Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
Jun. 30, 2014 | Jul. 24, 2014 | |
Document and Entity Information [Abstract] | ' | ' |
Entity Registrant Name | 'QUALITY SYSTEMS, INC | ' |
Entity Central Index Key | '0000708818 | ' |
Document Type | '10-Q | ' |
Document Period End Date | 30-Jun-14 | ' |
Amendment Flag | 'false | ' |
Document Fiscal Year Focus | '2015 | ' |
Document Fiscal Period Focus | 'Q1 | ' |
Current Fiscal Year End Date | '--03-31 | ' |
Entity Filer Category | 'Large Accelerated Filer | ' |
Entity Common Stock, Shares Outstanding | ' | 60,221,910 |
Consolidated_Balance_Sheets_Un
Consolidated Balance Sheets (Unaudited) (USD $) | Jun. 30, 2014 | Mar. 31, 2014 |
In Thousands, unless otherwise specified | ||
Current assets: | ' | ' |
Cash and cash equivalents | $107,748 | $103,145 |
Restricted cash | 2,605 | 4,351 |
Marketable securities | 8,687 | 10,656 |
Accounts receivable, net | 111,842 | 110,181 |
Inventories | 755 | 834 |
Income taxes receivable | 5,999 | 8,366 |
Deferred income taxes, net | 11,757 | 11,690 |
Other current assets | 9,769 | 11,135 |
Total current assets | 259,162 | 260,358 |
Equipment and improvements, net | 22,915 | 22,801 |
Capitalized software costs, net | 38,452 | 39,152 |
Intangibles, net | 31,175 | 33,016 |
Goodwill | 72,804 | 72,804 |
Other assets | 17,273 | 16,927 |
Total assets | 441,781 | 445,058 |
Current liabilities: | ' | ' |
Accounts payable | 8,850 | 7,888 |
Deferred revenue | 70,692 | 71,077 |
Accrued compensation and related benefits | 13,894 | 15,953 |
Dividends payable | 10,690 | 10,686 |
Other current liabilities | 20,616 | 18,282 |
Total current liabilities | 124,742 | 123,886 |
Deferred revenue, net of current | 2,001 | 2,187 |
Deferred compensation | 5,182 | 4,809 |
Other noncurrent liabilities | 19,316 | 19,086 |
Total liabilities | 151,241 | 149,968 |
Commitments and contingencies (Note 11) | ' | ' |
Shareholders' equity: | ' | ' |
Common stock $0.01 par value; authorized 100,000 shares; issued and outstanding 60,222 and 60,206 shares at June 30, 2014 and March 31, 2014, respectively | 602 | 602 |
Additional paid-in capital | 195,733 | 194,739 |
Accumulated other comprehensive loss | -198 | -182 |
Retained earnings | 94,403 | 99,931 |
Total shareholders' equity | 290,540 | 295,090 |
Total liabilities and shareholders' equity | $441,781 | $445,058 |
Consolidated_Balance_Sheets_Un1
Consolidated Balance Sheets (Unaudited) (Parenthetical) (USD $) | Jun. 30, 2014 | Mar. 31, 2014 |
In Thousands, except Per Share data, unless otherwise specified | ||
Statement of Financial Position [Abstract] | ' | ' |
Common stock, par value (in usd per share) | $0.01 | $0.01 |
Common stock, shares authorized | 100,000 | 100,000 |
Common stock, shares issued | 60,222 | 60,206 |
Common stock, shares outstanding | 60,222 | 60,206 |
Consolidated_Statements_of_Inc
Consolidated Statements of Income (Loss) (Unaudited) (USD $) | 3 Months Ended | |
In Thousands, except Per Share data, unless otherwise specified | Jun. 30, 2014 | Jun. 30, 2013 |
Revenues: | ' | ' |
Software and hardware | $14,743 | $15,972 |
Implementation and training services | 6,266 | 6,575 |
System sales | 21,009 | 22,547 |
Maintenance | 40,805 | 38,608 |
Electronic data interchange services | 18,319 | 16,692 |
Revenue cycle management and related services | 16,693 | 16,015 |
Other services | 21,068 | 15,667 |
Maintenance, EDI, RCM and other services | 96,885 | 86,982 |
Total revenues | 117,894 | 109,529 |
Cost of revenue: | ' | ' |
Software and hardware | 6,641 | 4,934 |
Implementation and training services | 7,151 | 7,134 |
Total cost of system sales | 13,792 | 12,068 |
Maintenance | 6,914 | 5,302 |
Electronic data interchange services | 11,999 | 10,796 |
Revenue cycle management and related services | 12,706 | 11,401 |
Other services | 10,779 | 8,505 |
Total cost of maintenance, EDI, RCM and other services | 42,398 | 36,004 |
Total cost of revenue | 56,190 | 48,072 |
Gross profit | 61,704 | 61,457 |
Operating expenses: | ' | ' |
Selling, general and administrative | 36,730 | 35,096 |
Research and development costs | 16,236 | 5,614 |
Amortization of acquired intangible assets | 983 | 1,194 |
Total operating expenses | 53,949 | 41,904 |
Income from operations | 7,755 | 19,553 |
Interest income, net | 54 | 31 |
Other income (expense), net | -9 | 254 |
Income before income taxes | 7,818 | 19,330 |
Provision for income taxes | 2,655 | 6,385 |
Net income | 5,163 | 12,945 |
Foreign currency translation (net of $0 tax) | -8 | -173 |
Unrealized loss on AFS securities (net of $0 tax) | -8 | 0 |
Comprehensive income | $5,147 | $12,772 |
Net income per share: | ' | ' |
Basic (in usd per share) | $0.09 | $0.22 |
Diluted (in usd per share) | $0.08 | $0.22 |
Weighted-average shares outstanding: | ' | ' |
Basic (in usd per share) | 60,230 | 59,559 |
Diluted (in usd per share) | 60,770 | 59,572 |
Dividends declared per common share | $0.18 | $0.18 |
Consolidated_Statements_of_Inc1
Consolidated Statements of Income (Loss) (Unaudited) (Parenthetical) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Jun. 30, 2014 | Jun. 30, 2013 |
Income Statement [Abstract] | ' | ' |
Other comprehensive loss, foreign currency translation, tax | $0 | $0 |
Other Comprehensive Income (Loss), Unrealized Holding Gain (Loss) on Securities Arising During Period, Tax | $0 | $0 |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows (Unaudited) (USD $) | 3 Months Ended | |||
In Thousands, unless otherwise specified | Jun. 30, 2014 | Jun. 30, 2013 | ||
Cash flows from operating activities: | ' | ' | ||
Net income | $5,163 | $12,945 | ||
Adjustments to reconcile net income to net cash provided by operating activities: | ' | ' | ||
Depreciation | 2,136 | 1,897 | ||
Amortization of capitalized software costs | 3,602 | 2,679 | ||
Amortization of other intangibles | 1,841 | [1] | 1,866 | [1] |
Provision for bad debts | -1,136 | 1,805 | ||
Provision for inventory obsolescence | 9 | 0 | ||
Share-based compensation | 790 | 541 | ||
Deferred income taxes | 16 | 517 | ||
Excess tax benefit from share-based compensation | 0 | -50 | ||
Change in fair value of contingent consideration | 604 | 46 | ||
Loss on disposal of equipment and improvements | 12 | 0 | ||
Changes in assets and liabilities, net of amounts acquired: | ' | ' | ||
Accounts receivable | 3,172 | 7,503 | ||
Inventories | 70 | -273 | ||
Income taxes receivable | 2,367 | 0 | ||
Other current assets | 3,129 | 4,025 | ||
Other assets | -429 | -610 | ||
Accounts payable | 955 | -4,061 | ||
Deferred revenue | -571 | -2,416 | ||
Accrued compensation and related benefits | -2,059 | 158 | ||
Income taxes payable | -178 | 3,823 | ||
Other current liabilities | -1,568 | 149 | ||
Deferred compensation | 373 | 141 | ||
Other noncurrent liabilities | 267 | 842 | ||
Net cash provided by operating activities | 18,565 | 31,527 | ||
Cash flows from investing activities: | ' | ' | ||
Additions to capitalized software costs | -2,902 | -7,300 | ||
Additions to equipment and improvements | -2,255 | -1,835 | ||
Proceeds from sales and maturities of marketable securities | 1,936 | 0 | ||
Net cash used in investing activities | -3,221 | -9,135 | ||
Cash flows from financing activities: | ' | ' | ||
Excess tax benefit from share-based compensation | 0 | 50 | ||
Proceeds from exercise of stock options | -54 | 250 | ||
Dividends paid | -10,687 | -10,417 | ||
Payment of contingent consideration related to acquisitions | 0 | -62 | ||
Net cash used in financing activities | -10,741 | -10,179 | ||
Net (decrease) increase in cash and cash equivalents | 4,603 | 12,213 | ||
Cash and cash equivalents at beginning of period | 103,145 | ' | ||
Cash and cash equivalents at end of period | 107,748 | 118,212 | ||
Supplemental disclosures of cash flow information: | ' | ' | ||
Cash paid during the period for income taxes, net of refunds | $212 | $2,032 | ||
[1] | Amortization of the customer relationships and the trade name & contracts intangible assets is included in operating expenses and amortization of the software technology intangible assets is included in cost of revenue for software and hardware. |
Summary_of_Significant_Account
Summary of Significant Accounting Policies | 3 Months Ended | |||||||
Jun. 30, 2014 | ||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' | |||||||
Summary of Significant Accounting Policies | ' | |||||||
Summary of Significant Accounting Policies | ||||||||
Principles of Consolidation. The consolidated financial statements include the accounts of Quality Systems, Inc. and its wholly-owned subsidiaries, which consist of NextGen Healthcare Information Systems, LLC (“NextGen”), NextGen RCM Services, LLC, Opus Healthcare Solutions, LLC, ViaTrack Systems, LLC (“ViaTrack”), Matrix Management Solutions, LLC, QSI Management, LLC, Quality Systems India Healthcare Private Limited (“QSIH”) and Mirth Corporation (“Mirth”) (collectively, the “Company”). All intercompany accounts and transactions have been eliminated. | ||||||||
Basis of Presentation. The accompanying unaudited consolidated financial statements as of June 30, 2014 and for the three months ended June 30, 2014 and 2013 have been prepared in accordance with the requirements of Form 10-Q and Article 10 of the Securities and Exchange Commission Regulation S-X and therefore do not include all information and notes which would be presented were such consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). These consolidated financial statements should be read in conjunction with the audited consolidated financial statements presented in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2014. Amounts related to disclosures of March 31, 2014 balances within these interim consolidated financial statements were derived from the aforementioned Form 10-K. In the opinion of management, the accompanying consolidated financial statements reflect all adjustments which are necessary for a fair presentation of the results of operations and cash flows for the periods presented. The results of operations for such interim periods are not necessarily indicative of results of operations to be expected for the full year. | ||||||||
References to amounts in the consolidated financial statement sections are in thousands, except shares and per share data, unless otherwise specified. | ||||||||
Revenue Recognition. The Company generates revenue from the sale of licensing rights to its software products directly to end-users and value-added resellers ("VARs"). The Company also generates revenue from sales of hardware and third-party software, implementation and training, electronic data interchange (“EDI”), revenue cycle management ("RCM"), post-contract support (maintenance) and other services, including subscriptions and hosting services, performed for clients who license the Company's products. | ||||||||
A typical system contract contains multiple elements of the above items. Revenue earned on software arrangements involving multiple elements is allocated to each element based on the relative fair values of those elements. The fair value of an element is based on vendor-specific objective evidence (“VSOE”). The Company limits its assessment of VSOE for each element to the price charged when the same element is sold separately. VSOE calculations are updated and reviewed quarterly or annually depending on the nature of the product or service. The Company generally establishes VSOE for the related undelivered elements based on the bell-shaped curve method. VSOE is established on maintenance for the Company's largest clients based on stated renewal rates only if the rate is determined to be substantive and falls within the Company's customary pricing practices. | ||||||||
When evidence of fair value exists for the delivered and undelivered elements of a transaction, discounts for individual elements are aggregated and the total discount is allocated to the individual elements in proportion to the elements' fair value relative to the total contract fair value. | ||||||||
When evidence of fair value exists for the undelivered elements only, the residual method is used. Under the residual method, the Company defers revenue related to the undelivered elements in a system sale based on VSOE of fair value of each of the undelivered elements and allocates the remainder of the contract price net of all discounts to revenue recognized from the delivered elements. If VSOE of fair value of any undelivered element does not exist, all revenue is deferred until VSOE of fair value of the undelivered element is established or the element has been delivered. | ||||||||
Provided that fees are fixed or determinable and collection is considered probable, revenue from licensing rights and sales of hardware and third-party software is generally recognized upon physical or electronic shipment and transfer of title. In certain transactions where collection risk is high, the revenue is deferred until collection occurs or becomes probable. If the fee is not fixed or determinable, then the revenue recognized in each period (subject to application of other revenue recognition criteria) will be the lesser of the aggregate amounts due and payable or the amount of the arrangement fee that would have been recognized if the fees were being recognized using the residual method. Fees which are considered fixed or determinable at the inception of the Company's arrangements must be negotiated at the outset of an arrangement and generally be based on the specific volume of products to be delivered without being subject to change based on variable pricing mechanisms such as the number of units copied or distributed or the expected number of users. | ||||||||
Revenue from implementation and training services is recognized as the corresponding services are performed. Maintenance revenue is recognized ratably over the contractual maintenance period. | ||||||||
Contract accounting is applied where services include significant modification, development or customization. | ||||||||
The Company ensures that the following criteria have been met prior to recognition of revenue: | ||||||||
▪ | the price is fixed or determinable; | |||||||
▪ | the customer is obligated to pay and there are no contingencies surrounding the obligation or the payment; | |||||||
▪ | the customer's obligation would not change in the event of theft or damage to the product; | |||||||
▪ | the customer has economic substance; | |||||||
▪ | the amount of returns can be reasonably estimated; and | |||||||
▪ | the Company does not have significant obligations for future performance in order to bring about resale of the product by the customer. | |||||||
The Company has historically offered short-term rights of return in certain sales arrangements. If the Company is able to estimate returns for these types of arrangements, revenue is recognized, net of an allowance for returns, and these arrangements are recorded in the consolidated financial statements. If the Company is unable to estimate returns for these types of arrangements, revenue is not recognized in the consolidated financial statements until the rights of return expire, provided also, that all other criteria for revenue recognition have been met. | ||||||||
