Company Ends Fiscal Year Posting Double-digit
Revenue Growth
Quality Systems, Inc. (NASDAQ:QSII) announced today results for
its fiscal 2015 fourth quarter and year ended March 31, 2015.
Revenues for the fiscal 2015 fourth quarter reached $128.4
million, an increase of 11 percent versus $115.2 million reported
for the fiscal 2014 fourth quarter. Net income for the 2015 fourth
quarter was $10.7 million, increasing 107 percent when compared
with $5.2 million in the 2014 fourth quarter.
On a GAAP basis, fully diluted earnings per share was $0.18 in
the fiscal 2015 fourth quarter compared with $0.09 for the same
period a year ago. On a non-GAAP basis, fully diluted earnings per
share for the fiscal 2015 fourth quarter was $0.21 versus $0.12
reported in the fourth quarter a year ago.
At quarter-end, the Company’s liquidity position was strong,
with $130.6 million of cash and investments.
For the fiscal year ended March 31, 2015, revenues reached
$490.2 million, up 10 percent when compared with $444.7 million for
the 2014 fiscal year. The recurring revenue base, which includes
maintenance, EDI, RCM and other services, reached $405.2 million
and represents 83 percent of total revenues for the fiscal year
ended 2015.
Net income for fiscal 2015 was $27.3 million, versus $15.7
million reported in fiscal 2014, an increase of 74 percent. On a
GAAP basis, fully diluted earnings per share for the 2015 fiscal
year was $0.45, compared with $0.26 reported in the 2014 fiscal
year. On a non-GAAP basis, fully diluted earnings per share for the
fiscal 2015 year was $0.62 versus $0.70 reported in the comparable
period a year ago (non-GAAP fully diluted earnings per share is
reconciled to its corresponding GAAP measure at the end of this
release). The fiscal 2015 non-GAAP earnings reflects the Company’s
significant and growing investment in research and development, the
net cost of which rose by $27.7 million, or 67 percent, from fiscal
2014 to fiscal 2015.
“We are very pleased with the fourth quarter and fiscal 2015
results overall. This latest quarter represents the fifth
consecutive period in which we delivered increases in consolidated
revenue, and which culminated in a new quarterly revenue record.
Our revenue growth in the 2015 fourth quarter and fiscal year
demonstrates the impact of our broad-based market offerings, which
now span nearly 30 products and services directly aimed at the
evolving value-based Accountable Care Organization (ACO) model. As
physicians strive to better manage their patients and payors seek
the necessary intelligence to help control costs while emphasizing
quality of care, we believe we are well positioned to help all
stakeholders meet the challenges that continue to unfold,”
explained Steven T. Plochocki, president and chief executive
officer.
“Our portfolio of products and services addresses the ways in
which healthcare constituents communicate and manage patient
populations. We believe that as we enter into our fiscal 2016 year,
there will be significant opportunities for our RCM business line,
along with the Mirth interoperability and connectivity solutions we
offer. With ICD-10 fast approaching, practices seek the exact type
of support Quality Systems/NextGen Healthcare brings to the table.
With our sales force boasting strong cross-selling capabilities
across our large installed client base and beyond, as well as our
enhanced marketing capabilities and seasoned implementation team,
we stand ready to meet healthcare’s rapidly changing needs. Our
ability to strengthen our offerings, expand our solutions and
demonstrate solid growth is reflective of our agility and
commitment to seamlessly serving the healthcare information
technology industry,” Plochocki said.
Quality Systems also announced that its Board of Directors
declared a quarterly cash dividend of seventeen and one-half cents
($0.175) per share on the Company’s outstanding shares of common
stock, payable to shareholders of record as of June 12, 2015 with
an anticipated distribution date of July 6, 2015. The $0.175 per
share cash dividend is pursuant to the Company’s current practice
to pay a regular quarterly dividend on the Company’s outstanding
shares of common stock, subject to Board review and approval, and
establishment of record and distribution dates by the Board prior
to the declaration and payment of each such quarterly dividend.
In addition, the Company announced that it will hold its 2015
Annual Shareholders' Meeting on Tuesday, August 11, 2015 at 1:00 PM
local time. The meeting will be held at the Center Club, 650 Town
Center Drive, Costa Mesa, California 92626. Holders of record as of
June 16, 2015 are eligible to vote and attend. Proxy materials and
the 2015 Annual Report will be made available to shareholders of
record and will also be posted on the Company's website at
www.qsii.com.
