Quality Systems, Inc. Reports Fiscal 2012 Fourth Quarter and Year-End Results

IRVINE, Calif.--(BUSINESS WIRE)-- Quality Systems, Inc. (NASDAQ:QSII) announced today results for its fiscal year and fourth quarter ended March 31, 2012.

The Company reported revenues of $429.8 million for the fiscal year ended March 31, 2012, an increase of 22 percent compared to $353.4 million for the fiscal year ended March 31, 2011. Net income for fiscal 2012 was $75.7 million, a 23 percent increase versus net income of $61.6 million for the year ago period. Fully diluted earnings per share for the fiscal year ended 2012 was $1.28, a 21 percent increase from $1.06 for fiscal 2011.

Revenues for the fiscal 2012 fourth quarter were $109.0 million, up 12 percent compared to $97.1 million in the year ago period. Net income for the fiscal 2012 fourth quarter was $15.1 million compared to $18.6 million in the same period a year ago. Fully diluted earnings per share was $0.25 in the fourth quarter of fiscal 2012 versus $0.32 for the fiscal 2011 fourth quarter.

"We are pleased with the results for fiscal 2012, which demonstrate strong growth in both revenues and profits compared with the previous fiscal year. Our performance for the fiscal 2012 fourth quarter was impacted by delays in the closing of several fourth quarter opportunities as well as recognition of revenue related to a large customer implementation program," said Steven T. Plochocki, chief executive officer. "Looking ahead, we remain confident about the growth opportunities, as evidenced by our recent guidance for the 2013 fiscal year. We have stated that we expect revenues to increase 20 - 24 percent and earnings per share to grow 20 - 25 percent."

Quality Systems will host a conference call to discuss its year-end and fiscal 2012 fourth quarter results on Thursday, May 17, 2012 at 10:00 AM ET (7:00 AM PT). All participants should dial 877-941-8609 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'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 4539176. The replay will be available from approximately 12:00 PM ET on Thursday, May 17, 2012, through 11:59 PM ET on Thursday, May 24, 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, net income and earnings per share). 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 BALANCE SHEETS
(IN THOUSANDS)
(UNAUDITED)
				March 31,					March 31,
				2012					2011
ASSETS
Current assets:
Cash and cash equivalents				$	134,444				$	116,617
Restricted cash					1,962					3,787
Marketable securities					4,987					1,120
Accounts receivable, net					145,756					139,772
Inventories					3,715					1,933
Income taxes receivable					2,628					-
Deferred income tax assets, net					10,127					10,397
Other current assets					9,090					8,768
Total current assets					312,709					282,394
Equipment and improvements, net					17,841					12,599
Capitalized software costs, net					19,994					15,150
Intangibles, net					23,259					16,890
Goodwill					60,776					46,721
Other assets					5,773					4,932
Total assets				$	440,352				$	378,686
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable				$	4,532				$	6,686
Deferred revenue					83,108					76,695
Accrued compensation and related benefits					11,870					10,247
Income taxes payable					-					3,530
Dividends payable					10,354					10,162
Other current liabilities					19,568					29,316
Total current liabilities					129,432					136,636
Deferred revenue, net of current					1,293					1,099
Deferred income tax liabilities, net					5,351					11,384
Deferred compensation					3,497					2,488
Other noncurrent liabilities					5,602					2,409
Total liabilities					145,175					154,016
Commitments and contingencies
Shareholders' equity:
Common stock
$0.01 par value; authorized 100,000 shares; issued and outstanding 59,180 and 58,068 shares at March 31, 2012 and March 31, 2011, respectively					592					580
Additional paid-in capital					168,988					132,969
Retained earnings					125,597					91,121
Total shareholders' equity					295,177					224,670
Total liabilities and shareholders' equity				$	440,352				$	378,686

QUALITY SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
				Three Months Ended March 31,										Year Ended March 31,
				2012					2011					2012						2011
Revenues:
Software, hardware and supplies				$	26,562				$	31,708				$	122,407					$	106,514
Implementation and training services					8,270					4,946					26,391						18,015
System sales					34,832					36,654					148,798						124,529
Maintenance					35,871					29,046					138,832						110,019
Electronic data interchange services					13,081					10,756					49,259						41,022
Revenue cycle management and related services					11,402					11,622					45,572						45,065
Other services					13,808					9,030					47,374						32,728
Maintenance, EDI, RCM and other services					74,162					60,454					281,037						228,834
Total revenues					108,994					97,108					429,835						353,363
Cost of revenue:
Software, hardware and supplies					4,976					3,204					18,399						19,779
Implementation and training services					6,179					4,868					21,298						15,010
Total cost of system sales					11,155					8,072					39,697						34,789
Maintenance					4,844					2,875					17,104						12,948
Electronic data interchange services					8,606					7,321					32,422						27,711
Revenue cycle management and related services					8,608					8,733					34,295						33,815
Other services					8,728					6,165					27,705						18,219
Total cost of maintenance, EDI, RCM and other services					30,786					25,094					111,526						92,693
Total cost of revenue					41,941					33,166					151,223						127,482
Gross profit					67,053					63,942					278,612						225,881
Operating expenses:
Selling, general and administrative					34,195					29,285					128,846						108,310
Research and development costs					8,907					5,751					31,369						21,797
Amortization of acquired intangible assets					653					445					2,198						1,682
Total operating expenses					43,755					35,481					162,413						131,789
Income from operations					23,298					28,461					116,199						94,092
Interest income					35					19					247						263
Other income (expense), net					261					2					(139	)					61
Income before provision for income taxes					23,594					28,482					116,307						94,416
Provision for income taxes					8,521					9,929					40,650						32,810
Net income				$	15,073				$	18,553				$	75,657					$	61,606
Net income per share:
Basic				$	0.26				$	0.32				$	1.29					$	1.06
Diluted				$	0.25				$	0.32				$	1.28					$	1.06
Weighted average shares outstanding:
Basic					59,048					58,010					58,729						57,894
Diluted					59,232					58,404					59,049						58,236
Dividends declared per common share				$	0.175				$	0.175				$	0.700					$	0.625

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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