Revenue related to sales arrangements that include hosting or the right to use software stored on the Company's hardware is recognized in accordance to the same revenue recognition criteria discussed above only if the customer has the contractual right to take possession of the software without incurring a significant penalty and it is feasible for the customer to either host the software themselves or through another third-party. Otherwise, the arrangement is accounted for as a service contract in which the entire arrangement is deferred and recognized over the period that the hosting services are being performed. | ||||||||
From time to time, the Company offers future purchase discounts on its products and services as part of its sales arrangements. Such discounts that are incremental to the range of discounts reflected in the pricing of the other elements of the arrangement, that are incremental to the range of discounts typically given in comparable transactions, and that are significant, are treated as an additional element of the contract to be deferred. Amounts deferred related to future purchase options are not recognized until either the customer exercises the discount offer or the offer expires. | ||||||||
RCM service revenue is derived from services fees, which include amounts charged for ongoing billing and other related services, and are generally billed to the customer as a percentage of total collections. The Company does not recognize revenue for services fees until these collections are made, as the services fees are not fixed or determinable until such time. | ||||||||
Revenue is divided into two categories, “system sales” and “maintenance, EDI, RCM and other services.” Revenue in the system sales category includes software license fees, third-party hardware and software and implementation and training services related to purchase of the Company's software systems. Revenue in the maintenance, EDI, RCM and other services category includes maintenance, EDI, RCM services, consulting services, annual third-party license fees, subscriptions, hosting services, Software as a Service ("SaaS") fees and other services revenue. | ||||||||
Goodwill. The Company tests goodwill for impairment annually during its first fiscal quarter, referred to as the annual test date. The Company will also test for impairment between annual test dates if an event occurs or circumstances change that would indicate the carrying amount may be impaired. Impairment testing for goodwill is performed at a reporting-unit level, which is defined as an operating segment or one level below an operating segment (referred to as a component). A component of an operating segment is a reporting unit if the component constitutes a business for which discrete financial information is available and segment management regularly reviews the operating results of that component. | ||||||||
During the quarter ended June 30, 2014, the Company elected to bypass the optional qualitative step of the goodwill impairment assessment and proceed directly with the quantitative step, under which the Company is required to compare the estimated fair value of each reporting unit with goodwill to its net carrying amount. An impairment loss is recognized when the carrying amount of the reporting unit's net assets exceeds the estimated fair value of the reporting unit. The Company determined the fair value of its reporting units utilizing the average of two valuation methods, consisting of the income approach (based upon estimates of future discounted cash flows for each reporting unit) and a market comparable approach (based upon valuation multiples of companies that operate in similar industries with similar operating characteristics). The cash flows used to determine fair value under the income approach represent Management's best estimates of projected operating results and assumed terminal growth rates that are dependent on a number of significant assumptions based on historical experience, expectations of future performance, and the expected macro-economic environment, which are subject to change given the inherent uncertainty in predicting future results. The Company also considered the Company's stock price and market capitalization as a corroborative step in assessing the reasonableness of the fair values estimated for the reporting units as part of the goodwill impairment assessment. The results of the goodwill impairment assessment established that the fair value for each reporting unit with goodwill significantly exceeded its respective net carrying amount, indicating that no goodwill impairment existed as of the annual test date. | ||||||||
Intangible Assets. Intangible assets consist of customer relationships, trade names and contracts and certain software technology. These intangible assets are recorded at fair value and are stated net of accumulated amortization. The Company currently amortizes the intangible assets over periods ranging from six months to nine years using a method that reflects the pattern in which the economic benefits of the intangible asset are consumed. The Company assesses the recoverability of intangible assets at least annually or whenever adverse events or changes in circumstances indicate that impairment may have occurred. If the future undiscounted cash flows expected to result from the use of the related assets are less than the carrying value of such assets, impairment has been incurred and a loss is recognized to reduce the carrying value of the intangible assets to fair value, which is determined by discounting estimated future cash flows. | ||||||||
Software Development Costs. Development costs, consisting primarily of employee salaries and benefits, incurred in the research and development of new software products and enhancements to existing software products for external use are expensed as incurred until technological feasibility has been established. After technological feasibility is established, any additional external software development costs are capitalized and amortized on a straight-line basis over the estimated economic life of the related product, which is typically three years. The Company provides support services on the current and prior two versions of its software. Management performs ongoing reviews of the estimated economic life and the recoverability of such capitalized software costs. If a determination is made that capitalized amounts are not recoverable based on the estimated cash flows to be generated from the applicable software, any remaining capitalized amounts are written off. | ||||||||
Share-Based Compensation. The following table shows total share-based compensation expense included in the consolidated statements of comprehensive income (loss) for the three months ended June 30, 2014 and 2013: | ||||||||
Three Months Ended June 30, | ||||||||
2014 | 2013 | |||||||
Costs and expenses: | ||||||||
Cost of revenue | $ | 86 | $ | 74 | ||||
Research and development costs | 83 | 42 | ||||||
Selling, general and administrative | 621 | 425 | ||||||
Total share-based compensation | 790 | 541 | ||||||
Income tax benefit | (263 | ) | (168 | ) | ||||
Decrease in net income | $ | 527 | $ | 373 | ||||
Recent Accounting Standards. New accounting pronouncements implemented by the Company during the current year or requiring implementation in future periods are discussed below or in the notes, where applicable. | ||||||||
In May 2014, the FASB, along with the International Accounting Standards Board, issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers ("ASU 2014-09"), which supersedes the revenue recognition requirements in ASC 605, Revenue Recognition. ASU 2014-09 provides enhancements to the quality and consistency of how revenue is reported while also improving comparability in the financial statements of companies reporting using International Financial Reporting Standards and GAAP. The core principle of this updated guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new standard also requires additional disclosure about revenue and provides improved guidance for multiple element arrangements. ASU 2014-09 is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Companies are permitted to adopt this new guidance following either a full retrospective or modified retrospective approach. Early adoption is not permitted. | ||||||||
ASU 2014-09 is effective for the Company in the first quarter of fiscal 2018. The Company is currently evaluating the potential impact of implementation of this updated authoritative guidance on its consolidated financial statements. |
Fair_Value_Measurements
Fair Value Measurements | 3 Months Ended | |||||||||||||||
Jun. 30, 2014 | ||||||||||||||||
Fair Value Disclosures [Abstract] | ' | |||||||||||||||
Fair Value Measurements | ' | |||||||||||||||
Fair Value Measurements | ||||||||||||||||
The following tables set forth by level within the fair value hierarchy the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis at June 30, 2014 and March 31, 2014: | ||||||||||||||||
Balance at | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Unobservable Inputs (Level 3) | |||||||||||||
June 30, | ||||||||||||||||
2014 | ||||||||||||||||
ASSETS | ||||||||||||||||
Cash and cash equivalents (1) | $ | 107,748 | $ | 107,748 | $ | — | $ | — | ||||||||
Restricted cash | 2,605 | 2,605 | — | — | ||||||||||||
Marketable securities (2) | 8,687 | 8,687 | — | — | ||||||||||||
$ | 119,040 | $ | 119,040 | $ | — | $ | — | |||||||||
LIABILITIES | ||||||||||||||||
Contingent consideration related to acquisitions | $ | 15,517 | $ | — | $ | — | $ | 15,517 | ||||||||
$ | 15,517 | $ | — | $ | — | $ | 15,517 | |||||||||
Balance at | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Unobservable Inputs (Level 3) | |||||||||||||
March 31, | ||||||||||||||||
2014 | ||||||||||||||||
ASSETS | ||||||||||||||||
Cash and cash equivalents (1) | $ | 103,145 | $ | 103,145 | $ | — | $ | — | ||||||||
Restricted cash | 4,351 | 4,351 | — | — | ||||||||||||
Marketable securities (2) | 10,656 | 10,656 | — | — | ||||||||||||
$ | 118,152 | $ | 118,152 | $ | — | $ | — | |||||||||
LIABILITIES | ||||||||||||||||
Contingent consideration related to acquisitions | $ | 14,913 | $ | — | $ | — | $ | 14,913 | ||||||||
$ | 14,913 | $ | — | $ | — | $ | 14,913 | |||||||||
___________________________________ | ||||||||||||||||
(1) Cash and cash equivalents consists of money market funds. | ||||||||||||||||
(2) Marketable securities consist of fixed-income securities, including certificates of deposit and municipal securities. | ||||||||||||||||
The Company’s contingent consideration liability is accounted for at fair value on a recurring basis and is adjusted to fair value when the carrying value differs from fair value. The fair value adjustments are reflected as a component of selling, general and administrative expense. Key assumptions include discount rates and probability-adjusted achievement of revenue and strategic targets that are not observable in the market. The categorization of the framework used to measure fair value of the contingent consideration liability is considered Level 3 due to the subjective nature of the unobservable inputs used. The fair values of the contingent consideration liability related to the acquisitions of Sphere Health Systems, Inc., IntraNexus, Inc., and Mirth were estimated based on the probability of achieving certain business milestones and/or management’s forecast of expected revenues. | ||||||||||||||||
The following table presents activity in the Company’s financial assets and liabilities measured at fair value using significant unobservable inputs (Level 3), as of and for the three months ended June 30, 2014: | ||||||||||||||||
Total Liabilities | ||||||||||||||||
Balance as of April 1, 2014 | $ | 14,913 | ||||||||||||||
Fair value adjustments | 604 | |||||||||||||||
Balance as of June 30, 2014 | $ | 15,517 | ||||||||||||||
Non-Recurring Fair Value Measurements | ||||||||||||||||
The Company has certain assets, including goodwill and other intangible assets, which are measured at fair value on a non-recurring basis and are adjusted to fair value only if an impairment charge is recognized. The categorization of the framework used to measure fair value of the assets is considered Level 3 due to the subjective nature of the unobservable inputs used. During the three months ended June 30, 2014, there were no adjustments to fair value of such assets. |
Goodwill
Goodwill | 3 Months Ended | |||||||||||||||
Jun. 30, 2014 | ||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ' | |||||||||||||||
Goodwill | ' | |||||||||||||||
Goodwill | ||||||||||||||||
The Company does not amortize goodwill as it has been determined to have an indefinite useful life. | ||||||||||||||||
Goodwill by division consists of the following: | ||||||||||||||||
March 31, | Acquisitions | Impairment | June 30, | |||||||||||||
2014 | 2014 | |||||||||||||||
QSI Dental Division (1) | $ | 7,289 | $ | — | $ | — | $ | 7,289 | ||||||||
NextGen Division | 33,225 | — | — | 33,225 | ||||||||||||
RCM Services Division | 32,290 | — | — | 32,290 | ||||||||||||
Total goodwill | $ | 72,804 | $ | — | $ | — | $ | 72,804 | ||||||||
(1) QSI Dental Division goodwill is presented on a basis consistent with that of the management reporting structures within QSI. For the purposes of testing goodwill for impairment annually and as otherwise may be required, however, the QSI Dental Division goodwill is allocated to all business units that derive cash flows from the products associated with the acquired goodwill. For all periods presented in this report, the allocation resulted in substantially all of such goodwill being ascribed to the NextGen Division. | ||||||||||||||||
Approximately 70% of the goodwill balance as of June 30, 2014 is expected to be deductible for income tax purposes over the periods prescribed by the Internal Revenue Code ("IRC"). |
Intangible_Assets
Intangible Assets | 3 Months Ended | |||||||||||||||
Jun. 30, 2014 | ||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ' | |||||||||||||||
Intangible Assets | ' | |||||||||||||||
Intangible Assets | ||||||||||||||||
The Company’s definite-lived intangible assets, other than capitalized software development costs, are summarized as follows: | ||||||||||||||||
June 30, 2014 | ||||||||||||||||
Customer Relationships | Trade Name & Contracts | Software Technology | Total | |||||||||||||
Gross carrying amount | $ | 22,050 | $ | 3,368 | $ | 23,510 | $ | 48,928 | ||||||||
Accumulated amortization | (12,702 | ) | (1,732 | ) | (3,319 | ) | (17,753 | ) | ||||||||
Net intangible assets | $ | 9,348 | $ | 1,636 | $ | 20,191 | $ | 31,175 | ||||||||
March 31, 2014 | ||||||||||||||||
Customer Relationships | Trade Name & Contracts | Software Technology | Total | |||||||||||||
Gross carrying amount | $ | 22,050 | $ | 3,368 | $ | 23,510 | $ | 48,928 | ||||||||
Accumulated amortization | (11,837 | ) | (1,599 | ) | (2,476 | ) | (15,912 | ) | ||||||||
Net intangible assets | $ | 10,213 | $ | 1,769 | $ | 21,034 | $ | 33,016 | ||||||||
Activity related to the intangible assets for the three months ended June 30, 2014 and 2013 is summarized as follows: | ||||||||||||||||
Customer Relationships | Trade Name & Contracts | Software Technology | Total | |||||||||||||
Balance as of April 1, 2014 | $ | 10,213 | $ | 1,769 | $ | 21,034 | $ | 33,016 | ||||||||
Amortization (1) | (865 | ) | (133 | ) | (843 | ) | (1,841 | ) | ||||||||
Balance as of June 30, 2014 | $ | 9,348 | $ | 1,636 | $ | 20,191 | $ | 31,175 | ||||||||