Quality Systems will host a conference call to discuss its
fiscal 2015 fourth quarter and year-end results on Thursday, May
21, 2015 at 10:00 AM ET (7:00 AM PT). All participants should dial
1-866-900-9499 at least ten minutes prior to the start of the call
and reference conference ID #46698028. International callers should
dial 1-937-502-2136. 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 800-585-8367 or 404-537-3406 and enter conference ID
#46698028. The replay will be available from approximately 1:00 PM
ET on Thursday, May 21, 2015, through 11:59 PM ET on Thursday, May
28, 2015.
As previously announced, Quality Systems will host its
Investment Community Analyst Day for those analysts that follow the
Company on Monday, June 8, 2015 from 8:30 AM – 1:00 PM at the Le
Parker Meridien Hotel in New York City, located at 119 West 56th
Street (between 6th and 7th Avenues), 212-245-5000. The general
public can access the session in real-time by visiting
www.qsii.com, clicking on Investors, and selecting Events &
Presentations. An archive of the analyst session will also be
available for 90 days.
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 in the
healthcare sector and regulatory framework, 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 and additional risks and uncertainties
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, 2014, 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.
USE OF NON-GAAP FINANCIAL MEASURES
This news release contains certain non-GAAP (Generally Accepted
Accounting Principles) financial measures, which are provided only
as supplemental information. Investors should consider these
non-GAAP financial measures only in conjunction with the comparable
GAAP financial measures. These non-GAAP measures are not in
accordance with or a substitute for U.S. GAAP. Pursuant to the
requirements of Regulation G, the Company has provided a
reconciliation of non-GAAP financial measures to the most directly
comparable financial measure in the accompanying financial tables.
Other companies may calculate non-GAAP measures differently than
Quality Systems, which limits comparability between companies. The
Company believes that its presentation of non-GAAP diluted earnings
per share provides useful supplemental information to investors and
management regarding the Company's financial condition and results.
The Company calculates non-GAAP diluted earnings per share by
excluding acquisition costs, amortization of acquired intangible
assets, impairment of goodwill and other assets, securities
litigation defense costs, share-based compensation, and other
non-run-rate expenses from GAAP income before provision for income
taxes. The non-GAAP provision for income taxes is calculated by
excluding the income tax effect of the non-GAAP adjustments.
QUALITY SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
Three Months Ended March 31, Fiscal Year Ended March 31,
2015 2014 2015 2014
Revenues: Software and hardware $ 16,061 $ 15,186 $ 61,373 $ 60,834
Implementation and training services 6,684
6,518 23,648 25,948 System sales
22,745 21,704 85,021 86,782 Maintenance 43,234 41,376
169,219 160,060 Electronic data interchange services 20,082 17,421
76,358 67,295 Revenue cycle management and related services 19,720
15,316 74,237 62,976 Other services 22,607
19,386 85,390 67,554
Maintenance, EDI, RCM and other services 105,643
93,499 405,204 357,885
Total revenues 128,388 115,203 490,225
444,667 Cost of revenue: Software and
hardware 5,404 7,115 24,693 44,226 Implementation and training
services 5,479 8,109 23,902
29,681 Total cost of system sales 10,883
15,224 48,595 73,907 Maintenance 7,802 6,384 28,866 22,590
Electronic data interchange services 12,274 10,845 48,244 42,567
Revenue cycle management and related services 14,252 12,059 54,406
46,203 Other services 10,630 8,842
43,053 34,896 Total cost of
maintenance, EDI, RCM and other services 44,958
38,130 174,569 146,256
Total cost of revenue 55,841 53,354
223,164 220,163 Gross profit 72,547
61,849 267,061 224,504 Operating expenses: Selling, general
and administrative 41,279 38,676 158,172 149,214 Research and
development costs 17,638 15,120 69,240 41,524 Amortization of
