-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, B49DjQ5sZDlMrm0cZ5LTxmotIb8118Hyr2xTtnt+D3HZJPTGNletD6LujIXeLa8z h6iJsgmy+5F3pKVbPwB8ig== 0001169232-05-004429.txt : 20050901 0001169232-05-004429.hdr.sgml : 20050901 20050901154605 ACCESSION NUMBER: 0001169232-05-004429 CONFORMED SUBMISSION TYPE: DEFA14A PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 20050901 DATE AS OF CHANGE: 20050901 EFFECTIVENESS DATE: 20050901 FILER: COMPANY DATA: COMPANY CONFORMED NAME: QUALITY SYSTEMS INC CENTRAL INDEX KEY: 0000708818 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER INTEGRATED SYSTEMS DESIGN [7373] IRS NUMBER: 952888568 STATE OF INCORPORATION: CA FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: DEFA14A SEC ACT: 1934 Act SEC FILE NUMBER: 001-12537 FILM NUMBER: 051064801 BUSINESS ADDRESS: STREET 1: 18191 VON KARMAN AVENUE CITY: IRVINE STATE: CA ZIP: 92612 BUSINESS PHONE: 7147317171 MAIL ADDRESS: STREET 1: 18191 VON KARMAN AVENUE STREET 2: SUITE 450 CITY: IRVINE STATE: CA ZIP: 92612 DEFA14A 1 d65244_defa14a.txt DEFINITIVE ADDITIONAL MATERIALS SCHEDULE 14A (Rule 14a-101) INFORMATION REQUIRED IN PROXY STATEMENT SCHEDULE 14A INFORMATION Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 (Amendment No. ) Filed by the Registrant |X| Filed by a Party other than the Registrant |_| Check the appropriate box: |_| Preliminary Proxy Statement |_| Soliciting Material Under Rule |_| Confidential, For Use of the 14a-12 Commission Only (as permitted by Rule 14a-6(e)(2)) |_| Definitive Proxy Statement |X| Definitive Additional Materials Quality Systems, Inc. - -------------------------------------------------------------------------------- (Name of Registrant as Specified In Its Charter) - -------------------------------------------------------------------------------- (Name of Person(s) Filing Proxy Statement, if Other Than the Registrant) Payment of Filing Fee (Check the appropriate box): |X| No fee required. |_| Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. 1) Title of each class of securities to which transaction applies: ________________________________________________________________________________ 2) Aggregate number of securities to which transaction applies: ________________________________________________________________________________ 3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): ________________________________________________________________________________ 4) Proposed maximum aggregate value of transaction: ________________________________________________________________________________ 5) Total fee paid: ________________________________________________________________________________ |_| Fee paid previously with preliminary materials: ________________________________________________________________________________ |_| Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing. 1) Amount previously paid: ________________________________________________________________________________ 2) Form, Schedule or Registration Statement No.: ________________________________________________________________________________ 3) Filing Party: ________________________________________________________________________________ 4) Date Filed: ________________________________________________________________________________ Quality Systems, Inc. Management Presentation -------------------- Quality Systems Inc. -------------------- Safe Harbor Provision of the Private Securities Litigation Reform Act of 1995 During the course of this presentation and discussion today, we may make forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 regarding future events or the future financial performance of QSI. We would like to caution you that such statements reflect only our current expectations and that actual events or results may differ materially. We refer you to the risk factors and cautionary language contained in our reports filed with the Securities and Exchange Commission from time to time, including, but not limited to, those risks and uncertainties listed in QSI's Annual Report on Form 10-K filed with the Securities and Exchange Commission and QSI's most recent Quarterly Report on Form 10-Q. Such reports contain and identify important factors that could cause actual events and results to differ materially from those contained in our projections or forward-looking statements. We undertake no obligation to update such projections or forward-looking statements in the future. -------------------- Quality Systems Inc. -------------------- Business Segments Served ----------------------------------------- HCIT ($28B, 12.5% CAGR) ----------------------------------------- / | \ / | \ / | \ / | \ / ------------------ \ ------------------- 10 billion ------------------ 575K Physicians Connectivity 160K Dentists ------------------- Transactions ------------------ \ ------------------ / \ / \ / \ / \ / \ / \ / \ / \ / ----------------- ----------------- NextGen QSI Division Division ----------------- ----------------- \ / \ / \ / \ / ------------------------- Quality Systems, Inc. ------------------------- -------------------- Quality Systems