Quality Systems, Inc. Reports Fiscal 2013 First Quarter Results

IRVINE, Calif.--(BUSINESS WIRE)-- Quality Systems, Inc. (NASDAQ:QSII) announced today results for its fiscal 2013 first quarter ended June 30, 2012.

The Company reported record revenues of $118.3 million for the fiscal 2013 first quarter, an increase of 18 percent, compared with $100.4 million for the fiscal 2012 first quarter. Net income for the fiscal 2013 first quarter was $15.5 million, down 18 percent versus net income of $19.0 million for the same period a year ago. Fully diluted earnings per share for the fiscal 2013 first quarter was $0.26, a 19 percent decrease from $0.32 for the fiscal 2012 first quarter.

"Although we delivered record revenue for our fiscal 2013 first quarter driven by strong performance in our recurring revenue streams, our overall results were impacted by lower-than-expected revenue from large, higher margin software system sales. There are times when a limited number of these types of sales can influence performance in any given quarter," explained Steven T. Plochocki, president and chief executive officer.

"We remain confident about our future performance and prospects. However, due to evolving conditions affecting our industry and uncertainty in predicting future results, we are not affirming our previous guidance nor providing revised guidance at this time," Plochocki said.

Quality Systems will host a conference call to discuss its fiscal 2013 first quarter results on Thursday, July 26, 2012 at 10:00 AM ET (7:00 AM PT). All participants should dial 877-941-2927 at least ten minutes prior to the start of the call. International callers should dial 480-629-9725. 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 4553724. The replay will be available from approximately 12:00 PM ET on Thursday, July 26, 2012, through 11:59 PM ET on Thursday, August 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, 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, 2012, 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 June 30,
				2012					2011
Revenues:
Software, hardware and supplies			$	25,844				$	28,911
Implementation and training services				12,046					5,472
System sales				37,890					34,383
Maintenance				38,568					31,502
Electronic data interchange services				13,823					12,092
Revenue cycle management and related services				14,401					11,881
Other services				13,614					10,584
Maintenance, EDI, RCM and other services				80,406					66,059
Total revenues				118,296					100,442
Cost of revenue:
Software, hardware and supplies				5,771					4,614
Implementation and training services				9,145					4,075
Total cost of system sales				14,916					8,689
Maintenance				4,811					3,854
Electronic data interchange services				9,248					7,962
Revenue cycle management and related services				10,870					8,826
Other services				8,550					5,597
Total cost of maintenance, EDI, RCM and other services				33,479					26,239
Total cost of revenue				48,395					34,928
Gross profit				69,901					65,514
Operating expenses:
Selling, general and administrative				36,681					29,386
Research and development costs				8,576					6,827
Amortization of acquired intangible assets				1,137					482
Total operating expenses				46,394					36,695
Income from operations				23,507					28,819
Interest income				35					82
Other income (expense), net				(213	)				(38	)
Income before provision for income taxes				23,329					28,863
Provision for income taxes				7,832					9,880
Net income			$	15,497				$	18,983
Net income per share:
Basic			$	0.26				$	0.33
Diluted			$	0.26				$	0.32
Weighted average shares outstanding:
Basic				59,281					58,362
Diluted				59,388					58,800
Dividends declared per common share			$	0.175				$	0.175

QUALITY SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
			June 30,				March 31,
				2012				2012
ASSETS
Current assets:
Cash and cash equivalents			$	129,906			$	134,444
Restricted cash				4,768				1,962
Marketable securities				4,990				4,987
Accounts receivable, net				153,218				145,756
Inventories				4,228				3,715
Income taxes receivable				-				2,628
Deferred income tax assets, net				10,143				10,127
Other current assets				7,563				9,090
Total current assets				314,816				312,709
Equipment and improvements, net				20,578				17,841
Capitalized software costs, net				21,865				19,994
Intangibles, net				33,292				23,259
Goodwill				63,161				60,776
Other assets				6,351				5,773
Total assets			$	460,063			$	440,352
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable			$	12,527			$	4,532
Deferred revenue				70,653				83,108
Accrued compensation and related benefits				11,180				11,870
Income taxes payable				4,413				-
Dividends payable				10,382				10,354
Other current liabilities				27,325				19,568
Total current liabilities				136,480				129,432
Deferred revenue, net of current				1,089				1,293
Deferred income tax liabilities, net				5,357				5,351
Deferred compensation				2,926				3,497
Other noncurrent liabilities				7,654				5,602
Total liabilities				153,506				145,175
Commitments and contingencies
Shareholders' equity:
Common stock
$0.01 par value; authorized 100,000 shares; issued and outstanding 59,343 and 59,180 shares at June 30, 2012 and March 31, 2012, respectively				593				592
Additional paid-in capital				175,252				168,988
Retained earnings				130,712				125,597
Total shareholders' equity				306,557				295,177
Total liabilities and shareholders' equity			$	460,063			$	440,352

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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