions of Entrada and EagleDream (see Note 3). The carrying amount of goodwill as of March 31, 2017 was $185,898. |
Intangible Assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets | Intangible Assets Our definite-lived intangible assets, other than capitalized software development costs, are summarized as follows, and reflects the acquisitions of Entrada and EagleDream (see Note 3):
Amortization expense related to customer relationships and trade name and contracts recorded as operating expenses in the consolidated statements of comprehensive income was $2,012 and $2,617 for the three months ended September 30, 2017 and 2016, respectively. Amortization expense related to software technology recorded as cost of revenue was $3,807 and $3,030 for the three months ended September 30, 2017 and 2016, respectively. Amortization expense related to customer relationships and trade name and contracts was $4,059 and $5,321 for the six months ended September 30, 2017 and 2016, respectively. Amortization expense related to software technology was $7,208 and $6,057 for the six months ended September 30, 2017 and 2016, respectively. The following table summarizes the remaining estimated amortization of definite-lived intangible assets as of September 30, 2017:
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Capitalized Software Costs |
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Capitalized Software Costs | Capitalized Software Costs Our capitalized software costs are summarized as follows:
Amortization expense related to capitalized software costs was $1,300 and $2,448 for the three months ended September 30, 2017 and 2016, respectively, and is recorded as cost of revenue in the consolidated statements of comprehensive income. Amortization expense related to capitalized software costs was $2,571 and $4,819 for the six months ended September 30, 2017 and 2016, respectively. The following table presents the remaining estimated amortization of capitalized software costs as of September 30, 2017. The estimated amortization is comprised of (i) amortization of released products and (ii) the expected amortization for products that are not yet available for sale based on their estimated economic lives and projected general release dates.
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Line of Credit (Notes) |
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Sep. 30, 2017 | |
Debt Disclosure [Abstract] | |
LIne of Credit | Line of Credit On January 4, 2016, we entered into a $250,000 revolving credit agreement (“Credit Agreement”) with JP Morgan Chase Bank, N.A., as administrative agent, U.S. Bank National Association, as syndication agent, and certain other lenders. The Credit Agreement is secured by substantially all of our existing and future property and material domestic subsidiaries. The Credit Agreement provides a subfacility of up to $10,000 for letters of credit and a subfacility of up to $10,000 for swing-line loans. The Credit Agreement matures on January 4, 2021 and the full balance of the revolving loans and all other obligations under the agreement must be paid at that time. The revolving loans under the Credit Agreement will be available for letters of credit, working capital and general corporate purposes. We were in compliance with all covenants under the Credit Agreement as of September 30, 2017. As of September 30, 2017, we had $55,000 in outstanding loans and $195,000 of unused credit under the Credit Agreement. As of March 31, 2017, we had $15,000 in outstanding loans under the Credit Agreement. Interest expense related to the Credit Agreement was $520 and $740 for the three months ended September 30, 2017 and 2016, respectively. Amortization of deferred debt issuance costs was $269 for both the three months ended September 30, 2017 and 2016. Interest expense related to the Credit Agreement was $927 and $1,272 for the six months ended September 30, 2017 and 2016, respectively. Amortization of deferred debt issuance costs was $538 for both the six months ended September 30, 2017 and 2016, respectively. |
Composition of Certain Financial Statement Captions |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Composition of Certain Financial Statement Captions | Composition of Certain Financial Statement Captions Accounts receivable may include amounts invoiced for undelivered products and services at each period end. Undelivered products and services are included as a component of the deferred revenue balance on the accompanying consolidated balance sheets.
Inventory is comprised of computer systems and components. Prepaid expenses and other current assets are summarized as follows:
Equipment and improvements are summarized as follows:
The current portion of deferred revenues are summarized as follows:
Accrued compensation and related benefits are summarized as follows:
Other current and noncurrent liabilities are summarized as follows:
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Income Taxes |
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Sep. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The provision for income taxes for the three months ended September 30, 2017 and 2016 was $2,493 and $1,925, respectively. The effective tax rates were 23.7% and 32.6% for the three months ended September 30, 2017 and 2016, respectively. The effective rate for the three months ended September 30, 2017 decreased compared to the prior year period primarily due to a favorable decline in the amount of certain non-deductible acquisition related costs and the current period reduction in state taxes. The provision for income taxes for the six months ended September 30, 2017 and 2016 was $4,647 and $1,608, respectively. The effective tax rates were 28.0% and 32.5% for the six months ended September 30, 2017 and 2016, respectively. The effective rate for the six months ended September 30, 2017 decreased compared to the prior year period primarily due to a favorable decline in the amount of certain non-deductible acquisition related costs, the current period reduction in state taxes, and the impact of excess tax deficiencies from share-based compensation recorded in the period. Additionally, we adopted ASU 2016-09 (see Note 1), which requires excess tax expense and benefits to be recorded in the income statement (income tax expense and/or benefit). Prior to adoption of ASU 2016-09, such amounts were recorded to additional paid-in capital and did not impact the effective tax rate. The deferred tax assets and liabilities have been shown net in the accompanying consolidated balance sheets as noncurrent. We expect to receive the full benefit of the deferred tax assets recorded with the exception of certain state credits, state net operating loss carryforwards, and foreign accumulated minimum tax credits, for which we have recorded a valuation allowance. Uncertain tax positions We had liabilities of $5,305 and $4,762 for unrecognized tax benefits related to various federal, state and local income tax matters as of September 30, 2017 and March 31, 2017, respectively. If recognized, this amount would reduce our effective tax rate. We are no longer subject to U.S. federal income tax examinations for tax years before fiscal years ended 2014. With a few exceptions, we are no longer subject to state or local income tax examinations for tax years before fiscal years ended 2013. We do not anticipate that total unrecognized tax benefits will significantly change due to the settlement of audits or the expiration of statute of limitations within the next twelve months. |
Earnings Per Share |
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Earnings Per Share | Earnings per Share The dual presentation of “basic” and “diluted” earnings per share is provided below. Share amounts below are in thousands.
