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)

October 31, 2008

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)

18111 Von Karman, Suite 600

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 October 31, 2008, Quality Systems, Inc. issued a press release announcing its financial performance for the period ended September 30, 2008. On that same date, Quality Systems, Inc. conducted a conference call concerning its performance for the period ended September 30, 2008. A copy of the news release is attached to this Form 8-K as Exhibit 99.1, which is incorporated herein by this reference.

Item 8.01 Other Events.

Quarterly Dividend 

On October 30, 2008, the Company’s Board declared a quarterly cash dividend of $0.30 per share on the Company’s outstanding shares of common stock, payable to shareholders of record as of December 15, 2008 with an anticipated distribution date on or about January 5, 2009 pursuant to the Company’s current policy to pay a regular quarterly dividend on the Company’s outstanding shares of Common Stock each fiscal quarter subject to further Board review, approval and establishment of record and distribution dates by the Board prior to the declaration and payment of each such quarterly dividend. A copy of the Company’s press release announcing the dividend is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

Exhibit No. Description

99.1 Press Release dated October 31, 2008

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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: November 3, 2008

QUALITY SYSTEMS, INC.

By: /s/ Paul Holt                                 

Paul Holt
Chief Financial Officer

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EXHIBITS ATTACHED TO THIS REPORT ON FORM 8-K

Exhibit
Number
Description

99.1 Press Release dated October 31, 2008

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EX-99.1

Exhibit 99.1

For Further Information:

Quality Systems, Inc. CCG Investor Relations

18111 Von Karman Avenue, Suite 600 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: Paul Holt, CONTACT: Sean Collins,

CFO Senior Partner

FOR IMMEDIATE RELEASE:

QUALITY SYSTEMS REPORTS SECOND QUARTER RESULTS

IRVINE, Calif.--(BUSINESS WIRE)— October 31, 2008-- Quality Systems, Inc. (NASDAQ:QSII - news) today announced the results of operations for its fiscal 2009 second quarter ended September 30, 2008. The Company posted record net revenues of $59.0 million in the second quarter, an increase of 31% from the $45.1 million generated during the same quarter of the prior year. The Company reported net income of $10.5 million, an increase of 9% over net income of $9.7 million earned in the comparable quarter of the prior year. Fully diluted earnings per share was $0.37 in the quarter, an increase of 6% over the fully diluted $0.35 per share earnings recorded in same quarter last year.

For the quarter, the Company’s NextGen Healthcare Information Systems division posted record revenue of $54.9 million, up 33% over the same quarter prior year and record operating income of $19.3 million, up 23% over the same quarter of the prior year. The Company’s Healthcare Strategic Initiatives acquisition, contributed approximately $4.2 million to NextGen revenue during the quarter.

Proxy related expenses and higher than normal legal expenses reduced earnings by approximately $0.05 in the quarter.

Quality Systems, Inc. will hold a conference call to discuss first quarter financial results October 31, 2008 at 11:00 a.m. EDT (8:00 a.m. PDT). 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 Friday, October 31, 2008 at 2:00 p.m. EST through Friday, November 7, 2008 at midnight EST. To access the replay dial 800-642-1687 and enter the conference ID number 70834963.

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, revenue cycle management, connectivity, and other applications and services for medical and dental group practices. Visit www.qsii.com, www.nextgen.com and www.hsillc.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, 2008		September 30, 2007		September 30, 2008		September 30, 2007
Revenues:
Software, hardware and   supplies	$	21,297	$	18,514	$	42,666	$	35,253
Implementation and   training services		3,486		3,182		7,071		6,430
System sales		24,783		21,696		49,737		41,683
Maintenance		17,234		13,442		34,370		26,001
Electronic data   interchange services		6,985		5,406		13,655		10,430
Revenue cycle management   and related services		4,527		222		6,484		356
Other services		5,452		4,380		9,959		8,708
Maintenance, EDI, revenue  cycle management and  other services		34,198		23,450		64,468		45,495
Total revenue		58,981		45,146		114,205		87,178
Cost of revenue:
Software, hardware and   supplies		3,395		2,477		6,882		4,966
Implementation and   training services..		2,626		2,423		5,640		4,832
Total cost of system    sales		6,021		4,900		12,522		9,798
Maintenance		2,947		3,033		6,030		6,159
Electronic data interchange   services		5,256		3,742		10,147		7,251
Revenue cycle management   and related services		3,132		138		4,437		236
Other services		3,866		2,962		7,313		5,873
Total cost of maintenance,  EDI,  revenue cycle  management and  other services		15,201		9,875		27,927		19,519
		21,222		14,775		40,449		29,317
Gross profit		37,759		30,371		73,756		57,861
Operating expenses:
Selling, general and    administrative		18,283		13,188		33,535		25,831
Research and development    costs		3,342		2,688		6,461		5,488
Total operating       expenses		21,625		15,876		39,996		31,319
Income from     operations		16,134		14,495		33,760		26,542
Interest income		340		645		714		1,384
Income before provision for  income taxes		16,474		15,140		34,474		27,926
Provision for income  taxes		5,975		5,468		12,861		10,314
Net income	$	10,499	$	9,672	$	21,613	$	17,612
Net income per share:
Basic	$	0.38	$	0.35	$	0.78	$	0.65
Diluted	$	0.37	$	0.35	$	0.77	$	0.64
Weighted average shares  outstanding:
Basic		27,930		27,287		27,699		27,211
Diluted		28,211		27,718		28,014		27,696
Dividends declared per  common share	$	0.30	$	0.25	$	0.55	$	0.50

QUALITY SYSTEMS, INC.

CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS, EXCEPT PER SHARE DATA)

(UNAUDITED)

	September 30, 2008			March 31, 2008
ASSETS
Current assets:
Cash and cash equivalents	$	67,880		$	59,046
Restricted cash		2,002			—
Marketable securities		—			2,500
Accounts receivable, net		90,250			76,585
Inventories, net		1,080			1,024
Income tax receivable		5,526			—
Net current deferred tax assets		6,395			6,397
Other current assets		4,425			4,596
Total current assets		177,558			150,148
Marketable securities		12,702			20,124
Equipment and improvements, net		5,142			4,773
Capitalized software costs, net		9,559			8,852
Intangibles, net		5,267			—
Goodwill		12,659			1,840
Other assets		2,220			2,171
Total assets	$	225,107		$	187,908
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	4,095		$	4,685
Deferred revenue		45,844			44,389
Accrued compensation and related benefits		8,771			8,346
Income taxes payable		—			1,541
Dividends payable		8,460			6,861
Other current liabilities		12,408			4,394
Total current liabilities		79,578			70,216
Deferred revenue, net of current		271			506
Net deferred tax liabilities		1,792			1,575
Deferred compensation		1,966			1,906
Total liabilities		83,607			74,203
Commitments and contingencies
Shareholders’ equity:
Common stock       $0.01 par value; authorized 50,000 shares; issued and outstanding 28,292       and 27,448 shares at September 30, 2008 and March 31, 2008,       respectively		283			274
Additional paid-in capital		97,976			75,556
Retained earnings		44,235			38,071
Accumulated other comprehensive loss, net of tax		(994	)		(196	)
Total shareholders’ equity		141,500			113,705
Total liabilities and shareholders’ equity	$	225,107		$	187,908