Inc. -------------------- Industry Growth Drivers ------------------------- Quality Systems' Market(s) ------------------------- | | | | | | | -------------------------------------------------------------- | | | | | | | | | - ------------------ ------------------- -------------------- Public Sector Technology Purchaser Initiatives Influence - flexibility - HIPAA - ROI - Payors - State/Local ------------------- - Employers - HCIT Czar - $ Incentives - $ Incentives - Group Initiatives - ------------------ -------------------- -------------------- Quality Systems Inc. -------------------- Quality Systems: Revenue Mix ----------------- % of Revenues ----------------- FY 01 FY 02 FY 03 FY 04 FY 05 FY 06 YTD - -------------------------------------------------------------------------------- NextGen 56% 59% 66% 72% 76% 79% Connectivity 13% 14% 13% 12% 12% 11% QSI 31% 27% 22% 16% 12% 10% -------------------- Quality Systems Inc. -------------------- Quality Systems: Product/Market Dynamics - -------------------------------------------------------------------------------- Small Large Growth Market Market Penetration - -------------------------------------------------------------------------------- EMR High Clinical Low Growth Dental ---------------- Penetration EDI / - -------------------------------------------------------------------------------- Connectivity ---------------- Low Dental Medical High Growth Practice Mgmt Practice Mgmt Penetration - -------------------------------------------------------------------------------- -------------------- Quality Systems Inc. -------------------- Quality Systems Today June 30, 2005 ---------------------------- Corporate Headquarters Irvine, CA ---------------------------- | | | | ------------------------ ------------------- ----------------------- NextGen Division Corp Admin QSI Division ------------------------ Irvine, CA ----------------------- | ------------------- | | | | --------------- | -------------- | | | | | | | | | | - ------------ ------------ | ---------- ---------- Horsham Atlanta | Software Depot PA GA | Irvine Santa Ana (Acq'd 1996) (Acq'd 1997) | CA CA - ------------ ------------ | ---------- ---------- | | | | | | | | | | --------------- | -------------- | | | | | | ------------------- ------------------ ------------------ 328 Employees 20 Employees 70 Employees ------------------- ------------------ ------------------ -------------------- Quality Systems Inc. -------------------- Quality Systems: Historical Financial Performance 5YE 3/31/05 [THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL.] Revenue (US$mm) CAGR = 22.2% 2001 $39.9 2002 $44.4 2003 $54.8 2004 $70.9 2005 $89.0 [THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL.] Operating Income (US$mm) CAGR = 48.9% 2001 $ 5.0 2002 $ 7.9 2003 $10.7 2004 $16.6 2005 $24.6 -------------------- Quality Systems Inc. -------------------- New vs. Recurring Revenue FY05 -------------------- QSI Division -------------------- [THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.] Recurring 79% New 21% -------------------- Company -------------------- [THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.] New 60% Recurring 40% -------------------- NextGen Division -------------------- [THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.] New 68% Recurring 32% -------------------- Quality Systems Inc. -------------------- QSI Division -------------------- Quality Systems Inc. -------------------- QSI Division Positioning o Approx 5,000 providers served o Installations at clients w/ est. 60+% share of dental consolidator market -------------------- Quality Systems Inc. -------------------- QSI Dental Target Market/Market Share --------------------------------------------------------- Est. Description # of Dentists --------------------------------------------------------- Consolidators 4,500 --------------------------------------------------------- Group Practices (3+ Dentists) 35,000 --------------------------------------------------------- Solo/Two Dentist Practice 115,000 --------------------------------------------------------- -------------------- Quality Systems Inc. -------------------- QSI Division Historical Results [THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL.] Revenue (US$mm) 2001 $17.2 2002 $17.2 2003 $17.4 2004 $17.4 2005 $15.4 [THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL.] Operating Income (US$mm) 2001 $3.2 2002 $5.2 2003 $4.7 2004 $4.9 2005 $4.1 -------------------- Quality Systems Inc. -------------------- NextGen Division -------------------- Quality Systems Inc. -------------------- NextGen Key Facts o 46% revenue growth FY04 o 77% operating income growth FY04 o 35% revenue growth FY05 o 64% operating income growth FY05 o 46% revenue growth Q1 FY06 o 68% operating income growth Q1 FY06 -------------------- Quality Systems Inc. -------------------- NextGen: Segmentation / Share ------------------------------------------------------------------- Est. Est. Market Segment # of Practices # of Physicians ------------------------------------------------------------------- 1 - 5 Physicians 43,234 127,540 ------------------------------------------------------------------- 6 - 9 Physicians 11,243 83,760 ------------------------------------------------------------------- 10 - 49 Physicians 3,895 91,388 ------------------------------------------------------------------- 50 - 99 Physicians 1,235 78,052 ------------------------------------------------------------------- 100 - 249 Physicians 456 69,768 ------------------------------------------------------------------- 250+ Physicians 312 123,240 ------------------------------------------------------------------- Total 60,375 573,748 ------------------------------------------------------------------- Source: AC Group - 11/22/2004 -------------------- Quality Systems Inc. -------------------- EMR Competitive Advantages o Interfaced with 26 practice management systems. o Flexibility overcomes physician acceptance issues. o 18 practice specific knowledge bases. o Financial strength vs. competition. -------------------- Quality Systems Inc. -------------------- NextGen in Review ------------------------------ Financial Highlights ------------------------------ o Nineteen record setting revenue quarters - of the last twenty o Q1 FY06: o 46% Revenue Growth o 68% Operating Income Growth o Approximately 86% of Company revenues Q1 FY06 (includes EDI) -------------------- Quality Systems Inc. -------------------- NextGen in Review -------------------------------- Non-Financial Highlights -------------------------------- o EMR earns awards at 01, 02, 03 and 04 TEPR conferences o EPM earns awards at 02, 03 and 04 TEPR conferences o HIMSS/HUG 2003, 2004, and 2005 awards: o Administrative/Financial Systems o Clinical/Patient Information Systems o Sales force expansion o Sales pipeline at $55 million -------------------- Quality Systems Inc. -------------------- NextGen Historical Results [THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL.] Revenue (US$mm) CAGR = 34.2% 2001 $22.7 2002 $27.2 2003 $37.3 2004 $54.4 2005 $73.6 [THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL.] Operating Income (US$mm) CAGR = 62% 2001 $ 3.7 2002 $ 4.7 2003 $ 8.9 2004 $15.8 2005 $25.9 -------------------- Quality Systems Inc. -------------------- Recent Results -------------------- Quality Systems Inc. -------------------- Quality Systems: Recent Results [THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL.] Revenue EPS (Millions) (Cents/Share) Mar-02 12.3 13 Jun-02 13.0 14 Dec-02 14.4 15 Mar-03 15.1 14 Jun-03 16.3 18 Sep-03 17.6 19 Dec-03 18.2 20 Mar-04 18.8 24 Jun-04 20.1 26 Sep-04 21.2 28 Dec-04 22.1 32 Mar-05 25.5 36 Jun-05 27.4 38 -------------------- Quality Systems Inc. -------------------- Q/E June 05 ---------------------------- Financial Highlights ---------------------------- o Record Company revenues of $27.4 million o Record NextGen revenues of $23.6 million o Cash at $57.5 million o No debt -------------------- Quality Systems Inc. -------------------- TTM June 30, 2005 ---------------------------- Financial Highlights ---------------------------- o Company Revenues at $96.2 million o NextGen revenues at $81.0 million o QSI revenues at $15.2 million o EPS at $1.34 (fully diluted) -------------------- Quality Systems Inc. -------------------- Coverage -------------------------------- Non-Financial Highlights -------------------------------- o Forbes: QSI named to 200 Best Small Companies list for four consecutive years. > #32 in 2004 o Fortune list of 100 Fastest Growing Small Public Companies. > #41 in 2005 o Business Week's list of 100 Hot Growth Companies. > #48 in 2005 o Business 2.0 list of 100 Fastest Growing Technology Companies. > #19 in 2005 o Expanded trade journal coverage: Healthcare Informatics, Health Data Management, Health Management Technology, Modern Physicians. -------------------- Quality Systems Inc. -------------------- Future -------------------- Quality Systems Inc. -------------------- Quality Systems: Future Vision o Maximize Top/Bottom Line Growth at NextGen and EDI/Connectivity o Maximize $ Profit at QSI Division o Stepped Investments in Sales, Marketing, Implementation, Support and Development o Continued improvements - compensation and process o Evaluate Selective Acquisition Opportunities - market share - niche products o Channel Expansion o New Product Rollouts -------------------- Quality Systems Inc. -------------------- Quality Systems: Future Initiatives o Maximize cross selling opportunities - EMR <--> EPM - EDI <--> NextGen - CPS <--> QSI - EDI <--> EDI o Leverage major new segment sales - Government - Payors - Insurers - International - Small Practices -------------------- Quality Systems Inc. -------------------- Investment Summary -------------------- Quality Systems Inc. -------------------- Quality Systems Equity Profile (NASDAQ: QSII) o Recent Price: $60.00/shr o Book Value: $5.04/shr o Cash: $4.39/shr (pre-dividend) o P/E - LTM - incl cash 44.8 o P/E - LTM - excl cash 41.5 o Market Cap: $787M o Shares Outstanding (FD): 13.5M o Equity Value/Sales (LTM) 8.2 o Enterprise Value/Sales (LTM) 7.6 -------------------- Quality Systems Inc. -------------------- -----END PRIVACY-ENHANCED MESSAGE-----