EX-99.1 2 d68395_ex99-1.htm PRESS RELEASE Quality Systems, Inc.

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