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May 27, 2004
Quality Systems Reports Fourth-Quarter and Fiscal Year-End Results
IRVINE, Calif. - May 27, 2004 - Quality Systems Inc. (Nasdaq: QSII) today announced the results of operations for its fiscal 2004 fourth quarter and year ended March 31, 2004. The Company posted net revenue of $18.8 million for the fourth quarter, an increase of 25% over the $15.1 million generated during the comparable quarter of the prior year. The Company reported net income of $3,104,000, an increase of 76% over net income of $1,763,000 earned during the prior year's fourth quarter. Fully diluted earnings per share totaled $0.47 in the current quarter, an increase of 74% over the fully diluted $0.27 per share recorded in the same quarter last year.
Revenue for fiscal year ended March 31, 2004 was $70,934,000, an increase of 30% over fiscal 2003 revenue of $54,769,000. Net income for fiscal 2004 was $10,400,000, an increase of 48% over fiscal 2003's net income of $7,035,000. Fully diluted earnings per share increased to $1.60 in FY 2004 from $1.10 earned during FY 2003, an increase of 45%.
Quality Systems, Inc. will hold a conference call to discuss fourth-quarter and year-end financial results today, Thursday, May 27 at 1:00 p.m. EDT (10:00 a.m. PDT). To participate in the call, please dial 877-586-7724 five to ten minutes prior to the scheduled conference call time. 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 Thursday, May 27 at 1:00 p.m. PDT, through Thursday, June 3 at midnight EDT. To access the replay dial (800) 642-1687 and enter the conference ID number 7753338.
A transcript of the conference call will be made available on the QSII Web site (www.qsii.com).
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. 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: volume and timing of systems sales and installations; length of sales cycles and installation process; the possibility that the products will not achieve 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 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 Operations and Comprehensive Income
Three Months Ended Year Ended
March 31, March 31,
2004 2003 2004 2003
Net Revenues:
Sales of
computer
systems,
upgrades, and
supplies $10,166,000 $8,264,000 $39,525,000 $29,169,000
Maintenance and
other services 8,621,000 6,804,000 31,409,000 25,600,000
------------ ----------- ------------ ------------
18,787,000 15,068,000 70,934,000 54,769,000
Cost of Products
and Services 7,048,000 6,822,000 28,673,000 23,755,000
------------ ----------- ------------ ------------
Gross Profit 11,739,000 8,246,000 42,261,000 31,014,000
Selling, General,
and Administrative
Expenses 5,072,000 4,260,000 19,482,000 15,293,000
Research and
Development Costs 1,643,000 1,367,000 6,139,000 5,062,000
------------ ----------- ------------ ------------
Income from
Operations 5,024,000 2,619,000 16,640,000 10,659,000
Investment Income 102,000 98,000 386,000 434,000
------------ ----------- ------------ ------------
Income before
Provision for
Income Taxes 5,126,000 2,717,000 17,026,000 11,093,000
Provision for
Income Taxes 2,022,000 954,000 6,626,000 4,058,000
------------ ----------- ------------ ------------
Net Income $3,104,000 $1,763,000 $10,400,000 $7,035,000
============ =========== ============ ============
Income per Share -
Basic $0.49 $0.29 $1.67 $1.15
Income per Share -
Diluted $0.47 $0.27 $1.60 $1.10
Weighted average
number of shares
outstanding -
Basic 6,312,000 6,144,000 6,218,000 6,127,000
Weighted average
number of shares
outstanding -
Diluted 6,582,000 6,431,000 6,483,000 6,389,000
Quality Systems, Inc.
Consolidated Balance Sheets
(in thousands)
ASSETS
March 31, March 31,
2004 2003
Current Assets:
Cash and cash equivalents $51,395 $36,443
Accounts receivable, net 20,336 17,561
Inventories 725 667
Net current deferred tax assets 2,552 2,029
Other current assets 1,437 2,086
------------- -------------
Total current assets 76,445 58,786
Equipment and improvements, net 2,012 1,777
Capitalized software costs, net 3,608 2,511
Deferred long-term tax assets 1,497 1,819
Goodwill, net 1,840 1,840
Other assets 1,242 869
------------- -------------
Total assets $86,644 $67,602
============= =============
LIABILITIES AND SHAREHOLDER'S EQUITY
Current Liabilities:
Accounts payable $1,655 $2,477
Deferred service revenue 17,263 11,699
Accrued employee compensation and
benefits 2,985 2,259
Other current liabilities 3,736 3,634
------------- -------------
Total current liabilities 25,639 20,069
Commitments and Contingencies
Shareholders' Equity:
Common stock, $0.01 par value, 20,000
shares authorized, 6,325 and 6,152
shares issued and outstanding,
respectively 63 62
Additional paid-in capital 39,735 35,121
Retained earnings 22,750 12,350
Deferred compensation (1,543) --
------------- -------------
Total shareholders' equity 61,005 47,533
Total liabilities and
shareholders' equity $86,644 $67,602
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