EX-99.1 2 d69753_ex99-1.htm PRESS RELEASE
   

Exhibit 99.1

 
   
 

For more information contact:

   
 

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

FOR IMMEDIATE RELEASE
 
 
   
  Sean Collins
Partner
CCG Investor Relations
(310) 231-8600
www.ccgir.com
 
 
 
   
QUALITY SYSTEMS REPORTS SECOND QUARTER RESULTS
 
IRVINE, Calif.—(BUSINESS WIRE)— November 2, 2006—Quality Systems, Inc. (NASDAQ:QSII - news) today announced the results of operations for its fiscal 2007 second quarter ended September 30, 2006. The Company posted net revenues of $37.5 million in the second quarter, an increase of 27% from the $29.5 million generated during the same quarter last year. The Company reported net income of $8.3 million, an increase of 44% over net income of $5.8 million earned in the comparable quarter of the prior year. Fully diluted earnings per share was $0.30 in the quarter, an increase of 43% over the fully diluted $0.21 per share earnings recorded in the same quarter last year. Second quarter 2007 net earnings and diluted earnings per share reflect the impact of adopting Statement of Financial Accounting Standards No. 123R (SFAS 123R), Share-Based Payment, which requires the expensing of stock options. Adoption of SFAS 123R reduced second quarter 2007 net earnings and diluted earnings per share by $612,000 and $0.02, respectively.
 
For the quarter, the Company’s NextGen Healthcare Information Systems division posted revenue of $33.5 million, up 31% over the same quarter prior year and operating income of $14.1 million, up 43% over the same quarter of the prior year.
 
Quality Systems, Inc. will hold a conference call to discuss second quarter financial results on Thursday, November 2, 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, November 2, 2006 at 5:30 p.m. EST, through Thursday, November 9, 2006 at midnight EST. To access the replay dial (800) 642-1687 and enter conference ID number 1157616.
 
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)
(UNAUDITED)

 
  THREE MONTHS ENDED   SIX MONTHS ENDED  
 

  SEPTEMBER 30,
2006
SEPTEMBER 30,
2005
SEPTEMBER 30,
2006
SEPTEMBER 30,
2005
 
 
 
 
 
  
Revenues:                
  Software, hardware and supplies $ 16,737   $ 13,661   $ 31,766   $ 26,634  
  Implementation and training services   2,848     3,031     5,802     5,521  




System sales 19,585    16,692    37,568    32,155  




                         
  Maintenance 9,639    7,360    19,038    14,671  
  Electronic data interchange services 4,066    3,174    8,043    6,276  
  Other services 4,169    2,316    8,884    3,868  




Maintenance, EDI and other services 17,874    12,850    35,965    24,815  




                         
     Total revenue 37,459    29,542    73,533    56,970  




                         
Cost of revenue:                        
  Software, hardware and supplies 1,723    1,907    3,412    4,364  
  Implementation and training services 2,154    1,942    4,117    3,766  




Total cost of system sales 3,877    3,849    7,529    8,130  




                         
  Maintenance 2,792    2,236    5,929    4,493  
  Electronic data interchange services 2,926    2,125    5,706    4,187  
  Other services 2,238    1,401    4,126    2,552  




Total cost of maintenance and other
services
 7,956    5,762    15,761    11,232  




     Total cost of revenue 11,833    9,611    23,290    19,362  




                         
     Gross profit 25,626    19,931    50,243    37,608  




                         
Operating expenses:                        
     Selling, general and administrative  9,994    8,920    20,194    16,952  
     Research and development costs  2,591    1,977    4,909    3,718  




          Total operating expenses  12,585    10,897    25,103    20,670  




                         
     Income from operations 13,041    9,034    25,140    16,938  
                         
Interest income 819    460    1,486    801  




                         
Income before provision for income
taxes
 13,860    9,494    26,626    17,739  
Provision for income taxes 5,523    3,700    10,620    6,870  




                         
     Net income$ 8,337   $ 5,794   $ 16,006   $ 10,869  




                         
Net income per share:                        
     Basic $ 0.31   $ 0.22   $ 0.60   $ 0.41  




     Diluted $ 0.30   $ 0.21   $ 0.59   $ 0.40  




                         
Weighted average shares outstanding:                        
Basic 26,802    26,298    26,758    26,262  




Diluted 27,380    27,128    27,332    27,058  




 



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

 
SEPTEMBER 30,
2006
MARCH 31,
2006
 
 
 
             
ASSETS        
             
Current assets:            
              Cash and cash equivalents $ 74,700   $ 57,225  
              Accounts receivable, net  55,292    44,665  
              Inventories, net  856    561  
              Income tax receivable  54    1,195  
              Net current deferred tax assets  1,807    1,824  
              Other current assets  2,814    2,912  
 
 
 
                          Total current assets  135,523    108,382  
             
Equipment and improvements, net 4,192    3,739  
Capitalized software costs, net 5,852    5,171  
Net deferred tax assets 1,257    1,157  
Goodwill 1,840    1,840  
Other 2,386    1,958  
 
 
 
                          Total assets $ 151,050   $ 122,247  
 
 
 
             
LIABILITIES AND SHAREHOLDERS’ EQUITY            
             
Current liabilities:            
              Accounts payable $ 3,389   $ 2,934  
              Deferred revenue  37,853    34,422  
              Accrued compensation and related benefits  4,497    5,490  
              Other current liabilities  6,561    3,812  
 
 
 
                          Total current liabilities  52,300    46,658  
             
Deferred revenue, net of current 1,497    1,494  
Deferred compensation 1,932    1,686  
 
 
 
                          Total liabilities  55,729    49,838  
 
 
 
             
Commitments and contingencies            
             
Shareholders’ equity:            
              Common stock, $0.01 par value; authorized 50,000 shares; issued
                   and outstanding 26,934 and 26,711 shares at September 30, 2006
                   and March 31, 2006, respectively
 269    267  
              Additional paid-in capital  59,895    53,675  
              Retained earnings  35,157    19,151  
              Deferred compensation      (684 )
 
 
 
                          Total shareholders’ equity  95,321    72,409  
 
 
 
                          Total liabilities and shareholders’ equity $ 151,050   $ 122,247