Customer Relationships | Trade Name & Contracts | Software Technology | Total | |||||||||||||
Balance as of April 1, 2013 | $ | 13,128 | $ | 906 | $ | 13,516 | $ | 27,550 | ||||||||
Amortization (1) | (1,054 | ) | (80 | ) | (732 | ) | (1,866 | ) | ||||||||
Balance as of June 30, 2013 | $ | 12,074 | $ | 826 | $ | 12,784 | $ | 25,684 | ||||||||
_______________________________ | ||||||||||||||||
(1) Amortization of the customer relationships and the trade name & contracts intangible assets is included in operating expenses and amortization of the software technology intangible assets is included in cost of revenue for software and hardware. | ||||||||||||||||
The following table represents the remaining estimated amortization of definite-lived intangible assets as of June 30, 2014: | ||||||||||||||||
For the year ended March 31, | ||||||||||||||||
2015 (remaining nine months) | $ | 5,286 | ||||||||||||||
2016 | 7,024 | |||||||||||||||
2017 | 6,553 | |||||||||||||||
2018 | 4,301 | |||||||||||||||
2019 | 3,517 | |||||||||||||||
2020 and beyond | 4,494 | |||||||||||||||
Total | $ | 31,175 | ||||||||||||||
Approximately 95% of the acquired intangible assets are expected to be deductible for income tax purposes over the periods prescribed by the IRC. |
Capitalized_Software_Costs
Capitalized Software Costs | 3 Months Ended | |||||||
Jun. 30, 2014 | ||||||||
Research and Development [Abstract] | ' | |||||||
Capitalized Software Costs | ' | |||||||
Capitalized Software Costs | ||||||||
The Company’s capitalized software development costs are summarized as follows: | ||||||||
June 30, | March 31, 2014 | |||||||
2014 | ||||||||
Gross carrying amount | $ | 103,358 | $ | 100,455 | ||||
Accumulated amortization | (64,906 | ) | (61,303 | ) | ||||
Net capitalized software costs | $ | 38,452 | $ | 39,152 | ||||
Activity related to net capitalized software costs for the three months ended June 30, 2014 and 2013 is summarized as follows: | ||||||||
2014 | 2013 | |||||||
Balance as of April 1 | $ | 39,152 | $ | 39,781 | ||||
Capitalized | 2,902 | 7,300 | ||||||
Amortization | (3,602 | ) | (2,679 | ) | ||||
Balance as of June 30 | $ | 38,452 | $ | 44,402 | ||||
The following table presents the remaining estimated amortization of capitalized software costs as of June 30, 2014. The estimated amortization is comprised of (i) amortization of released products and (ii) the expected amortization for products that are not yet available for sale based on their estimated economic lives and projected general release dates. | ||||||||
For the year ended March 31, | ||||||||
2015 (remaining nine months) | $ | 11,500 | ||||||
2016 | 13,800 | |||||||
2017 | 6,700 | |||||||
2018 | 2,900 | |||||||
2019 | 2,700 | |||||||
2020 and beyond | 852 | |||||||
Total | $ | 38,452 | ||||||
Composition_of_Certain_Financi
Composition of Certain Financial Statement Captions | 3 Months Ended | |||||||
Jun. 30, 2014 | ||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' | |||||||
Composition of Certain Financial Statement Captions | ' | |||||||
Composition of Certain Financial Statement Captions | ||||||||
Accounts receivable include amounts related to maintenance and services that were billed but not yet rendered at each period end. Undelivered maintenance and services are included as a component of the deferred revenue balance on the accompanying consolidated balance sheets. | ||||||||
June 30, | March 31, | |||||||
2014 | 2014 | |||||||
Accounts receivable, gross | $ | 127,476 | $ | 127,006 | ||||
Sales return reserve | (10,774 | ) | (10,530 | ) | ||||
Allowance for doubtful accounts | (4,860 | ) | (6,295 | ) | ||||
Accounts receivable, net | $ | 111,842 | $ | 110,181 | ||||
Inventories are summarized as follows: | ||||||||
June 30, | March 31, | |||||||
2014 | 2014 | |||||||
Computer systems and components | $ | 755 | $ | 834 | ||||
Equipment and improvements are summarized as follows: | ||||||||
June 30, | March 31, | |||||||
2014 | 2014 | |||||||
Computer equipment | $ | 38,273 | $ | 37,322 | ||||
Furniture and fixtures | 9,571 | 9,395 | ||||||
Leasehold improvements | 9,934 | 8,874 | ||||||
57,778 | 55,591 | |||||||
Accumulated depreciation and amortization | (34,863 | ) | (32,790 | ) | ||||
Equipment and improvements, net | $ | 22,915 | $ | 22,801 | ||||
Current and non-current deferred revenue are summarized as follows: | ||||||||
June 30, | March 31, | |||||||
2014 | 2014 | |||||||
Maintenance | $ | 14,942 | $ | 15,482 | ||||
Implementation services | 34,149 | 36,634 | ||||||
Annual license services | 11,351 | 11,176 | ||||||
Undelivered software and other (1) | 10,250 | 7,785 | ||||||
Deferred revenue | $ | 70,692 | $ | 71,077 | ||||
Deferred revenue, net of current | $ | 2,001 | $ | 2,187 | ||||
(1) Includes subscriptions and SaaS deferred revenue. | ||||||||
Accrued compensation and related benefits are summarized as follows: | ||||||||
June 30, | March 31, | |||||||
2014 | 2014 | |||||||
Payroll, bonus and commission | $ | 3,473 | $ | 6,193 | ||||
Vacation | 10,421 | 9,760 | ||||||
Accrued compensation and related benefits | $ | 13,894 | $ | 15,953 | ||||
Other current and non-current liabilities are summarized as follows: | ||||||||
June 30, | March 31, | |||||||
2014 | 2014 | |||||||
Customer deposits and liabilities | $ | 3,699 | $ | 76 | ||||
Self insurance reserve | 2,675 | 2,090 | ||||||
Care services liabilities | 2,605 | 4,351 | ||||||
Accrued EDI expense | 1,978 | 1,702 | ||||||
Accrued royalties | 1,423 | 1,418 | ||||||
Accrued consulting | 1,311 | 1,707 | ||||||
Contingent consideration and other liabilities related to acquisitions | 978 | 1,052 | ||||||
Deferred rent | 843 | 964 | ||||||
Users group meeting deposits | 549 | — | ||||||
Professional services | 303 | 170 | ||||||
Accrued travel | 251 | 369 | ||||||
Outside commission payable | 144 | 255 | ||||||
Other accrued expenses | 3,857 | 4,128 | ||||||
Other current liabilities | $ | 20,616 | $ | 18,282 | ||||
Contingent consideration and other liabilities related to acquisitions | $ | 15,030 | $ | 14,736 | ||||
Deferred rent | 3,482 | 3,509 | ||||||
Income tax payable | 804 | 841 | ||||||
Other non-current liabilities | $ | 19,316 | $ | 19,086 | ||||
Income_Taxes
Income Taxes | 3 Months Ended |
Jun. 30, 2014 | |
Income Tax Disclosure [Abstract] | ' |
Income Taxes | ' |
Income Taxes | |
The provision for income taxes for the three months ended June 30, 2014 and 2013 was approximately $2.7 million and $6.4 million, respectively. The effective tax rates were 34.0% and 33.0% for the three months ended June 30, 2014 and 2013, respectively. The effective rate for the three months ended June 30, 2014 increased as compared to the same prior year period primarily due to the absence of a federal research and development tax credit reflected in the current period, offset by an increased benefit of the foreign rate differential and a decrease in qualified production activities deduction. The federal research and development tax credit statute expired on December 31, 2013 and has not been reenacted as of June 30, 2014. | |
The deferred tax assets and liabilities have been shown net in the accompanying consolidated balance sheets based on the long-term or short-term nature of the items that give rise to the deferred amount. The Company expects to receive the full benefit of the deferred tax assets recorded with the exception of a specific state tax credit for which the Company has recorded a valuation allowance. | |
Uncertain tax positions As of June 30, 2014, the Company had recorded a liability of $759 for unrecognized tax benefits related to various federal, state and local income tax matters. If recognized, this amount would reduce the Company’s effective tax rate. The tax liability for the three months ended June 30, 2014 increased from the same prior year period by $24 due to changes in reserves for state and local income tax liabilities and certain tax positions related to acquired companies. | |
The Company is no longer subject to U.S. federal income tax examinations for tax years before 2013. With few exceptions, the Company is no longer subject to state income tax examinations for tax years before 2009. The Company does not anticipate that total unrecognized tax benefits will significantly change due to the settlement of audits or the expiration of statute of limitations within the next twelve months. |
Earnings_Per_Share
Earnings Per Share | 3 Months Ended | |||||||
Jun. 30, 2014 | ||||||||
Earnings Per Share [Abstract] | ' | |||||||
Earnings Per Share | ' | |||||||
Earnings per Share | ||||||||
The Company provides presentation of “basic” and “diluted” earnings per share (“EPS”). Shares discussed below are in thousands. | ||||||||
Three Months Ended June 30, | ||||||||
2014 | 2013 | |||||||
Net income | $ | 5,163 | $ | 12,945 | ||||
Basic net income per share: | ||||||||
Weighted-average shares outstanding — Basic | 60,230 | 59,559 | ||||||
Basic net income per common share | $ | 0.09 | $ | 0.22 | ||||
Net income | $ | 5,163 | $ | 12,945 | ||||
Diluted net income per share: | ||||||||
Weighted-average shares outstanding — Basic | 60,230 | 59,559 | ||||||
Effect of potentially dilutive securities | 540 | 13 | ||||||
Weighted-average shares outstanding — Diluted | 60,770 | 59,572 | ||||||
Diluted net income per common share | $ | 0.08 | $ | 0.22 | ||||
The computation of diluted net income per share does not include 1,492 and 1,227 options to acquire shares of common stock for the three months ended June 30, 2014 and 2013, respectively, because their inclusion would have an anti-dilutive effect on net income per share. |
ShareBased_Awards
Share-Based Awards | 3 Months Ended | |||||||||||||
Jun. 30, 2014 | ||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' | |||||||||||||
Share-Based Awards | ' | |||||||||||||
Share-Based Awards | ||||||||||||||
Employee Stock Option and Incentive Plans | ||||||||||||||
In September 1998, the Company’s shareholders approved a stock option plan (the “1998 Plan”) under which 8,000,000 shares of common stock were reserved for the issuance of options. The 1998 Plan provides that employees and directors of the Company may, at the discretion of the Board of Directors or a duly designated compensation committee, be granted options to purchase shares of common stock. The exercise price of each option granted was determined based on the date of grant, and options under the 1998 Plan expire no later than 10 years from the date of grant. Options granted pursuant to the 1998 Plan became exercisable in accordance with the terms of the agreements pursuant to which they were granted. Upon change of control of the Company, as such term is defined in the 1998 Plan, each outstanding option may be subject to accelerated vesting at the discretion of the Board of Directors if no provision is made for the continuance of the 1998 Plan and the assumption of the options outstanding under the 1998 Plan, or certain other circumstances. The 1998 Plan was terminated on December 31, 2007. As of June 30, 2014, there were 20,000 outstanding options related to the 1998 Plan. | ||||||||||||||
In October 2005, the Company’s shareholders approved a stock option and incentive plan (the “2005 Plan”) under which 4,800,000 shares of common stock were reserved for the issuance of awards, including incentive stock options and non-qualified stock options, stock appreciation rights, restricted stock, unrestricted stock, restricted stock units, performance shares, performance units (including performance options) and other share-based awards. The 2005 Plan provides that employees and directors of the Company may, at the discretion of the Board of Directors or a duly designated compensation committee, be granted certain share-based awards. In the case of option awards granted under the 2005 Plan, the exercise price of each option is determined based on the date of grant and expire no later than 10 years from the date of grant. Awards granted pursuant to the 2005 Plan are subject to the vesting schedule or performance metrics set forth in the agreements pursuant to which they are granted. Upon a change of control of the Company, as such term is defined in the 2005 Plan, awards under the 2005 Plan will fully vest under certain circumstances. The 2005 Plan expires on May 25, 2015, unless terminated earlier by the Board of Directors. As of June 30, 2014, there were 1,759,551 outstanding options, 53,293 outstanding shares of restricted stock, restricted stock units and performance based restricted stock, and 2,222,739 shares available for future grant under the 2005 Plan. | ||||||||||||||
A summary of stock option transactions during the three months ended June 30, 2014 follows: | ||||||||||||||
Number of | Weighted- | Weighted- | Aggregate | |||||||||||
Shares | Average | Average | Intrinsic | |||||||||||
Exercise | Remaining | Value | ||||||||||||
Price | Contractual | (in thousands) | ||||||||||||
per Share | Life (years) | |||||||||||||
Outstanding, April 1, 2014 | 1,370,101 | $ | 27.85 | 5.8 | ||||||||||
Granted | 439,650 | 15.99 | 7.9 | |||||||||||
Exercised | — | — | 0 | $ | — | |||||||||
Forfeited/Canceled | (30,200 | ) | 26.24 | 6.3 | ||||||||||
Outstanding, June 30, 2014 | 1,779,551 | $ | 24.94 | 6.1 | $ | 26 | ||||||||
Vested and expected to vest, June 30, 2014 | 1,678,763 | $ | 25.12 | 6.1 | $ | 24 | ||||||||
Exercisable, June 30, 2014 | 571,981 | $ | 30.9 | 4.7 | $ | — | ||||||||
The Company utilizes the Black-Scholes valuation model for estimating the fair value of share-based compensation with the following assumptions: | ||||||||||||||
Three Months Ended June 30, 2014 | Three Months Ended June 30, 2013 | |||||||||||||
Expected life | 4.8 years | 4.9 years | ||||||||||||
Expected volatility | 36.60% | 43.70% | ||||||||||||
Expected dividends | 4.30% | 3.90% | ||||||||||||
Risk-free rate | 1.70% | 1.00% | ||||||||||||
The weighted-average grant date fair value of stock options granted during the three months ended June 30, 2014 and 2013 was $3.50 and $4.87 per share, respectively. | ||||||||||||||
The Company issues new shares to satisfy option exercises. Based on historical experience of option cancellations, the Company has estimated an annualized forfeiture rate of 8.4% and 8.1% for employee options for the three months ended June 30, 2014 and 2013, respectively, and 0.0% for director options for the three months ended June 30, 2014 and 2013. Forfeiture rates are adjusted over the requisite service period when actual forfeitures differ, or are expected to differ, from the estimate. | ||||||||||||||
During the three months ended June 30, 2014, a total of 439,650 options to purchase shares of common stock were granted under the 2005 Plan at an exercise price equal to the market price of the Company’s common stock on the date of grant. A summary of stock options granted under the 2005 Plan during fiscal years 2015 and 2014 is as follows: | ||||||||||||||
Option Grant Date | Number of Shares | Exercise Price | Vesting Terms (1) | Expires | ||||||||||
June 3, 2014 | 439,650 | $ | 15.99 | Five years | June 3, 2022 | |||||||||
Fiscal year 2015 option grants | 439,650 | |||||||||||||
August 15, 2013 | 85,000 | $ | 20.85 | Five years | August 15, 2021 | |||||||||
July 30, 2013 | 28,000 | $ | 22.59 | Five years | July 30, 2021 | |||||||||
May 29, 2013 | 356,000 | $ | 17.95 | Five years | May 29, 2021 | |||||||||
Fiscal year 2014 option grants | 469,000 | |||||||||||||
