8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report
(Date of earliest event reported)
May 26, 2011

QUALITY SYSTEMS, INC.

(Exact name of registrant as specified in its charter)

CALIFORNIA	001-12537	95-2888568
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification Number)

18111 Von Karman, Suite 700
Irvine, California 92612
(Address of Principal Executive Offices)

(949) 255-2600
(Registrant’s Telephone Number, Including Area Code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions ( see General Instruction A.2. below):

o     Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o     Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o     Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o     Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition.

     The information in this Item 2.02 of this Form 8-K, as well as Exhibit 99.1 attached hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

     On May 26, 2011, Quality Systems, Inc. (the “Company”) issued a press release announcing its financial performance for the period ended March 31, 2011. A copy of the press release is attached to this Form 8-K as Exhibit 99.1, which is incorporated herein by this reference.

     On May 26, 2011, the Company held a conference call concerning its financial performance for the period ended March 31, 2011. The Company expects to file a copy of the transcript of the conference call as soon as available by amendment to this Form 8-K. The conference call contains forward-looking statements regarding the Company and includes cautionary statements identifying important factors that could cause actual results to differ materially from those anticipated.

Use of Non-GAAP Financial Measures

     The Company from time to time discloses its Days Sales Outstanding (“DSO”), which is a non-GAAP financial measure. For the quarter ended March 31, 2011, DSO was 131 days. The Company calculates DSO as follows: Net revenue for the quarter is annualized (multiplied by four) and then divided by 365 days to yield an average daily sales amount. The balance of accounts receivable net of any reserves for bad debts is then divided by that average daily sales amount resulting in a DSO figure. For the quarter ended March 31, 2011, the calculation was as follows:

Quarterly Revenue		$	97,108,000
Times four(4)	x		4
Equals Annualized Revenue			388,432,000
Divided by 365 days	÷		365
Equals Daily Revenue	=		$1,064,197
Net Accounts Receivable		$	139,772,000
Divided by Average Daily Revenue	÷		1,064,197
Equals Days Sales Outstanding	=		131

Item 8.01 Other Events.

Quarterly Dividend

     On May 25, 2011, the Company’s Board of Directors declared a quarterly cash dividend of $0.35 per share on the Company’s outstanding shares of common stock, payable to shareholders of record as of June 17, 2011 with an anticipated distribution date on or about July 5, 2011 pursuant to the Company’s current policy to pay a regular quarterly dividend on the Company’s outstanding shares of common stock each fiscal quarter subject to further Board review, approval and establishment of record and distribution dates by the Board prior to the declaration and payment of each such quarterly dividend.

     A copy of the Company’s press release announcing the dividend and earnings results is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

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Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

Exhibit No.	Description
99.1	Press Release dated May 26, 2011

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SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: May 26, 2011

QUALITY SYSTEMS, INC.
By:	/s/ Paul Holt
	Paul Holt
	Chief Financial Officer

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EXHIBITS ATTACHED TO THIS REPORT ON FORM 8-K

Exhibit No.	Description
99.1	Press Release dated May 26, 2011

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EX-99.1

Exhibit 99.1

For Further Information, Contact:
Quality Systems, Inc.	Susan J. Lewis
18111 Von Karman Avenue, Suite 700	Phone: (303) 804-0494
Irvine, CA 92612	slewis@qsii.com
Phone: (949) 255-2600
Paul Holt, CFO, pholt@qsii.com

FOR IMMEDIATE RELEASE
   MAY 26, 2011

QUALITY SYSTEMS, INC. REPORTS RECORD FISCAL 2011 FOURTH QUARTER AND
YEAR-END RESULTS

Strong Quarterly and Year-end Results Reflect Onset of Stimulus Incentives

     IRVINE, Calif. ... May 26, 2011 ... Quality Systems, Inc. (NASDAQ:QSII) announced today results for its fiscal 2011 fourth quarter and year ended March 31, 2011.

     The Company reported record net revenues of $97.1 million for the fiscal 2011 fourth quarter, up 24 percent from the $78.5 million reported in the comparable period a year ago. For the 2011 fourth quarter, net income reached $18.6 million, an increase of 42 percent when compared with net income of $13.1 million for the same period last year. Fully diluted earnings per share were $0.64 in the fiscal 2011 fourth quarter, a 42 percent increase, versus $0.45 fully diluted earnings per share for the fiscal 2010 fourth quarter.

     Revenue for the fiscal year ended March 31, 2011 reached $353.4 million, rising 21 percent when compared with fiscal 2010 revenue of $291.8 million. Net income for fiscal year 2011 was $61.6 million, an increase of 27 percent versus net income of $48.4 million for the 2010 fiscal year. Fully diluted earnings per share increased to $2.12 for fiscal year 2011, up from $1.68 earned during fiscal year 2010, an increase of 26 percent.

     The record fourth quarter and year end results were positively impacted by the onset of the stimulus plan.

