Nextgen Healthcare (NXGN) 8-K Results of Operations and Financial Condition

FOR IMMEDIATE RELEASE	For more information contact:
	Louis Silverman
	President and CEO
	Quality Systems, Inc.
	(949) 255-2600
	www.qsii.com
	Sean Collins
	Partner
	CCG Investor Relations
	(310) 231-8600
	www.ccgir.com

QUALITY SYSTEMS REPORTS FOURTH QUARTER AND
FISCAL YEAR-END RESULTS

IRVINE, Calif.--(BUSINESS WIRE)— June 10, 2008--Quality Systems, Inc. (NASDAQ:QSII - news) today announced the results of operations for its fiscal 2008 fourth quarter and fiscal year ended March 31, 2008. The Company posted net revenue of $51.2 million in the fourth quarter, a record for the Company, and an increase of 14% from the $45.1 million generated during the same quarter last year. The Company reported record net income of $11.3 million, an increase of 32% over net income of $8.5 million earned in the comparable quarter of the prior year. Fully diluted earnings per share was $0.41 in the quarter, also a record, and an increase of 32% over the fully diluted $0.31 per share earnings recorded in the same quarter last year.

For the quarter, the Company’s NextGen Healthcare Information Systems division posted record revenue of $47.3 million, up 16% over the same quarter prior year and record operating income of $19.1 million, up 24% over the same quarter of the prior year.

Revenue for the fiscal year ended March 31, 2008 was $186.5 million, an increase of 19% over fiscal year 2007 revenue of $157.2 million. Net income for fiscal year 2008 was $40.1 million, an increase of 21% over fiscal 2007’s net income of $33.2 million. Fully diluted earnings per share increased to $1.44 in fiscal year 2008 from $1.21 earned during fiscal year 2007, an increase of 19%.

Quality Systems, Inc. will hold a conference call to discuss fourth quarter and fiscal year end financial results June 10, 2008 at 4:30 p.m. EDT (1:30 p.m. PDT). To participate in the conference call, please dial the following number five to ten minutes prior to the scheduled conference call time: (877) 586-7724. There is no pass code required for this call. If you are unable to participate in the call at this time, a replay will be available on Tuesday, June 10, 2008 at 6:30 p.m. EDT through Tuesday, June 17, 2008 at midnight EDT. To access the replay dial (800) 642-1687 and enter the conference ID number 50252683.

A transcript of the conference call will be made available on the QSII web site (www.qsii.com).

About Quality Systems, Inc.

Quality Systems, Inc. and its NextGen Healthcare Information Systems subsidiary develop and market computer-based practice management, patient records, and connectivity and other applications and services for medical and dental group practices. Visit www.qsii.com and www.nextgen.com for additional information.

This news release may contain forward-looking statements within the meaning of the federal securities laws. Statements regarding future events, developments, the Company’s future performance, as well as management’s expectations, beliefs, intentions, plans, estimates or projections relating to the future (including, without limitation, statements concerning revenue and net income), are forward-looking statements within the meaning of these laws and involve a number of risks and uncertainties. Moreover, these forward-looking statements are subject to a number of risks and uncertainties, some of which are outlined below. As a result, actual results may vary materially from those anticipated by the forward-looking statements. Among the important factors that could cause actual results to differ materially from those indicated by such forward-looking statements are: the volume and timing of systems sales and installations; length of sales cycles and the installation process; the possibility that products will not achieve or sustain market acceptance; seasonal patterns of sales and customer buying behavior; the timing, cost and success or failure of new product and service introductions, development and product upgrade releases; undetected errors or bugs in software; changing economic, political or regulatory influences in the health-care industry; changes in product-pricing policies; availability of third-party products and components; competitive pressures including product offerings, pricing and promotional activities; the Company’s ability or inability to attract and retain qualified personnel; possible regulation of the Company’s software by the U.S. Food and Drug Administration; uncertainties concerning threatened, pending and new litigation against the Company including related professional services fees; uncertainties concerning the amount and timing of professional fees incurred by the Company generally; changes of accounting estimates and assumptions used to prepare the prior periods’ financial statements; general economic conditions; and the risk factors detailed from time to time in Quality Systems’ periodic reports and registration statements filed with the Securities and Exchange Commission. A significant portion of the Company’s quarterly sales of software product licenses and computer hardware is concluded in the last month of the fiscal quarter, generally with a concentration of such revenues earned in the final ten business days of that month. Due to these and other factors, the Company’s revenues and operating results are very difficult to forecast. A major portion of the Company’s costs and expenses, such as personnel and facilities, are of a fixed nature and, accordingly, a shortfall or decline in quarterly and/or annual revenues typically results in lower profitability or losses. As a result, comparison of the Company’s period-to-period financial performance is not necessarily meaningful and should not be relied upon as an indicator of future performance. The Company undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.