acquired intangible assets 898 1,132 3,693 4,805 Impairment of
goodwill and other assets - - -
5,873 Total operating expenses 59,815
54,928 231,105 201,416
Income from operations 12,732 6,921 35,956 23,088
Interest income (expense), net (271 ) 322 (230 ) 269 Other income
(expense), net (45 ) 35 (62 ) (356 )
Income before provision for income taxes 12,416 7,278 35,664
23,001 Provision for income taxes 1,673 2,077
8,332 7,321 Net income $ 10,743
$ 5,201 $ 27,332 $ 15,680 Net income per share: Basic $ 0.18
$ 0.09 $ 0.45 $ 0.26 Diluted $ 0.18 $ 0.09 $ 0.45 $ 0.26
Weighted-average shares outstanding: Basic 60,288 60,208 60,259
59,918 Diluted 60,956 60,592 60,849 60,134 Dividends
declared per common share $ 0.175 $ 0.175 $ 0.70 $ 0.70
QUALITY SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
(UNAUDITED)
March 31, March 31, 2015 2014 ASSETS Current assets: Cash
and cash equivalents $ 118,993 $ 103,145 Restricted cash and cash
equivalents 2,419 4,351 Marketable securities 11,592 10,656
Accounts receivable, net 107,669 113,268 Inventories 622 834 Income
taxes receivable 3,147 8,366 Deferred income taxes, net 24,080
21,531 Other current assets 11,535 11,135
Total current assets 280,057 273,286 Equipment
and improvements, net 20,807 22,801 Capitalized software costs, net
40,397 39,152 Intangibles, net 27,689 33,016 Goodwill 73,571 72,804
Other assets 18,000 10,292 Total
assets $ 460,521 $ 451,351 LIABILITIES AND
SHAREHOLDERS’ EQUITY Current liabilities: Accounts payable $ 10,018
$ 7,888 Deferred revenue 66,343 71,077 Accrued compensation and
related benefits 24,051 15,953 Income taxes payable 10,048 -
Dividends payable 10,700 10,686 Other current liabilities
33,924 21,369 Total current liabilities
155,084 126,973 Deferred revenue, net of current 1,349 2,187
Deferred compensation 5,750 4,809 Other noncurrent liabilities
14,798 22,292 Total liabilities
176,981 156,261 Commitments and contingencies
Shareholders’ equity: Common stock
$0.01 par value; authorized 100,000
shares; issued and outstanding 60,303 and 60,206 shares at March
31, 2015 and 2014, respectively
603 602 Additional paid-in capital 198,650 194,739 Accumulated
other comprehensive loss (192 ) (182 ) Retained earnings
84,479 99,931 Total shareholders’
equity 283,540 295,090 Total
liabilities and shareholders’ equity $ 460,521 $ 451,351
QUALITY SYSTEMS, INC.
NON-GAAP FINANCIAL MEASURES
(IN THOUSANDS, EXCEPT PER SHARE DATA)
RECONCILIATION OF
NON-GAAP DILUTED EARNINGS PER SHARE
Three Months Ended March 31, Fiscal Year Ended
March 31, 2015 2014 2015 2014 Income before provision for
income taxes - GAAP $ 12,416 $ 7,278 $ 35,664 $ 23,001 Plus
items included in cost of revenue: Amortization of acquired
software technology 858 858 3,433 3,526 Impairment of other assets*
- - - 20,098 Share-based compensation 91 95
373 348 Total adjustments to cost of revenue 949 953 3,806
23,972 Plus items included in operating expenses:
Acquisition costs 441 846 2,923 1,448 Amortization of acquired
intangible assets 898 1,132 3,693 4,805 Impairment of goodwill and
other assets - - - 5,873 Securities litigation defense costs 1,491
- 3,951 1,721 Share-based compensation 754 563 3,098 2,142 Other
non-run-rate expenses - - 315 - Total
adjustments to operating expenses 3,584 2,541 13,980 15,989
Total adjustments to GAAP income before
provision for income taxes: 4,533 3,494 17,786
39,961 Income before provision for income taxes -
Non-GAAP 16,949 10,772 53,450 62,962 Provision for income taxes
4,425 3,318 15,718 20,966 Net
income - Non-GAAP $ 12,524 $ 7,454 $ 37,732 $ 41,996 Diluted
net income per share - Non-GAAP $ 0.21 $ 0.12 $ 0.62 $ 0.70
Weighted-average shares outstanding (diluted): 60,956 60,592 60,849
60,134 * Relates to the impairment of acquired
software technology and capitalized software costs in the Hospital
Solutions Division
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version on businesswire.com: http://www.businesswire.com/news/home/20150521005357/en/
Quality Systems, Inc.John Stumpf, Interim Chief
Financial OfficerPhone: 949-255-2600jstumpf@qsii.comorSusan J.
LewisPhone: 954-389-3700slewis@qsii.com
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