     “The last quarter of our fiscal year marked the first full quarter under the stimulus plan of The American Recovery and Reinvestment Act (ARRA). As we have stated, we spent much time preparing all facets of our organization for this important point in time. As we enter the front-end of the stimulus — where regulations are finalized, meaningful use standards have been established and our products certified — the rubber is hitting the road as it relates to benefitting from the stimulus,” explained Steven T. Plochocki, Quality Systems’ chief executive officer.

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Quality Systems, Inc.
Fiscal 2011 Fourth Quarter and Year-end Results
Page 2

     “Decisions are being made with more clarity and certainty in a timely manner, which is obviously reflected in our results and will bode well for us over the next few years of the stimulus. All of our planning and preparation during the past several quarters has paid off as we look ahead to further solidifying our leadership role in an industry well positioned for change, growth and expansion,” Plochocki said.

     Quality Systems, Inc. also announced that the Company’s Board of Directors declared a quarterly cash dividend of Thirty-Five Cents ($0.35) per share on the Company’s outstanding shares of Common Stock, payable to shareholders of record as of June 17, 2011, with an anticipated distribution date of July 5, 2011. The $0.35 per share cash dividend is pursuant to the Company’s current policy to pay a regular quarterly dividend on the Company’s outstanding shares of Common Stock, subject to further Board review and approval, and establishment of record and distribution dates by the Board prior to the declaration and payment of each such quarterly dividend.

     The Company also announced that its 2011 Annual Shareholders’ Meeting will be held on Thursday, August 11, 2011 at 1:00 PM. The meeting will be held at The Center Club, 650 Town Center Drive, Costa Mesa, Calif. Holders of record as of June 13, 2011 are eligible to vote and attend. Proxy materials and the 2011 Annual Report will be made available to shareholders of record and will also be posted on the Company’s website at www.qsii.com.

     Quality Systems, Inc. will host a conference call to discuss its fiscal 2011 fourth quarter and year-end results on Thursday, May 26, 2011 at 11:00 AM ET (8:00 AM PT). All participants should dial 877-941-2332 at least ten minutes prior to the start of the call. International callers should dial 480-629-9722. To hear a live Web simulcast or to listen to the archived webcast following completion of the call, please visit the company website at www.qsii.com, click on the “Investors” tab, then select “Conference Calls,” to access the link to the call. To listen to a telephone replay of the conference call, please dial 800-406-7325 or 303-590-3030 and enter reservation identification number 4442392. The replay will be available from approximately 1:00 PM ET on Thursday, May 26, 2011, through 11:59 PM ET on Thursday, June 2, 2011.

     A transcript of the conference call will be made available on the Company’s website at www.qsii.com.

About Quality Systems, Inc.

     Irvine, Calif.-based Quality Systems, Inc. and its NextGen Healthcare subsidiary develop and market computer-based practice management, electronic health records and revenue cycle management applications as well as connectivity products and services for medical and dental group practices and small hospitals. Visit www.qsii.com and www.nextgen.com for additional information.

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Quality Systems, Inc.
Fiscal 2011 Fourth Quarter and Year-end Results
Page 2

SAFE HARBOR PROVISIONS FOR FORWARD-LOOKING STATEMENTS

This news release may contain forward-looking statements within the meaning of the federal securities laws. Statements regarding future events, developments, the Company’s future performance, as well as management’s expectations, beliefs, intentions, plans, estimates or projections relating to the future (including, without limitation, statements concerning revenue and net income), are forward-looking statements within the meaning of these laws and involve a number of risks and uncertainties. Management believes that these forward looking statements are reasonable and are based on reasonable assumptions and forecasts, however, undue reliance should not be placed on such statements that speak only as of the date hereof. Moreover, these forward-looking statements are subject to a number of risks and uncertainties, some of which are outlined below. As a result, actual results may vary materially from those anticipated by the forward-looking statements. Among the important factors that could cause actual results to differ materially from those indicated by such forward-looking statements are: the volume and timing of systemssales and installations; length of sales cycles and the installation process; the possibility that products will not achieve or sustain market acceptance; seasonal patterns of sales and customer buying behavior; impact of incentive payments under The American Recovery and Reinvestment Act on sales and the ability of the Company to meet continued certification requirements; the development by competitors of new or superior technologies; the timing, cost and success or failure of new product and service introductions, development and product upgradereleases; undetected errors or bugs in software; product liability; changing economic, political or regulatory influences in the health-care industry; changes in product-pricing policies; availability of third-party products and components; competitive pressures including product offerings, pricing and promotional activities; the Company’s ability or inability to attract and retain qualified personnel; possible regulation of the Company’s software by the U.S. Food and Drug Administration; uncertainties concerning threatened, pending and new litigation against the Company including related professional services fees; uncertainties concerning the amount and timing of professional fees incurred by the Company generally; changes of accounting estimates and assumptions used to prepare the prior periods’ financial statements; general economic conditions; and the risk factors detailed from time to time in the Company’s periodic reports and registration statements filed with the Securities and Exchange Commission.

