EX-99.1 2 d72149_ex99-1.htm PRESS RELEASE

Exhibit. 99.1

For Further Information:

 

 

Quality Systems, Inc.

CCG Investor Relations


18191 Von Karman Avenue, Suite 450


10960 Wilshire Blvd., Suite 2050

Irvine, CA 92612

Los Angeles, CA 90024

Phone: (949) 255-2600

Phone: (310) 477-9800

www.qsii.com

www.ccgir.com

CONTACT: Louis Silverman,

CONTACT: Sean Collins,

                      President and CEO

                      Senior Partner

QUALITY SYSTEMS REPORTS FOURTH QUARTER AND FISCAL YEAR-END RESULTS

IRVINE, Calif.—(BUSINESS WIRE)— June 7, 2007—Quality Systems, Inc. (NASDAQ:QSII - news) today announced the results of operations for its fiscal 2007 fourth quarter and fiscal year ended March 31, 2007.

The Company posted record net revenues of $45.1 million in the fourth quarter, an increase of 27% from the $35.6 million generated during the same quarter last year. The Company reported net income of $8.5 million in the fourth quarter, an increase of 11% over net income of $7.6 million earned in the comparable quarter of the prior year. Fully diluted earnings per share was $0.31 in the quarter. The adoption of Statement of Financial Accounting Standards No. 123R (SFAS 123R), Share-Based Payment, which requires the expensing of stock options reduced 4th quarter 2007 net earnings and diluted earnings per share by $963,000 and $0.03, respectively.

For the quarter, the Company’s NextGen Healthcare Information Systems Division posted record revenue of $40.7 million, up 28% over the same quarter of the prior year, and record operating income of $15.4 million, up 12% over the same quarter of the prior year.

The Company’s revenue for the fiscal year ended March 31, 2007 was $157.2 million, an increase of 32% over fiscal year 2006 revenue of $119.3 million. Net income for fiscal year 2007 was $33.2 million, an increase of 42% over fiscal 2006’s net income of $23.3 million. Fully diluted earnings per share increased to $1.21 in fiscal year 2007 from $0.85 earned during fiscal year 2006, an increase of 42%. Adoption of SFAS 123R reduced fiscal year 2007 net earnings and diluted earnings per share by $2.8 million and $0.10, respectively.

For the fiscal year, the Company’s NextGen Healthcare Information Systems Division recorded revenue of $140.6 million, up 36% over the prior year, and operating income of $56.3 million, an increase of 40% over the prior year.

For the fiscal fourth quarter, FAS 123R expense for the quarter, was $0.01 per diluted share higher than was incurred in prior quarters due to the previously announced revisions in the company’s option plan targets and option pool and the company’s strong revenue performance in the quarter.

In addition, the previously announced revisions to performance targets along with the quarter’s strong revenue performance impacted certain bonus programs and caused the quarter’s expense levels to increase over prior quarters in this area.



Also, as previously disclosed in our Form 10-Q for the quarter ended December 31, 2006, we received written notification from the Commission stating that the Commission initiated an investigation of trading activity in our securities. While making clear that the investigation did not mean the Commission had concluded there has been a violation of law, the Commission sought documents and records concerning our Chief Financial Officer. To the best of our knowledge, the Commission’s investigation is ongoing and is not an investigation of our company. We intend to continue to fully cooperate with the Commission.

After we received the Commission’s notification, our Audit Committee, assisted by independent outside legal counsel, conducted an investigation of certain trading activity in our securities with particular focus on trading in advance of our third quarter 2006 earnings release. Based on the information available to the investigators and the results of the investigation, the Audit Committee has concluded that it does not appear that our Chief Financial Officer engaged in improper insider trading or tipping in connection with that trading activity. The legal and professional service expenses associated with the investigation was in excess of $0.01 per diluted share for the March quarter. The Audit Committee’s investigation was concluded during the quarter ended June 30, 2007.

During the quarter, the Company’s effective tax rate returned to more customary levels versus the third quarter tax rate, which as previously disclosed, was impacted by the retroactive reinstatement of the R&D tax credit.