__________________________________ | ||||||||||||||
(1) Options vest in equal annual installments on each grant anniversary date commencing one year following the date of grant. | ||||||||||||||
Employee and Executive Officer Awards | ||||||||||||||
On May 28, 2014, the Board of Directors awarded options to purchase the Company’s common stock to certain high-performing employees. The options were granted on the first day of the next open trading window under the Company's Insider Trading Policy, issued pursuant to the 2005 Plan, have an exercise price equal to the closing price of the Company’s shares on the date of grant, a term of eight years and vest in five equal annual installments commencing one year following the date of grant. | ||||||||||||||
On May 27, 2014, the Compensation Committee of the Board of Directors approved the Company's fiscal year 2015 Executive Compensation Program (the "Program") under which the Company's named executive officers are eligible to receive cash bonuses based on meeting certain target increases in revenue and non-GAAP financial targets, as defined in the Program (i.e. non-GAAP earnings per share and a measure of free cash flow) for fiscal year 2015. Under the Program, the named executive officers also received certain equity incentive awards issued under the 2005 Plan. These equity awards included (i) an aggregate of 105,000 options to purchase the Company's common stock, which were granted on the first day of the next open trading window under the Company's Insider Trading Policy, have an exercise price equal to the closing price of the Company's shares on the date of grant, a term of eight years and a vesting schedule of five equal annual installments commencing one year following the date of grant; and (ii) a potential award of up to an aggregate of 170,000 restricted performance shares of the Company's common stock vesting over a three year period based on the achievement of target average daily share prices for the ninety calendar day period ending May 31st of each of the subsequent three fiscal years. | ||||||||||||||
Share-based compensation expense associated with the restricted performance shares under the Program is based on the grant date fair value measured at the underlying closing share price on the date of grant using a Monte Carlo-based valuation model. Share-based compensation expense associated with the options under the Company’s equity incentive programs are initially based on the number of options expected to vest after assessing the probability that the performance criteria will be met. Cumulative adjustments are recorded quarterly to reflect subsequent changes in the estimated outcome of performance-related conditions. The Company utilizes the Black-Scholes option valuation model with the assumptions in the table below to calculate the share-based compensation expense related to the options. Share-based compensation expense recorded for these performance-based awards was $104 and $92 for the three months ended June 30, 2014 and 2013, respectively. | ||||||||||||||
Three Months Ended June 30, 2014 | Three Months Ended June 30, 2013 | |||||||||||||
Expected life | 4.8 years | 4.9 years | ||||||||||||
Expected volatility | 36.50% | 43.50% | ||||||||||||
Expected dividends | 4.30% | 3.70% | ||||||||||||
Risk-free rate | 1.60% | 1.40% | ||||||||||||
Non-vested stock option award activity, including employee stock options and performance-based awards, during the three months ended June 30, 2014 is summarized as follows: | ||||||||||||||
Non-Vested | Weighted- | |||||||||||||
Number of | Average | |||||||||||||
Shares | Grant-Date | |||||||||||||
Fair Value | ||||||||||||||
per Share | ||||||||||||||
Outstanding, April 1, 2014 | 991,560 | $ | 7.73 | |||||||||||
Granted | 439,650 | 3.5 | ||||||||||||
Vested | (193,440 | ) | 8.5 | |||||||||||
Forfeited/Canceled | (30,200 | ) | 7.66 | |||||||||||
Outstanding, June 30, 2014 | 1,207,570 | $ | 6.07 | |||||||||||
As of June 30, 2014, $6,308 of total unrecognized compensation costs related to stock options is expected to be recognized over a weighted-average period of 3.8 years. This amount does not include the cost of new options that may be granted in future periods or any changes in the Company’s forfeiture percentage. The total fair value of options vested during the three months ended June 30, 2014 and 2013 was $1,645 and $1,057, respectively. | ||||||||||||||
Director Awards | ||||||||||||||
On May 28, 2014, the Board of Directors approved its 2015 Director Compensation Program, pursuant to which each non-employee director is to be granted shares of restricted stock upon election or re-election to the Board of Directors. The shares of restricted stock are awarded under the 2005 Plan. Such shares of restricted stock vest in two equal, annual installments on the first and second anniversaries of the grant date and are nontransferable for one year following vesting. The weighted-average grant date fair value for the restricted stock was estimated using the market price of the common stock on the date of grant. The fair value of the restricted stock is amortized on a straight-line basis over the vesting period. | ||||||||||||||
The Company recorded compensation expense related to restricted stock of approximately $174 and $92 for the three months ended June 30, 2014 and 2013, respectively. Restricted stock activity for the three months ended June 30, 2014 is summarized as follows: | ||||||||||||||
Number of | Weighted- | |||||||||||||
Shares | Average | |||||||||||||
Grant-Date | ||||||||||||||
Fair Value | ||||||||||||||
per Share | ||||||||||||||
Outstanding, April 1, 2014 | 64,571 | $ | 20.74 | |||||||||||
Granted | 788 | 17.14 | ||||||||||||
Vested | (12,066 | ) | 21.68 | |||||||||||
Outstanding, June 30, 2014 | 53,293 | $ | 21.21 | |||||||||||
As of June 30, 2014, $713 of total unrecognized compensation costs related to restricted stock is expected to be recognized over a weighted-average period of 1.1 years. This amount does not include the cost of new restricted stock that may be granted in future periods. |
Concentration_of_Credit_Risk
Concentration of Credit Risk | 3 Months Ended |
Jun. 30, 2014 | |
Risks and Uncertainties [Abstract] | ' |
Concentration of Credit Risk | ' |
Concentration of Credit Risk | |
The Company had cash deposits at U.S. banks and financial institutions which exceeded federally insured limits at June 30, 2014. The Company is exposed to credit loss for amounts in excess of insured limits in the event of non-performance by the institutions; however, the Company does not anticipate non-performance by these institutions. |
Commitments_Guarantees_and_Con
Commitments, Guarantees and Contingencies | 3 Months Ended |
Jun. 30, 2014 | |
Commitments and Contingencies Disclosure [Abstract] | ' |
Commitments, Guarantees and Contingencies | ' |
Commitments, Guarantees and Contingencies | |
Commitments and Guarantees | |
The Company's software license agreements include a performance guarantee that the Company's software products will substantially operate as described in the applicable program documentation for a period of 365 days after delivery. To date, the Company has not incurred any significant costs associated with its performance guarantee or other related warranties and does not expect to incur significant warranty costs in the future. Therefore, no accrual has been made for potential costs associated with these warranties. Certain arrangements also include performance guarantees related to response time, availability for operational use, and other performance-related guarantees. Certain arrangements also include penalties in the form of maintenance credits should the performance of the software fail to meet the performance guarantees. To date, the Company has not incurred any significant costs associated with these warranties and does not expect to incur significant warranty costs in the future. Therefore, no accrual has been made for potential costs associated with these warranties. | |
The Company has historically offered short-term rights of return in certain sales arrangements. If the Company is able to estimate returns for these types of arrangements and all other criteria for revenue recognition have been met, revenue is recognized and these arrangements are recorded in the consolidated financial statements. If the Company is unable to estimate returns for these types of arrangements, revenue is not recognized in the consolidated financial statements until the rights of return expire, provided also, that all other criteria of revenue recognition have been met. | |
Certain standard sales agreements contain a money back guarantee providing for a performance guarantee that is already part of the software license agreement as well as training and support. The money back guarantee also warrants that the software will remain robust and flexible to allow participation in the federal health incentive programs. The specific elements of the performance guarantee pertain to aspects of the software, which the Company has already tested and confirmed to consistently meet using the Company's existing software without any modifications or enhancements. To date, the Company has not incurred any costs associated with this guarantee and does not expect to incur significant costs in the future. Therefore, no accrual has been made for potential costs associated with this guarantee. | |
The Company's standard sales agreements contain an indemnification provision pursuant to which it shall indemnify, hold harmless, and reimburse the indemnified party for losses suffered or incurred by the indemnified party in connection with any United States patent, any copyright or other intellectual property infringement claim by any third-party with respect to its software. As the Company has not incurred any significant costs to defend lawsuits or settle claims related to these indemnification agreements, the Company believes that its estimated exposure on these agreements is currently minimal. Accordingly, the Company has no liabilities recorded for these indemnification obligations. | |
Hussein Litigation | |
On October 7, 2013, a complaint was filed against the Company and certain of the Company’s officers and directors in the Superior Court of the State of California for the County of Orange, captioned Ahmed D. Hussein v. Sheldon Razin, Steven Plochocki, Quality Systems, Inc. and Does 1-10, inclusive, No. 30-2013-00679600-CU-NP-CJC, by Ahmed Hussein, a former director and significant shareholder of the Company. The Company filed a demurrer to the complaint, which the Court granted on April 10, 2014. An amended complaint was filed on April 25, 2014. The amended complaint generally alleges fraud and deceit, constructive fraud, negligent misrepresentation and breach of fiduciary duty in connection with statements made to the Company’s shareholders regarding the Company’s financial condition and projected future performance. The amended complaint seeks actual damages, exemplary and punitive damages and costs. The Company has filed a demurrer to the amended complaint and is awaiting a decision from the Court. The Company believes that plaintiff’s claims are without merit and continues to defend against them vigorously. | |
Federal Securities Class Action | |
On November 19, 2013, a putative class action complaint was filed on behalf of the shareholders of the Company other than the defendants against the Company and certain of the Company’s officers and directors in the United States District Court for the Central District of California, captioned Deerfield Beach Police Pension Fund, individually and on behalf of all others similarly situated, v. Quality Systems, Inc., Steven T. Plochocki, Paul A. Holt and Sheldon Razin, No. SACV13-01818-CJC-JPRx, by the Deerfield Beach Police Pension Fund, a shareholder of the Company. After the court appointed lead plaintiffs and lead counsel for this action, lead plaintiffs filed an amended complaint on April 7, 2014. The amended complaint, which is substantially similar to the litigation described above under the caption “Hussein Litigation,” generally alleges that statements made to the Company’s shareholders regarding the Company’s financial condition and projected future performance were false and misleading in violation of Section 10(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and that the individual defendants are liable for such statements because they are controlling persons under Section 20(a) of the Exchange Act. The complaint seeks compensatory damages, court costs and attorneys' fees. The Company filed a motion to dismiss the amended complaint on June 20, 2014. The Company believes that plaintiff’s claims are without merit and intends to defend against them vigorously. | |
Shareholder Derivative Litigation | |
On January 24, 2014, a complaint was filed against the Company and certain of the Company’s officers and current and former directors in the United States District Court for the Central District of California, captioned Timothy J. Foss, derivatively on behalf of himself and all others similarly situated, vs. Craig A. Barbarosh, George H. Bristol, James C. Malone, Peter M. Neupert, Morris Panner, D. Russell Pflueger, Steven T. Plochocki, Sheldon Razin, Lance E. Rosenzweig and Quality Systems, Inc., No. SACV14-00110-DOC-JPPx, by Timothy J. Foss, a shareholder of the Company. The complaint arises from the same allegations described above under the captions “Hussein Litigation” and “Federal Securities Class Action” and generally alleges breach of fiduciary duties, abuse of control and gross mismanagement by the Company’s directors, in addition to unjust enrichment and insider selling by individual directors. The complaint seeks compensatory damages, restitution and disgorgement of all profits, court costs, attorneys’ fees and implementation of enhanced corporate governance procedures. The parties have agreed to stay this litigation pending resolution of the Defendants' anticipated motion to dismiss the Federal Securities Class Action. The Company believes that plaintiff’s claims are without merit and intends to defend against them vigorously. |
Operating_Segment_Information
Operating Segment Information | 3 Months Ended | ||||||||
Jun. 30, 2014 | |||||||||
Segment Reporting [Abstract] | ' | ||||||||
Operating Segment Information | ' | ||||||||
Operating Segment Information | |||||||||
The Company has four reportable segments that are evaluated regularly by its chief decision making group (consisting of the Chief Executive Officer, Chief Financial Officer and Chief Operating Officer) in deciding how to allocate resources and in assessing performance. The chief decision making group evaluates performance based upon stand-alone segment operating income. Since assets by segment are not reported to or used by the Company’s chief decision making group to allocate resources, or to assess performance, total assets by segment are not disclosed. | |||||||||
Operating segment data is as follows: | |||||||||
Three Months Ended June 30, | |||||||||
2014 | 2013 | ||||||||
Revenue: | |||||||||
QSI Dental Division | $ | 4,243 | $ | 5,151 | |||||
NextGen Division | 91,714 | 81,535 | |||||||
Hospital Solutions Division | 4,176 | 5,467 | |||||||
RCM Services Division | 17,761 | 17,376 | |||||||
Consolidated revenue | $ | 117,894 | $ | 109,529 | |||||
Operating income (loss): | |||||||||