A significant portion of the Company’s quarterly sales of software product licenses and computer hardware is concluded in the last month of the fiscal quarter, generally with a concentration of such revenues earned in the final ten business days of that month. Due to these and other factors, the Company’s revenues and operating results are very difficult to forecast. A major portion of the Company’s costs and expenses, such as personnel and facilities, are of a fixed nature and, accordingly, a shortfall or decline in quarterly and/or annual revenues typically results in lower profitability or losses. As a result, comparison of the Company’s period-to-period financial performance is not necessarily meaningful and should not be relied upon as an indicator of future performance. The Company undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.

FINANCIAL TABLES ATTACHED

QUALITY SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS)
(UNAUDITED)

	Three Months Ended March 31,				Fiscal Year Ended March 31,
	2011		2010		2011		2010
Revenues:
Software, hardware and supplies	$	31,708	$	24,783	$	106,514	$	89,761
Implementation and training services		4,946		4,226		18,015		14,376
System sales		36,654		29,009		124,529		104,137
Maintenance		29,046		23,938		110,019		89,192
Electronic data interchange services		10,756		9,181		41,022		35,035
Revenue cycle management and related services		11,622		9,183		45,065		36,665
Other services		9,030		7,202		32,728		26,782
Maintenance, EDI, RCM and other services		60,454		49,504		228,834		187,674
Total revenues		97,108		78,513		353,363		291,811
Cost of revenue:
Software, hardware and supplies		3,204		2,864		19,779		12,115
Implementation and training services		4,868		2,908		15,010		11,983
Total cost of system sales		8,072		5,772		34,789		24,098
Maintenance		2,875		3,667		12,948		13,339
Electronic data interchange services		7,321		6,683		27,711		25,262
Revenue cycle management and related services		8,733		7,213		33,815		27,715
Other services		6,165		4,963		18,219		20,393
Total cost of maintenance, EDI, RCM and other services		25,094		22,526		92,693		86,709
Total cost of revenue		33,166		28,298		127,482		110,807
Gross profit		63,942		50,215		225,881		181,004
Operating expenses:
Selling, general and administrative		29,285		25,223		108,310		86,951
Research and development costs		5,751		4,269		21,797		16,546
Amortization of acquired intangible assets		445		682		1,682		1,783
Total operating expenses		35,481		30,174		131,789		105,280
Income from operations		28,461		20,041		94,092		75,724
Interest income		19		46		263		226
Other income, net		2		74		61		268
Income before provision for income taxes		28,482		20,161		94,416		76,218
Provision for income taxes		9,929		7,100		32,810		27,839
Net income	$	18,553	$	13,061	$	61,606	$	48,379
Net income per share:
Basic	$	0.64	$	0.45	$	2.13	$	1.69
Diluted	$	0.64	$	0.45	$	2.12	$	1.68
Weighted average shares outstanding:
Basic		29,005		28,784		28,947		28,635
Diluted		29,202		28,929		29,118		28,796
Dividends declared per common share	$	0.35	$	0.30	$	1.25	$	1.20

QUALITY SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)

	March 31,		March 31,
	2011		2010
ASSETS
Current assets:
Cash and cash equivalents	$	116,617	$	84,611
Restricted cash		3,787		2,339
Marketable securities		1,120		7,158
Accounts receivable, net		139,772		107,458
Inventories		1,933		1,340
Income taxes receivable		—		2,953
Deferred income tax assets, net		10,397		5,678
Other current assets		8,768		8,684
Total current assets		282,394		220,221
Equipment and improvements, net		12,599		8,432
Capitalized software costs, net		15,150		11,546
Intangibles, net		16,890		20,145
Goodwill		46,721		46,189
Other assets		4,932		3,647
Total assets	$	378,686	$	310,180
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	6,686	$	3,342
Deferred revenue		76,695		64,109
Accrued compensation and related benefits		10,247		8,951
Income taxes payable		3,530		—
Dividends payable		10,162		8,664
Other current liabilities		29,316		16,220
Total current liabilities		136,636		101,286
Deferred revenue, net of current		1,099		474
Deferred income tax liabilities, net		11,384		10,859
Deferred compensation		2,488		1,883
Other noncurrent liabilities		2,409		7,389
Total liabilities		154,016		121,891
Commitments and contingencies
Shareholders’ equity:
Common stock $0.01 par value; authorized 50,000 shares; issued and outstanding 29,034 and 28,879 shares at March 31, 2011 and March 31, 2010, respectively		290		289
Additional paid-in capital		133,259		122,271
Retained earnings		91,121		65,729
Total shareholders’ equity		224,670		188,289
Total liabilities and shareholders’ equity	$	378,686	$	310,180

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