May 17, 2012

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
pholt@qsii.com
or
Susan J. Lewis
303-804-0494
slewis@qsii.com

Source: Quality Systems, Inc.

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