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 27, 2011
QUALITY SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
CALIFORNIA |
001-12537 |
95-2888568 | ||
(State or other jurisdiction of incorporation) |
(Commission File Number) | (IRS Employer Identification Number) |
18111 Von Karman, Suite 700
Irvine, California 92612
(Address of Principal Executive Offices)
(949) 255-2600
(Registrants 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):
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | 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 Item 2.02 of this Form 8-K, as well as Exhibit 99.1 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 27, 2011, Quality Systems, Inc. (the Company) issued a press release announcing its financial performance for the period ended September 30, 2011. A copy of the press release is attached to this Form 8-K as Exhibit 99.1, which is incorporated herein by this reference.
On October 27, 2011, the Company held a conference call concerning its financial performance for the period ended September 30, 2011. The Company expects to file a copy of the transcript of the conference call as soon as available by amendment to this Form 8-K. The conference call contains forward-looking statements regarding the Company and includes cautionary statements identifying important factors that could cause actual results to differ materially from those anticipated.
Use of Non-GAAP Financial Measures
The Company from time to time discloses its Days Sales Outstanding (DSO), which is a non-GAAP financial measure. For the quarter ended September 30, 2011, DSO was 127 days. The Company calculates DSO as follows: Net revenue for the quarter is annualized (multiplied by four) and then divided by 365 days to yield an average daily sales amount. The balance of accounts receivable, net of any reserves for bad debts, is then divided by that average daily sales amount resulting in the DSO. For the quarter ended September 30, 2011, the calculation was as follows:
Quarterly Revenue |
$ | 107,634,000 | ||||||
Times four(4) |
x | 4 | ||||||
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Equals Annualized Revenue |
430,536,000 | |||||||
Divided by 365 days |
÷ | 365 | ||||||
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Equals Daily Revenue |
= | $ | 1,179,551 | |||||
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Net Accounts Receivable |
$ | 150,224,000 | ||||||
Divided by Average Daily Revenue |
÷ | 1,179,551 | ||||||
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Equals Days Sales Outstanding |
= | 127 | ||||||
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Item 8.01 | Other Events. |
Quarterly Dividend
On October 26, 2011, the Companys Board of Directors declared a quarterly cash dividend of $0.175 per share on the Companys outstanding shares of common stock, payable to shareholders of record as of December 20, 2011 with an anticipated distribution date on or about January 5, 2011. The $0.175 dividend reflects the 2:1 stock split which became effective on October 26, 2011, and is pursuant to the Companys current policy to pay a regular dividend on the Companys 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 Companys press release announcing the dividend and earnings results is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
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Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits.
Exhibit No. |
Description | |
99.1 | Press Release dated October 27, 2011 |
-3-
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: October 27, 2011
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 No. |
Description | |
99.1 | Press Release dated October 27, 2011 |
-5-
Exhibit 99.1
For Further Information, Contact: | ||
Quality Systems, Inc. | Susan J. Lewis | |
18111 Von Karman Avenue, Suite 700 |
Phone: (303) 804-0494 | |
Irvine, CA 92612 |
slewis@qsii.com | |
Phone: (949) 255-2600 |
||
Paul Holt, CFO, pholt@qsii.com |
FOR IMMEDIATE RELEASE
OCTOBER 27, 2011
QUALITY SYSTEMS, INC. REPORTS RECORD FISCAL 2012 SECOND QUARTER
RESULTS; BOARD-APPROVED 2:1 STOCK SPLIT EFFECTIVE TODAY
IRVINE, Calif. October 27, 2011 Quality Systems, Inc. (NASDAQ:QSII) announced today results for its fiscal 2012 second quarter ended September 30, 2011.
Results reflect the previously announced, Board-approved 2:1 stock split which became effective yesterday for shareholders of record as of October 6, 2011. Each shareholder of record at the close of business on October 6, 2011 received one additional share for every outstanding share held as of the record date. Today, the Companys shares will begin trading on the Nasdaq Stock Market at the new split-adjusted price. All share and per share data provided herein have been adjusted to reflect the impact of the stock split.
The Company reported record net revenues of $107.6 million for the fiscal 2012 second quarter, an increase of 32 percent versus $81.5 million for the fiscal 2011 second quarter. Net income for the fiscal 2012 second quarter reached a record $20.5 million, up 53 percent compared with $13.4 million for the same period a year ago. Fully diluted earnings per share were $0.35 in the second quarter of fiscal 2012, versus $0.23 for the fiscal 2011 second quarter, an increase of 52 percent.
The extraordinary growth and our solid performance stem from sales resulting from decisions made, in part based on the stimulus plan. As the stimulus continues to gain momentum, and our pipeline fills, we are realizing the benefits of the positioning and preparation we did in advance. The quarterly results reflect the ongoing acceptance of our solutions and strength of our services in the marketplace, explained Steven T. Plochocki, Quality Systems chief executive officer.
