EX-99.1 2 d73441_ex99-1.htm PRESS RELEASE DATED FEBRUARY 5, 2008

 

 

 

For more information contact:

 

 

FOR IMMEDIATE RELEASE

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 THIRD QUARTER RESULTS

IRVINE, Calif.—(BUSINESS WIRE)— February 5, 2008—Quality Systems, Inc. (NASDAQ:QSII - news) today announced the results of operations for its fiscal 2008 third quarter ended December 31, 2007. The Company posted net revenues of $48.1 million in the third quarter, an increase of 25% from the $38.5 million generated during the same quarter last year. The Company reported record net income of $11.2 million, an increase of 29% over net income of $8.7 million earned in the comparable quarter of the prior year. Fully diluted earnings per share was $0.40 in the quarter, a record for the Company, and an increase of 25% over the fully diluted $0.32 per share earnings recorded in the same quarter last year.

For the quarter, the Company’s NextGen Healthcare Information Systems division posted record revenue of $44.0 million, up 29% over the same quarter prior year and record operating income of $17.8 million, up 33% over the same quarter of the prior year.

The quarter’s financial performance was positively impacted by a net $0.03 per share, as a result of life insurance proceeds and associated compensation expense related to the passing of Mr. Greg Flynn, the Company’s Executive Vice President and General Manager.

Quality Systems, Inc. will hold a conference call to discuss third quarter financial results February 5, 2008 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 Tuesday, February 5, 2008 at 6:30 p.m. EST through Tuesday, February 12, 2008 at midnight EST. To access the replay dial 800-642-1687 and enter the conference ID number 33740575.

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

 

NINE MONTHS ENDED

 

 

 


 


 

 

 

DECEMBER 31, 2007

 

DECEMBER 31, 2006

 

DECEMBER 31, 2007

 

DECEMBER 31, 2006

 

 

 


 


 


 


 

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

Software, hardware and supplies

 

 

$

20,591

 

 

 

$

16,088

 

 

 

$

55,844

 

 

 

$

47,854

 

 

Implementation and training services

 

 

 

3,115

 

 

 

 

2,885

 

 

 

 

9,545

 

 

 

 

8,687

 

 

 

 

 



 

 

 



 

 

 



 

 

 



 

 

System sales

 

 

 

23,706

 

 

 

 

18,973

 

 

 

 

65,389

 

 

 

 

56,541

 

 

 

 

 



 

 

 



 

 

 



 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Maintenance

 

 

 

14,861

 

 

 

 

11,069

 

 

 

 

40,862

 

 

 

 

30,107

 

 

Electronic data interchange services (EDI)

 

 

 

5,739

 

 

 

 

4,290

 

 

 

 

16,169

 

 

 

 

12,333

 

 

Other services

 

 

 

3,784

 

 

 

 

4,164

 

 

 

 

12,848

 

 

 

 

13,048

 

 

 

 

 



 

 

 



 

 

 



 

 

 



 

 

Maintenance, EDI and other services

 

 

 

24,384

 

 

 

 

19,523

 

 

 

 

69,879

 

 

 

 

55,488

 

 

 

 

 



 

 

 



 

 

 



 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue

 

 

 

48,090

 

 

 

 

38,496

 

 

 

 

135,268

 

 

 

 

112,029

 

 

 

 

 



 

 

 



 

 

 



 

 

 



 

 

Cost of revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Software, hardware and supplies

 

 

 

2,984

 

 

 

 

1,798

 

 

 

 

7,949

 

 

 

 

5,210

 

 

Implementation and training services

 

 

 

2,638

 

 

 

 

2,169

 

 

 

 

7,469

 

 

 

 

6,285

 

 

 

 

 



 

 

 



 

 

 



 

 

 



 

 

Total cost of system sales

 

 

 

5,622

 

 

 

 

3,967

 

 

 

 

15,418

 

 

 

 

11,495

 

 

 

 

 



 

 

 



 

 

 



 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Maintenance

 

 

 

3,131

 

 

 

 

3,058

 

 

 

 

9,292

 

 

 

 

8,987

 

 

Electronic data interchange services

 

 

 

4,162

 

 

 

 

3,144

 

 

 

 

11,413

 

 

 

 

8,850

 

 

Other services

 

 

 

3,233

 

 

 

 

2,528

 

 

 

 

9,342

 

 

 

 

6,655

 

 

 

 

 



 

 

 



 

 

 



 

 

 



 

 

Total cost of maintenance and other services

 

 

 

10,526

 

 

 

 

8,730

 

 

 

 

30,047

 

 

 

 

24,492

 

 

 

 

 



 

 

 

 


 

 

 



 

 

 



 

 

Total cost of revenue

 

 

 

16,148

 

 

 

 

12,697

 

 

 

 

45,465

 

 

 

 

35,987

 

 

 

 

 



 

 

 



 

 

 



 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

 

 

31,942

 

 

 

 

25,799

 

 

 

 

89,803

 

 

 

 

76,042

 

 

 

 

 



 

 

 



 

 

 



 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

 

 

13,283

 

 

 

 

10,593

 

 

 

 

39,114

 

 

 