QSI Dental Division | $ | 935 | $ | 1,641 | |||||
NextGen Division | 43,965 | 36,629 | |||||||
Hospital Solutions Division | (1,125 | ) | (704 | ) | |||||
RCM Services Division | 1,836 | 3,022 | |||||||
Corporate and unallocated | (37,856 | ) | (21,035 | ) | |||||
Consolidated operating income | $ | 7,755 | $ | 19,553 | |||||
Effective April 1, 2014, the Company refined the measurement of its segment data to better reflect an organizational structure whereby certain expenses managed by functional area leadership are no longer classified within the operating segments but rather as a component of Corporate and unallocated. Such classification is consistent with the disaggregated financial information used by the Company's chief decision making group. The amounts classified as Corporate and unallocated have historically consisted primarily of corporate general and administrative costs and other centrally managed overhead costs, including accounting and finance, human resources, and legal costs, as well as non-recurring acquisition costs and the post-acquisition amortization of certain intangible assets. Currently, as a result of the refinement of its segment data, the Company no longer classifies the costs of the marketing and research and development functional areas and the amortization of capitalized software costs within the operating segments. The Company has retroactively reclassified the prior year operating income in the table above to present all segment information on a comparable basis. | |||||||||
The major components of the Corporate and unallocated amounts are summarized in the table below: | |||||||||
Three Months Ended June 30, | |||||||||
2014 | 2013 | ||||||||
Research and development costs | $ | 16,236 | $ | 5,614 | |||||
Amortization of capitalized software costs | 4,491 | 2,395 | |||||||
Marketing expense | 3,229 | 2,167 | |||||||
Other Corporate and overhead costs | 13,900 | 10,859 | |||||||
Total Corporate and unallocated | 37,856 | 21,035 | |||||||
Subsequent_Events
Subsequent Events | 3 Months Ended |
Jun. 30, 2014 | |
Subsequent Events [Abstract] | ' |
Subsequent Events | ' |
Subsequent Events | |
On July 23, 2014, the Board of Directors approved a quarterly cash dividend of $0.175 per share on the Company’s outstanding shares of common stock, payable to shareholders of record as of September 12, 2014 with an expected distribution date on or about October 3, 2014. |
Significant_Accounting_Policie
Significant Accounting Policies (Policies) | 3 Months Ended | |
Jun. 30, 2014 | ||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' | |
Principles of Consolidation | ' | |
Principles of Consolidation. The consolidated financial statements include the accounts of Quality Systems, Inc. and its wholly-owned subsidiaries, which consist of NextGen Healthcare Information Systems, LLC (“NextGen”), NextGen RCM Services, LLC, Opus Healthcare Solutions, LLC, ViaTrack Systems, LLC (“ViaTrack”), Matrix Management Solutions, LLC, QSI Management, LLC, Quality Systems India Healthcare Private Limited (“QSIH”) and Mirth Corporation (“Mirth”) (collectively, the “Company”). All intercompany accounts and transactions have been eliminated. | ||
Basis of Presentation | ' | |
Basis of Presentation. The accompanying unaudited consolidated financial statements as of June 30, 2014 and for the three months ended June 30, 2014 and 2013 have been prepared in accordance with the requirements of Form 10-Q and Article 10 of the Securities and Exchange Commission Regulation S-X and therefore do not include all information and notes which would be presented were such consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). These consolidated financial statements should be read in conjunction with the audited consolidated financial statements presented in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2014. Amounts related to disclosures of March 31, 2014 balances within these interim consolidated financial statements were derived from the aforementioned Form 10-K. In the opinion of management, the accompanying consolidated financial statements reflect all adjustments which are necessary for a fair presentation of the results of operations and cash flows for the periods presented. The results of operations for such interim periods are not necessarily indicative of results of operations to be expected for the full year. | ||
References to amounts in the consolidated financial statement sections are in thousands, except shares and per share data, unless otherwise specified. | ||
Revenue Recognition | ' | |
Revenue Recognition. The Company generates revenue from the sale of licensing rights to its software products directly to end-users and value-added resellers ("VARs"). The Company also generates revenue from sales of hardware and third-party software, implementation and training, electronic data interchange (“EDI”), revenue cycle management ("RCM"), post-contract support (maintenance) and other services, including subscriptions and hosting services, performed for clients who license the Company's products. | ||
A typical system contract contains multiple elements of the above items. Revenue earned on software arrangements involving multiple elements is allocated to each element based on the relative fair values of those elements. The fair value of an element is based on vendor-specific objective evidence (“VSOE”). The Company limits its assessment of VSOE for each element to the price charged when the same element is sold separately. VSOE calculations are updated and reviewed quarterly or annually depending on the nature of the product or service. The Company generally establishes VSOE for the related undelivered elements based on the bell-shaped curve method. VSOE is established on maintenance for the Company's largest clients based on stated renewal rates only if the rate is determined to be substantive and falls within the Company's customary pricing practices. | ||
When evidence of fair value exists for the delivered and undelivered elements of a transaction, discounts for individual elements are aggregated and the total discount is allocated to the individual elements in proportion to the elements' fair value relative to the total contract fair value. | ||
When evidence of fair value exists for the undelivered elements only, the residual method is used. Under the residual method, the Company defers revenue related to the undelivered elements in a system sale based on VSOE of fair value of each of the undelivered elements and allocates the remainder of the contract price net of all discounts to revenue recognized from the delivered elements. If VSOE of fair value of any undelivered element does not exist, all revenue is deferred until VSOE of fair value of the undelivered element is established or the element has been delivered. | ||
Provided that fees are fixed or determinable and collection is considered probable, revenue from licensing rights and sales of hardware and third-party software is generally recognized upon physical or electronic shipment and transfer of title. In certain transactions where collection risk is high, the revenue is deferred until collection occurs or becomes probable. If the fee is not fixed or determinable, then the revenue recognized in each period (subject to application of other revenue recognition criteria) will be the lesser of the aggregate amounts due and payable or the amount of the arrangement fee that would have been recognized if the fees were being recognized using the residual method. Fees which are considered fixed or determinable at the inception of the Company's arrangements must be negotiated at the outset of an arrangement and generally be based on the specific volume of products to be delivered without being subject to change based on variable pricing mechanisms such as the number of units copied or distributed or the expected number of users. | ||
Revenue from implementation and training services is recognized as the corresponding services are performed. Maintenance revenue is recognized ratably over the contractual maintenance period. | ||
Contract accounting is applied where services include significant modification, development or customization. | ||
The Company ensures that the following criteria have been met prior to recognition of revenue: | ||
▪ | the price is fixed or determinable; | |
▪ | the customer is obligated to pay and there are no contingencies surrounding the obligation or the payment; | |
▪ | the customer's obligation would not change in the event of theft or damage to the product; | |
▪ | the customer has economic substance; | |
▪ | the amount of returns can be reasonably estimated; and | |
▪ | the Company does not have significant obligations for future performance in order to bring about resale of the product by the customer. | |
The Company has historically offered short-term rights of return in certain sales arrangements. If the Company is able to estimate returns for these types of arrangements, revenue is recognized, net of an allowance for returns, and these arrangements are recorded in the consolidated financial statements. If the Company is unable to estimate returns for these types of arrangements, revenue is not recognized in the consolidated financial statements until the rights of return expire, provided also, that all other criteria for revenue recognition have been met. | ||
Revenue related to sales arrangements that include hosting or the right to use software stored on the Company's hardware is recognized in accordance to the same revenue recognition criteria discussed above only if the customer has the contractual right to take possession of the software without incurring a significant penalty and it is feasible for the customer to either host the software themselves or through another third-party. Otherwise, the arrangement is accounted for as a service contract in which the entire arrangement is deferred and recognized over the period that the hosting services are being performed. | ||
From time to time, the Company offers future purchase discounts on its products and services as part of its sales arrangements. Such discounts that are incremental to the range of discounts reflected in the pricing of the other elements of the arrangement, that are incremental to the range of discounts typically given in comparable transactions, and that are significant, are treated as an additional element of the contract to be deferred. Amounts deferred related to future purchase options are not recognized until either the customer exercises the discount offer or the offer expires. | ||
RCM service revenue is derived from services fees, which include amounts charged for ongoing billing and other related services, and are generally billed to the customer as a percentage of total collections. The Company does not recognize revenue for services fees until these collections are made, as the services fees are not fixed or determinable until such time. | ||
Revenue is divided into two categories, “system sales” and “maintenance, EDI, RCM and other services.” Revenue in the system sales category includes software license fees, third-party hardware and software and implementation and training services related to purchase of the Company's software systems. Revenue in the maintenance, EDI, RCM and other services category includes maintenance, EDI, RCM services, consulting services, annual third-party license fees, subscriptions, hosting services, Software as a Service ("SaaS") fees and other services revenue. | ||
Goodwill | ' | |
Goodwill. The Company tests goodwill for impairment annually during its first fiscal quarter, referred to as the annual test date. The Company will also test for impairment between annual test dates if an event occurs or circumstances change that would indicate the carrying amount may be impaired. Impairment testing for goodwill is performed at a reporting-unit level, which is defined as an operating segment or one level below an operating segment (referred to as a component). A component of an operating segment is a reporting unit if the component constitutes a business for which discrete financial information is available and segment management regularly reviews the operating results of that component. | ||
During the quarter ended June 30, 2014, the Company elected to bypass the optional qualitative step of the goodwill impairment assessment and proceed directly with the quantitative step, under which the Company is required to compare the estimated fair value of each reporting unit with goodwill to its net carrying amount. An impairment loss is recognized when the carrying amount of the reporting unit's net assets exceeds the estimated fair value of the reporting unit. The Company determined the fair value of its reporting units utilizing the average of two valuation methods, consisting of the income approach (based upon estimates of future discounted cash flows for each reporting unit) and a market comparable approach (based upon valuation multiples of companies that operate in similar industries with similar operating characteristics). The cash flows used to determine fair value under the income approach represent Management's best estimates of projected operating results and assumed terminal growth rates that are dependent on a number of significant assumptions based on historical experience, expectations of future performance, and the expected macro-economic environment, which are subject to change given the inherent uncertainty in predicting future results. The Company also considered the Company's stock price and market capitalization as a corroborative step in assessing the reasonableness of the fair values estimated for the reporting units as part of the goodwill impairment assessment. The results of the goodwill impairment assessment established that the fair value for each reporting unit with goodwill significantly exceeded its respective net carrying amount, indicating that no goodwill impairment existed as of the annual test date. | ||
Intangible Assets | ' | |
Intangible Assets. Intangible assets consist of customer relationships, trade names and contracts and certain software technology. These intangible assets are recorded at fair value and are stated net of accumulated amortization. The Company currently amortizes the intangible assets over periods ranging from six months to nine years using a method that reflects the pattern in which the economic benefits of the intangible asset are consumed. The Company assesses the recoverability of intangible assets at least annually or whenever adverse events or changes in circumstances indicate that impairment may have occurred. If the future undiscounted cash flows expected to result from the use of the related assets are less than the carrying value of such assets, impairment has been incurred and a loss is recognized to reduce the carrying value of the intangible assets to fair value, which is determined by discounting estimated future cash flows. | ||
Software Development Costs | ' | |