Quality Systems, Inc. will hold a conference call to discuss fourth quarter and fiscal year-end financial results June 7, 2007 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, June 7, 2007 at 6:30 p.m. EST through Wednesday, June 13, 2007 at midnight EST. To access the replay dial (800) 642-1687 and enter the conference ID number 3371063.

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,
2007

 

MARCH 31,
2006

 

MARCH 31,
2007

 

MARCH 31,
2006

 

 

 


 


 


 


 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Software, hardware and supplies

 

 

$

21,017

 

 

 

$

17,469

 

 

 

$

68,871

 

 

 

$

54,938

 

 

Implementation and training services

 

 

 

3,490

 

 

 

 

3,157

 

 

 

 

12,177

 

 

 

 

11,293

 

 

 

 

 



 

 

 



 

 

 



 

 

 



 

 

System sales

 

 

 

24,507

 

 

 

 

20,626

 

 

 

 

81,048

 

 

 

 

66,231

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Maintenance

 

 

 

11,841

 

 

 

 

8,720

 

 

 

 

41,948

 

 

 

 

31,124

 

 

Electronic data interchange services

 

 

 

4,716

 

 

 

 

3,670

 

 

 

 

17,049

 

 

 

 

13,256

 

 

Other services

 

 

 

4,072

 

 

 

 

2,549

 

 

 

 

17,120

 

 

 

 

8,676

 

 

 

 

 



 

 

 



 

 

 



 

 

 



 

 

Maintenance, EDI and other services

 

 

 

20,629

 

 

 

 

14,939

 

 

 

 

76,117

 

 

 

 

53,056

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 



 

 

 



 

 

 



 

 

Total revenue

 

 

 

45,136

 

 

 

 

35,565

 

 

 

 

157,165

 

 

 

 

119,287

 

 

 

 

 



 

 

 



 

 

 



 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Costs of revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Software, hardware and supplies

 

 

 

3,243

 

 

 

 

2,126

 

 

 

 

8,453

 

 

 

 

8,148

 

 

Implementation and training services

 

 

 

2,249

 

 

 

 

2,347

 

 

 

 

8,535

 

 

 

 

8,088

 

 

 

 

 



 

 

 



 

 

 



 

 

 



 

 

Cost of system sales

 

 

 

5,492

 

 

 

 

4,473

 

 

 

 

16,988

 

 

 

 

16,236

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Maintenance

 

 

 

2,847

 

 

 

 

2,812

 

 

 

 

11,834

 

 

 

 

9,330

 

 

Electronic data interchange services

 

 

 

3,331

 

 

 

 

2,158

 

 

 

 

12,181

 

 

 

 

8,569

 

 

Other services

 

 

 

3,127

 

 

 

 

1,620

 

 

 

 

9,781

 

 

 

 

5,693

 

 

 

 

 



 

 

 



 

 

 



 

 

 



 

 

Cost of maintenance, EDI and other services

 

 

 

9,305

 

 

 

 

6,590

 

 

 

 

33,796

 

 

 

 

23,592

 

 

 

 

 



 

 

 



 

 

 



 

 

 



 

 

Cost of revenue

 

 

 

14,797

 

 

 

 

11,063

 

 

 

 

50,784

 

 

 

 

39,828

 

 

 

 

 



 

 

 



 

 

 



 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 



 

 

 



 

 

 



 

 

Gross profit

 

 

 

30,339

 

 

 

 

24,502

 

 

 

 

106,381

 

 

 

 

79,459

 

 

 

 

 



 

 

 



 

 

 



 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

 

 

14,550

 

 

 

 

10,586

 

 

 

 

45,337

 

 

 

 

35,554

 

 

Research and development costs

 

 

 

2,656

 

 

 

 

2,161

 

 

 

 

10,166

 

 

 

 

8,087

 

 

 

 

 



 

 

 



 

 

 



 

 

 



 

 

Total operating expenses

 

 

 

17,206

 

 

 

 

12,747

 

 

 

 

55,503

 

 

 

 

43,641

 

 

 

 

 



 

 

 



 

 

 



 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from operations

 

 

 

13,133

 

 

 

 

11,755

 

 

 

 

50,878

 

 

 

 

35,818

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

 

885

 

 

 

 

713

 

 

 

 

3,306

 

 

 

 

2,108

 

 

 

 

 



 

 