Quality Systems, Inc. also announced that the Companys Board of Directors declared a quarterly cash dividend of Seventeen and One-Half Cents ($0.175) per share on the Companys outstanding shares of Common Stock, payable to shareholders of record as of December 20, 2011 with an anticipated distribution date of January 5, 2012. The $0.175 per share cash dividend, which has been adjusted to reflect the 2:1 stock split that became effective yesterday, is consistent with the Companys current policy to pay a regular quarterly dividend on the Companys outstanding shares of
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Quality Systems, Inc.
Fiscal 2012 Second Quarter Results
Page 2
Common Stock, subject to further Board review and approval, and establishment of record and distribution dates by the Board prior to the declaration and payment of each such quarterly dividend.
Quality Systems will host a conference call to discuss its fiscal 2012 second quarter results on Thursday, October 27, 2011 at 10:00 AM ET (7:00 AM PT). All participants should dial 877-941-1468 at least ten minutes prior to the start of the call. International callers should dial 480-629-9869. To hear a live Web simulcast or to listen to the archived webcast following completion of the call, please visit the Companys website at www.qsii.com, click on the Investors tab, then select Conference Calls, to access the link to the call. To listen to a telephone replay of the conference call, please dial 800-406-7325 or 303-590-3030 and enter reservation identification number 4478711. The replay will be available from approximately 12:00 PM ET on Thursday, October 27, 2011, through 11:59 PM ET on Thursday, November 3, 2011.
A transcript of the conference call will be made available on the Companys website at www.qsii.com.
About Quality Systems, Inc.
Irvine, Calif.-based Quality Systems, Inc. and its NextGen Healthcare subsidiary develop and market computer-based practice management, electronic health records and revenue cycle management applications as well as connectivity products and services for medical and dental group practices and small hospitals. Visit www.qsii.com and www.nextgen.com for additional information.
SAFE HARBOR PROVISIONS FOR FORWARD-LOOKING STATEMENTS
This news release may contain forward-looking statements within the meaning of the federal securities laws. Statements regarding future events, developments, the Companys future performance, as well as managements 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. Management believes that these forward looking statements are reasonable and are based on reasonable assumptions and forecasts, however, undue reliance should not be placed on such statements that speak only as of the date hereof. 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; impact of incentive payments under The American Recovery and Reinvestment Act on sales and the ability of the Company to meet continued certification requirements; the development by competitors of new or superior technologies; the timing, cost and success or failure of new product and service introductions, development and product upgrade releases; undetected errors or bugs in software; product liability; 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 Companys ability or inability to attract and retain qualified personnel; possible regulation of the Companys software by the U.S. Food and Drug Administration;
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Quality Systems, Inc.
Fiscal 2012 Second Quarter Results
Page 3
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 the Companys periodic reports and registration statements filed with the Securities and Exchange Commission. A significant portion of the Companys 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 Companys revenues and operating results are very difficult to forecast. A major portion of the Companys 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 Companys 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 TABLES ATTACHED
QUALITY SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS)
(UNAUDITED)
Three Months Ended September 30, |
Six Months Ended September 30, |
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2011 | 2010 | 2011 | 2010 | |||||||||||||
Revenues: |
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Software, hardware and supplies |
$ | 31,860 | $ | 20,375 | $ | 60,771 | $ | 45,131 | ||||||||
Implementation and training services |
6,094 | 4,499 | 11,566 | 8,807 | ||||||||||||
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System sales |
37,954 | 24,874 | 72,337 | 53,938 | ||||||||||||
Maintenance |
35,214 | 27,529 | 66,716 | 53,065 | ||||||||||||
Electronic data interchange services |
11,985 | 10,142 | 24,077 | 19,906 | ||||||||||||
Revenue cycle management and related services |
11,142 | 11,175 | 23,023 | 21,947 | ||||||||||||
Other services |
11,339 | 7,737 | 21,923 | 15,528 | ||||||||||||
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Maintenance, EDI, RCM and other services |
69,680 | 56,583 | 135,739 | 110,446 | ||||||||||||
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Total revenues |
107,634 | 81,457 | 208,076 | 164,384 | ||||||||||||
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Cost of revenue: |