The computation of diluted net income per share does not include 2,567 and 2,565 options to acquire shares of common stock for the three and six months ended September 30, 2017, respectively, because their inclusion would have an anti-dilutive effect on net income per share. The computation of diluted net income per share does not include 3,230 and 2,997 options to acquire shares of common stock for the three and six months ended September 30, 2016, respectively, because their inclusion would have an anti-dilutive effect on net income per share. |
Share-Based Awards |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Awards | Share-Based Awards Employee Stock Option and Incentive Plans In October 2005, our shareholders approved a stock option and incentive plan (the “2005 Plan”) under which 4,800,000 shares of common stock were reserved for the issuance of awards, including incentive stock options and non-qualified stock options, stock appreciation rights, restricted stock, unrestricted stock, restricted stock units, performance shares, performance units (including performance options) and other share-based awards. The 2005 Plan provides that our employees and directors may, at the discretion of the Board of Directors ("Board") or a duly designated compensation committee, be granted certain share-based awards. In the case of option awards granted under the 2005 Plan, the exercise price of each option is determined based on the date of grant and expire no later than 10 years from the date of grant. Awards granted pursuant to the 2005 Plan are subject to the vesting schedule or performance metrics set forth in the agreements pursuant to which they are granted. Upon a change of control of our Company, as such term is defined in the 2005 Plan, awards under the 2005 Plan will fully vest under certain circumstances. The 2005 Plan expired on May 25, 2015. As of September 30, 2017, there were 702,860 outstanding options under the 2005 Plan. In August 2015, our shareholders approved a stock option and incentive plan (the “2015 Plan”) under which 11,500,000 shares of common stock were reserved for the issuance of awards, including incentive stock options and non-qualified stock options, stock appreciation rights, restricted stock awards and restricted stock unit awards, performance stock awards and other share-based awards. In August 2017, our shareholders approved an amendment to our 2015 Equity Incentive Plan, (the “Amended 2015 Plan”), to, among other items, increase the number of shares of common stock reserved for issuance thereunder by 6,000,000. The Amended 2015 Plan provides that our employees and directors may, at the discretion of the Board of Directors or a duly designated compensation committee, be granted certain share-based awards. In the case of option awards granted under the Amended 2015 Plan, the exercise price of each option is determined based on the date of grant and expire no later than 10 years from the date of grant. Awards granted pursuant to the Amended 2015 Plan are subject to the vesting schedule or performance metrics set forth in the agreements pursuant to which they are granted. Upon a change of control of our Company, as such term is defined in the Amended 2015 Plan, awards under the Amended 2015 Plan will fully vest under certain circumstances. As of September 30, 2017, there were 1,989,375 outstanding options, 1,619,002 outstanding shares of restricted stock awards, 114,916 outstanding shares of performance stock awards, and 11,352,428 shares available for future grant under the Amended 2015 Plan. The following table summarizes the stock option transactions during the six months ended September 30, 2017:
We utilize the Black-Scholes valuation model for estimating the fair value of share-based compensation with the following assumptions:
The weighted-average grant date fair value of stock options granted during the six months ended September 30, 2017 and 2016 was $6.11 and $4.92 per share, respectively. During the six months ended September 30, 2017, a total of 334,000 options to purchase shares of common stock were granted under the Amended 2015 Plan at an exercise price equal to the market price of our common stock on the date of grant, as summarized below:
(1) Options vest in equal annual installments on each grant anniversary date commencing one year following the date of grant. Non-vested stock option award activity during the six months ended September 30, 2017 is summarized as follows:
As of September 30, 2017, $7,590 of total unrecognized compensation costs related to stock options is expected to be recognized over a weighted-average period of 3.1 years. This amount does not include the cost of new options that may be granted in future periods or any changes in our forfeiture percentage. The total fair value of options vested during the six months ended September 30, 2017 and 2016 was $2,092 and $1,486, respectively. Restricted stock awards activity during the six months ended September 30, 2017 is summarized as follows:
Share-based compensation expense related to restricted stock awards was $2,207 and $972 for the three months ended September 30, 2017 and 2016, respectively. Share-based compensation expense related to restricted stock awards was $3,746 and $1,517 for the six months ended September 30, 2017 and 2016, respectively. The weighted-average grant date fair value for the restricted stock awards was estimated using the market price of the common stock on the date of grant. The fair value of the restricted stock awards is amortized on a straight-line basis over the vesting period, which is generally between one to three years. As of September 30, 2017, $20,842 of total unrecognized compensation costs related to restricted stock awards is expected to be recognized over a weighted-average period of 2.4 years. This amount does not include the cost of new restricted stock awards that may be granted in future periods. On December 29, 2016, the Compensation Committee of the Board granted 123,082 performance stock awards to certain executive officers, of which 114,916 shares are currently outstanding. The performance stock awards vest in four equal increments on each of the first four anniversaries of the grant date, subject in each case to the executive officer’s continued service and achievement of certain Company performance goals, including strong Company stock price performance. Share-based compensation expense related to the performance stock awards was $77 and $150 for the three and six months ended September 30, 2017, respectively. Employee Share Purchase Plan On August 11, 2014, our shareholders approved an Employee Share Purchase Plan (the “Purchase Plan”) under which 4,000,000 shares of common stock were reserved for future grant. The Purchase Plan allows eligible employees to purchase shares through payroll deductions of up to 15% of total base salary at a price equal to 90% of the lower of the fair market values of the shares as of the beginning or the end of the corresponding offering period. Any shares purchased under the Purchase Plan are subject to a six-month holding period. Employees are limited to purchasing no more than 1,500 shares on any single purchase date and no more than $25,000 in total fair market value of shares during any one calendar year. As of September 30, 2017, we have issued 290,649 shares under the Purchase Plan and 3,709,351 shares are available for future issuance. Share-based compensation expense recorded for the employee share purchase plan was $80 and $81 for the three months ended September 30, 2017 and 2016, respectively. Share-based compensation expense recorded for the employee share purchase plan was $177 and $207 for the six months ended September 30, 2017 and 2016, respectively. |
Concentration of Credit Risk |
6 Months Ended |
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Sep. 30, 2017 | |
Risks and Uncertainties [Abstract] | |
Concentration of Credit Risk | Concentration of Credit Risk We had cash deposits at U.S. banks and financial institutions which exceeded federally insured limits at September 30, 2017. We are exposed to credit loss for amounts in excess of insured limits in the event of non-performance by the institutions; however, we do not anticipate non-performance by these institutions. |
Commitments, Guarantees and Contingencies |
6 Months Ended |
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Sep. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments, Guarantees and Contingencies | Commitments, Guarantees and Contingencies Commitments and Guarantees Our software license agreements include a performance guarantee that our software products will substantially operate as described in the applicable program documentation for a period of 365 days after delivery. To date, we have not incurred any significant costs associated with our performance guarantee or other related warranties and do not expect to incur significant warranty costs in the future. Therefore, no accrual has been made for potential costs associated with these warranties. Certain arrangements also include performance guarantees related to response time, availability for operational use, and other performance-related guarantees. Certain arrangements also include penalties in the form of maintenance credits should the performance of the software fail to meet the performance guarantees. To date, we have not incurred any significant costs associated with these warranties and do not expect to incur significant warranty costs in the future. Therefore, no accrual has been made for potential costs associated with these warranties. We have historically offered short-term rights of return in certain sales arrangements. If we are able to estimate returns for these types of arrangements and all other criteria for revenue recognition have been met, revenue is recognized and these arrangements are recorded in the consolidated financial statements. If we are unable to estimate returns for these types of arrangements, revenue is not recognized in the consolidated financial statements until the rights of return expire, provided