Quality Systems, Inc. Reports Record Fiscal 2012 Third Quarter Results

IRVINE, Calif.--(BUSINESS WIRE)-- Quality Systems, Inc. (NASDAQ:QSII) announced today results for its fiscal 2012 third quarter ended December 31, 2011.

The Company reported record net revenues of $112.8 million for the fiscal 2012 third quarter, an increase of 23 percent when compared with $91.9 million for the fiscal 2011 third quarter. Net income for the fiscal 2012 third quarter reached a record $21.1 million, up 20 percent versus $17.5 million for the same period a year ago. Fully diluted earnings per share were $0.36 in the third quarter of fiscal 2012, versus $0.30 for the fiscal 2011 third quarter, up 20 percent.

"The record fiscal 2012 third quarter results can be attributed to the continued adoption of electronic health records by physicians, medical groups and hospitals. As the momentum continues and more practices transition to electronic-based solutions, Quality Systems is capturing additional market share. We now have entered the second year of the five-year stimulus period, which appears to be the most aggressive in terms of healthcare information technology adoption. Our quarterly results are indicative of the continued acceptance of our innovative solutions throughout the marketplace and across physician practices, small hospitals and dental groups," noted Steven T. Plochocki, Quality Systems' chief executive officer.

Quality Systems also announced that the Company's Board of Directors declared a quarterly cash dividend of Seventeen and One-Half Cents ($0.175) per share on the Company's outstanding shares of Common Stock, payable to shareholders of record as of Tuesday, March 20, 2012 with an anticipated distribution date of April 5, 2012. The $0.175 per share cash dividend is consistent with the Company's current policy to pay a regular quarterly dividend on the Company's outstanding shares of Common Stock, subject to Board review and approval.

Quality Systems will host a conference call to discuss its fiscal 2012 third quarter results on Thursday, January 26, 2012 at 10:00 AM ET (7:00 AM PT). All participants should dial 877-941-6010 at least ten minutes prior to the start of the call. International callers should dial 480-629-9772. To hear a live Web simulcast or to listen to the archived webcast following completion of the call, please visit the Company's 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 4507957. The replay will be available from approximately 12:00 PM ET on Thursday, January 26, 2012, through 11:59 PM ET on Thursday, February 2, 2012.

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, including but not limited to, 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). Risks and uncertainties exist that may cause the results to differ materially from those set forth in these forward-looking statements. Factors that could cause the anticipated results to differ from those described in the forward-looking statements are set forth in Part I, Item A of our most recent Annual Report on Form 10-K for the fiscal year ended March 31, 2011, including but not limited to: 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 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; changes of accounting estimates and assumptions used to prepare the prior periods' financial statements; and general economic conditions. A significant portion of the Company's quarterly sales of software product licenses and computer hardware is concluded in the last month of a 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,
				2011							2010						2011							2010
Revenues:
Software, hardware and supplies				$	35,074						$	29,675					$	95,845						$	74,806
Implementation and training services					6,555							4,262						18,121							13,069
System sales					41,629							33,937						113,966							87,875
Maintenance					36,245							27,908						102,961							80,973
Electronic data interchange services					12,101							10,360						36,178							30,266
Revenue cycle management and related services					11,147							11,496						34,170							33,443
Other services					11,643							8,170						33,566							23,698
Maintenance, EDI, RCM and other services					71,136							57,934						206,875							168,380
Total revenues					112,765							91,871						320,841							256,255
Cost of revenue:
Software, hardware and supplies					4,622							5,667						13,423							16,575
Implementation and training services					5,994							3,677						15,119							10,142
Total cost of system sales					10,616							9,344						28,542							26,717
Maintenance					4,412							3,381						12,260							10,073
Electronic data interchange services					7,890							6,908						23,816							20,390
Revenue cycle management and related services					8,405							8,715						25,687							25,082
Other services					7,011							3,981						18,977							12,054
Total cost of maintenance, EDI, RCM and other services					27,718							22,985						80,740							67,599
Total cost of revenue					38,334							32,329						109,282							94,316
Gross profit					74,431							59,542						211,559							161,939
Operating expenses:
Selling, general and administrative					33,096							27,958						94,651							79,025
Research and development costs					8,277							5,358						22,462							16,046
Amortization of acquired intangible assets					543							445						1,545							1,237
Total operating expenses					41,916							33,761						118,658							96,308
Income from operations					32,515							25,781						92,901							65,631
Interest income					55							55						212							244
Other income (expense), net					(218	)						-						(400	)						59
Income before provision for income taxes					32,352							25,836						92,713							65,934
Provision for income taxes					11,247							8,305						32,129							22,881
Net income				$	21,105						$	17,531					$	60,584						$	43,053
Net income per share:
Basic				$	0.36						$	0.30					$	1.03						$	0.74
Diluted				$	0.36						$	0.30					$	1.03						$	0.74
Weighted average shares outstanding:
Basic					58,847							57,956						58,623							57,872
Diluted					59,128							58,280						58,943							58,182
Dividends declared per common share				$	0.175						$	0.15					$	0.525						$	0.45

QUALITY SYSTEMS, INC. CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED)
				December 31,						March 31,
				2011						2011
ASSETS
Current assets:
Cash and cash equivalents				$	129,046					$	116,617
Restricted cash					2,166						3,787
Marketable securities					1,086						1,120
Accounts receivable, net					159,555						139,772
Inventories					3,194						1,933
Income taxes receivable					5,053						-
Deferred income tax assets, net					10,466						10,397
Other current assets					8,664						8,768
Total current assets					319,230						282,394
Equipment and improvements, net					16,234						12,599
Capitalized software costs, net					18,733						15,150
Intangibles, net					24,585						16,890
Goodwill					58,445						46,721
Other assets					4,629						4,932
Total assets				$	441,856					$	378,686
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable				$	8,083					$	6,686
Deferred revenue					90,617						76,695
Accrued compensation and related benefits					10,996						10,247
Income taxes payable					-						3,530
Dividends payable					10,305						10,162
Other current liabilities					18,209						29,316
Total current liabilities					138,210						136,636
Deferred revenue, net of current					1,127						1,099
Deferred income tax liabilities, net					11,384						11,384
Deferred compensation					3,125						2,488
Other noncurrent liabilities					5,536						2,409
Total liabilities					159,382						154,016
Commitments and contingencies
Shareholders' equity:
Common stock
$0.01 par value; authorized 100,000 shares; issued and outstanding 58,901 and 58,068 shares at December 31, 2011 and March 31, 2011, respectively					589						580
Additional paid-in capital					161,007						132,969
Retained earnings					120,878						91,121
Total shareholders' equity					282,474						224,670
Total liabilities and shareholders' equity				$	441,856					$	378,686

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

Source: Quality Systems, Inc.

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