Quality Systems, Inc. Reports Record Fiscal 2011 Third Quarter Results; Increases Quarterly Dividend

Company Well Positioned as First Year of Stimulus Incentives Kick in

IRVINE, Calif.--(BUSINESS WIRE)-- Quality Systems, Inc. (NASDAQ:QSII) announced today the results of operations for its fiscal 2011 third quarter ended December 31, 2010.

The Company reported record net revenues of $91.9 million for the fiscal 2011 third quarter, an increase of 23 percent from the $75.0 million reported in the same period a year ago. The Company reported net income of $17.5 million, up 33 percent versus net income of $13.2 million for the comparable period last year. Fully diluted earnings per share were $0.60 in the fiscal 2011 third quarter; rising 33 percent when compared with $0.46 fully diluted earnings per share for the third quarter of fiscal 2010.

Quality Systems, Inc. also announced that the Company's Board of Directors increased the cash dividend by five cents ($0.05), or 17 percent, to Thirty-Five Cents ($0.35) per share on the Company's outstanding shares of Common Stock, payable to shareholders of record as of March 17, 2011, with an anticipated distribution date of April 5, 2011. The $0.35 per share cash dividend is pursuant to the Company's current policy to pay a regular quarterly dividend on the Company's outstanding shares of 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.

"We are very pleased with the Company's third quarter performance. Our entire organization has worked very hard preparing for the first year of incentives provided under The American Recovery and Reinvestment Act (ARRA). The team is ready to witness the fruits of their labor," noted Steven T. Plochocki, Quality Systems' chief executive officer.

"As we said for the past 22 months since the bill was first introduced, there were levels of uncertainty and speculation, but once certification was announced in October 2010 and the regulations for Stage 1 Meaningful Use were finalized, the path became very clear. We are in a very positive position to take advantage of the benefits stemming from the first year of the stimulus incentives. Additionally, the Board's declaration to increase our quarterly dividend is indicative of the Company's strength in the marketplace and optimism about the future. We remain very encouraged by the industry opportunity before us, and confident in the certified electronic health solutions we bring to the physician, dental and hospital marketplaces," Plochocki concluded.

Quality Systems, Inc. will host a conference call to discuss its fiscal 2011 third quarter results on Friday, January 28, 2011 at 10:00 AM ET (7:00 AM PT). All participants should dial 866-225-8754 at least ten minutes prior to the start of the call. International callers should dial 480-629-9692. To hear a live Web simulcast or to listen to the archived webcast following completion of the call, please visit the company 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 1-800-406-7325 or 303-590-3030 and enter reservation identification number 4403880. The replay will be available from approximately 12:00 PM ET on Friday, January 28, 2011, through 11:59 PM ET on Friday, February 4, 2011.

A transcript of the conference call will be made available on the Company's 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 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. 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; 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 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 the Company's 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.

QUALITY SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS)
(UNAUDITED)
					Three Months Ended December 31,										Nine Months Ended December 31,
						2010			2009							2010			2009
Revenues:
Software, hardware and supplies					$	29,675		$	24,346						$	74,806		$	64,978
Implementation and training services						4,262			3,313							13,069			10,150
System sales						33,937			27,659							87,875			75,128
Maintenance						27,908			22,139							80,973			65,254
Electronic data interchange services						10,360			8,897							30,266			25,855
Revenue cycle management and related services						11,496			9,602							33,443			27,482
Other services						8,170			6,665							23,698			19,579
Maintenance, EDI, RCM and other services						57,934			47,303							168,380			138,170
Total revenues						91,871			74,962							256,255			213,298
Cost of revenue:
Software, hardware and supplies						5,667			2,810							16,575			9,251
Implementation and training services						3,677			2,898							10,142			9,075
Total cost of system sales						9,344			5,708							26,717			18,326
Maintenance						3,381			3,392							10,073			9,672
Electronic data interchange services						6,908			6,525							20,390			18,579
Revenue cycle management and related services						8,715			7,124							25,082			20,502
Other services						3,981			5,560							12,054			15,430
Total cost of maintenance, EDI, RCM and other services						22,985			22,601							67,599			64,183
Total cost of revenue						32,329			28,309							94,316			82,509
Gross profit						59,542			46,653							161,939			130,789
Operating expenses:
Selling, general and administrative						27,958			21,574							79,025			61,728
Research and development costs						5,358			3,954							16,046			12,277
Amortization of acquired intangible assets						445			377							1,237			1,101
Total operating expenses						33,761			25,905							96,308			75,106
Income from operations						25,781			20,748							65,631			55,683
Interest income						55			43							244			180
Other income, net						-			136							59			194
Income before provision for income taxes						25,836			20,927							65,934			56,057
Provision for income taxes						8,305			7,775							22,881			20,739
Net income					$	17,531		$	13,152						$	43,053		$	35,318
Net income per share:
Basic					$	0.60		$	0.46						$	1.49		$	1.24
Diluted					$	0.60		$	0.46						$	1.48		$	1.23
Weighted-average shares outstanding:
Basic						28,978			28,667							28,936			28,586
Diluted						29,140			28,833							29,091			28,755
Dividends declared per common share					$	0.30		$	0.30						$	0.90		$	0.90

QUALITY SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
					December 31,							March 31,
					2010							2010
ASSETS
Current assets:
Cash and cash equivalents					$	118,221						$	84,611
Restricted cash						2,956							2,339
Marketable securities						-							7,158
Accounts receivable, net						123,196							107,458
Inventories						1,942							1,340
Income taxes receivable						-							2,953
Deferred income taxes, net						5,470							5,678
Other current assets						7,356							8,684
Total current assets						259,141							220,221
Equipment and improvements, net						10,940							8,432
Capitalized software costs, net						14,931							11,546
Intangibles, net						17,720							20,145
Goodwill						46,189							46,189
Other assets						4,576							3,647
Total assets					$	353,497						$	310,180
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable					$	5,525						$	3,342
Deferred revenue						71,897							64,109
Accrued compensation and related benefits						9,322							8,951
Income taxes payable						1,157							-
Dividends payable						8,693							8,664
Other current liabilities						20,955							16,220
Total current liabilities						117,549							101,286
Deferred revenue, net of current						870							474
Deferred income taxes, net						10,108							10,859
Deferred compensation						2,240							1,883
Other noncurrent liabilities						10,747							7,389
Total liabilities						141,514							121,891
Commitments and contingencies
Shareholders' equity:
Common stock
$0.01 par value; authorized 50,000 shares; issued and outstanding 28,976 and 28,879 shares at December 31, 2010 and March 31, 2010, respectively						290							289
Additional paid-in capital						128,964							122,271
Retained earnings						82,729							65,729
Total shareholders' equity						211,983							188,289
Total liabilities and shareholders' equity					$	353,497						$	310,180

Quality Systems, Inc.
Paul Holt, CFO, 949-255-2600
[email protected]
or
Susan J. Lewis, 303-804-0494
[email protected]

Source: Quality Systems, Inc.

News Provided by Acquire Media

Close window | Back to top