Quality Systems, Inc. Reports Fiscal 2013 Third Quarter Results

Quality Systems will host a conference call to discuss its fiscal 2013 third quarter results on Thursday, January 24, 2013 at 10:00 AM ET (7:00 AM PT). All participants should dial 1-866-225-8754 at least ten minutes prior to the start of the call. International callers should dial 1-480-629-9818. To hear a live Web simulcast or to listen to the archived webcast following completion of the call, please visit the Company’s website at www.qsii.com, click on the "Investors” tab, then select "Conference Calls," to access the link to the call. To listen to a telephone replay of the conference call, please dial 800-406-7325 or 303-590-3030 and enter reservation identification number 4591712. The replay will be available from approximately 12:00 PM ET on Thursday, January 24, 2013, through 11:59 PM ET on Thursday, January 31, 2013.

A transcript of the conference call will be made available on the Company’s website at www.qsii.com.

About Quality Systems, Inc.

Irvine, Calif.-based Quality Systems, Inc. and its NextGen Healthcare subsidiary develop and market computer-based practice management, electronic health records and revenue cycle management applications as well as connectivity products and services for medical and dental group practices and small hospitals. Visit www.qsii.com and www.nextgen.com for additional information.

SAFE HARBOR PROVISIONS FOR FORWARD-LOOKING STATEMENTS

This news release may contain forward-looking statements within the meaning of the federal securities laws, including but not limited to, 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, net income and earnings per share). Risks and uncertainties exist that may cause the results to differ materially from those set forth in these forward-looking statements. Factors that could cause the anticipated results to differ from those described in the forward-looking statements are set forth in Part I, Item A of our most recent Annual Report on Form 10-K for the fiscal year ended March 31, 2012, including but not limited to: 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; impact of incentive payments under The American Recovery and Reinvestment Act on sales and the ability of the Company to meet continued certification requirements; the development by competitors of new or superior technologies; the timing, cost and success or failure of new product and service introductions, development and product upgrade releases; undetected errors or bugs in software; product liability; 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; changes of accounting estimates and assumptions used to prepare the prior periods' financial statements; and general economic conditions. A significant portion of the Company's quarterly sales of software product licenses and computer hardware is concluded in the last month of a 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.

QUALITY SYSTEMS, INC. CONSOLIDATED STATEMENTS OF INCOME (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED)
				Three Months Ended December 31,													Nine Months Ended December 31,
					2012						2011							2012						2011
Revenues:
Software, hardware and supplies				$	21,899					$	35,074						$	71,463					$	95,845
Implementation and training services					7,266						6,555							27,847						18,121
System sales					29,165						41,629							99,310						113,966
Maintenance					39,463						36,245							116,746						102,961
Electronic data interchange services					15,209						12,101							44,056						36,178
Revenue cycle management and related services					15,015						11,147							43,902						34,170
Other services					15,658						11,643							44,920						33,566
Maintenance, EDI, RCM and other services					85,345						71,136							249,624						206,875
Total revenues					114,510						112,765							348,934						320,841
Cost of revenue:
Software, hardware and supplies					4,660						4,622							16,055						13,423
Implementation and training services					7,221						5,994							23,873						15,119
Total cost of system sales					11,881						10,616							39,928						28,542
Maintenance					5,259						4,412							14,811						12,260
Electronic data interchange services					9,852						7,890							28,251						23,816
Revenue cycle management and related services					10,918						8,405							32,344						25,687
Other services					8,686						7,011							26,021						18,977
Total cost of maintenance, EDI, RCM and other services					34,715						27,718							101,427						80,740
Total cost of revenue					46,596						38,334							141,355						109,282
Gross profit					67,914						74,431							207,579						211,559
Operating expenses:
Selling, general and administrative					35,532						33,096							110,045						94,651
Research and development costs					7,786						8,277							22,634						22,462
Amortization of acquired intangible assets					1,212						543							3,665						1,545
Total operating expenses					44,530						41,916							136,344						118,658
Income from operations					23,384						32,515							71,235						92,901
Interest income (expense), net					13						55							(14	)					212
Other expense, net					(122	)					(218	)						(115	)					(400	)
Income before provision for income taxes					23,275						32,352							71,106						92,713
Provision for income taxes					7,649						11,247							24,292						32,129
Net income				$	15,626					$	21,105						$	46,814					$	60,584
Net income per share:
Basic				$	0.26					$	0.36						$	0.79					$	1.03
Diluted				$	0.26					$	0.36						$	0.79					$	1.03
Weighted average shares outstanding:
Basic					59,400						58,847							59,343						58,623
Diluted					59,405						59,128							59,411						58,943
Dividends declared per common share				$	0.175					$	0.175						$	0.525					$	0.525

QUALITY SYSTEMS, INC. CONSOLIDATED BALANCE SHEETS (IN THOUSANDS) (UNAUDITED)
					December 31,							March 31,
						2012							2012
ASSETS
Current assets:
Cash and cash equivalents					$	101,702						$	134,444
Restricted cash						5,155							1,962
Marketable securities						4,987							4,987
Accounts receivable, net						151,495							145,756
Inventories						3,912							3,715
Income taxes receivable						1,864							2,628
Deferred income tax assets, net						10,127							10,127
Other current assets						7,276							9,090
Total current assets						286,518							312,709
Equipment and improvements, net						20,930							17,841
Capitalized software costs, net						32,881							19,994
Intangibles, net						29,415							23,259
Goodwill						63,161							60,776
Other assets						7,315							5,773
Total assets					$	440,220						$	440,352
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable					$	6,563						$	4,532
Deferred revenue						63,001							83,108
Accrued compensation and related benefits						8,595							11,870
Dividends payable						-							10,354
Other current liabilities						27,750							19,568
Total current liabilities						105,909							129,432
Deferred revenue, net of current						1,307							1,293
Deferred income tax liabilities, net						4,096							5,351
Deferred compensation						3,454							3,497
Other noncurrent liabilities						4,368							5,602
Total liabilities						119,134							145,175
Commitments and contingencies
Shareholders' equity:
Common stock
$0.01 par value; authorized 100,000 shares; issued andoutstanding 59,535 and 59,180 shares at December 31,2012 and March 31, 2012, respectively						595							592
Additional paid-in capital						179,306							169,033
Accumulated other comprehensive loss						(45	)						(45	)
Retained earnings						141,230							125,597
Total shareholders' equity						321,086							295,177
Total liabilities and shareholders' equity					$	440,220						$	440,352

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