 

30,787

 

 

Research and development costs

 

 

 

2,874

 

 

 

 

2,601

 

 

 

 

8,362

 

 

 

 

7,510

 

 

 

 

 



 

 

 



 

 

 



 

 

 



 

 

Total operating expenses

 

 

 

16,157

 

 

 

 

13,194

 

 

 

 

47,476

 

 

 

 

38,297

 

 

 

 

 



 

 

 



 

 

 



 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from operations

 

 

 

15,785

 

 

 

 

12,605

 

 

 

 

42,327

 

 

 

 

37,745

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

 

710

 

 

 

 

935

 

 

 

 

2,094

 

 

 

 

2,421

 

 

Other income

 

 

 

953

 

 

 

 

 

 

 

 

953

 

 

 

 

 

 

 

 

 



 

 

 



 

 

 



 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before provision for income taxes

 

 

 

17,448

 

 

 

 

13,540

 

 

 

 

45,374

 

 

 

 

40,166

 

 

Provision for income taxes

 

 

 

6,234

 

 

 

 

4,819

 

 

 

 

16,548

 

 

 

 

15,439

 

 

 

 

 



 

 

 



 

 

 



 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

$

11,214

 

 

 

$

8,721

 

 

 

$

28,826

 

 

 

$

24,727

 

 

 

 

 



 

 

 



 

 

 



 

 

 



 

 

Net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

$

0.41

 

 

 

$

0.32

 

 

 

$

1.06

 

 

 

$

0.92

 

 

 

 

 



 

 

 



 

 

 



 

 

 



 

 

Diluted

 

 

$

0.40

 

 

 

$

0.32

 

 

 

$

1.04

 

 

 

$

0.90

 

 

 

 

 



 

 

 



 

 

 



 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

 

27,362

 

 

 

 

26,966

 

 

 

 

27,261

 

 

 

 

26,828

 

 

 

 

 



 

 

 



 

 

 



 

 

 



 

 

Diluted

 

 

 

27,696

 

 

 

 

27,507

 

 

 

 

27,739

 

 

 

 

27,441

 

 

 

 

 



 

 

 



 

 

 



 

 

 



 

 

Dividends declared per common shares

 

 

$

0.25

 

 

 

$

 

 

 

$

0.75

 

 

 

$

 

 

 

 

 



 

 

 



 

 

 



 

 

 



 

 




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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

DECEMBER 31, 2007

 

MARCH 31,
2007

 

 

 


 


 

 

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

$

30,013

 

 

 

$

60,028

 

 

Marketable securities

 

 

 

48,400

 

 

 

 

Accounts receivable, net

 

 

 

72,906

 

 

 

 

63,945

 

 

Inventories, net

 

 

 

1,333

 

 

 

1,175

 

Net current deferred tax assets

 

 

 

4,106

 

 

 

 

3,443

 

 

Other current assets

 

 

 

3,498

 

 

 

4,507

 

 

 

 



 

 



 

Total current assets

 

 

 

160,256

 

 

 

 

133,098

 

 

 

 

 

 

 

 

 

 

 

 

Equipment and improvements, net

 

 

 

4,946

 

 

 

5,029

 

Capitalized software costs, net

 

 

 

8,367

 

 

 

 

6,982

 

 

Net deferred tax assets

 

 

 

1,636

 

 

 

1,180

 

Goodwill

 

 

 

1,840

 

 

 

 

1,840

 

 

Other assets

 

 

 

2,498

 

 

 

2,552

 

 

 

 



 

 



 

Total assets

 

 

$

179,543

 

 

 

$

150,681

 

 

 

 

 



 

 



 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

 

 

Accounts payable

 

 

$

5,818

 

 

$

5,246

 

Deferred revenue

 

 

 

40,574

 

 

 

 

38,774

 

 

Accrued compensation and related benefits

 

 

 

7,420

 

 

 

6,521

 

Income taxes payable

 

 

 

2,899

 

 

 

 

315

 

 

Other current liabilities

 

 

 

5,218

 

 

 

5,626

 

 

 

 



 

 



 

Total current liabilities

 

 

 

61,929

 

 

 

 

56,482

 

 

 

 

 

 

 

 

 

 

 

 

Deferred revenue, net of current

 

 

 

717

 

 

 

674

 

Deferred compensation

 

 

 

2,231

 

 

 

 

2,279

 

 

 

 

 



 

 



 

 

 

 

 

64,877

 

 

 

59,435

 

 

 

 



 

 



 

 

 

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

 

 

 

 

 

Common stock, $0.01 par value; authorized 50,000 shares; issued and outstanding 27,393 and 27,123 shares at December 31, 2007 and March 31, 2007, respectively

 

 

 

274

 

 

 

 

271

 

 

Additional paid-in capital

 

 

 

73,871

 

 

 

65,666

 

Retained earnings

 

 

 

40,521

 

 

 

 

25,309

 

 

 

 

 



 

 



 

Total shareholders’ equity

 

 

 

114,666

 

 

 

91,246

 

 

 

 



 

 



 

Total liabilities and shareholders’ equity

 

 

$

179,543

 

 

 

$

150,681