also, that all other criteria of revenue recognition have been met. Our standard sales agreements contain an indemnification provision pursuant to which we shall indemnify, hold harmless, and reimburse the indemnified party for losses suffered or incurred by the indemnified party in connection with any United States patent, any copyright or other intellectual property infringement claim by any third-party with respect to our software. As we have not incurred any significant costs to defend lawsuits or settle claims related to these indemnification agreements, we believe that our estimated exposure on these agreements is currently minimal. Accordingly, we have no liabilities recorded for these indemnification obligations. Hussein Litigation On October 7, 2013, a complaint was filed against our Company and certain of our officers and directors in the Superior Court of the State of California for the County of Orange, captioned Ahmed D. Hussein v. Sheldon Razin, Steven Plochocki, Quality Systems, Inc. and Does 1-10, inclusive, No. 30-2013-00679600-CU-NP-CJC, by Ahmed Hussein, a former director and significant shareholder of our Company. We filed a demurrer to the complaint, which the Court granted on April 10, 2014. An amended complaint was filed on April 25, 2014. The amended complaint generally alleges fraud and deceit, constructive fraud, negligent misrepresentation and breach of fiduciary duty in connection with statements made to our shareholders regarding our financial condition and projected future performance. The amended complaint seeks actual damages, exemplary and punitive damages and costs. We filed a demurrer to the amended complaint. On July 29, 2014, the Court sustained the demurrer with respect to the breach of fiduciary duty claim, and overruled the demurrer with respect to the fraud and deceit claims. On August 28, 2014, we filed an answer and also filed a cross-complaint against Hussein, alleging that he breached fiduciary duties owed to the Company, Mr. Razin and Mr. Plochocki. Mr. Razin and Mr. Plochocki have dismissed their claims against Hussein, leaving QSI as the sole plaintiff in the cross-complaint. On June 26, 2015, we filed a motion for summary judgment with respect to Hussein’s claims, which the Court granted on September 16, 2015, dismissing all of Hussein’s claims against us. On September 23, 2015, Hussein filed an application for reconsideration of the Court's summary judgment order, which the Court denied. Hussein filed a renewed application for reconsideration of the Court’s summary judgment order on August 3, 2017. Argument on the renewed application for reconsideration is scheduled for October 26, 2017. On October 28, 2015, May 9, 2016, and August 5, 2016, Hussein filed a motion for summary judgment, motion for summary adjudication, and motion for judgment on the pleadings, respectively, seeking to dismiss our cross-complaint. The Court denied each motion. Trial on our cross-complaint began June 12, 2017. On July 26, 2017, the Court issued a statement of decision granting Hussein’s motion for judgment on our cross-complaint. We believe the Court’s decision on our cross-complaint was erroneous and we are evaluating a potential appeal. At this time, we are unable to estimate the probability or the amount of liability, if any, related to this claim. Federal Securities Class Action On November 19, 2013, a putative class action complaint was filed on behalf of the shareholders of our Company other than the defendants against us and certain of our officers and directors in the United States District Court for the Central District of California by one of our shareholders. After the Court appointed lead plaintiffs and lead counsel for this action, and recaptioned the action In re Quality Systems, Inc. Securities Litigation, No. 8:13-cv-01818-CJC-JPR, lead plaintiffs filed an amended complaint on April 7, 2014. The amended complaint, which is substantially similar to the litigation described above under the caption “Hussein Litigation,” generally alleges that statements made to our shareholders regarding our financial condition and projected future performance were false and misleading in violation of Section 10(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and that the individual defendants are liable for such statements because they are controlling persons under Section 20(a) of the Exchange Act. The complaint seeks compensatory damages, court costs and attorneys' fees. We filed a motion to dismiss the amended complaint on June 20, 2014, which the Court granted on October 20, 2014, dismissing the complaint with prejudice. Plaintiffs filed a motion for reconsideration of the Court's order, which the Court denied on January 5, 2015. On January 30, 2015, Plaintiffs filed a notice of appeal to the United States Court of Appeals for the Ninth Circuit, captioned In re Quality Systems, Inc. Securities Litigation, No. 15-55173. Oral argument was held on December 5, 2016. On July 28, 2017, the Ninth Circuit issued a decision reversing and remanding the District Court's order on our motion to dismiss. On September 5, 2017, we filed a petition for rehearing en banc, which was denied on September 29, 2017. We believe that the plaintiffs' claims are without merit and continue to defend against them vigorously, including by evaluating potential challenges to the Ninth Circuit decision. At this time, we are unable to estimate the probability or the amount of liability, if any, related to this claim. Shareholder Derivative Litigation On January 24, 2014, a complaint was filed against our Company and certain of our officers and current and former directors in the United States District Court for the Central District of California, captioned Timothy J. Foss, derivatively on behalf of himself and all others similarly situated, vs. Craig A. Barbarosh, George H. Bristol, James C. Malone, Peter M. Neupert, Morris Panner, D. Russell Pflueger, Steven T. Plochocki, Sheldon Razin, Lance E. Rosenzweig and Quality Systems, Inc., No. SACV14-00110-DOC-JPPx, by Timothy J. Foss, a purported shareholder of ours. The complaint arises from the same allegations described above under the captions “Hussein Litigation” and “Federal Securities Class Action” and generally alleges breach of fiduciary duties, abuse of control and gross mismanagement by our directors, in addition to unjust enrichment and insider selling by individual directors. The complaint seeks compensatory damages, restitution and disgorgement of all profits, court costs, attorneys’ fees and implementation of enhanced corporate governance procedures. The parties have agreed to stay this litigation until the United States Court of Appeals for the Ninth Circuit issues a ruling on the pending appeal described above under the caption “Federal Securities Class Action,” and will meet and confer to discuss process going forward. On September 28, 2017, a complaint was filed against our Company and certain of our current and former officers and directors in the United States District Court for the Central District of California, captioned Kusumam Koshy, derivatively on behalf of Quality Systems Inc. vs. Craig Barbarosh, George H. Bristol, James C. Malone, Peter M. Neupert, Morris Panner, D. Russell Pflueger, Steven T. Plochocki, Sheldon Razin, Lance E. Rosenzweig, Paul A. Holt, and Quality Systems, Inc., No. 8:17-cv-01694, by Kusumam Koshy, a purported shareholder of ours. The complaint alleges breach of fiduciary duties and abuse of control, as well as unjust enrichment and insider selling by individual directors arising out of the allegations described above under the captions “Hussein Litigation” and “Federal Securities Class Action,” QSI’s adoption of revised indemnification agreements, and the resignation of certain officers of the Company. The complaint seeks restitution and disgorgement, court costs and attorneys’ fees, and enhanced corporate governance reforms and internal control procedures. We believe that the plaintiffs’ claims are without merit and intend to defend against them vigorously. At this time, we are unable to estimate the probability or the amount of liability, if any, related to this claim. Other Regulatory Matters In April 2017, we received a request for documents and information from the U.S. Attorney's Office for the District of Vermont pursuant to a Civil Investigative Demand (“CID”). The CID relates to an investigation concerning the certification we obtained for our software under the U.S. Department of Health and Human Services' Electronic Health Record Incentive Program. Given the highly-regulated nature of our industry, we may, from time to time, be subject to subpoenas, requests for information, or investigations from various government agencies. It is our practice to respond to such matters in a cooperative, thorough and timely manner. We are currently responding to this CID and intend to cooperate fully with the government. Requests and investigations of this nature may lead to the assertion of claims or the commencement of legal proceedings against us, as well as other material liabilities. In addition, our responses to the CID require time and effort, which can result in additional cost to us. At this time, we are unable to estimate the probability or the amount of liability, if any, related to this claim. |
Restructuring Plan |
6 Months Ended |
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Sep. 30, 2017 | |
Restructuring Costs [Abstract] | |