Software Development Costs. Development costs, consisting primarily of employee salaries and benefits, incurred in the research and development of new software products and enhancements to existing software products for external use are expensed as incurred until technological feasibility has been established. After technological feasibility is established, any additional external software development costs are capitalized and amortized on a straight-line basis over the estimated economic life of the related product, which is typically three years. The Company provides support services on the current and prior two versions of its software. Management performs ongoing reviews of the estimated economic life and the recoverability of such capitalized software costs. If a determination is made that capitalized amounts are not recoverable based on the estimated cash flows to be generated from the applicable software, any remaining capitalized amounts are written off. | ||
Recent Accounting Standards | ' | |
Recent Accounting Standards. New accounting pronouncements implemented by the Company during the current year or requiring implementation in future periods are discussed below or in the notes, where applicable. | ||
In May 2014, the FASB, along with the International Accounting Standards Board, issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers ("ASU 2014-09"), which supersedes the revenue recognition requirements in ASC 605, Revenue Recognition. ASU 2014-09 provides enhancements to the quality and consistency of how revenue is reported while also improving comparability in the financial statements of companies reporting using International Financial Reporting Standards and GAAP. The core principle of this updated guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new standard also requires additional disclosure about revenue and provides improved guidance for multiple element arrangements. ASU 2014-09 is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Companies are permitted to adopt this new guidance following either a full retrospective or modified retrospective approach. Early adoption is not permitted. | ||
ASU 2014-09 is effective for the Company in the first quarter of fiscal 2018. The Company is currently evaluating the potential impact of implementation of this updated authoritative guidance on its consolidated financial statements. |
Summary_of_Significant_Account1
Summary of Significant Accounting Policies (Tables) | 3 Months Ended | |||||||
Jun. 30, 2014 | ||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' | |||||||
Stock-based compensation expense | ' | |||||||
The following table shows total share-based compensation expense included in the consolidated statements of comprehensive income (loss) for the three months ended June 30, 2014 and 2013: | ||||||||
Three Months Ended June 30, | ||||||||
2014 | 2013 | |||||||
Costs and expenses: | ||||||||
Cost of revenue | $ | 86 | $ | 74 | ||||
Research and development costs | 83 | 42 | ||||||
Selling, general and administrative | 621 | 425 | ||||||
Total share-based compensation | 790 | 541 | ||||||
Income tax benefit | (263 | ) | (168 | ) | ||||
Decrease in net income | $ | 527 | $ | 373 | ||||
Fair_Value_Measurements_Tables
Fair Value Measurements (Tables) | 3 Months Ended | |||||||||||||||
Jun. 30, 2014 | ||||||||||||||||
Fair Value Disclosures [Abstract] | ' | |||||||||||||||
Fair value of assets and liabilities on a recurring basis | ' | |||||||||||||||
The following tables set forth by level within the fair value hierarchy the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis at June 30, 2014 and March 31, 2014: | ||||||||||||||||
Balance at | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Unobservable Inputs (Level 3) | |||||||||||||
June 30, | ||||||||||||||||
2014 | ||||||||||||||||
ASSETS | ||||||||||||||||
Cash and cash equivalents (1) | $ | 107,748 | $ | 107,748 | $ | — | $ | — | ||||||||
Restricted cash | 2,605 | 2,605 | — | — | ||||||||||||
Marketable securities (2) | 8,687 | 8,687 | — | — | ||||||||||||
$ | 119,040 | $ | 119,040 | $ | — | $ | — | |||||||||
LIABILITIES | ||||||||||||||||
Contingent consideration related to acquisitions | $ | 15,517 | $ | — | $ | — | $ | 15,517 | ||||||||
$ | 15,517 | $ | — | $ | — | $ | 15,517 | |||||||||
Balance at | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Unobservable Inputs (Level 3) | |||||||||||||
March 31, | ||||||||||||||||
2014 | ||||||||||||||||
ASSETS | ||||||||||||||||
Cash and cash equivalents (1) | $ | 103,145 | $ | 103,145 | $ | — | $ | — | ||||||||
Restricted cash | 4,351 | 4,351 | — | — | ||||||||||||
Marketable securities (2) | 10,656 | 10,656 | — | — | ||||||||||||
$ | 118,152 | $ | 118,152 | $ | — | $ | — | |||||||||
LIABILITIES | ||||||||||||||||
Contingent consideration related to acquisitions | $ | 14,913 | $ | — | $ | — | $ | 14,913 | ||||||||
$ | 14,913 | $ | — | $ | — | $ | 14,913 | |||||||||
___________________________________ | ||||||||||||||||
(1) Cash and cash equivalents consists of money market funds. | ||||||||||||||||
(2) Marketable securities consist of fixed-income securities, including certificates of deposit and municipal securities. | ||||||||||||||||
Company's assets and liabilities measured at fair value using significant unobservable inputs (Level 3) | ' | |||||||||||||||
The following table presents activity in the Company’s financial assets and liabilities measured at fair value using significant unobservable inputs (Level 3), as of and for the three months ended June 30, 2014: | ||||||||||||||||
Total Liabilities | ||||||||||||||||
Balance as of April 1, 2014 | $ | 14,913 | ||||||||||||||
Fair value adjustments | 604 | |||||||||||||||
Balance as of June 30, 2014 | $ | 15,517 | ||||||||||||||
Goodwill_Tables
Goodwill (Tables) | 3 Months Ended | |||||||||||||||
Jun. 30, 2014 | ||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ' | |||||||||||||||
Summary of Goodwill | ' | |||||||||||||||
Goodwill by division consists of the following: | ||||||||||||||||
March 31, | Acquisitions | Impairment | June 30, | |||||||||||||
2014 | 2014 | |||||||||||||||
QSI Dental Division (1) | $ | 7,289 | $ | — | $ | — | $ | 7,289 | ||||||||
NextGen Division | 33,225 | — | — | 33,225 | ||||||||||||
RCM Services Division | 32,290 | — | — | 32,290 | ||||||||||||
Total goodwill | $ | 72,804 | $ | — | $ | — | $ | 72,804 | ||||||||
(1) QSI Dental Division goodwill is presented on a basis consistent with that of the management reporting structures within QSI. For the purposes of testing goodwill for impairment annually and as otherwise may be required, however, the QSI Dental Division goodwill is allocated to all business units that derive cash flows from the products associated with the acquired goodwill. For all periods presented in this report, the allocation resulted in substantially all of such goodwill being ascribed to the NextGen Division. |
Intangible_Assets_Tables
Intangible Assets (Tables) | 3 Months Ended | |||||||||||||||
Jun. 30, 2014 | ||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ' | |||||||||||||||
Intangible assets, other than capitalized software development costs | ' | |||||||||||||||
The Company’s definite-lived intangible assets, other than capitalized software development costs, are summarized as follows: | ||||||||||||||||
June 30, 2014 | ||||||||||||||||
Customer Relationships | Trade Name & Contracts | Software Technology | Total | |||||||||||||
Gross carrying amount | $ | 22,050 | $ | 3,368 | $ | 23,510 | $ | 48,928 | ||||||||
Accumulated amortization | (12,702 | ) | (1,732 | ) | (3,319 | ) | (17,753 | ) | ||||||||
Net intangible assets | $ | 9,348 | $ | 1,636 | $ | 20,191 | $ | 31,175 | ||||||||
March 31, 2014 | ||||||||||||||||
Customer Relationships | Trade Name & Contracts | Software Technology | Total | |||||||||||||
Gross carrying amount | $ | 22,050 | $ | 3,368 | $ | 23,510 | $ | 48,928 | ||||||||
Accumulated amortization | (11,837 | ) | (1,599 | ) | (2,476 | ) | (15,912 | ) | ||||||||
Net intangible assets | $ | 10,213 | $ | 1,769 | $ | 21,034 | $ | 33,016 | ||||||||
Activity related to the intangible assets | ' | |||||||||||||||
Activity related to the intangible assets for the three months ended June 30, 2014 and 2013 is summarized as follows: | ||||||||||||||||
Customer Relationships | Trade Name & Contracts | Software Technology | Total | |||||||||||||
Balance as of April 1, 2014 | $ | 10,213 | $ | 1,769 | $ | 21,034 | $ | 33,016 | ||||||||
Amortization (1) | (865 | ) | (133 | ) | (843 | ) | (1,841 | ) | ||||||||
Balance as of June 30, 2014 | $ | 9,348 | $ | 1,636 | $ | 20,191 | $ | 31,175 | ||||||||
Customer Relationships | Trade Name & Contracts | Software Technology | Total | |||||||||||||
Balance as of April 1, 2013 | $ | 13,128 | $ | 906 | $ | 13,516 | $ | 27,550 | ||||||||
Amortization (1) | (1,054 | ) | (80 | ) | (732 | ) | (1,866 | ) | ||||||||
Balance as of June 30, 2013 | $ | 12,074 | $ | 826 | $ | 12,784 | $ | 25,684 | ||||||||
_______________________________ | ||||||||||||||||
(1) Amortization of the customer relationships and the trade name & contracts intangible assets is included in operating expenses and amortization of the software technology intangible assets is included in cost of revenue for software and hardware. | ||||||||||||||||
Estimated amortization of intangible assets with determinable lives | ' | |||||||||||||||
The following table represents the remaining estimated amortization of definite-lived intangible assets as of June 30, 2014: | ||||||||||||||||
For the year ended March 31, | ||||||||||||||||
2015 (remaining nine months) | $ | 5,286 | ||||||||||||||
2016 | 7,024 | |||||||||||||||
2017 | 6,553 | |||||||||||||||
2018 | 4,301 | |||||||||||||||
2019 | 3,517 | |||||||||||||||
2020 and beyond | 4,494 | |||||||||||||||
Total | $ | 31,175 | ||||||||||||||
Approximately 95% of the acquired intangible assets are expected to be deductible for income tax purposes over the periods prescribed by the IRC. |
Capitalized_Software_Costs_Tab
Capitalized Software Costs (Tables) | 3 Months Ended | |||||||
Jun. 30, 2014 | ||||||||
Research and Development [Abstract] | ' | |||||||
Capitalized software development costs | ' | |||||||
The Company’s capitalized software development costs are summarized as follows: | ||||||||
June 30, | March 31, 2014 | |||||||
2014 | ||||||||
Gross carrying amount | $ | 103,358 | $ | 100,455 | ||||
Accumulated amortization | (64,906 | ) | (61,303 | ) | ||||
Net capitalized software costs | $ | 38,452 | $ | 39,152 | ||||
Activity related to net capitalized software costs | ' | |||||||
Activity related to net capitalized software costs for the three months ended June 30, 2014 and 2013 is summarized as follows: | ||||||||
2014 | 2013 | |||||||
Balance as of April 1 | $ | 39,152 | $ | 39,781 | ||||
Capitalized | 2,902 | 7,300 | ||||||
Amortization | (3,602 | ) | (2,679 | ) | ||||
Balance as of June 30 | $ | 38,452 | $ | 44,402 | ||||
Estimated amortization of capitalized software costs | ' | |||||||
The following table presents the remaining estimated amortization of capitalized software costs as of June 30, 2014. The estimated amortization is comprised of (i) amortization of released products and (ii) the expected amortization for products that are not yet available for sale based on their estimated economic lives and projected general release dates. | ||||||||
For the year ended March 31, | ||||||||
2015 (remaining nine months) | $ | 11,500 | ||||||
2016 | 13,800 | |||||||
2017 | 6,700 | |||||||
2018 | 2,900 | |||||||
2019 | 2,700 | |||||||
2020 and beyond | 852 | |||||||
Total | $ | 38,452 | ||||||
Composition_of_Certain_Financi1
Composition of Certain Financial Statement Captions (Tables) | 3 Months Ended | |||||||
Jun. 30, 2014 | ||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' | |||||||
Summary of Accounts Receivable | ' | |||||||
June 30, | March 31, | |||||||
2014 | 2014 | |||||||
Accounts receivable, gross | $ | 127,476 | $ | 127,006 | ||||
Sales return reserve | (10,774 | ) | (10,530 | ) | ||||
Allowance for doubtful accounts | (4,860 | ) | (6,295 | ) | ||||
Accounts receivable, net | $ | 111,842 | $ | 110,181 | ||||
Summary of Inventories | ' | |||||||
Inventories are summarized as follows: | ||||||||
June 30, | March 31, | |||||||
2014 | 2014 | |||||||
Computer systems and components | $ | 755 | $ | 834 | ||||
Summary of Equipment and improvements | ' | |||||||
Equipment and improvements are summarized as follows: | ||||||||
June 30, | March 31, | |||||||
2014 | 2014 | |||||||
Computer equipment | $ | 38,273 | $ | 37,322 | ||||
Furniture and fixtures | 9,571 | 9,395 | ||||||
Leasehold improvements | 9,934 | 8,874 | ||||||
57,778 | 55,591 | |||||||
Accumulated depreciation and amortization | (34,863 | ) | (32,790 | ) | ||||
Equipment and improvements, net | $ | 22,915 | $ | 22,801 | ||||
Summary of Current and non-current deferred revenue | ' | |||||||
Current and non-current deferred revenue are summarized as follows: | ||||||||
June 30, | March 31, | |||||||
2014 | 2014 | |||||||
Maintenance | $ | 14,942 | $ | 15,482 | ||||
Implementation services | 34,149 | 36,634 | ||||||
Annual license services | 11,351 | 11,176 | ||||||
Undelivered software and other (1) | 10,250 | 7,785 | ||||||
Deferred revenue | $ | 70,692 | $ | 71,077 | ||||
Deferred revenue, net of current | $ | 2,001 | $ | 2,187 | ||||
Summary of Accrued compensation and related benefits | ' | |||||||
Accrued compensation and related benefits are summarized as follows: | ||||||||
June 30, | March 31, | |||||||
2014 | 2014 | |||||||
Payroll, bonus and commission | $ | 3,473 | $ | 6,193 | ||||
Vacation | 10,421 | 9,760 | ||||||
Accrued compensation and related benefits | $ | 13,894 | $ | 15,953 | ||||
Summary of Other current liabilities | ' | |||||||
Other current and non-current liabilities are summarized as follows: | ||||||||
June 30, | March 31, | |||||||
2014 | 2014 | |||||||
Customer deposits and liabilities | $ | 3,699 | $ | 76 | ||||
Self insurance reserve | 2,675 | 2,090 | ||||||
Care services liabilities | 2,605 | 4,351 | ||||||
Accrued EDI expense | 1,978 | 1,702 | ||||||
Accrued royalties | 1,423 | 1,418 | ||||||
Accrued consulting | 1,311 | 1,707 | ||||||
Contingent consideration and other liabilities related to acquisitions | 978 | 1,052 | ||||||
Deferred rent | 843 | 964 | ||||||
Users group meeting deposits | 549 | — | ||||||
Professional services | 303 | 170 | ||||||
Accrued travel | 251 | 369 | ||||||
Outside commission payable | 144 | 255 | ||||||
Other accrued expenses | 3,857 | 4,128 | ||||||
Other current liabilities | $ | 20,616 | $ | 18,282 | ||||
Contingent consideration and other liabilities related to acquisitions | $ | 15,030 | $ | 14,736 | ||||
Deferred rent | 3,482 | 3,509 | ||||||
Income tax payable | 804 | 841 | ||||||
Other non-current liabilities | $ | 19,316 | $ | 19,086 | ||||
Earnings_Per_Share_Tables
Earnings Per Share (Tables) | 3 Months Ended | |||||||
Jun. 30, 2014 | ||||||||
Earnings Per Share [Abstract] | ' | |||||||
Weighted-average shares outstanding for basic and diluted net income per share | ' | |||||||
The Company provides presentation of “basic” and “diluted” earnings per share (“EPS”). Shares discussed below are in thousands. | ||||||||
Three Months Ended June 30, | ||||||||
2014 | 2013 | |||||||
Net income | $ | 5,163 | $ | 12,945 | ||||
Basic net income per share: | ||||||||
Weighted-average shares outstanding — Basic | 60,230 | 59,559 | ||||||
Basic net income per common share | $ | 0.09 | $ | 0.22 | ||||
Net income | $ | 5,163 | $ | 12,945 | ||||
Diluted net income per share: | ||||||||
Weighted-average shares outstanding — Basic | 60,230 | 59,559 | ||||||
Effect of potentially dilutive securities | 540 | 13 | ||||||
Weighted-average shares outstanding — Diluted | 60,770 | 59,572 | ||||||
