Exhibit 99.1
For Further Information:
Quality Systems, Inc. CCG Investor Relations
18191 Von Karman Ave, #450 15300 Ventura Blvd., Suite 303
Irvine, CA 92612 Sherman Oaks, CA 91403
www.qsii.com www.coffincg.com
(949) 255-2600 (818) 789-0100
CONTACT: Lou Silverman CONTACT: William F. Coffin, President
President and CEO Sean Collins, Partner
QUALITY SYSTEMS REPORTS THIRD QUARTER RESULTS
IRVINE, Calif.--(BUSINESS WIRE) February 7, 2005--Quality Systems, Inc.
(NASDAQ:QSII - news) today announced the results of operations for its fiscal
2005 third quarter ended December 31, 2004.
The Company posted net revenues of $22.1 million in the third quarter, an
increase of 21% from $18.2 million generated during the same quarter last year.
The Company reported net income of $4.2 million, an increase of 62% over net
income of $2.6 million earned in the comparable quarter of the prior year. Fully
diluted earnings per share was $0.64 in the quarter, an increase of 60% over the
fully diluted $0.40 per share earnings recorded in the same quarter last year.
The revenue and net income results achieved in the quarter were records for the
Company. Results in the third quarter were driven by record revenue and
operating profit in the Company's NextGen Healthcare Information Systems
division. For the quarter, the Company's NextGen Healthcare Information Systems
division posted record revenue of $18.3 million, up 31% over the same quarter
prior year and record operating income of $6.7 million, up 78% over the same
quarter of the prior year.
Quality Systems, Inc. will hold a conference call to discuss third quarter
financial results today at 4:30 p.m. EST (1:30 p.m. PST). 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 Monday, February 7 at 6:30 p.m. EST through
Monday, February 14 at midnight EST. To access the replay dial (800) 642-1687
and enter the conference ID number 3400595.
Quality Systems, Inc. and its NextGen Healthcare Information Systems subsidiary
develop and market computer-based practice management, patient records, and
connectivity applications 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 NINE MONTHS ENDED
---------------------------- ----------------------------
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
2004 2003 2004 2003
------------ ------------ ------------ ------------
Revenues:
Software, hardware and supplies ................ $ 9,781 $ 8,068 $27,891 $24,130
Implementation and training services ........... 1,889 1,791 6,455 5,229
------- ------- ------- -------
System sales ..................................... 11,670 9,859 34,346 29,359
Maintenance and other services ................... 10,418 8,340 29,089 22,788
------- ------- ------- -------
Total revenue ................................. 22,088 18,199 63,435 52,147
------- ------- ------- -------
Cost of revenue:
Software, hardware and supplies ................ 1,384 1,966 5,428 6,541
Implementation and training services ........... 1,575 1,427 4,546 3,964
------- ------- ------- -------
Total cost of system sales ....................... 2,959 3,393 9,974 10,505
Total cost of maintenance and other services ..... 4,556 4,130 13,580 11,120
------- ------- ------- -------
Total cost of revenue ......................... 7,515 7,523 23,554 21,625
------- ------- ------- -------
Gross profit .................................. 14,573 10,676 39,881 30,522
------- ------- ------- -------
Operating expenses:
Selling, general and administrative ........... 6,420 4,902 16,786 14,410
Research and development ...................... 1,707 1,628 5,137 4,496
------- ------- ------- -------
Total operating expenses .................... 8,127 6,530 21,923 18,906
------- ------- ------- -------
Income from operations ........................ 6,446 4,146 17,958 11,616
Interest income .................................. 263 95 553 284
------- ------- ------- -------
Income before provision for income taxes ......... 6,709 4,241 18,511 11,900
Provision for income taxes ....................... 2,488 1,630 7,193 4,604
------- ------- ------- -------
Net income .................................... $ 4,221 $ 2,611 $11,318 $ 7,296
======= ======= ======= =======
Net income per share:
Basic ......................................... $ 0.65 $ 0.42 $ 1.77 $ 1.18
======= ======= ======= =======
Diluted ....................................... $ 0.64 $ 0.40 $ 1.72 $ 1.13
======= ======= ======= =======
Weighted-average shares used in per
share calculation:
Basic ......................................... 6,476 6,237 6,400 6,162
======= ======= ======= =======
Diluted ....................................... 6,641 6,549 6,567 6,476
======= ======= ======= =======
QUALITY SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
December 31, March 31,
2004 2004
------------ ---------
ASSETS (UNAUDITED)
Current assets:
Cash and cash equivalents .............................................. $ 66,432 $ 51,395
Accounts receivable, net ............................................... 27,929 20,336
Inventories, net ....................................................... 1,405 725
Deferred tax assets .................................................... 2,979 2,979
Other current assets ................................................... 1,353 1,437
--------- ---------
Total current assets ......................................... 100,098 76,872
Equipment and improvements, net .............................................. 2,406 2,012
Capitalized software costs, net .............................................. 3,961 3,608
Deferred tax assets .......................................................... 1,104 1,104
Goodwill ..................................................................... 1,840 1,840
Other ........................................................................ 1,616 1,242
--------- ---------
Total assets ................................................. $ 111,025 $ 86,678
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable ....................................................... $ 2,269 $ 1,655
Deferred revenue ....................................................... 22,599 16,016
Accrued compensation and related benefits .............................. 2,304 2,985
Income taxes payable ................................................... 1,806 273
Other current liabilities .............................................. 4,478 3,497
--------- ---------
Total current liabilities .................................... 33,456 24,426
Deferred revenue ............................................................. 1,103 1,247
--------- ---------
Total liabilities ............................................ 34,559 25,673
--------- ---------
Commitments and contingencies ................................................ -- --
Shareholders' equity:
Common stock, $0.01 par value; authorized 20,000 shares; issued and
outstanding 6,525 and 6,325 shares at December 31, 2004 and
March 31, 2004, respectively ....................................... 65 63
Additional paid-in capital ............................................. 43,553 39,735
Retained earnings ...................................................... 34,068 22,750
Deferred compensation .................................................. (1,220) (1,543)
--------- ---------
Total shareholders' equity ................................... 76,466 61,005
--------- ---------
Total liabilities and shareholders' equity ................... $ 111,025 $ 86,678
========= =========