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Software, hardware and supplies |
4,187 | 4,696 | 8,801 | 10,908 | ||||||||||||
Implementation and training services |
5,050 | 3,475 | 9,125 | 6,465 | ||||||||||||
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Total cost of system sales |
9,237 | 8,171 | 17,926 | 17,373 | ||||||||||||
Maintenance |
3,994 | 3,238 | 7,848 | 6,692 | ||||||||||||
Electronic data interchange services |
7,964 | 6,773 | 15,926 | 13,482 | ||||||||||||
Revenue cycle management and related services |
8,456 | 8,222 | 17,282 | 16,367 | ||||||||||||
Other services |
6,369 | 3,724 | 11,966 | 8,073 | ||||||||||||
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Total cost of maintenance, EDI, RCM and other services |
26,783 | 21,957 | 53,022 | 44,614 | ||||||||||||
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Total cost of revenue |
36,020 | 30,128 | 70,948 | 61,987 | ||||||||||||
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Gross profit |
71,614 | 51,329 | 137,128 | 102,397 | ||||||||||||
Operating expenses: |
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Selling, general and administrative |
32,169 | 24,829 | 61,555 | 51,067 | ||||||||||||
Research and development costs |
7,358 | 5,232 | 14,185 | 10,688 | ||||||||||||
Amortization of acquired intangible assets |
520 | 445 | 1,002 | 792 | ||||||||||||
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Total operating expenses |
40,047 | 30,506 | 76,742 | 62,547 | ||||||||||||
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Income from operations |
31,567 | 20,823 | 60,386 | 39,850 | ||||||||||||
Interest income |
75 | 129 | 157 | 189 | ||||||||||||
Other income (expense), net |
(144 | ) | 65 | (182 | ) | 59 | ||||||||||
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Income before provision for income taxes |
31,498 | 21,017 | 60,361 | 40,098 | ||||||||||||
Provision for income taxes |
11,002 | 7,587 | 20,882 | 14,576 | ||||||||||||
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Net income |
$ | 20,496 | $ | 13,430 | $ | 39,479 | $ | 25,522 | ||||||||
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Net income per share: |
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Basic |
$ | 0.35 | $ | 0.23 | $ | 0.67 | $ | 0.44 | ||||||||
Diluted |
$ | 0.35 | $ | 0.23 | $ | 0.67 | $ | 0.44 | ||||||||
Weighted average shares outstanding: |
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Basic |
58,664 | 57,870 | 58,511 | 57,830 | ||||||||||||
Diluted |
59,005 | 58,156 | 58,902 | 58,132 | ||||||||||||
Dividends declared per common share |
$ | 0.175 | $ | 0.15 | $ | 0.35 | $ | 0.30 |
QUALITY SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
September 30, 2011 |
March 31, 2011 |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
$ | 125,775 | $ | 116,617 | ||||
Restricted cash |
2,848 | 3,787 | ||||||
Marketable securities |
1,098 | 1,120 | ||||||
Accounts receivable, net |
150,224 | 139,772 | ||||||
Inventories |
2,791 | 1,933 | ||||||
Income taxes receivable |
3,230 | | ||||||
Deferred income tax assets, net |
10,466 | 10,397 | ||||||
Other current assets |
9,814 | 8,768 | ||||||
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Total current assets |
306,246 | 282,394 | ||||||
Equipment and improvements, net |
14,853 | 12,599 | ||||||
Capitalized software costs, net |
17,395 | 15,150 | ||||||
Intangibles, net |
22,541 | 16,890 | ||||||
Goodwill |
51,156 | 46,721 | ||||||
Other assets |
4,535 | 4,932 | ||||||
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Total assets |
$ | 416,726 | $ | 378,686 | ||||
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LIABILITIES AND SHAREHOLDERS EQUITY |
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Current liabilities: |
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Accounts payable |
$ | 6,369 | $ | 6,686 | ||||
Deferred revenue |
83,291 | 76,695 | ||||||
Accrued compensation and related benefits |
9,793 | 10,247 | ||||||
Income taxes payable |
| 3,530 | ||||||
Dividends payable |
10,290 | 10,162 | ||||||
Other current liabilities |
18,178 | 29,316 | ||||||
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Total current liabilities |
127,921 | 136,636 | ||||||
Deferred revenue, net of current |
1,272 | 1,099 | ||||||
Deferred income tax liabilities, net |
11,384 | 11,384 | ||||||
Deferred compensation |
2,756 | 2,488 | ||||||
Other noncurrent liabilities |
4,334 | 2,409 | ||||||
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Total liabilities |
147,667 | 154,016 | ||||||
Commitments and contingencies |
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Shareholders equity: |
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Common stock |
||||||||
$0.01 par value; authorized 100,000 shares; issued and outstanding 58,818 and 58,068 shares at September 30, 2011 and March 31, 2011, respectively |
588 | 580 | ||||||
Additional paid-in capital |
158,394 | 132,969 | ||||||
Retained earnings |
110,077 | 91,121 | ||||||
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Total shareholders equity |
269,059 | 224,670 | ||||||
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Total liabilities and shareholders equity |
$ | 416,726 | $ | 378,686 | ||||
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