Restructuring Plan | Restructuring Plan In fiscal year 2016, as part of our reorganization efforts, we recorded $7,078 of restructuring costs within operating expenses in our consolidated statements of net income and comprehensive income. The restructuring plan was substantially complete by the end of fiscal 2017. The restructuring costs consisted primarily 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, which were accrued when it was probable that the benefits would be paid and the amounts were reasonably estimable. Also included in restructuring costs were certain facilities-related costs associated with accruals for the remaining lease obligations at certain locations, including Solana Beach, Costa Mesa, and a portion of Horsham with contractual lease terms ending between January 2018 and September 2023. We have vacated each of the locations or portions thereof and are actively marketing the locations for sublease. We estimated the remaining lease obligations at fair value as of the cease-use date for each location based on the future contractual lease obligations, reduced by projected sublease rentals that could be reasonably obtained for the locations after a period of marketing, and adjusted for the effect deferred rents that have been recognized under the lease. The effect of discounting future cash flows using a credit-adjusted risk free rate was not significant. Sublease income and commencement dates were estimated based on data available from rental activity in the local markets. Significant judgment was required to estimate the remaining lease obligations at fair value and actual results could vary from the estimates, resulting in potential future adjustments to amounts previously recorded. As of September 30, 2017, the remaining lease obligation, net of estimated projected sublease rentals, was $1,579. |
Significant Accounting Policies (Policies) |
6 Months Ended |
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Sep. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Principles of Consolidation | Principles of Consolidation. The consolidated financial statements include the accounts of Quality Systems, Inc. and its wholly-owned subsidiaries (collectively, the “Company”). Each of the terms “we,” “us,” or “our” as used herein refers collectively to the Company, unless otherwise stated. All intercompany accounts and transactions have been eliminated. |
Segment Reporting, Policy [Policy Text Block] | Business Segments. We have determined that the Company operates in one segment as of June 30, 2017. We have made such determination by first identifying our Chief Executive Officer as our chief operating decision maker ("CODM") and considering the measures used by our CODM to allocate resources. Our CODM utilizes consolidated revenue and consolidated operating results to assess performance and make decisions about allocation of resources. Previously, through the end of fiscal year 2017, we operated under two reportable segments, consisting of the Software and Related Solutions segment and the RCM and Related Services segment, which was consistent with the disaggregated financial information used and evaluated by our CODM to assess performance and make decisions about the allocation of resources. However, as part of our reorganization efforts that were substantially complete as of the end of fiscal year 2017, our internal organizational structure whereby certain functions that formerly existed within each individual operating segment has continued to evolve. Our former Chief Operating Officer was previously responsible for leading the operations of our former RCM and Related Services business while our former Chief Client Officer led our client success organization, consisting of the Software and Related Solutions business and other functions, such as sales and marketing. Upon the resignation of our former Chief Operating Officer in April 2017 and concurrent appointment of our former Chief Client Officer as Chief Operating Officer, our entire portfolio of software and services were aligned under our new Chief Operating Officer in an effort to provide our clients with an even more simplified experience and more effectively deliver a consolidated financial solution to our clients, rather than components of a solution. As a result of such changes in our internal organization structure, the CODM now operates the Company as a single functional organization. The CODM measures company-wide performance by reviewing consolidated revenue and operating results and evaluates the impact of allocating resources to overall profit and margins on a consolidated basis. |
Basis of Presentation | Basis of Presentation. The accompanying unaudited consolidated financial statements as of September 30, 2017 and for the three and six months ended September 30, 2017 have been prepared in accordance with the requirements of Quarterly Report on Form 10-Q and Article 10 of the Securities and Exchange Commission Regulation S-X and therefore do not include all information and notes which would be presented were such consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). These consolidated financial statements should be read in conjunction with the audited consolidated financial statements presented in our Annual Report on Form 10-K for the fiscal year ended March 31, 2017. In the opinion of management, the accompanying consolidated financial statements reflect all adjustments which are necessary for a fair statement of the results of operations and cash flows for the periods presented. The results of operations for such interim periods are not necessarily indicative of results of operations to be expected for the full year. References to amounts in the consolidated financial statement sections are in thousands, except shares and per share data, unless otherwise specified. |
Recent Accounting Standards | Recent Accounting Standards. Recent accounting pronouncements requiring implementation in future periods are discussed below or in the notes, where applicable. In May 2017, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2017-09, Compensation–Stock Compensation (Topic 718): Scope of Modification Accounting ("ASU 2017-09"). ASU 2017-09 clarifies the changes to terms or conditions of a share-based payment award that require an entity to apply modification accounting. ASU 2017-09 is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Early application is permitted and prospective application is required. ASU 2017-09 is effective for us in the first quarter of fiscal 2019, and we currently do not expect the adoption of this new standard to have a material impact on our consolidated financial statements. In January 2017, the FASB issued ASU 2017-04, Intangibles–Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment (“ASU 2017-04”). ASU 2017-04 removes the requirement to compare the implied fair value of goodwill with its carrying amount as part of Step two of the goodwill impairment test. Instead, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value. ASU 2017-04 is effective prospectively for annual and interim periods beginning after December 15, 2019, and early adoption is permitted on goodwill impairment tests performed on testing dates after January 1, 2017. ASU 2017-04 is effective for us in the fourth quarter of fiscal 2020, and we currently do not expect the adoption of this new standard to have a material impact on our consolidated financial statements. In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business (“ASU 2017-01”). ASU 2017-01 clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. ASU 2017-01 is effective for annual periods beginning after December 15, 2017, including interim periods within those periods. Early adoption is permitted in two scenarios as identified in the new standard. ASU 2017-01 is effective for us in the first quarter of fiscal 2019, and we currently do not expect the adoption of this new standard to have a material impact on our consolidated financial statements. In November 2016, the FASB issued Accounting Standards Update ("ASU") 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (“ASU 2016-18”). ASU 2016-18 provides guidance on the classification of restricted cash and cash equivalents in the statement of cash flows. Although it does not provide a definition of restricted cash or restricted cash equivalents, it states that amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of period total amounts shown on the statement of cash flows. ASU 2016-18 is effective for interim and annual reporting periods beginning after December 15, 2017. Early adoption is permitted, including adoption in an interim period. ASU 2016-18 is effective for us in the first quarter of fiscal 2019, and we do not expect the adoption of this new standard to have a material impact on our consolidated financial statements. In October 2016, the FASB issued ASU 2016-16, Income Taxes: Intra-Entity Transfers of Assets Other Than Inventory ("ASU 2016-16"). ASU 2016-16 requires the recognition of current and deferred income taxes for intra-entity asset transfers when the transaction occurs. ASU 2016-16 is effective for interim and annual reporting periods beginning after December 15, 2017. Early adoption is permitted. ASU 2016-16 is effective for us in the first quarter of fiscal 2019, and we are currently in the process of evaluating the potential impact of adoption of this updated authoritative guidance on our consolidated financial statements. In August 2016, the FASB issued ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments. ASU 2016-15 is intended to add and clarify guidance on the classification of certain cash receipts and cash payments in the statement of cash flows to eliminate diversity in practice related to how such cash receipts and cash payments are presented and classified in the statement of cash flows. ASU 2016-15 is effective for interim and annual reporting periods beginning after December 15, 2017. Early adoption is permitted, including adoption in an interim period. ASU 2016-15 is effective for us in the first quarter of fiscal 2019, and we do not expect the adoption of this new standard to have a material impact on our consolidated financial statements. In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting ("ASU 2016-09"). ASU 2016-09 simplifies the accounting for and reporting on share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. ASU 2016-09 is effective for interim and annual reporting periods beginning after December 15, 2016, with early adoption permitted. The amendments in this update are to be applied differently upon adoption with certain amendments being applied prospectively, retrospectively and under a modified retrospective transition method. We adopted ASU 2016-09 in the