 



 

 

 



 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before provision for income taxes

 

 

 

14,018

 

 

 

 

12,468

 

 

 

 

54,184

 

 

 

 

37,926

 

 

Provision for income taxes

 

 

 

5,513

 

 

 

 

4,830

 

 

 

 

20,952

 

 

 

 

14,604

 

 

 

 

 



 

 

 



 

 

 



 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

$

8,505

 

 

 

$

7,638

 

 

 

$

33,232

 

 

 

$

23,322

 

 

 

 

 



 

 

 



 

 

 



 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

$

0.31

 

 

 

$

0.29

 

 

 

$

1.24

 

 

 

$

0.88

 

 

 

 

 



 

 

 



 

 

 



 

 

 



 

 

Diluted

 

 

$

0.31

 

 

 

$

0.28

 

 

 

$

1.21

 

 

 

$

0.85

 

 

 

 

 



 

 

 



 

 

 



 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted–average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

 

27,049

 

 

 

 

26,642

 

 

 

 

26,882

 

 

 

 

26,413

 

 

 

 

 



 

 

 



 

 

 



 

 

 



 

 

Diluted

 

 

 

27,600

 

 

 

 

27,432

 

 

 

 

27,550

 

 

 

 

27,356

 

 

 

 

 



 

 

 



 

 

 



 

 

 



 

 




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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31, 2007

 

March 31, 2006

 

 

 


 


 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

$

60,028

 

 

 

$

57,225

 

 

Accounts receivable, net

 

 

 

63,945

 

 

 

 

44,665

 

 

Inventories, net

 

 

 

1,175

 

 

 

 

561

 

 

Income tax receivable

 

 

 

 

 

 

 

1,195

 

 

Net current deferred tax assets

 

 

 

3,443

 

 

 

 

1,824

 

 

Other current assets

 

 

 

4,507

 

 

 

 

2,912

 

 

 

 

 



 

 

 



 

 

Total current assets

 

 

 

133,098

 

 

 

 

108,382

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equipment and improvements, net

 

 

 

5,029

 

 

 

 

3,739

 

 

Capitalized software costs, net

 

 

 

6,982

 

 

 

 

5,171

 

 

Net deferred tax assets

 

 

 

1,180

 

 

 

 

1,157

 

 

Goodwill

 

 

 

1,840

 

 

 

 

1,840

 

 

Other

 

 

 

2,552

 

 

 

 

1,958

 

 

 

 

 



 

 

 



 

 

Total assets

 

 

$

150,681

 

 

 

$

122,247

 

 

 

 

 



 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

 

 

Accounts payable

 

 

$

5,246

 

 

 

$

2,934

 

 

Deferred revenue

 

 

 

38,774

 

 

 

 

34,422

 

 

Accrued compensation and related benefits

 

 

 

6,521

 

 

 

 

5,490

 

 

Income taxes payable

 

 

 

315

 

 

 

 

 

 

Other current liabilities

 

 

 

5,626

 

 

 

 

3,812

 

 

 

 

 



 

 

 



 

 

Total current liabilities

 

 

 

56,482

 

 

 

 

46,658

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deferred revenue, net of current

 

 

 

674

 

 

 

 

1,494

 

 

Deferred compensation

 

 

 

2,279

 

 

 

 

1,686

 

 

 

 

 



 

 

 



 

 

Total liabilities

 

 

 

59,435

 

 

 

 

49,838

 

 

 

 

 



 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

 

 

 

 

 

 

 

Common stock, $0.01 par value; authorized 50,000 shares; issued and outstanding 27,123 and 26,711 shares at March 31, 2007 and March 31, 2006, respectively

 

 

 

271

 

 

 

 

267

 

 

Additional paid-in capital

 

 

 

65,666

 

 

 

 

53,675

 

 

Retained earnings

 

 

 

25,309

 

 

 

 

19,151

 

 

Deferred compensation

 

 

 

 

 

 

 

(684

)

 

 

 

 



 

 

 



 

 

Total shareholders’ equity

 

 

 

91,246

 

 

 

 

72,409

 

 

 

 

 



 

 

 



 

 

Total liabilities and shareholders’ equity

 

 

$

150,681

 

 

 

$

122,247