Quality Systems, Inc. Reports Fiscal 2013 Third Quarter Results

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Quality Systems, Inc. Reports Fiscal 2013 Third Quarter Results

IRVINE, Calif.--(BUSINESS WIRE)-- Quality Systems, Inc. (NAS: QSII) announced today results for its fiscal 2013 third quarter ended December 31, 2012.


The Company reported revenues of $114.5 million for the fiscal 2013 third quarter, an increase of two percent, when compared with $112.8 million for the fiscal 2012 third quarter. Net income for the fiscal 2013 third quarter was $15.6 million, versus net income of $21.1 million for the same period last year, a decrease of 26 percent. Fully diluted earnings per share for the fiscal 2013 third quarter were $0.26, a 28 percent decrease from $0.36 for the fiscal 2012 third quarter. Although revenues were slightly up in the quarter, profitability continued to be affected by lower software license sales.

"We continue to execute on the restructuring plan we laid out in October 2012, which included the centralization of our sales and marketing efforts as well as the business development and technology functions of the organization. In addition, we have been strengthening our operational structure under the direction of our recently appointed chief operating officer, Dan Morefield," explained Steven T. Plochocki, president and chief executive officer.

"All these initiatives are starting to gain traction, and we are confident in the anticipated benefits of these organizational changes. Albeit early, we are beginning to see some impact from our reorganization as we continue to maximize and leverage our multi-product offering within the healthcare information technology marketplace," Plochocki concluded.

In other news, Quality Systems has set a new date for its Investment Community Analyst Day, originally scheduled to be held in November 2012 but postponed due to Hurricane Sandy. The meeting has been rescheduled for Monday, May 6, 2013 at the Le Parker Meridien Hotel in New York City. More details to follow.

Quality Systems also announced that its 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 March 15, 2013 with an anticipated distribution date of April 5, 2013. The $0.175 per share cash dividend is pursuant to 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 2013 third quarter results on Thursday, January 24, 2013 at 10:00 AM ET (7:00 AM PT). All participants should dial 1-866-225-8754 at least ten minutes prior to the start of the call. International callers should dial 1-480-629-9818. 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 4591712. The replay will be available from approximately 12:00 PM ET on Thursday, January 24, 2013, through 11:59 PM ET on Thursday, January 31, 2013.

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, EXCEPT PER SHARE DATA)


(UNAUDITED)

             
 
Three Months Ended December 31,Nine Months Ended December 31,
 2012  2011  2012  2011 
 
Revenues:
Software, hardware and supplies$21,899$35,074$71,463$95,845
Implementation and training services 7,266  6,555  27,847  18,121 
 
System sales29,16541,62999,310113,966
 
Maintenance39,46336,245116,746102,961
Electronic data interchange services15,20912,10144,05636,178
Revenue cycle management and related services15,01511,14743,90234,170
Other services 15,658  11,643  44,920  33,566 
 
Maintenance, EDI, RCM and other services 85,345  71,136  249,624  206,875 
 
Total revenues 114,510  112,765  348,934  320,841 
 
Cost of revenue:
Software, hardware and supplies4,6604,62216,05513,423
Implementation and training services 7,221  5,994  23,873  15,119 
 
Total cost of system sales11,88110,61639,92828,542
 
Maintenance5,2594,41214,81112,260
Electronic data interchange services9,8527,89028,25123,816
Revenue cycle management and related services10,9188,40532,34425,687
Other services 8,686  7,011  26,021  18,977 
 
Total cost of maintenance, EDI, RCM and other services 34,715  27,718  101,427  80,740 
 
Total cost of revenue 46,596  38,334  141,355  109,282 
 
Gross profit67,91474,431207,579211,559
 
Operating expenses:
Selling, general and administrative35,53233,096110,04594,651
Research and development costs7,7868,27722,63422,462
Amortization of acquired intangible assets 1,212  543  3,665  1,545 
 
Total operating expenses 44,530  41,916  136,344  118,658 
 
Income from operations23,38432,51571,23592,901
 
Interest income (expense), net1355(14)212
Other expense, net (122) (218) (115) (400)
 
Income before provision for income taxes23,27532,35271,10692,713
Provision for income taxes 7,649  11,247  24,292  32,129 
 
Net income$15,626 $21,105 $46,814 $60,584 
 
Net income per share:
Basic$0.26$0.36$0.79$1.03
Diluted$0.26$0.36$0.79$1.03
 
Weighted average shares outstanding:
Basic59,40058,84759,34358,623
Diluted59,40559,12859,41158,943
 
Dividends declared per common share$0.175$0.175$0.525$0.525
 

QUALITY SYSTEMS, INC.

CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS)


(UNAUDITED)

        
December 31,March 31,
 2012  2012 
 
ASSETS
Current assets:
Cash and cash equivalents$101,702$134,444
Restricted cash5,1551,962
Marketable securities4,9874,987
Accounts receivable, net151,495145,756
Inventories3,9123,715
Income taxes receivable1,8642,628
Deferred income tax assets, net10,127
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