[financial highlights follow]

QUALITY SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(Unaudited)

	Three Months Ended						Twelve Months Ended
	March 31, 2008			March 31, 2007			March 31, 2008			March 31, 2007
Revenues:
Software, hardware and supplies		$	20,519		$	21,017		$	76,363		$	68,871
Implementation and training services			3,861			3,490			13,406			12,177
System sales			24,380			24,507			89,769			81,048
Maintenance			15,593			11,841			56,455			41,948
Electronic data interchange services			6,281			4,716			22,450			17,049
Other services			4,978			4,072			17,826			17,120
Maintenance, EDI and other services			26,852			20,629			96,731			76,117
Total revenue			51,232			45,136			186,500			157,165
Cost of revenue:
Software, hardware and supplies			2,939			3,243			10,887			8,453
Implementation and training services			2,872			2,249			10,341			8,535
Total cost of system sales			5,811			5,492			21,228			16,988
Maintenance			3,153			2,847			12,446			11,834
Electronic data interchange services			4,363			3,331			15,776			12,181
Other services			3,709			3,127			13,051			9,781
Total cost of maintenance and other services			11,225			9,305			41,273			33,796
Total cost of revenue			17,036			14,797			62,501			50,784
Gross profit			34,196			30,339			123,999			106,381
Operating expenses:
Selling, general and administrative			14,146			14,550			53,260			45,337
Research and development costs			2,988			2,656			11,350			10,166
Total operating expenses			17,134			17,206			64,610			55,503
Income from operations			17,062			13,133			59,389			50,878
Interest income			567			885			2,661			3,306
Other income			—			—			953			—
Income before provision for income taxes			17,629			14,018			63,003			54,184
Provision for income taxes			6,377			5,513			22,925			20,952
Net income		$	11,252		$	8,505		$	40,078		$	33,232
Net income per share:
Basic		$	0.41		$	0.31		$	1.47		$	1.24
Diluted		$	0.41		$	0.31		$	1.44		$	1.21
Weighted average shares outstanding:
Basic			27,408			27,049			27,298			26,882
Diluted			27,712			27,600			27,770			27,550
Dividends declared per common share		$	0.25		$	1.00		$	1.00		$	1.00

QUALITY SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)

	March 31, 2008				March 31, 2007
ASSETS
Current assets:
Cash and cash equivalents		$	59,046			$	60,028
Marketable securities			2,500				—
Accounts receivable, net			76,585				63,945
Inventories, net			1,024				1,175
Net current deferred tax assets			6,397				3,443
Other current assets			4,596				4,507
Total current assets			150,148				133,098
Marketable securities			20,124				—
Equipment and improvements, net			4,773				5,029
Capitalized software costs, net			8,852				6,982
Net deferred tax assets			—				1,180
Goodwill			1,840				1,840
Other assets			2,171				2,552
Total assets		$	187,908			$	150,681
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	4,685			$	5,246
Deferred revenue			44,389				38,774
Accrued compensation and related benefits			8,346				6,521
Income taxes payable			1,541				315
Dividends payable			6,861				—
Other current liabilities			4,394				5,626
Total current liabilities			70,216				56,482
Deferred revenue, net of current			506				674
Net deferred tax liabilities			1,575				—
Deferred compensation			1,906				2,279
Total liabilities			74,203				59,435
Commitments and contingencies
Shareholders’ equity:
Common stock $0.01 par value; authorized 50,000 shares; issued and outstanding 27,448 and 27,123 shares at March 31, 2008 and March 31, 2007, respectively			274				271
Additional paid-in capital			75,556				65,666
Retained earnings			38,071				25,309
Accumulated other comprehensive loss			(196	)			—
Total shareholders’ equity			113,705				91,246
Total liabilities and shareholders’ equity		$	187,908			$	150,681