first quarter of fiscal 2018. As permitted by ASU 2016-09, we have made an accounting policy election to account for forfeitures as they occur, which was adopted on a modified retrospective basis and resulted in a cumulative-effect adjustment of $0.1 million to retained earnings and additional paid-in capital as of April 1, 2017. ASU 2016-09 also eliminates additional paid-in capital pools and requires excess tax benefits and tax deficiencies to be recorded in the income statement when the awards vest or are settled, which was adopted on a prospective basis. The requirements to recognize previously unrecognized excess tax benefits on a modified retrospective basis did not have an impact on our consolidated financial statements. Upon adoption of ASU 2016-09, excess tax benefits and tax deficiencies are recognized in the income statement, and the tax effects of exercised or vested awards are treated as discrete items in the period they occur. The provisions of ASU 2016-09 could have an impact to our future income tax expense, including increased volatility in our effective tax rate on a quarter by quarter basis due to a number of factors, including fluctuations in the stock price and the timing of stock option exercises and vesting of restricted share awards. Additionally, ASU 2016-09 addresses presentation of excess tax benefits and deficiencies and employee taxes paid related to shares withheld for tax withholdings purposes on the statement of cash flows, including a requirement to present excess tax benefits and deficiencies as an operating activity in the same manner as other cash flows related to income taxes on the statement of cash flows, which will be adopted on a prospective basis, and presentation of employee taxes paid related to shares withheld for tax withholdings purposes as a financing activity, which is consistent with our current presentation and thus did not impact our consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) (“ASU 2016-02”), which is intended to improve financial reporting about leasing transactions. The new guidance will require lessees to recognize on their balance sheets the assets and liabilities for the rights and obligations created by leases and to disclose key information about the leasing arrangements. ASU 2016-02 is effective for interim and annual periods beginning after December 15, 2018, with early adoption permitted. ASU 2016-02 is effective for us in the first quarter of fiscal 2020. We are currently in the process of evaluating the potential impact of adoption of this updated authoritative guidance on our consolidated financial statements. In May 2014, the FASB, along with the International Accounting Standards Board, issued ASU 2014-09, Revenue from Contracts with Customers ("ASU 2014-09"), which supersedes the revenue recognition requirements in ASC 605, Revenue Recognition. ASU 2014-09 provides enhancements to the quality and consistency of how revenue is reported while also improving comparability in the financial statements of companies reporting using International Financial Reporting Standards and GAAP. The core principle of this updated guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new standard also requires additional disclosure about revenue and provides improved guidance for multiple element arrangements. In July 2015 decision, the FASB issued ASU 2015-14, Deferral of Effective Date ("ASU 2015-14") to delay the effective date by one year. In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606) –Principal versus Agent Consideration ("ASU 2016-08"). In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606) - Identifying Performance Obligations and Licensing ("ASU 2016-10”). In May 2016, the FASB issued ASU 2016-11, Revenue from Contracts with Customers (Topic 606) and Derivatives and Hedging (Topic 815) – Rescission of SEC Guidance Because of ASU 2014-09 and 2014-16 ("ASU 2016-11") and ASU 2016-12, Revenue from Contracts with Customers (Topic 606) –Narrow Scope Improvements and Practical Expedients ("ASU 2016-12"). The new ASUs do not change the core principle of the guidance in Topic 606 (as amended by ASU 2014-09), but rather help to provide further interpretive clarifications on the new guidance in ASU 2014-09. ASU 2014-09, as amended by ASU 2015-14, is effective for us in the first quarter of fiscal 2019. Companies are permitted to adopt this new guidance following either a full retrospective or modified retrospective approach. We have completed our assessment of the potential impacts to our business processes, systems, and internal controls that could result from the implementation of the new revenue guidance. Based on our assessment, we currently believe that the impact on our consolidated financial statements could be material. We expect that revenue related to hardware, EDI, maintenance, and certain subscriptions would remain substantially unchanged, and we are the process of evaluating the impact of the new revenue guidance on our other revenue streams. Due to the complexity of our revenue recognition, a significant amount of work remains as we continue to evaluate all potential impacts of the new revenue guidance, and develop and implement the necessary changes to our current accounting systems, processes, and internal controls. Accordingly, our preliminary assessments are subject to change. We expect that the new revenue guidance will result in additional complexity to our revenue recognition, including the use of an increased amount of significant judgments and estimates, particularly as it relates to our RCM services revenue, as compared to our current revenue recognition. Additionally, certain incremental costs incurred to obtain contracts with customers, such as sales commissions, are within the scope of the new revenue guidance and are required to be capitalized and amortized to expense over the remaining performance periods of the contracts. Currently, our sales commission are capitalized and amortized to expense over the related period of revenue recognition. Although the amortization period of capitalized sales commissions may differ upon adoption of the new revenue guidance, we do not expect the adoption of this new revenue standard to have a material impact on our consolidated financial statements with respect to the capitalization and amortization of sales commissions. We currently expect to implement the new revenue guidance when it becomes effective for us in the first quarter of fiscal 2019 utilizing the modified retrospective transition method. Under this transition method, prior period amounts will not be adjusted and the cumulative effect from prior periods of applying the new revenue guidance will be recognized in our consolidated balance sheets as of the date of adoption, including an adjustment to retained earnings. We do not believe that any other recently issued, but not yet effective accounting standards, if adopted, would have a material impact on our consolidated financial statements. |
Contingent Consideration Policy | The contingent consideration liability as of March 31, 2017 relates to the acquisition of HealthFusion, which was settled during the quarter ended June 30, 2017. The measurement period of the contingent consideration liability ended on December 31, 2016, and thus the actual revenue achievement rate was utilized to compute the ending contingent consideration liability as of March 31, 2017. Accordingly, the contingent consideration liability was reflected under a Level 2 valuation hierarchy because the fair value was determined based on other significant observable inputs. |
Non-Recurring Fair Value Measurements | Non-Recurring Fair Value Measurements We have certain assets, including goodwill and other intangible assets, which are measured at fair value on a non-recurring basis and are adjusted to fair value only if an impairment charge is recognized. The categorization of the framework used to measure fair value of the assets is considered to be within the Level 3 valuation hierarchy due to the subjective nature of the unobservable inputs used. During the three and six months ended September 30, 2017, no adjustments were recorded. |
Summary of Significant Accounting Policies (Tables) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation expense | Share-Based Compensation. The following table shows total share-based compensation expense included in the consolidated statements of comprehensive income for the three and six months ended September 30, 2017 and 2016:
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Fair Value Measurements (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair value of assets and liabilities on a recurring basis | The following tables set forth by level within the fair value hierarchy our financial assets and liabilities that were accounted for at fair value on a recurring basis at September 30, 2017 and March 31, 2017:
___________________________________ (1) Cash equivalents consist primarily of money market funds. (2) The contingent consideration liability as of March 31, 2017 relates to the acquisition of HealthFusion, which was settled during the quarter ended June 30, 2017. The measurement period of the contingent consideration liability ended on December 31, 2016, and thus the actual revenue achievement rate was utilized to compute the ending contingent consideration liability as of March 31, 2017. Accordingly, the contingent consideration liability was reflected under a Level 2 valuation hierarchy because the fair value was determined based on other significant observable inputs. |
Business Combinations and Dispositions (Tables) |
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Business Acquisition [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Business Acquisitions, by Acquisition | The total preliminary purchase price for the EagleDream acquisition is summarized as follows:
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Summary of purchase price allocation |
