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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, 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

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 and for additional information.


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.





Three Months Ended December 31, Nine Months Ended December 31,
  2012     2011     2012     2011  
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





December 31, March 31,
  2012     2012  
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  
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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