Diluted net income per common share | $ | 0.08 | $ | 0.22 | ||||
Share_Based_Awards_Tables
Share Based Awards (Tables) | 3 Months Ended | |||||||||||||
Jun. 30, 2014 | ||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' | |||||||||||||
Summary of Stock Option Activity | ' | |||||||||||||
A summary of stock option transactions during the three months ended June 30, 2014 follows: | ||||||||||||||
Number of | Weighted- | Weighted- | Aggregate | |||||||||||
Shares | Average | Average | Intrinsic | |||||||||||
Exercise | Remaining | Value | ||||||||||||
Price | Contractual | (in thousands) | ||||||||||||
per Share | Life (years) | |||||||||||||
Outstanding, April 1, 2014 | 1,370,101 | $ | 27.85 | 5.8 | ||||||||||
Granted | 439,650 | 15.99 | 7.9 | |||||||||||
Exercised | — | — | 0 | $ | — | |||||||||
Forfeited/Canceled | (30,200 | ) | 26.24 | 6.3 | ||||||||||
Outstanding, June 30, 2014 | 1,779,551 | $ | 24.94 | 6.1 | $ | 26 | ||||||||
Vested and expected to vest, June 30, 2014 | 1,678,763 | $ | 25.12 | 6.1 | $ | 24 | ||||||||
Exercisable, June 30, 2014 | 571,981 | $ | 30.9 | 4.7 | $ | — | ||||||||
Schedule of Share Based Compensation Valuation Assumption | ' | |||||||||||||
The Company utilizes the Black-Scholes valuation model for estimating the fair value of share-based compensation with the following assumptions: | ||||||||||||||
Three Months Ended June 30, 2014 | Three Months Ended June 30, 2013 | |||||||||||||
Expected life | 4.8 years | 4.9 years | ||||||||||||
Expected volatility | 36.60% | 43.70% | ||||||||||||
Expected dividends | 4.30% | 3.90% | ||||||||||||
Risk-free rate | 1.70% | 1.00% | ||||||||||||
Summary of stock options granted | ' | |||||||||||||
A summary of stock options granted under the 2005 Plan during fiscal years 2015 and 2014 is as follows: | ||||||||||||||
Option Grant Date | Number of Shares | Exercise Price | Vesting Terms (1) | Expires | ||||||||||
June 3, 2014 | 439,650 | $ | 15.99 | Five years | June 3, 2022 | |||||||||
Fiscal year 2015 option grants | 439,650 | |||||||||||||
August 15, 2013 | 85,000 | $ | 20.85 | Five years | August 15, 2021 | |||||||||
July 30, 2013 | 28,000 | $ | 22.59 | Five years | July 30, 2021 | |||||||||
May 29, 2013 | 356,000 | $ | 17.95 | Five years | May 29, 2021 | |||||||||
Fiscal year 2014 option grants | 469,000 | |||||||||||||
__________________________________ | ||||||||||||||
(1) Options vest in equal annual installments on each grant anniversary date commencing one year following the date of grant. | ||||||||||||||
Schedule of Performance Based Awards Under Incentive plan | ' | |||||||||||||
Share-based compensation expense recorded for these performance-based awards was $104 and $92 for the three months ended June 30, 2014 and 2013, respectively. | ||||||||||||||
Three Months Ended June 30, 2014 | Three Months Ended June 30, 2013 | |||||||||||||
Expected life | 4.8 years | 4.9 years | ||||||||||||
Expected volatility | 36.50% | 43.50% | ||||||||||||
Expected dividends | 4.30% | 3.70% | ||||||||||||
Risk-free rate | 1.60% | 1.40% | ||||||||||||
Schedule of Employee Stock Options and Performance Based Awards by Nonvested Stock options | ' | |||||||||||||
Non-vested stock option award activity, including employee stock options and performance-based awards, during the three months ended June 30, 2014 is summarized as follows: | ||||||||||||||
Non-Vested | Weighted- | |||||||||||||
Number of | Average | |||||||||||||
Shares | Grant-Date | |||||||||||||
Fair Value | ||||||||||||||
per Share | ||||||||||||||
Outstanding, April 1, 2014 | 991,560 | $ | 7.73 | |||||||||||
Granted | 439,650 | 3.5 | ||||||||||||
Vested | (193,440 | ) | 8.5 | |||||||||||
Forfeited/Canceled | (30,200 | ) | 7.66 | |||||||||||
Outstanding, June 30, 2014 | 1,207,570 | $ | 6.07 | |||||||||||
Restricted stock units award activity | ' | |||||||||||||
Restricted stock activity for the three months ended June 30, 2014 is summarized as follows: | ||||||||||||||
Number of | Weighted- | |||||||||||||
Shares | Average | |||||||||||||
Grant-Date | ||||||||||||||
Fair Value | ||||||||||||||
per Share | ||||||||||||||
Outstanding, April 1, 2014 | 64,571 | $ | 20.74 | |||||||||||
Granted | 788 | 17.14 | ||||||||||||
Vested | (12,066 | ) | 21.68 | |||||||||||
Outstanding, June 30, 2014 | 53,293 | $ | 21.21 | |||||||||||
Operating_Segment_Information_
Operating Segment Information (Tables) | 3 Months Ended | ||||||||
Jun. 30, 2014 | |||||||||
Segment Reporting [Abstract] | ' | ||||||||
Operating segment data | ' | ||||||||
Operating segment data is as follows: | |||||||||
Three Months Ended June 30, | |||||||||
2014 | 2013 | ||||||||
Revenue: | |||||||||
QSI Dental Division | $ | 4,243 | $ | 5,151 | |||||
NextGen Division | 91,714 | 81,535 | |||||||
Hospital Solutions Division | 4,176 | 5,467 | |||||||
RCM Services Division | 17,761 | 17,376 | |||||||
Consolidated revenue | $ | 117,894 | $ | 109,529 | |||||
Operating income (loss): | |||||||||
QSI Dental Division | $ | 935 | $ | 1,641 | |||||
NextGen Division | 43,965 | 36,629 | |||||||
Hospital Solutions Division | (1,125 | ) | (704 | ) | |||||
RCM Services Division | 1,836 | 3,022 | |||||||
Corporate and unallocated | (37,856 | ) | (21,035 | ) | |||||
Consolidated operating income | $ | 7,755 | $ | 19,553 | |||||
Summary_of_Significant_Account2
Summary of Significant Accounting Policies (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Jun. 30, 2014 | Jun. 30, 2013 |
Costs and expenses: | ' | ' |
Total share-based compensation | $790 | $541 |
Software and hardware charges | -6,641 | -4,934 |
Income tax benefit | -263 | -168 |
Decrease in net income | 527 | 373 |
Cost of revenue [Member] | ' | ' |
Costs and expenses: | ' | ' |
Total share-based compensation | 86 | 74 |
Research and development costs [Member] | ' | ' |
Costs and expenses: | ' | ' |
Total share-based compensation | 83 | 42 |
Selling, general and administrative [Member] | ' | ' |
Costs and expenses: | ' | ' |
Total share-based compensation | $621 | $425 |
Software Technology [Member] | ' | ' |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ' | ' |
Useful life | ' | '3 years |
Fair_Value_Measurements_Detail
Fair Value Measurements (Details) (Fair Value, Measurements, Recurring [Member], USD $) | Jun. 30, 2014 | Mar. 31, 2014 | ||
In Thousands, unless otherwise specified | ||||
ASSETS | ' | ' | ||
Cash and cash equivalents | $107,748 | [1] | $103,145 | [1] |
Restricted cash | 2,605 | 4,351 | ||
Marketable securities | 8,687 | [2] | 10,656 | [2] |
Total | 119,040 | 118,152 | ||
LIABILITIES | ' | ' | ||
Contingent consideration related to acquisitions | 15,517 | 14,913 | ||
Total | 15,517 | 14,913 | ||
Quoted Prices in Active Markets for Identical Assets (Level 1) | ' | ' | ||
ASSETS | ' | ' | ||
Cash and cash equivalents | 107,748 | [1] | 103,145 | [1] |
Restricted cash | 2,605 | 4,351 | ||
Marketable securities | 8,687 | [2] | 10,656 | [2] |
Total | 119,040 | 118,152 | ||
LIABILITIES | ' | ' | ||
Contingent consideration related to acquisitions | 0 | 0 | ||
Total | 0 | 0 | ||
Significant Other Observable Inputs (Level 2) | ' | ' | ||
ASSETS | ' | ' | ||
Cash and cash equivalents | 0 | [1] | 0 | [1] |
Restricted cash | 0 | 0 | ||
Marketable securities | 0 | [2] | 0 | [2] |
Total | 0 | 0 | ||
LIABILITIES | ' | ' | ||
Contingent consideration related to acquisitions | 0 | 0 | ||
Total | 0 | 0 | ||
Unobservable Inputs (Level 3) | ' | ' | ||
ASSETS | ' | ' | ||
Cash and cash equivalents | 0 | [1] | 0 | [1] |
Restricted cash | 0 | 0 | ||
Marketable securities | 0 | [2] | 0 | [2] |
Total | 0 | 0 | ||
LIABILITIES | ' | ' | ||
Contingent consideration related to acquisitions | 15,517 | 14,913 | ||
Total | $15,517 | $14,913 | ||
[1] | Cash and cash equivalents consists of money market funds. | |||
[2] | Marketable securities consist of fixed-income securities, including certificates of deposit and municipal securities. |
Fair_Value_Measurements_Detail1
Fair Value Measurements (Details 1) (USD $) | 3 Months Ended |
In Thousands, unless otherwise specified | Jun. 30, 2014 |
Company's assets measured at fair value using significant unobservable inputs (Level 3) | ' |
Balance as of April 1, 2014 | $14,913 |
Fair value adjustments | 604 |
Balance as of June 30, 2014 | $15,517 |
Fair_Value_Measurement_Details
Fair Value Measurement (Details Textual) (USD $) | 3 Months Ended |
In Millions, unless otherwise specified | Jun. 30, 2014 |
Fair Value Measurements (Textual) | ' |
Fair Value Adjustments | $0 |
Goodwill_Details
Goodwill (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Jun. 30, 2014 | |
Goodwill [Roll Forward] | ' | |
Goodwill, beginning of period | $72,804 | |
Acquisitions | 0 | |
Impairment | 0 | |
Goodwill, end of period | 72,804 | |
QSI Dental Division [Member] | ' | |
Goodwill [Roll Forward] | ' | |
Goodwill, beginning of period | 7,289 | [1] |
Acquisitions | 0 | [1] |
Impairment | 0 | [1] |
Goodwill, end of period | 7,289 | [1] |
NextGen Division [Member] | ' | |
Goodwill [Roll Forward] | ' | |
Goodwill, beginning of period | 33,225 | |
Acquisitions | 0 | |
Impairment | 0 | |
Goodwill, end of period | 33,225 | |
RCM Services Division [Member] | ' | |
Goodwill [Roll Forward] | ' | |
Goodwill, beginning of period | 32,290 | |
Acquisitions | 0 | |
Impairment | 0 | |
Goodwill, end of period | $32,290 | |
[1] | QSI Dental Division goodwill is presented on a basis consistent with that of the management reporting structures within QSI. For the purposes of testing goodwill for impairment annually and as otherwise may be required, however, the QSI Dental Division goodwill is allocated to all business units that derive cash flows from the products associated with the acquired goodwill. For all periods presented in this report, the allocation resulted in substantially all of such goodwill being ascribed to the NextGen Division. |
Goodwill_Details_Textual
Goodwill (Details Textual) | Jun. 30, 2014 |
Goodwill and Intangible Assets Disclosure [Abstract] | ' |
Percent of goodwill expected to be deductible for income tax purposes | 70.00% |
Intangible_Assets_Details
Intangible Assets (Details) (USD $) | Jun. 30, 2014 | Mar. 31, 2014 | Jun. 30, 2013 | Mar. 31, 2012 |
In Thousands, unless otherwise specified | ||||
Intangible assets, other than capitalized software development costs | ' | ' | ' | ' |
Gross carrying amount | $48,928 | $48,928 | ' | ' |
Accumulated amortization | -17,753 | -15,912 | ' | ' |
Net intangible assets | 31,175 | 33,016 | 25,684 | 27,550 |
Customer Relationships [Member] | ' | ' | ' | ' |
Intangible assets, other than capitalized software development costs | ' | ' | ' | ' |
Gross carrying amount | 22,050 | 22,050 | ' | ' |
Accumulated amortization | -12,702 | -11,837 | ' | ' |
Net intangible assets | 9,348 | 10,213 | 12,074 | 13,128 |
Trade Name & Contracts [Member] | ' | ' | ' | ' |
Intangible assets, other than capitalized software development costs | ' | ' | ' | ' |
Gross carrying amount | 3,368 | 3,368 | ' | ' |
Accumulated amortization | -1,732 | -1,599 | ' | ' |
Net intangible assets | 1,636 | 1,769 | 826 | 906 |
Software Technology [Member] | ' | ' | ' | ' |
Intangible assets, other than capitalized software development costs | ' | ' | ' | ' |
Gross carrying amount | 23,510 | 23,510 | ' | ' |
Accumulated amortization | -3,319 | -2,476 | ' | ' |
Net intangible assets | $20,191 | $21,034 | $12,784 | $13,516 |
Intangible_Assets_Details_1
Intangible Assets (Details 1) (USD $) | 3 Months Ended | ||||
In Thousands, unless otherwise specified | Jun. 30, 2014 | Jun. 30, 2013 | Mar. 31, 2012 | ||
Activity Related to the intangible assets | ' | ' | ' | ||
Balance at beginning of period | $33,016 | ' | $27,550 | ||
Amortization | -1,841 | [1] | -1,866 | [1] | ' |
Balance at end of period | 31,175 | 25,684 | 27,550 | ||
Customer Relationships [Member] | ' | ' | ' | ||
Activity Related to the intangible assets | ' | ' | ' | ||
Balance at beginning of period | 10,213 | ' | 13,128 | ||
Amortization | -865 | [1] | -1,054 | [1] | ' |
Balance at end of period | 9,348 | 12,074 | 13,128 | ||
Trade Name & Contracts [Member] | ' | ' | ' | ||
Activity Related to the intangible assets | ' | ' | ' | ||
Balance at beginning of period | 1,769 | ' | 906 | ||
Amortization | -133 | [1] | -80 | [1] | ' |
Balance at end of period | 1,636 | 826 | 906 | ||
Software Technology [Member] | ' | ' | ' | ||
Activity Related to the intangible assets | ' | ' | ' | ||
Balance at beginning of period | 21,034 | ' | 13,516 | ||
Amortization | -843 | [1] | -732 | [1] | ' |
Balance at end of period | $20,191 | $12,784 | $13,516 | ||
[1] | Amortization of the customer relationships and the trade name & contracts intangible assets is included in operating expenses and amortization of the software technology intangible assets is included in cost of revenue for software and hardware. |
Intangible_Assets_Details_2
Intangible Assets (Details 2) (USD $) | Jun. 30, 2014 | Mar. 31, 2014 | Jun. 30, 2013 | Mar. 31, 2012 |
In Thousands, unless otherwise specified | ||||
Estimated amortization of intangible assets with determinable lives | ' | ' | ' | ' |
2015 (remaining nine months) | $5,286 | ' | ' | ' |
2016 | 7,024 | ' | ' | ' |
2017 | 6,553 | ' | ' | ' |
2018 | 4,301 | ' | ' | ' |
2019 | 3,517 | ' | ' | ' |
2020 and beyond | 4,494 | ' | ' | ' |
Net intangible assets | $31,175 | $33,016 | $25,684 | $27,550 |
Intangible_Assets_Details_Text
Intangible Assets (Details Textual) (Mirth [Member]) | 0 Months Ended |
Sep. 09, 2013 | |
Mirth [Member] | ' |
Finite Lived Intangible Assets [Line Items] | ' |
Percentage of acquired intangible assets that are expected to be deductible for income tax purposes | 95.00% |
Capitalized_Software_Costs_Det
Capitalized Software Costs (Details) (USD $) | Jun. 30, 2014 | Mar. 31, 2014 | Jun. 30, 2013 | Mar. 31, 2012 |
In Thousands, unless otherwise specified | ||||
Capitalized software development costs | ' | ' | ' | ' |
Gross carrying amount | $103,358 | $100,455 | ' | ' |
Accumulated amortization | -64,906 | -61,303 | ' | ' |
Net capitalized software costs | $38,452 | $39,152 | $44,402 | $39,781 |
Capitalized_Software_Costs_Det1
Capitalized Software Costs (Details 1) (USD $) | 3 Months Ended | ||
In Thousands, unless otherwise specified | Jun. 30, 2014 | Jun. 30, 2013 | Mar. 31, 2012 |
Activity related to net capitalized software costs | ' | ' | ' |
Balance as of April 1 | $39,152 | ' | $39,781 |
Capitalized | 2,902 | 7,300 | ' |
Amortization | -3,602 | -2,679 | ' |
Balance as of June 30 | 38,452 | 44,402 | 39,781 |
Estimated amortization of capitalized software costs | ' | ' | ' |
2015 (remaining nine months) | 11,500 | ' | ' |
2016 | 13,800 | ' | ' |
2017 | 6,700 | ' | ' |
2018 | 2,900 | ' | ' |
2019 | 2,700 | ' | ' |
2020 and beyond | 852 | ' | ' |
Total | $38,452 | ' | ' |
Composition_of_Certain_Financi2
Composition of Certain Financial Statement Captions (Details) (USD $) | Jun. 30, 2014 | Mar. 31, 2014 |
In Thousands, unless otherwise specified | ||
Summary of Accounts Receivable | ' | ' |
Accounts receivable, gross | $127,476 | $127,006 |
Sales return reserve | -10,774 | -10,530 |
Allowance for doubtful accounts | -4,860 | -6,295 |
Accounts receivable, net | 111,842 | 110,181 |
Summary of Inventories | ' | ' |
Computer systems and components | 755 | 834 |
Summary of Equipment and improvements | ' | ' |
Computer equipment | 38,273 | 37,322 |
Furniture and fixtures | 9,571 | 9,395 |
Leasehold improvements | 9,934 | 8,874 |