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Intangible Assets (Tables) |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible assets, other than capitalized software development costs | Our definite-lived intangible assets, other than capitalized software development costs, are summarized as follows, and reflects the acquisitions of Entrada and EagleDream (see Note 3):
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Estimated amortization of intangible assets with determinable lives | The following table summarizes the remaining estimated amortization of definite-lived intangible assets as of September 30, 2017:
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Capitalized Software Costs (Tables) |
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Research and Development [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
Capitalized software development costs | Our capitalized software costs are summarized as follows:
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Estimated amortization of capitalized software costs | The following table presents the remaining estimated amortization of capitalized software costs as of September 30, 2017. The estimated amortization is comprised of (i) amortization of released products and (ii) the expected amortization for products that are not yet available for sale based on their estimated economic lives and projected general release dates.
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Composition of Certain Financial Statement Captions (Tables) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Accounts Receivable | Accounts receivable may include amounts invoiced for undelivered products and services at each period end. Undelivered products and services are included as a component of the deferred revenue balance on the accompanying consolidated balance sheets.
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Summary of Inventories | Inventory is comprised of computer systems and components. |
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Summary of Prepaid Expense and Other Assets, Current | Prepaid expenses and other current assets are summarized as follows:
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Summary of Equipment and improvements | Equipment and improvements are summarized as follows:
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Summary of Current and non-current deferred revenue | The current portion of deferred revenues are summarized as follows:
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Summary of Accrued compensation and related benefits | Accrued compensation and related benefits are summarized as follows:
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Summary of Other current liabilities | Other current and noncurrent liabilities are summarized as follows:
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Earnings Per Share (Tables) |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Weighted-average shares outstanding for basic and diluted net income per share | The dual presentation of “basic” and “diluted” earnings per share is provided below. Share amounts below are in thousands.
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Share Based Awards (Tables) |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Stock Option Activity | The following table summarizes the stock option transactions during the six months ended September 30, 2017:
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Schedule of Share Based Compensation Valuation Assumption | We utilize the Black-Scholes valuation model for estimating the fair value of share-based compensation with the following assumptions:
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Summary of stock options granted | During the six months ended September 30, 2017, a total of 334,000 options to purchase shares of common stock were granted under the Amended 2015 Plan at an exercise price equal to the market price of our common stock on the date of grant, as summarized below:
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Schedule of Employee Stock Options and Performance Based Awards by Nonvested Stock options | Non-vested stock option award activity during the six months ended September 30, 2017 is summarized as follows:
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Schedule of Other Share-based Compensation, Activity [Table Text Block] | Restricted stock awards activity during the six months ended September 30, 2017 is summarized as follows:
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Summary of Significant Accounting Policies (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Costs and expenses: | ||||
Total share-based compensation | $ 3,091 | $ 1,918 | $ 5,132 | $ 3,177 |
Income tax benefit | (1,144) | (695) | (1,860) | (1,107) |
Increase Decrease in Net Income | 1,947 | 1,223 | 3,272 | 2,070 |
Cost of revenue [Member] | ||||
Costs and expenses: | ||||
Total share-based compensation | 290 | 166 | 427 | 315 |
Research and development costs [Member] | ||||
Costs and expenses: | ||||
Total share-based compensation | 513 | 334 | 874 | 417 |
Selling, general and administrative [Member] | ||||
Costs and expenses: | ||||
Total share-based compensation | $ 2,288 | $ 1,418 | $ 3,831 | $ 2,445 |
Business Combinations and Dispositions (Details) - USD ($) $ in Thousands |
Aug. 16, 2017 |
Apr. 14, 2017 |
Sep. 30, 2017 |
Mar. 31, 2017 |
---|---|---|---|---|
Business Acquisition [Line Items] | ||||
Goodwill | $ 216,530 | $ 185,898 | ||
Entrada [Member] | ||||
Business Acquisition [Line Items] | ||||
Initial purchase price | $ 34,000 | |||
Preliminary working capital and other adjustments | (42) | |||
Acquired cash and cash equivalents | 102 | |||
Accounts receivable, net | 1,835 | |||
Prepaid expense and other current assets | 145 | |||
Property, plant and equipment | 134 | |||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Capitalized Software | 364 | |||
Business Combination Recognized Identifiable Assets Acquired and Liabilities Assumed, Deferred Tax Assets | 1,041 | |||
Accrued compensation and related benefits | (639) | |||
Other liabilities | (120) | |||
Deferred revenues | (234) | |||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Noncurrent Liabilities, Other | (444) | |||
Total preliminary net tangible assets acquired and liabilities assumed | 2,184 | |||
Goodwill | 16,374 | |||
Total preliminary identifiable intangible assets acquired | 31,774 | |||
Total preliminary purchase price | 33,958 | |||
Finite-lived Intangible Assets Acquired | $ 15,400 | |||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 6 years 1 month | |||
Business Combination, Consideration Transferred | $ 33,958 | |||
Entrada [Member] | Computer Software, Intangible Asset [Member] | ||||
Business Acquisition [Line Items] | ||||
Intangible assets | $ 10,500 | |||
Finite-Lived Intangible Asset, Useful Life | 5 years | |||
Entrada [Member] | Customer Relationships [Member] | ||||
Business Acquisition [Line Items] | ||||
Intangible assets | $ 3,300 | |||
Finite-Lived Intangible Asset, Useful Life | 10 years | |||
Entrada [Member] | Trade Names [Member] | ||||
Business Acquisition [Line Items] | ||||
Intangible assets | $ 1,600 | |||
Finite-Lived Intangible Asset, Useful Life | 5 years | |||
EagleDreamHealth [Member] | ||||
Business Acquisition [Line Items] | ||||
Initial purchase price | $ 26,000 | |||
Preliminary working capital and other adjustments | (391) | |||
Acquired cash and cash equivalents | 573 | |||
Accounts receivable, net | 217 | |||
Prepaid expense and other current assets | 20 | |||
Accrued compensation and related benefits | (115) | |||
Other liabilities | (271) | |||
Deferred revenues | (394) | |||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Deferred Tax Liabilities | (1,957) | |||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Noncurrent Liabilities, Other | (122) | |||
Total preliminary net tangible assets acquired and liabilities assumed | (2,049) | |||
Goodwill | 14,258 | |||
Total preliminary identifiable intangible assets acquired | 27,658 | |||
Total preliminary purchase price | 25,609 | |||
Finite-lived Intangible Assets Acquired | $ 13,400 | |||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 5 years 1 month | |||
Business Combination, Consideration Transferred | $ 25,609 | |||
EagleDreamHealth [Member] | Computer Software, Intangible Asset [Member] | ||||
Business Acquisition [Line Items] | ||||
Intangible assets | $ 12,800 | |||
Finite-Lived Intangible Asset, Useful Life | 5 years | |||
EagleDreamHealth [Member] | Customer Relationships [Member] | ||||
Business Acquisition [Line Items] | ||||
Intangible assets | $ 600 | |||
Finite-Lived Intangible Asset, Useful Life | 8 years |
Goodwill (Details) - USD ($) $ in Thousands |
Sep. 30, 2017 |
Mar. 31, 2017 |
---|---|---|
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Goodwill | $ 216,530 | $ 185,898 |
Intangible Assets (Details) - USD ($) |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
Mar. 31, 2017 |
|
Finite Lived Intangible Assets [Line Items] | |||||
2018 (remaining nine months) | $ 12,130 | $ 12,130 | |||
2019 | 22,088 | 22,088 | |||
2020 | 21,091 | 21,091 | |||
2021 | 16,359 | 16,359 | |||
2022 | 7,433 | 7,433 | |||
2023 and beyond | 7,645 | 7,645 | |||
Intangible assets, other than capitalized software development costs | |||||
Gross carrying amount | 152,640 | 152,640 | $ 123,840 | ||
Accumulated amortization | (65,894) | (65,894) | (54,627) | ||
Net intangible assets | 86,746 | 86,746 | 69,213 | ||
Amortization | $ 11,267,000 | $ 11,378,000 | |||
Document Period End Date | Sep. 30, 2017 | ||||
Operating Expense [Member] | |||||
Finite Lived Intangible Assets [Line Items] | |||||
2018 (remaining nine months) | 3,874 | $ 3,874 | |||
2019 | 5,577 | 5,577 | |||
2020 | 4,580 | 4,580 | |||
2021 | 3,731 | 3,731 | |||
2022 | 2,593 | 2,593 | |||
2023 and beyond | 6,056 | 6,056 | |||
Intangible assets, other than capitalized software development costs | |||||
Net intangible assets | 26,411 | 26,411 | |||
Cost of Sales [Member] | |||||
Finite Lived Intangible Assets [Line Items] | |||||
2018 (remaining nine months) | 8,256 | 8,256 | |||
2019 | 16,511 | 16,511 | |||
2020 | 16,511 | 16,511 | |||
2021 | 12,628 | 12,628 | |||
