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February
2, 2004
Quality Systems Reports Third Quarter Results
IRVINE, Calif.--(BUSINESS WIRE)-- February 2, 2004 --Quality Systems, Inc. (NASDAQ:QSII - news) today announced the results of operations for its fiscal 2004 third quarter ended December 31, 2003.
The Company posted net revenues of $18.2 million in the third quarter, an increase of 26% from $14.4 million for the same quarter last year. The Company reported net income of $2,609,000, an increase of 35% over net income of $1,935,000 for the comparable quarter of the prior year. Fully diluted earnings per share totaled $0.40 in the quarter, an increase of 33% over the fully diluted $0.30 per share earnings recorded in the same quarter of last year.
The revenue and net income results achieved in the quarter were records for the company. The quarter�s revenue increase was driven by record revenue in the company�s NextGen Healthcare Information Systems division, which posted revenue of $14.0 million, up 40% over the same quarter of the prior year. Both the QSI division and the NextGen Healthcare Information Systems division contributed significantly to the Company�s record operating income which increased 49% over the prior year quarter to $4.1 million.
Quality Systems, Inc. will hold a conference call to discuss third-quarter financial results today, Monday, February 2, 2004 at 1:00 p.m. EST (10:00 a.m. PST). To participate in the conference call, please dial the following number five to ten minutes prior to the scheduled conference call time: (877) 586-7724. There is no pass code required for this call.
If you are unable to participate in the call at this time, a replay will be available on Monday, February 2 at 1:00 p.m. PST, through Monday, February 9 at midnight EST. To access the replay dial (800) 642-1687 and enter the conference ID number 5112055.
A transcript of the conference call will be made available on the QSII Web site (www.qsii.com).
About Quality Systems
Quality Systems, Inc. and its NextGen Healthcare Information Systems subsidiary develop and market computer-based practice management, medical records, and connectivity applications for medical and dental group practices. Visit www.qsii.com and www.nextgen.com for additional information.
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. 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 timing, cost and success or failure of new product and service introductions, development and product upgrade releases; undetected errors or bugs in software; 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 Quality Systems' 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
(unaudited)
Three Months Ended Nine Months Ended
December 31, December 31,
2003 2002 2003 2002
------------ ----------- ----------- -----------
Net Revenues:
Sales of computer
systems, Upgrades
and supplies 9,859,000 7,666,000 29,359,000 20,905,000
Maintenance and
other services 8,340,000 6,734,000 22,788,000 18,796,000
------------ ----------- ----------- -----------
18,199,000 14,400,000 52,147,000 39,701,000
Cost of Products and
Services 7,523,000 6,353,000 21,625,000 16,933,000
------------ ----------- ----------- -----------
Gross Profit 10,676,000 8,047,000 30,522,000 22,768,000
Selling, General and
Administrative
Expenses 4,902,000 3,918,000 14,410,000 11,033,000
Research and
Development Costs 1,628,000 1,347,000 4,496,000 3,695,000
------------ ----------- ----------- -----------
Income from
Operations 4,146,000 2,782,000 11,616,000 8,040,000
Investment Income 95,000 109,000 284,000 336,000
------------ ----------- ----------- -----------
Income before
Provision for Income
Taxes 4,241,000 2,891,000 11,900,000 8,376,000
Provision for Income
Taxes 1,630,000 956,000 4,604,000 3,104,000
------------ ----------- ----------- -----------
Net Income $2,611,000 $1,935,000 $7,296,000 $5,272,000
============ =========== =========== ===========
Income per Share -
Basic $0.42 $0.32 $1.18 $0.86
============ =========== =========== ===========
Income per Share -
Diluted $0.40 $0.30 $1.13 $0.83
============ =========== =========== ===========
Weighted average
number of shares
outstanding - Basic 6,237,000 6,134,000 6,162,000 6,121,000
============ =========== =========== ===========
Weighted average
number of shares
outstanding -
Diluted 6,549,000 6,403,000 6,476,000 6,363,000
============ =========== =========== ===========
Quality Systems, Inc.
Consolidated Balance Sheets
(in thousands)
ASSETS
December March
31, 31,
2003 2003
----------- --------
Current Assets: (unaudited)
Cash and cash equivalents $45,348 $36,443
Accounts receivable, net 21,545 17,561
Inventories 837 667
Deferred tax assets 2,029 2,029
Other current assets 1,408 2,086
----------- --------
Total current assets 71,167 58,786
Equipment and Improvements, net 1,919 1,777
Capitalized Software Costs, net 3,323 2,511
Deferred Tax Asset 1,819 1,819
Excess of Cost Over Net Assets
of Acquired Business, net 1,840 1,840
Other Assets 1,049 869
----------- --------
Total assets $81,117 $67,602
=========== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $2,066 $2,477
Deferred revenue 16,299 11,699
Other current liabilities 6,747 5,893
----------- --------
Total liabilities 25,112 20,069
Commitments and Contingencies
Shareholders' Equity:
Common stock, $0.01 par value, 20,000 shares
authorized, 6,276 and 6,152 shares issued
and outstanding, respectively 63 62
Additional paid-in capital 37,946 35,121
Retained Earnings 19,646 12,350
Deferred Compensation (1,650) -
--------------------
Total shareholders' equity 56,005 47,533
Total liabilities and
Shareholders' equity $81,117 $67,602
=========== ========
Contact:
Quality Systems Inc., Irvine
Lou Silverman, 949/255-2600
www.qsii.com
or
Coffin Communications Group, Sherman Oaks, Calif.
William F. Coffin/Sean Collins, 818/789-0100
www.coffincg.com.
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