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)
June 8, 2006

QUALITY SYSTEMS, INC.
(Exact name of registrant as specified in its charter)

CALIFORNIA
(State or other jurisdiction
of incorporation) 0-13801
(Commission File Number) 95-2888568
(IRS Employer
Identification Number)

18191 Von Karman, Suite 450
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 Form 8-K and the Exhibits 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 June 8, 2006, Quality Systems, Inc. issued a press release announcing its financial performance for the fiscal 2006 fourth quarter and year end. On that same date, Quality Systems, Inc. conducted a conference call concerning its performance for the fiscal 2006 fourth quarter and year end. A copy of the news release is attached to this Form 8-K as Exhibit 99.1.

Item 9.01 Financial Statements and Exhibits.

(c) Exhibits.

Exhibit 99.1 Press release dated June 8, 2006 of Quality Systems, Inc.

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: June 9, 2006

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

INDEX TO EXHIBITS

Exhibit Number	Description
99.1	Press Release dated June 8, 2006.

EX-99.1

Exhibit 99.1

FOR IMMEDIATE RELEASE For more information contact:

Louis Silverman
President and CEO
Quality Systems, Inc.
(949) 255-2600
www.qsii.com

Sean Collins
Partner
CCG Investor Relations
(310) 231-8600
www.ccgir.com

QUALITY SYSTEMS REPORTS FOURTH QUARTER AND
FISCAL YEAR-END RESULTS

IRVINE, Calif.—(BUSINESS WIRE)— June 8, 2006—Quality Systems, Inc. (NASDAQ:QSII - news) today announced the results of operations for its fiscal 2006 fourth quarter and fiscal year ended March 31, 2006. The Company posted net revenues of $35.6 million in the fourth quarter, an increase of 39% from the $25.5 million generated during the same quarter last year. The Company reported net income of $7.6 million an increase of 59% over net income of $4.8 million earned in the comparable quarter of the prior year. Fully diluted earnings per share was $0.28 in the quarter, an increase of 56% over the fully diluted $0.18 per share earnings recorded in the same quarter last year.

For the quarter, the Company’s NextGen Healthcare Information Systems division posted revenue of $31.7 million, up 45% over the same quarter prior year and operating income of $13.8 million, up 74% over the same quarter of the prior year.

Revenue for the fiscal year ended March 31, 2006 was $119.3 million, an increase of 34% over fiscal 2005 revenue of $89.0 million. Net income for fiscal year 2006 was $23.3 million, an increase of 45% over fiscal 2005’s net income of $16.1 million. Fully diluted earnings per share increased to $0.85 in fiscal year 2006 from $0.61 earned during fiscal year 2005, an increase of 39%.

Quality Systems, Inc. will hold a conference call to discuss fourth quarter and fiscal year-end financial results June 8, 2006 at 4:30 p.m. EST (1:30 p.m. PST). To participate in the conference call, please dial the following number five to ten minutes prior to the scheduled conference call time: (877) 586-7724. There is no pass code required for this call. If you are unable to participate in the call at this time, a replay will be available on Thursday at 6:30 p.m. EST, through Wednesday, June 14, 2006 at midnight EST. To access the replay dial (800) 642-1687 and enter conference ID number 1369934.

A transcript of the conference call will be made available on the QSII Web site (www.qsii.com).

About Quality Systems, Inc.

Quality Systems, Inc. and its NextGen Healthcare Information Systems subsidiary develop and market computer-based practice management, patient records, and connectivity applications for medical and dental group practices. Visit www.qsii.com and www.nextgen.com for additional information.

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. 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 systems sales 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; the timing, cost and success or failure of new product and service introductions, development and product upgrade releases; undetected errors or bugs in software; 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 Quality Systems’ 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 highlights follow]

QUALITY SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)

	THREE MONTHS ENDED				TWELVE MONTHS ENDED
	MARCH 31, 2006		MARCH 31, 2005		MARCH 31, 2006		MARCH 31, 2005
Revenues:
Software, hardware and supplies	$	17,469	$	11,765	$	54,938	$	39,672
Implementation and training services		3,157		2,402		11,293		8,856
System sales		20,626		14,167		66,231		48,528
Maintenance and other services		11,269		8,483		39,800		29,945
Electronic data interchange services		3,670		2,876		13,256		10,488
Maintenance, EDI and other services		14,939		11,359		53,056		40,433
Total revenue		35,565		25,526		119,287		88,961
Cost of revenue:
Software, hardware and supplies		2,126		2,097		8,148		7,525
Implementation and training services		2,347		1,754		8,088		6,300
Total cost of system sales		4,473		3,851		16,236		13,825
Maintenance and other services		4,432		3,394		15,023		12,120
Electronic data interchange services		2,158		1,871		8,569		6,724
Total cost of maintenance, EDI and other
services		6,590		5,265		23,592		18,844
Total cost of revenue		11,063		9,116		39,828		32,669
Gross profit		24,502		16,410		79,459		56,292
Operating expenses:
Selling, general and administrative		10,586		7,989		35,554		24,776
Research and development costs		2,161		1,766		8,087		6,903
Total operating expenses		12,747		9,755		43,641		31,679
Income from operations		11,755		6,655		35,818		24,613
Interest income		713		323		2,108		876
Income before provision for income
taxes		12,468		6,978		37,926		25,489
Provision for income taxes		4,830		2,187		14,604		9,380
Net income	$	7,638	$	4,791	$	23,322	$	16,109
Net income per share:
Basic	$	0.29	$	0.18	$	0.88	$	0.63
Diluted	$	0.28	$	0.18	$	0.85	$	0.61
Weighted-average shares outstanding:
Basic		26,642		26,178		26,413		25,744
Diluted		27,432		26,740		27,356		26,406

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

	March 31, 2006			March 31, 2005
ASSETS
Current assets:
Cash and cash equivalents	$	57,225		$	51,157
Accounts receivable, net		44,665			33,362
Inventories, net		561			960
Income tax receivable		1,195			15
Net current deferred tax assets		1,824			1,796
Other current assets		2,912			1,677
Total current assets		108,382			88,967
Equipment and improvements, net		3,739			2,697
Capitalized software costs, net		5,171			4,334
Net deferred tax assets		1,157			—
Goodwill		1,840			1,840
Other		1,958			1,604
Total assets	$	122,247		$	99,442
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	2,934		$	2,284
Deferred revenue		34,422			24,115
Accrued compensation and related benefits		5,490			3,436
Other current liabilities		3,812			4,021
Total current liabilities		46,658			33,856
Deferred revenue, net of current		1,494			1,362
Net deferred tax liability		—			291
Deferred compensation		1,686			1,202
Total liabilities		49,838			36,711
Commitments and contingencies
Shareholders’ equity:
Common stock, $0.01 par value; authorized 50,000 shares; issued
and outstanding 26,711 and 26,222 shares at March 31, 2006 and
March 31, 2005, respectively		267			262
Additional paid-in capital		53,675			44,368
Retained earnings		19,151			19,213
Deferred compensation		(684	)		(1,112	)
Total shareholders’ equity		72,409			62,731
Total liabilities and shareholders’ equity	$	122,247		$	99,442