For more information contact:
Louis Silverman
President and CEO
Quality Systems, Inc.
(949) 255-2600
FOR IMMEDIATE RELEASE www.qsii.com
Sean Collins
Partner
CCG Investor Relations
(310) 231-8600
www.ccgir.com
QUALITY SYSTEMS REPORTS SECOND QUARTER RESULTS
IRVINE, Calif.--(BUSINESS WIRE)--November 3, 2005--Quality Systems, Inc.
(NASDAQ: QSII - news) today announced the results of operations for its fiscal
2006 second quarter ended September 30, 2005. The Company posted net revenues of
$29.5 million in the second quarter, an increase of 39% from the $21.2 million
generated during the same quarter last year. The Company reported net income of
$5.8 million an increase of 56% over net income of $3.7 million earned in the
comparable quarter of the prior year. Fully diluted earnings per share was $0.43
in the quarter, an increase of 54% over the fully diluted $0.28 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 second quarter were driven by record revenue and 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 $25.5 million, up 48% over the same quarter prior year and
record operating income of $9.9 million, up 62% over the same quarter of the
prior year.
Quality Systems, Inc. will hold a conference call to discuss second quarter
financial results November 3, 2005 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 Thursday, November 3, 2005 at
approximately 7:30 p.m. EST, through Wednesday, November 9, 2005 at midnight
EST. To access the replay dial (800) 642-1687 and enter conference ID number
2047523.
A transcript of the conference call will be made available on the QSII Web site
(www.qsii.com).
About Quality Systems
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 SIX MONTHS ENDED
-------------------------------- --------------------------------
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
2005 2004 2005 2004
------------- ------------- ------------- -------------
Revenues:
Software, hardware and supplies ....................... $ 13,661 $ 9,307 $ 26,634 $ 18,110
Implementation and training services .................. 3,031 2,300 5,521 4,566
------------- ------------- ------------- -------------
System sales ........................................... 16,692 11,607 32,155 22,676
------------- ------------- ------------- -------------
Maintenance and other services ........................ 9,676 7,022 18,539 13,796
Electronic data interchange services .................. 3,174 2,588 6,276 4,875
------------- ------------- ------------- -------------
Maintenance, EDI and other services .................... 12,850 9,610 24,815 18,671
------------- ------------- ------------- -------------
Total revenue ....................................... 29,542 21,217 56,970 41,347
------------- ------------- ------------- -------------
Cost of revenue:
Software, hardware and supplies ....................... 1,907 1,692 4,364 4,044
Implementation and training services .................. 1,942 1,579 3,766 2,971
------------- ------------- ------------- -------------
Total cost of system sales ............................. 3,849 3,271 8,130 7,015
------------- ------------- ------------- -------------
Maintenance and other services ........................ 3,637 2,956 7,045 5,902
Electronic data interchange services .................. 2,125 1,710 4,187 3,121
------------- ------------- ------------- -------------
Total cost of maintenance and other
services ............................................... 5,762 4,666 11,232 9,023
------------- ------------- ------------- -------------
Total cost of revenue ............................... 9,611 7,937 19,362 16,038
------------- ------------- ------------- -------------
Gross profit ........................................ 19,931 13,280 37,608 25,309
------------- ------------- ------------- -------------
Operating expenses:
Selling, general and administrative ................. 8,920 5,414 16,952 10,367
Research and development costs ...................... 1,977 1,818 3,718 3,430
------------- ------------- ------------- -------------
Total operating expenses .......................... 10,897 7,232 20,670 13,797
------------- ------------- ------------- -------------
Income from operations .............................. 9,034 6,048 16,938 11,512
Interest income ........................................ 460 170 801 290
------------- ------------- ------------- -------------
Income before provision for income
taxes .................................................. 9,494 6,218 17,739 11,802
Provision for income taxes ............................. 3,700 2,503 6,870 4,705
------------- ------------- ------------- -------------
Net income .......................................... $ 5,794 $ 3,715 $ 10,869 $ 7,097
============= ============= ============= =============
Net income per share:
Basic ................................................ $ 0.44 $ 0.29 $ 0.83 $ 0.56
============= ============= ============= =============
Diluted .............................................. $ 0.43 $ 0.28 $ 0.80 $ 0.54
============= ============= ============= =============
Weighted average shares outstanding:
Basic .................................................. 13,149 12,780 13,131 12,722
============= ============= ============= =============
Diluted ................................................ 13,564 13,196 13,529 13,160
============= ============= ============= =============
QUALITY SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
SEPTEMBER 30, MARCH 31,
2005 2005
------------- -------------
ASSETS (UNAUDITED)
Current assets:
Cash and cash equivalents ............................................................ $ 63,126 $ 51,157
Accounts receivable, net ............................................................. 40,733 33,362
Inventories, net ..................................................................... 547 960
Income tax receivable ................................................................ 177 15
Net current deferred tax assets ...................................................... 1,796 1,796
Other current assets ................................................................. 1,975 1,677
------------- -------------
Total current assets ....................................................... 108,354 88,967
Equipment and improvements, net ............................................................ 3,113 2,697
Capitalized software costs, net ............................................................ 4,823 4,334
Goodwill ................................................................................... 1,840 1,840
Other ...................................................................................... 1,715 1,604
------------- -------------
Total assets ............................................................... $ 119,845 $ 99,442
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable ..................................................................... $ 3,450 $ 2,284
Deferred revenue ..................................................................... 28,627 24,115
Accrued compensation and related benefits ............................................ 3,874 3,436
Other current liabilities ............................................................ 4,759 4,021
------------- -------------
Total current liabilities .................................................. 40,710 33,856
Deferred revenue, net of current ........................................................... 1,447 1,362
Net deferred tax liabilities ............................................................... 291 291
Deferred compensation ...................................................................... 1,457 1,202
------------- -------------
Total liabilities .......................................................... 43,905 36,711
------------- -------------
Commitments and contingencies .............................................................. -- --
Shareholders' equity:
Common stock, $0.01 par value; authorized 20,000 shares; issued and
outstanding 13,186 and 13,111 shares at September 30, 2005 and
March 31, 2005, respectively ..................................................... 131 131
Additional paid-in capital ........................................................... 46,639 44,499
Retained earnings .................................................................... 30,068 19,213
Deferred compensation ................................................................ (898) (1,112)
------------- -------------
Total shareholders' equity ................................................. 75,940 62,731
------------- -------------
Total liabilities and shareholders' equity ................................. $ 119,845 $ 99,442
============= =============