2022 | 4,840 | 4,840 | |||
2023 and beyond | 1,589 | 1,589 | |||
Intangible assets, other than capitalized software development costs | |||||
Net intangible assets | 60,335 | 60,335 | |||
Customer Relationships [Member] | |||||
Intangible assets, other than capitalized software development costs | |||||
Gross carrying amount | 54,450 | 54,450 | 50,550 | ||
Accumulated amortization | (32,349) | (32,349) | (28,972) | ||
Net intangible assets | 22,101 | 22,101 | 21,578 | ||
Trade Name & Contracts [Member] | |||||
Intangible assets, other than capitalized software development costs | |||||
Gross carrying amount | 7,080 | 7,080 | 5,480 | ||
Accumulated amortization | (2,770) | (2,770) | (2,088) | ||
Net intangible assets | 4,310 | 4,310 | 3,392 | ||
Software Technology [Member] | |||||
Intangible assets, other than capitalized software development costs | |||||
Gross carrying amount | 91,110 | 91,110 | 67,810 | ||
Accumulated amortization | (30,775) | (30,775) | (23,567) | ||
Net intangible assets | 60,335 | 60,335 | $ 44,243 | ||
Software Technology [Member] | Cost of Sales [Member] | |||||
Intangible assets, other than capitalized software development costs | |||||
Amortization | 3,807,000 | $ 3,030,000 | 7,208,000 | 6,057,000 | |
Customer relations, trade name and contracts [Member] | Operating Expense [Member] | |||||
Intangible assets, other than capitalized software development costs | |||||
Amortization | $ 2,012,000 | $ 2,617,000 | $ 4,059,000 | $ 5,321,000 |
Capitalized Software Costs (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
Mar. 31, 2017 |
|
Research and Development [Abstract] | |||||
Capitalized Computer Software, Amortization | $ 1,300 | $ 2,448 | $ 2,571 | $ 4,819 | |
Capitalized software development costs | |||||
Gross carrying amount | 111,180 | 111,180 | $ 104,948 | ||
Accumulated amortization | (90,156) | (90,156) | (91,341) | ||
Net capitalized software costs | $ 21,024 | $ 21,024 | $ 13,607 |
Capitalized Software Costs (Details 1) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Activity related to net capitalized software costs | ||||
Amortization expense related to capitalized software costs | $ (1,300) | $ (2,448) | $ (2,571) | $ (4,819) |
Estimated amortization of capitalized software costs | ||||
2018 (remaining six months) | 4,700 | |||
2019 | 9,100 | |||
2020 | 4,700 | |||
2021 | 2,524 | |||
Total | $ 21,024 |
Line of Credit (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||||
---|---|---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
Mar. 31, 2017 |
Jan. 04, 2016 |
|
Line of Credit Facility [Line Items] | ||||||
Document Period End Date | Sep. 30, 2017 | |||||
Loans outstanding | $ 55,000 | $ 55,000 | $ 15,000 | |||
Remaining borrowing capacity | 195,000 | 195,000 | ||||
Interest expense | 520 | $ 740 | 927 | $ 1,272 | ||
Amortization of debt issuance costs | $ 269 | $ 269 | $ 538 | $ 538 | ||
Line of Credit [Member] | ||||||
Line of Credit Facility [Line Items] | ||||||
Maximum borrowing capacity | $ 250,000 | |||||
Letter of Credit [Member] | ||||||
Line of Credit Facility [Line Items] | ||||||
Maximum borrowing capacity | 10,000 | |||||
Swing-Line Loans [Member] | ||||||
Line of Credit Facility [Line Items] | ||||||
Maximum borrowing capacity | $ 10,000 |
Composition of Certain Financial Statement Captions (Details) - USD ($) $ in Thousands |
Sep. 30, 2017 |
Mar. 31, 2017 |
---|---|---|
Summary of Accounts Receivable | ||
Accounts receivable, gross | $ 90,753 | $ 93,377 |
Sales return reserve | (6,413) | (7,213) |
Allowance for doubtful accounts | (2,628) | (2,757) |
Accounts receivable, net | 81,712 | 83,407 |
Summary of Prepaid Expense and Other Assets, Current | ||
Prepaid Expense, Current | 13,651 | 14,884 |
Other Assets, Current | 1,718 | 3,085 |
Prepaid Expense and Other Assets, Current | 15,369 | 17,969 |
Summary of Equipment and improvements | ||
Computer equipment | 26,120 | 22,014 |
Internal-use software | 13,290 | 13,053 |
Furniture and fixtures | 12,025 | 10,472 |
Leasehold improvements | 17,258 | 16,360 |
Equipment and improvements, gross | 68,693 | 61,899 |
Accumulated depreciation | (41,012) | (34,473) |
Equipment and improvements, net | 27,681 | 27,426 |
Summary of Current and non-current deferred revenue | ||
Professional services | 22,084 | 21,889 |
Undelivered software, hardware and other | 11,579 | 12,680 |
Support and Maintenance | 10,203 | 9,691 |
Software related subscription services | 8,419 | 8,123 |
Deferred revenue | 52,285 | 52,383 |
Deferred revenue, net of current | 1,191 | 1,394 |
Summary of Accrued compensation and related benefits | ||
Payroll, bonus and commission | 8,869 | 15,836 |
Vacation | 8,733 | 8,677 |
Accrued compensation and related benefits | 17,602 | 24,513 |
Summary of Other current liabilities | ||
Care Services Liabilities Current | 6,488 | 4,957 |
Customer Deposits, Current | 3,964 | 4,124 |
Accrued consulting services, Current | 3,006 | 2,496 |
Deferred Rent Credit, Current | 2,275 | 2,427 |
Electronic Data Interchange Expense Current | 2,469 | 2,490 |
Accrued Royalties, Current | 721 | 2,033 |
Self Insurance Reserve, Current | 2,502 | 1,697 |
Accrued Professional Fees, Current | 1,245 | 853 |
Other Accrued Liabilities | 1,157 | 0 |
Accrued Hosting Costs | 951 | 401 |
Accrued Outsourcing Expenses | 1,678 | 1,588 |
Sales and Excise Tax Payable, Current | 494 | 448 |
Accrued Employee Benefits, Current | 671 | 739 |
Contingent consideration and other liabilities related to acquisitions | 0 | 18,817 |
Other Accrued Liabilities, Current | 4,292 | 3,705 |
Other Liabilities, Current | 31,913 | 46,775 |
Deferred Rent Credit, Noncurrent | 11,660 | 11,402 |
Unrecognized Tax Benefits | 5,305 | 4,762 |
Other Liabilities | 350 | 297 |
Other Liabilities, Noncurrent | $ 17,315 | $ 16,461 |
Income Taxes (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
Mar. 31, 2017 |
|
Income Tax Disclosure [Abstract] | |||||
Provision for income taxes | $ 2,493 | $ 1,925 | $ 4,647 | $ 1,608 | |
Effective tax rate (as a percentage) | 23.70% | 32.60% | 28.00% | 32.50% | |
Liability for unrecognized tax benefits | $ 5,305 | $ 5,305 | $ 4,762 | ||
Period within which the company does not anticipate total unrecognized tax benefits to change | within the next twelve months |
Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Weighted-average shares outstanding for basic and diluted net income per share | ||||
Net income (in dollars) | $ 8,030,000 | $ 3,987,000 | $ 11,926,000 | $ 3,340,000 |
Basic net income per share: | ||||
Weighted-average shares outstanding - Basic | 63,513 | 61,658 | 63,077 | 61,420 |
Basic net income per common share (in usd per share) | $ 0.13 | $ 0.06 | $ 0.19 | $ 0.05 |
Diluted net income per share: | ||||
Weighted-average shares outstanding - Basic | 63,513 | 61,658 | 63,077 | 61,420 |
Effect of potentially dilutive securities | 17 | 394 | 12 | 284 |
Weighted-average shares outstanding - Diluted | 63,530 | 62,052 | 63,089 | 61,704 |
Diluted net income per common share (in usd per share) | $ 0.13 | $ 0.06 | $ 0.19 | $ 0.05 |
Earnings Per Share (Details Textual) - shares |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Earnings Per Share [Abstract] | ||||
Options excluded from the computation of diluted net income per share | 2,567 | 3,230 | 2,565 | 2,997 |
Share Based Awards (Details Textual) - USD ($) |
3 Months Ended | 6 Months Ended | |||||||
---|---|---|---|---|---|---|---|---|---|
Aug. 04, 2017 |
Aug. 11, 2014 |
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
Mar. 31, 2017 |
Aug. 31, 2015 |
Oct. 31, 2005 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Volatility Rate | 37.20% | 36.90% | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Term | 5 years 7 months | 6 years 7 months | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Volatility Rate, Minimum | 37.20% | 36.90% | |||||||
Share Based Awards (Textual) [Abstract] | |||||||||
Document Period End Date | Sep. 30, 2017 | ||||||||
Outstanding options under 1998 and 2005 plan | 2,692,235 | 2,692,235 | 2,885,415 | ||||||
Weighted-average grant date fair value per share of stock options | $ 6.11 | $ 4.92 | |||||||
Total share-based compensation | $ 3,091,000 | $ 1,918,000 | $ 5,132,000 | $ 3,177,000 | |||||
Fair value of options vested | $ 2,092,000 | $ 1,486,000 | |||||||
Employee Stock Purchase Plan [Abstract] | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Volatility Rate, Maximum | 37.70% | 37.40% | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Dividend Rate | 0.00% | 0.00% | 0.00% | 0.00% | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Risk Free Interest Rate | 1.90% | 1.20% | 1.90% | ||||||
Employee Stock Option [Member] | |||||||||
Share Based Awards (Textual) [Abstract] | |||||||||
Total unrecognized compensation costs | $ 7,590,000 | $ 7,590,000 | |||||||
Stock option recognized over weighted average period (in years) | 3 years 1 month | ||||||||
Restricted Stock Units Award [Member] | |||||||||
Share Based Awards (Textual) [Abstract] | |||||||||
Total share-based compensation | $ 2,207,000 | $ 972,000 | 3,746,000 | $ 1,517,000 | |||||
Total unrecognized compensation costs | $ 20,842,000 | 20,842,000 | |||||||
Stock option recognized over weighted average period (in years) | 2 years 5 months | ||||||||
Employee Share Purchase Plan [Member] | |||||||||
Share Based Awards (Textual) [Abstract] | |||||||||
Total share-based compensation | $ 80,000 | $ 81,000 | $ 177,000 | $ 207,000 | |||||
2005 Stock Options Plan [Member] | |||||||||
Share Based Awards (Textual) [Abstract] | |||||||||
Common stock reserved | 4,800,000 | ||||||||
Outstanding options under 1998 and 2005 plan | 702,860 | 702,860 | |||||||
2005 Stock Options Plan [Member] | Employee Stock Option [Member] | |||||||||
Share Based Awards (Textual) [Abstract] | |||||||||
Expiration period (in years) | 10 years | ||||||||
Two Thousand Fifteen Stock Options Plan [Member] | |||||||||
Share Based Awards (Textual) [Abstract] | |||||||||
Common stock reserved | 11,500,000 | ||||||||
Two Thousand Fifteen Stock Options Plan [Member] | Restricted Stock Units Award [Member] | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 334,000 | ||||||||
