October 27, 2011

Quality Systems, Inc. Reports Record Fiscal 2012 Second Quarter Results; Board-Approved 2:1 Stock Split Effective Today

IRVINE, Calif.--(BUSINESS WIRE)-- Quality Systems, Inc. (NASDAQ:QSII) announced today results for its fiscal 2012 second quarter ended September 30, 2011.

Results reflect the previously announced, Board-approved 2:1 stock split which became effective yesterday for shareholders of record as of October 6, 2011. Each shareholder of record at the close of business on October 6, 2011 received one additional share for every outstanding share held as of the record date. Today, the Company's shares will begin trading on the Nasdaq Stock Market at the new split-adjusted price. All share and per share data provided herein have been adjusted to reflect the impact of the stock split.

The Company reported record net revenues of $107.6 million for the fiscal 2012 second quarter, an increase of 32 percent versus $81.5 million for the fiscal 2011 second quarter. Net income for the fiscal 2012 second quarter reached a record $20.5 million, up 53 percent compared with $13.4 million for the same period a year ago. Fully diluted earnings per share were $0.35 in the second quarter of fiscal 2012, versus $0.23 for the fiscal 2011 second quarter, an increase of 52 percent.

"The extraordinary growth and our solid performance stem from sales resulting from decisions made, in part based on the stimulus plan. As the stimulus continues to gain momentum, and our pipeline fills, we are realizing the benefits of the positioning and preparation we did in advance. The quarterly results reflect the ongoing acceptance of our solutions and strength of our services in the marketplace," explained Steven T. Plochocki, Quality Systems' chief executive officer.

Quality Systems, Inc. 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 December 20, 2011 with an anticipated distribution date of January 5, 2012. The $0.175 per share cash dividend, which has been adjusted to reflect the 2:1 stock split that became effective yesterday, 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 further Board review and approval, and establishment of record and distribution dates by the Board prior to the declaration and payment of each such quarterly dividend.

Quality Systems will host a conference call to discuss its fiscal 2012 second quarter results on Thursday, October 27, 2011 at 10:00 AM ET (7:00 AM PT). All participants should dial 877-941-1468 at least ten minutes prior to the start of the call. International callers should dial 480-629-9869. 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 4478711. The replay will be available from approximately 12:00 PM ET on Thursday, October 27, 2011, through 11:59 PM ET on Thursday, November 3, 2011.

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. 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: 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; 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 the Company's 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

(IN THOUSANDS)

(UNAUDITED)

                     
Three Months Ended September 30, Six Months Ended September 30,
2011 2010 2011 2010
 
Revenues:
Software, hardware and supplies $ 31,860 $ 20,375 $ 60,771 $ 45,131
Implementation and training services   6,094     4,499   11,566     8,807
 
System sales 37,954 24,874 72,337 53,938
 
Maintenance 35,214 27,529 66,716 53,065
Electronic data interchange services 11,985 10,142 24,077 19,906
Revenue cycle management and related services 11,142 11,175 23,023 21,947
Other services   11,339     7,737   21,923     15,528
 
Maintenance, EDI, RCM and other services   69,680     56,583   135,739     110,446
 
Total revenues   107,634     81,457   208,076     164,384
 
Cost of revenue:
Software, hardware and supplies 4,187 4,696 8,801 10,908
Implementation and training services   5,050     3,475   9,125     6,465
 
Total cost of system sales 9,237 8,171 17,926 17,373
 
Maintenance 3,994 3,238 7,848 6,692
Electronic data interchange services 7,964 6,773 15,926 13,482
Revenue cycle management and related services 8,456 8,222 17,282 16,367
Other services   6,369     3,724   11,966     8,073
 
Total cost of maintenance, EDI, RCM and other services   26,783     21,957   53,022     44,614
 
Total cost of revenue   36,020     30,128   70,948     61,987
 
Gross profit 71,614 51,329 137,128 102,397
 
Operating expenses:
Selling, general and administrative 32,169 24,829 61,555 51,067
Research and development costs 7,358 5,232 14,185 10,688
Amortization of acquired intangible assets   520     445   1,002     792
 
Total operating expenses   40,047     30,506   76,742     62,547
 
Income from operations 31,567 20,823 60,386 39,850
 
Interest income 75 129 157 189
Other income (expense), net   (144 )   65   (182 )   59
 
Income before provision for income taxes 31,498 21,017 60,361 40,098
Provision for income taxes   11,002     7,587   20,882     14,576
 
Net income $ 20,496   $ 13,430 $ 39,479   $ 25,522
 
Net income per share:
Basic $ 0.35 $ 0.23 $ 0.67 $ 0.44
Diluted $ 0.35 $ 0.23 $ 0.67 $ 0.44
 
Weighted average shares outstanding:
Basic 58,664 57,870 58,511 57,830
Diluted 59,005 58,156 58,902 58,132
 
Dividends declared per common share $ 0.175 $ 0.15 $ 0.35 $ 0.30
 

QUALITY SYSTEMS, INC.

CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS, EXCEPT PER SHARE DATA)

(UNAUDITED)

         
September 30, March 31,
2011 2011
 
ASSETS
Current assets:
Cash and cash equivalents $ 125,775 $ 116,617
Restricted cash 2,848 3,787
Marketable securities 1,098 1,120
Accounts receivable, net 150,224 139,772
Inventories 2,791 1,933
Income taxes receivable 3,230 -
Deferred income tax assets, net 10,466 10,397
Other current assets   9,814   8,768
 
Total current assets 306,246 282,394
 
Equipment and improvements, net 14,853 12,599
Capitalized software costs, net 17,395 15,150
Intangibles, net 22,541 16,890
Goodwill 51,156 46,721
Other assets   4,535   4,932
 
Total assets $ 416,726 $ 378,686
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 6,369 $ 6,686
Deferred revenue 83,291 76,695
Accrued compensation and related benefits 9,793 10,247
Income taxes payable - 3,530
Dividends payable 10,290 10,162
Other current liabilities   18,178   29,316
 
Total current liabilities 127,921 136,636
 
Deferred revenue, net of current 1,272 1,099
Deferred income tax liabilities, net 11,384 11,384
Deferred compensation 2,756 2,488
Other noncurrent liabilities   4,334   2,409
 
Total liabilities 147,667 154,016
 
Commitments and contingencies
 
Shareholders' equity:
Common stock

$0.01 par value; authorized 100,000 shares; issued and
outstanding 58,818 and 58,068 shares at September 30,
2011 and March 31, 2011, respectively

588 580
Additional paid-in capital 158,394 132,969
Retained earnings   110,077   91,121
 
Total shareholders' equity   269,059   224,670
 
Total liabilities and shareholders' equity $ 416,726 $ 378,686

Quality Systems, Inc.
Paul Holt, CFO, 949-255-2600
pholt@qsii.com
or
Susan J. Lewis, 303-804-0494
slewis@qsii.com

Source: Quality Systems, Inc.

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