Exhibit 99.1
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 THIRD QUARTER RESULTS
IRVINE, Calif.--(BUSINESS WIRE)--February 9, 2006--Quality Systems, Inc.
(NASDAQ: QSII - news) today announced the results of operations for its fiscal
2006 third quarter ended December 31, 2005. The Company posted net revenues of
$26.8 million in the third quarter, an increase of 21% from the $22.1 million
generated during the same quarter last year. The Company reported net income of
$4.8 million an increase of 14% over net income of $4.2 million earned in the
comparable quarter of the prior year. Fully diluted earnings per share was $0.35
in the quarter, an increase of 9% over the fully diluted $0.32 per share
earnings recorded in the same quarter last year.
Revenue and profit results for the quarter exclude a $4 million sale of NextGen
licenses that was closed and paid for in full during the quarter, for which
recognition of revenue was deferred.
For the quarter, the Company's NextGen Healthcare Information Systems division
posted revenue of $22.9 million, up 25% over the same quarter prior year and
operating income of $7.9 million, up 17% over the same quarter of the prior
year.
Quality Systems, Inc. will hold a conference call to discuss third quarter
financial results February 9, 2006 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, February 9 at 6:30 p.m.
EST, through Wednesday, February 15 at midnight EST. To access the replay dial
(800) 642-1687 and enter conference ID number 5149713.
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 NINE MONTHS ENDED
------------------------------ ------------------------------
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
2005 2004 2005 2004
------------ ------------ ------------ ------------
Revenues:
Software, hardware and supplies ........................... $ 10,835 $ 9,781 $ 37,469 $ 27,891
Implementation and training services ...................... 2,615 1,889 8,136 6,455
------------ ------------ ------------ ------------
System sales ............................................... 13,450 11,670 45,605 34,346
------------ ------------ ------------ ------------
Maintenance and other services ............................ 9,992 7,681 28,531 21,477
Electronic data interchange services ...................... 3,310 2,737 9,586 7,612
------------ ------------ ------------ ------------
Maintenance, EDI and other services ........................ 13,302 10,418 38,117 29,089
------------ ------------ ------------ ------------
Total revenue ........................................... 26,752 22,088 83,722 63,435
------------ ------------ ------------ ------------
Cost of revenue:
Software, hardware and supplies ........................... 1,659 1,384 6,023 5,428
Implementation and training services ...................... 1,975 1,575 5,741 4,546
------------ ------------ ------------ ------------
Total cost of system sales ................................. 3,634 2,959 11,764 9,974
------------ ------------ ------------ ------------
Maintenance and other services ............................ 3,553 2,823 10,598 8,727
Electronic data interchange services ...................... 2,216 1,733 6,403 4,853
------------ ------------ ------------ ------------
Total cost of maintenance, EDI and other
services ................................................... 5,769 4,556 17,001 13,580
------------ ------------ ------------ ------------
Total cost of revenue ................................... 9,403 7,515 28,765 23,554
------------ ------------ ------------ ------------
Gross profit ............................................ 17,349 14,573 54,957 39,881
------------ ------------ ------------ ------------
Operating expenses:
Selling, general and administrative ..................... 8,016 6,420 24,968 16,786
Research and development costs .......................... 2,208 1,707 5,926 5,137
------------ ------------ ------------ ------------
Total operating expenses .............................. 10,224 8,127 30,894 21,923
------------ ------------ ------------ ------------
Income from operations .................................. 7,125 6,446 24,063 17,958
Interest income ............................................ 594 263 1,395 553
------------ ------------ ------------ ------------
Income before provision for income taxes ................... 7,719 6,709 25,458 18,511
Provision for income taxes ................................. 2,904 2,488 9,774 7,193
------------ ------------ ------------ ------------
Net income .............................................. $ 4,815 $ 4,221 $ 15,684 $ 11,318
============ ============ ============ ============
Net income per share:
Basic .................................................... $ 0.36 $ 0.33 $ 1.19 $ 0.88
============ ============ ============ ============
Diluted .................................................. $ 0.35 $ 0.32 $ 1.15 $ 0.86
============ ============ ============ ============
Weighted average shares outstanding:
Basic ...................................................... 13,245 12,952 13,169 12,800
============ ============ ============ ============
Diluted .................................................... 13,686 13,282 13,624 13,134
============ ============ ============ ============
QUALITY SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
DECEMBER 31, MARCH 31,
2005 2005
------------ ------------
ASSETS (UNAUDITED)
Current assets:
Cash and cash equivalents .................................................... $ 75,228 $ 51,157
Accounts receivable, net ..................................................... 37,861 33,362
Inventories, net ............................................................. 670 960
Prepaid income tax ........................................................... 2,579 15
Net current deferred tax assets .............................................. 1,796 1,796
Other current assets ......................................................... 1,976 1,677
------------ ------------
Total current assets ............................................... 120,110 88,967
Equipment and improvements, net .................................................... 3,270 2,697
Capitalized software costs, net .................................................... 4,880 4,334
Goodwill ........................................................................... 1,840 1,840
Other .............................................................................. 1,830 1,604
------------ ------------
Total assets ....................................................... $ 131,930 $ 99,442
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable ............................................................. $ 3,371 $ 2,284
Deferred revenue ............................................................. 33,036 24,115
Accrued compensation and related benefits .................................... 4,299 3,436
Other current liabilities .................................................... 3,389 4,021
------------ ------------
Total current liabilities .......................................... 44,095 33,856
Deferred revenue, net of current ................................................... 1,080 1,362
Net deferred tax liabilities ....................................................... 291 291
Deferred compensation .............................................................. 1,529 1,202
------------ ------------
Total liabilities .................................................. 46,995 36,711
------------ ------------
Commitments and contingencies ...................................................... -- --
Shareholders' equity:
Common stock, $0.01 par value; authorized 50,000 shares; issued
and outstanding 13,296 and 13,111 shares at December 31, 2005 and
March 31, 2005, respectively ............................................. 133 131
Additional paid-in capital ................................................... 50,710 44,499
Retained earnings ............................................................ 34,883 19,213
Deferred compensation ........................................................ (791) (1,112)
------------ ------------
Total shareholders' equity ......................................... 84,935 62,731
------------ ------------
Total liabilities and shareholders' equity ......................... $ 131,930 $ 99,442
============ ============