Share Based Awards (Textual) [Abstract] | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 1,081,374 | ||||||||
Number of Shares Outstanding | 1,619,002 | 1,619,002 | 902,948 | ||||||
Weighted-average grant date fair value per share of stock options | $ 6.11 | ||||||||
Amended Two Thousand Fifteen Stock Options Plan [Member] | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 334,000 | ||||||||
Share Based Awards (Textual) [Abstract] | |||||||||
Common stock reserved | 6,000,000 | ||||||||
Outstanding options under 1998 and 2005 plan | 1,989,375 | 1,989,375 | |||||||
Shares available for future grant | 11,352,428 | 11,352,428 | |||||||
Amended Two Thousand Fifteen Stock Options Plan [Member] | Restricted Stock Units Award [Member] | |||||||||
Share Based Awards (Textual) [Abstract] | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding, Number | 1,619,002 | 1,619,002 | |||||||
Amended Two Thousand Fifteen Stock Options Plan [Member] | Employee Stock Option [Member] | |||||||||
Share Based Awards (Textual) [Abstract] | |||||||||
Expiration period (in years) | 10 years | ||||||||
Employee Share Purchase Plan [Member] | |||||||||
Employee Stock Purchase Plan [Abstract] | |||||||||
Shares reserved for future grant | 4,000,000 | 3,709,351 | 3,709,351 | ||||||
Maximum percentage of gross payroll deduction | 15.00% | ||||||||
Purchase price as a percentage of fair market value | 90.00% | ||||||||
Maximum shares purchase in a single transaction | 1,500 | ||||||||
Maximum amount purchased in a calendar year | $ 25,000 | ||||||||
Shares issued | 290,649 | 290,649 | |||||||
Minimum [Member] | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Term | 5 years 7 months | 6 years | |||||||
Employee Stock Purchase Plan [Abstract] | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Risk Free Interest Rate | 1.20% | ||||||||
Maximum [Member] | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Term | 5 years 8 months | 6 years 7 months | |||||||
Employee Stock Purchase Plan [Abstract] | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Risk Free Interest Rate | 1.50% |
Share Based Awards (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 6 Months Ended |
---|---|---|
Mar. 31, 2017 |
Sep. 30, 2017 |
|
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||
Share-based Compensation Arrangements by Share-based Payment Award, Options, Exercises in Period, Weighted Average Exercise Price | $ 16.62 | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Exercisable Options, Weighted Average Remaining Contractual Term | 6 years 2 months | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period, Intrinsic Value | $ 119 | |
Number of Shares | ||
Outstanding, April 1, 2017 | 2,885,415 | |
Forfeited/Canceled | (310,775) | |
Outstanding, September 30, 2017 | 2,885,415 | 2,692,235 |
Vested and expected to vest, September 30, 2017 | 2,440,400 | |
Exercisable, September 30, 2017 | 921,280 | |
Weighted- Average Exercise Price per Share | ||
Outstanding, April 1, 2017 (in dollars per share) | $ 15.41 | |
Granted (in dollars per share) | 16.03 | |
Forfeited/Canceled (in dollars per share) | 17.75 | |
Outstanding, September 30, 2017 (in dollars per share) | $ 15.41 | 16.44 |
Vested and expected to vest, September 30, 2017 (in dollars per share) | 16.64 | |
Exercisable, September 30, 2017 (in dollars per share) | $ 20.10 | |
Weighted- Average Remaining Contractual Life (years) | ||
Outstanding | 6 years 2 months | 6 years |
Granted | 7 years 8 months | |
Forfeited/Canceled | 5 years 1 month | |
Vested and expected to vest, September 30, 2017 | 5 years 11 months | |
Exercisable, September 30, 2017 | 4 years 7 months | |
Aggregate Intrinsic Value Outstanding Beginning Balance | $ 3,150 | |
Aggregate Intrinsic Value Outstanding Ending Balance | $ 3,150 | 4,012 |
Aggregate Intrinsic Value Vested and expected to vest | 2,885 | |
Aggregate Intrinsic Value Exercisable | $ 768 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period | (216,405) |
Share Based Awards (Details 1) - $ / shares |
3 Months Ended | 6 Months Ended | |
---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
|
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Exercisable Options, Weighted Average Remaining Contractual Term | 6 years 2 months | ||
Schedule of Share Based Compensation Valuation Assumption | |||
Weighted-average grant date fair value per share of stock options | $ 6.11 | $ 4.92 |
Share Based Awards (Details 2) - Amended Two Thousand Fifteen Stock Options Plan [Member] |
6 Months Ended |
---|---|
Sep. 30, 2017
$ / shares
shares
| |
Option Grant Date Thirteen June Two Thousand Seventeen [Member] [Member] | |
Summary of stock options granted | |
Number of shares granted | shares | 249,000 |
Exercise Price Granted (in usd per share) | $ / shares | $ 16.37 |
Vesting period | 4 years |
Expiration | Jun. 13, 2025 |
Option Grant Date Twenty-four May Two Thousand Seventeen [Member] | |
Summary of stock options granted | |
Number of shares granted | shares | 60,000 |
Exercise Price Granted (in usd per share) | $ / shares | $ 14.57 |
Vesting period | 4 years |
Expiration | May 24, 2025 |
Option Grant Date Fourth August Two Thousand Seventeen [Member] | |
Summary of stock options granted | |
Number of shares granted | shares | 25,000 |
Exercise Price Granted (in usd per share) | $ / shares | $ 16.13 |
Vesting period | 4 years |
Expiration | Aug. 04, 2025 |
Share Based Awards (Details 3) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract] | ||||
Weighted-average grant date fair value per share of stock options | $ 6.11 | $ 4.92 | ||
Allocated Share-based Compensation Expense | $ 3,091 | $ 1,918 | $ 5,132 | $ 3,177 |
Employee Share Purchase Plan [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract] | ||||
Allocated Share-based Compensation Expense | 80 | 81 | 177 | 207 |
Restricted Stock Units Award [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract] | ||||
Allocated Share-based Compensation Expense | 2,207 | $ 972 | 3,746 | $ 1,517 |
Performance Shares [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract] | ||||
Allocated Share-based Compensation Expense | $ 77 | $ 150 | ||
Two Thousand Fifteen Stock Options Plan [Member] | Restricted Stock Units Award [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Number of Shares [Roll Forward] | ||||
Non-Vested Number of Shares Outstanding Beginning Balance | 2,073,295 | |||
Non-Vested Number of Shares Granted | 334,000 | |||
Non-Vested Number of Shares Vested | (430,190) | |||
Non-Vested Number of Shares Forfeited | (206,150) | |||
Non-Vested Number of Shares Outstanding Ending Balance | 1,770,955 | 1,770,955 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract] | ||||
Weighted Average Fair Value per Share Price Beginning Balance | $ 5.09 | |||
Weighted-average grant date fair value per share of stock options | 6.11 | |||
Weighted Average Fair Value per Share Price Vested | 4.86 | |||
Weighted Average Fair Value per Share Price Forfeited | 4.57 | |||
Weighted Average Fair Value per Share Price Ending Balance | $ 4.98 | $ 4.98 |
Share Based Awards Share Based Awards - Restricted (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 6 Months Ended | 9 Months Ended | ||
---|---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
Dec. 31, 2016 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Allocated Share-based Compensation Expense | $ 3,091 | $ 1,918 | $ 5,132 | $ 3,177 | |
Restricted Stock Units Award [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Allocated Share-based Compensation Expense | $ 2,207 | $ 972 | $ 3,746 | $ 1,517 | |
Restricted Stock Units Award [Member] | Two Thousand Fifteen Stock Options Plan [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | |||||
Number of Shares Outstanding Beginning Balance | 902,948 | ||||
Granted | 1,081,374 | ||||
Vested | (288,304) | ||||
Stock Issued During Period, Shares, Restricted Stock Award, Forfeited | (77,016) | ||||
Number of Shares Outstanding Ending Balance | 1,619,002 | 1,619,002 | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract] | |||||
Weighted Average Grant-Date Fair Value per Share, Beginning of Period (in dollars per share) | $ 12.92 | ||||
Weighted Average Grant-Date Fair Value per Share, Granted (in dollars per share) | 15.57 | ||||
Weighted Average Grant-Date Fair Value per Share, Vested (in dollars per share) | 12.57 | ||||
Weighted Average Grant-Date Fair Value per Share, End of Period (in dollars per share) | $ 14.79 | 14.79 | |||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeitures, Weighted Average Grant Date Fair Value | $ 13.81 | ||||
Award Grant Date Twenty-Nine December Two Thousand Sixteen [Member] | Two Thousand Fifteen Stock Options Plan [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Net of Forfeitures | 123,082 | ||||
Performance Shares [Member] | Two Thousand Fifteen Stock Options Plan [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding, Number | 114,916 | 114,916 |
Commitments Guarantees and Contingencies (Details Textual) |
3 Months Ended |
---|---|
Sep. 30, 2017 | |
Commitments Guarantees and Contingencies (Textual) | |
Applicable program documentation period | 365 days |
Restructuring Plan (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | 12 Months Ended | ||
---|---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
Mar. 31, 2016 |
|
Restructuring Costs [Abstract] | |||||
Restructuring expense | $ 0 | $ 701 | $ 0 | $ 4,454 | $ 7,078 |
Restructuring and Related Cost, Expected Cost | $ 1,579 | $ 1,579 |
Label | Element | Value |
---|---|---|
EagleDreamHealth [Member] | ||
Payments to Acquire Businesses, Gross | us-gaap_PaymentsToAcquireBusinessesGross | $ 25,036,000 |
Liabilities Assumed | us-gaap_LiabilitiesAssumed1 | 2,859,000 |
Fair Value of Assets Acquired | us-gaap_FairValueOfAssetsAcquired | 27,895,000 |
Entrada [Member] | ||
Payments to Acquire Businesses, Gross | us-gaap_PaymentsToAcquireBusinessesGross | 33,856,000 |
Liabilities Assumed | us-gaap_LiabilitiesAssumed1 | 1,437,000 |
Fair Value of Assets Acquired | us-gaap_FairValueOfAssetsAcquired | $ 35,293,000 |
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