Equipment and improvements, gross | 57,778 | 55,591 |
Accumulated depreciation | -34,863 | -32,790 |
Equipment and improvements, net | 22,915 | 22,801 |
Summary of Current and non-current deferred revenue | ' | ' |
Maintenance | 14,942 | 15,482 |
Implementation services | 34,149 | 36,634 |
Annual license services | 11,351 | 11,176 |
Undelivered software, subscriptions and other | 10,250 | 7,785 |
Deferred revenue | 70,692 | 71,077 |
Deferred revenue, net of current | 2,001 | 2,187 |
Summary of Accrued compensation and related benefits | ' | ' |
Payroll, bonus and commission | 3,473 | 6,193 |
Vacation | 10,421 | 9,760 |
Accrued compensation and related benefits | 13,894 | 15,953 |
Summary of Other current liabilities | ' | ' |
Customer deposits | 3,699 | 76 |
Self insurance reserve | 2,675 | 2,090 |
Contingent consideration and other liabilities related to acquisitions | 978 | 1,052 |
Care services liabilities | 2,605 | 4,351 |
Accrued EDI expense | 1,978 | 1,702 |
Accrued royalties | 1,423 | 1,418 |
Accrued consulting | 1,311 | 1,707 |
Deferred rent | 843 | 964 |
Users group meeting deposits | 549 | 0 |
Professional services | 303 | 170 |
Accrued travel | 251 | 369 |
Outside commission payable | 144 | 255 |
Other accrued expenses | 3,857 | 4,128 |
Other current liabilities | 20,616 | 18,282 |
Contingent consideration and other liabilities related to acquisitions | 15,030 | 14,736 |
Deferred rent | 3,482 | 3,509 |
Income tax payable | 804 | 841 |
Other noncurrent liabilities | $19,316 | $19,086 |
Income_Taxes_Details
Income Taxes (Details) (USD $) | 3 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2013 | |
Income Tax Disclosure [Abstract] | ' | ' |
Provision for income taxes | $2,655,000 | $6,385,000 |
Effective tax rate (as a percentage) | 34.00% | 33.00% |
Liability for unrecognized tax benefits | 759,000 | ' |
Decrease in liability for unrecognized tax benefits due to the expiration of the statute of limitations of prior year tax positions of acquired companies | $0 | ' |
Period within which the company does not anticipate total unrecognized tax benefits to change | 'within the next twelve months | ' |
Earnings_Per_Share_Details
Earnings Per Share (Details) (USD $) | 3 Months Ended | |
In Thousands, except Per Share data, unless otherwise specified | Jun. 30, 2014 | Jun. 30, 2013 |
Weighted-average shares outstanding for basic and diluted net income per share | ' | ' |
Net income (in dollars) | $5,163 | $12,945 |
Basic net income per share: | ' | ' |
Weighted-average shares outstanding - Basic | 60,230 | 59,559 |
Basic net income per common share (in usd per share) | $0.09 | $0.22 |
Diluted net income per share: | ' | ' |
Weighted-average shares outstanding - Basic | 60,230 | 59,559 |
Effect of potentially dilutive securities | 540 | 13 |
Weighted-average shares outstanding - Diluted | 60,770 | 59,572 |
Diluted net income per common share (in usd per share) | $0.08 | $0.22 |
Earnings_Per_Share_Details_Tex
Earnings Per Share (Details Textual) | 3 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2013 | |
Earning Per Share (Textual) [Abstract] | ' | ' |
Options excluded from the computation of diluted net income per share | 1,492 | 1,227 |
Share_Based_Awards_Details
Share Based Awards (Details) (USD $) | 3 Months Ended | 12 Months Ended |
In Thousands, except Share data, unless otherwise specified | Jun. 30, 2014 | Mar. 31, 2013 |
Summary of Stock Option Activity | ' | ' |
Number of Shares Outstanding Beginning Balance | 1,370,101 | ' |
Weighted Average Exercise Price per Share Outstanding Beginning Balance | $27.85 | ' |
Weighted Average Remaining Contractual Life Outstanding Beginning Balance (in years) | '6 years 1 month 6 days | '5 years 6 months |
Number of Share Granted | 439,650 | ' |
Weighted Average Exercise Price per Share Granted | $15.99 | ' |
Weighted Average Remaining Contractual Life Granted (in years) | '7 years 10 months 24 days | ' |
Number of Shares Exercised | 0 | ' |
Weighted Average Exercise Price per Share Exercised | $0 | ' |
Aggregate Intrinsic Value, Exercised | $0 | ' |
Number of Shares Forfeited/Canceled | -30,200 | ' |
Weighted Average Exercise Price per Share Forfeited/Canceled | $26.24 | ' |
Weighted Average Remaining Contractual Life Forfeited/Canceled (in years) | '6 years 3 months 18 days | ' |
Number of Shares Outstanding Ending Balance | 1,779,551 | ' |
Weighted Average Exercise Price per Share Outstanding Ending Balance | $24.94 | ' |
Weighted Average Remaining Contractual Life Outstanding Ending Balance (in years) | '6 years 1 month 6 days | '5 years 6 months |
Aggregate Intrinsic Value Outstanding Ending Balance | 26 | ' |
Number of Shares Vested and expected to vest | 1,678,763 | ' |
Weighted Average Exercise Price per Share Vested and expected to vest | $25.12 | ' |
Weighted Average Remaining Contractual Life Vested and expected to vest (in years) | '6 years 1 month 6 days | ' |
Aggregate Intrinsic Value Vested and expected to vest | 24 | ' |
Number of Shares Exercisable | 571,981 | ' |
Weighted Average Exercise Price per Share Exercisable | $30.90 | ' |
Weighted Average Remaining Contractual Life Exercisable (in years) | '4 years 8 months 12 days | ' |
Aggregate Intrinsic Value Exercisable | $0 | ' |
Share_Based_Awards_Details_1
Share Based Awards (Details 1) | 3 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2013 | |
Schedule of Share Based Compensation Valuation Assumption | ' | ' |
Expected life (in years) | '4 years 9 months 18 days | '4 years 10 months 24 days |
Expected volatility | 36.60% | 43.70% |
Expected Dividends | 4.30% | 3.90% |
Risk-free rate | 1.70% | 1.00% |
Share_Based_Awards_Details_2
Share Based Awards (Details 2) (USD $) | 3 Months Ended | |
Jun. 30, 2014 | ||
Summary of stock options granted | ' | |
Number of Share Granted | 439,650 | |
2005 Stock Options Plan [Member] | ' | |
Summary of stock options granted | ' | |
Vesting Terms | '5 years | |
2005 Stock Options Plan [Member] | June 3, 2014 [Member] | ' | |
Summary of stock options granted | ' | |
Option Grant Date | 'June 3, 2014 | |
Number of Share Granted | 439,650 | |
Exercise Price Granted (in usd per share) | 15.99 | |
Vesting Terms | '5 years | [1] |
Option Grants Expires | 3-Jun-22 | |
2005 Stock Options Plan [Member] | Fiscal year 2014 option grants [Member] | ' | |
Summary of stock options granted | ' | |
Option Grant Date | 'Fiscal year 2015 option grants | |
Number of Share Granted | 439,650 | |
2005 Stock Options Plan [Member] | August 15, 2013 [Member] | ' | |
Summary of stock options granted | ' | |
Option Grant Date | 'August 15, 2013 | |
Number of Share Granted | 85,000 | |
Exercise Price Granted (in usd per share) | 20.85 | |
Vesting Terms | '5 years | [1] |
Option Grants Expires | 15-Aug-21 | |
2005 Stock Options Plan [Member] | July 30, 2013 [Member] | ' | |
Summary of stock options granted | ' | |
Option Grant Date | 'July 30, 2013 | |
Number of Share Granted | 28,000 | |
Exercise Price Granted (in usd per share) | 22.59 | |
Vesting Terms | '5 years | [1] |
Option Grants Expires | 30-Jul-21 | |
2005 Stock Options Plan [Member] | May 29, 2013 [Member] | ' | |
Summary of stock options granted | ' | |
Option Grant Date | 'May 29, 2013 | |
Number of Share Granted | 356,000 | |
Exercise Price Granted (in usd per share) | 17.95 | |
Vesting Terms | '5 years | [1] |
Option Grants Expires | 29-May-21 | |
2005 Stock Options Plan [Member] | Fiscal year 2013 option grants [Member] | ' | |
Summary of stock options granted | ' | |
Option Grant Date | 'Fiscal year 2014 option grants | |
Number of Share Granted | 469,000 | |
[1] | Options vest in equal annual installments on each grant anniversary date commencing one year following the date of grant. |
Share_Based_Awards_Details_3
Share Based Awards (Details 3) | 3 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2013 | |
Schedule of Performance Based Awards Under Incentive plan | ' | ' |
Expected life (in years) | '4 years 9 months 18 days | '4 years 10 months 24 days |
Expected dividends | 4.30% | 3.90% |
Risk-free rate | 1.70% | 1.00% |
Performance Based Award [Member] | ' | ' |
Schedule of Performance Based Awards Under Incentive plan | ' | ' |
Expected life (in years) | '4 years 9 months 7 days | '4 years 10 months 24 days |
Expected volatility | 36.50% | 43.50% |
Expected dividends | 4.30% | 3.70% |
Risk-free rate | 1.60% | 1.40% |
Share_Based_Awards_Details_4
Share Based Awards (Details 4) (USD $) | 3 Months Ended |
Jun. 30, 2014 | |
Schedule of Employee Stock Options and Performance Based Awards by Nonvested Stock Options | ' |
Non-Vested Number of Shares Outstanding Beginning Balance | 991,560 |
Weighted Average Fair Value Price per Share Outstanding Beginning Balance | $7.73 |
Non-Vested Number of Shares Granted | 439,650 |
Weighted Average Fair Value per Share Price Granted | $3.50 |
Non-Vested Number of Shares Vested | -193,440 |
Weighted Average Fair Value per Share Price Vested | $8.50 |
Non-Vested Number of Shares Forfeited | -30,200 |
Weighted Average Fair Value per Share Price Forfeited | $7.66 |
Non-Vested Number of Share Outstanding Ending Balance | 1,207,570 |
Weighted Average Fair Value per Share Price Outstanding Ending Balance | $6.07 |
Share_Based_Awards_Details_5
Share Based Awards (Details 5) (Restricted Stock Units Award [Member], USD $) | 3 Months Ended |
Jun. 30, 2014 | |
Restricted Stock Units Award [Member] | ' |
Restricted stock units award activity | ' |
Number of Shares Outstanding Beginning Balance | 64,571 |
Weighted average Grant Date Fair value Per Share Outstanding Beginning Balance | $20.74 |
Number of Shares Granted | 788 |
Weighted average Grant Date Fair value Per Share Granted | $17.14 |
Number of Shares Vested | -12,066 |
Weighted average Grant Date Fair value Per Share Vested | $21.68 |
Weighted average Grant Date Fair value Per Share Outstanding Ending Balance | $21.21 |
Share_Based_Awards_Details_Tex
Share Based Awards (Details Textual) (USD $) | 3 Months Ended | 3 Months Ended | 3 Months Ended | 3 Months Ended | 3 Months Ended | |||||||||||||||
In Thousands, except Share data, unless otherwise specified | Jun. 30, 2014 | Jun. 30, 2013 | Mar. 31, 2014 | Jun. 30, 2014 | Jun. 30, 2014 | Jun. 30, 2013 | Mar. 31, 2014 | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Sep. 30, 1998 | Jun. 30, 2014 | Oct. 31, 2005 | Jun. 30, 2014 | Jun. 30, 2014 | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 |
Employee Stock Option [Member] | Restricted Stock Units Award [Member] | Restricted Stock Units Award [Member] | Restricted Stock Units Award [Member] | Employee Option [Member] | Employee Option [Member] | Director Options [Member] | Director Options [Member] | Nineteen Ninety Eight Plan [Member] | Nineteen Ninety Eight Plan [Member] | 2005 Stock Options Plan [Member] | 2005 Stock Options Plan [Member] | 2005 Stock Options Plan [Member] | Employee Stock Option [Member] | Performance Based Award [Member] | Performance Based Award [Member] | Performance Based Award [Member] | ||||
Restricted Stock Units Award [Member] | 2005 Stock Options Plan [Member] | 2005 Stock Options Plan [Member] | ||||||||||||||||||
Executive Officer [Member] | Executive Officer [Member] | |||||||||||||||||||
Share Based Awards (Textual) [Abstract] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Common stock reserved | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 8,000,000 | ' | 4,800,000 | ' | ' | ' | ' | ' |
Expiration date of options under 1998 Plan | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '10 years | ' | '10 years | ' | ' | ' | ' | ' | ' |
Outstanding options under 1998 and 2005 plan | 1,779,551 | ' | 1,370,101 | ' | ' | ' | ' | ' | ' | ' | ' | 20,000 | ' | 1,759,551 | ' | ' | ' | ' | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number | ' | ' | ' | ' | ' | ' | 64,571 | ' | ' | ' | ' | ' | ' | ' | ' | 53,293 | ' | ' | ' | ' |
Shares available for future grants | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 2,222,739 | ' | ' | ' | ' | ' | ' |
Expiration period (in years) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '8 years | ' | ' | '8 years | ' | ' | ' |
Weighted-average grant date fair value per share of stock options | $3.50 | $4.87 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Annualized forfeiture rate for employee options | ' | ' | ' | ' | ' | ' | ' | 8.40% | 8.10% | 0.00% | 0.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Options granted under 2005 plan | 439,650 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Vesting period (in years) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '5 years | ' | ' | '5 years | ' | ' | '3 years |
Maximum number of shares per employee (in shares) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 105,000 | ' | ' | 170,000 |
Compensation expense | $790 | $541 | ' | ' | $174 | $92 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $104 | $92 | ' |
Total unrecognized compensation costs | ' | ' | ' | 6,308 | 713 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Stock option recognized over weighted average period (in years) | ' | ' | ' | '3 years 10 months | '1 year 26 days | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Fair value of options vested | $1,645 | $1,057 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Commitments_Guarantees_and_Con1
Commitments Guarantees and Contingencies (Details Textual) | 3 Months Ended |
Jun. 30, 2014 | |
Commitments Guarantees and Contingencies (Textual) | ' |
Applicable program documentation period | '365 days |
Operating_Segment_Information_1
Operating Segment Information (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Jun. 30, 2014 | Jun. 30, 2013 |
segment | ||
Segment Reporting Information [Line Items] | ' | ' |
Number of reportable segments | 4 | ' |
Segment Operating Data | ' | ' |
Revenue | $117,894 | $109,529 |
Operating income | 7,755 | 19,553 |
QSI Dental Division [Member] | ' | ' |
Segment Operating Data | ' | ' |
Revenue | 4,243 | 5,151 |
Operating income | 935 | 1,641 |
NextGen Division [Member] | ' | ' |
Segment Operating Data | ' | ' |
Revenue | 91,714 | 81,535 |
Operating income | 43,965 | 36,629 |
Hospital Solutions Division [Member] | ' | ' |
Segment Operating Data | ' | ' |
Revenue | 4,176 | 5,467 |
Operating income | -1,125 | -704 |
RCM Services Division [Member] | ' | ' |
Segment Operating Data | ' | ' |
Revenue | 17,761 | 17,376 |
Operating income | 1,836 | 3,022 |
Unallocated corporate expense [Member] | ' | ' |
Segment Operating Data | ' | ' |
Operating income | -37,856 | -21,035 |
Unallocated corporate expense [Member] | Research and development costs [Member] | ' | ' |
Segment Operating Data | ' | ' |
Operating income | -16,236 | -5,614 |
Unallocated corporate expense [Member] | Amortization of capitalize software costs [Member] | ' | ' |
Segment Operating Data | ' | ' |
Operating income | -4,491 | -2,395 |
Unallocated corporate expense [Member] | Marketing expense [Member] | ' | ' |
Segment Operating Data | ' | ' |
Operating income | -3,229 | -2,167 |
Unallocated corporate expense [Member] | Other corporate and overhead costs [Member] | ' | ' |
Segment Operating Data | ' | ' |
Operating income | ($13,900) | ($10,859) |
Subsequent_Events_Details
Subsequent Events (Details) (Dividend Declared [Member], Subsequent Event [Member], USD $) | Jul. 23, 2014 |
Dividend Declared [Member] | Subsequent Event [Member] | ' |
Subsequent Event [Line Items] | ' |
Cash dividend (in usd per share) | $0.18 |