Quality Systems, Inc. (NASDAQ: QSII) announced today results for
its fiscal 2017 first quarter ended June 30, 2016.
“In the first quarter, we saw a number of positive developments
as we continued to execute on our strategic plan and have made
great progress reinvigorating the culture of our organization,”
commented Rusty Frantz, president and chief executive officer of
Quality Systems, Inc. “In addition, we remain focused on our
solutions integration and product roadmap strategy, and are excited
about the enhanced product and service offering we’ll now be able
to provide to our clients.”
Mr. Frantz continued, “As in any turnaround, the early results
are often mixed. During the first quarter, we experienced softer
than anticipated sales, and as a result, we are taking a more
conservative approach to our annual guidance. I remain very bullish
about the long-term growth potential and opportunity for the
Company.”
Revenues for the fiscal 2017 first quarter of $122.2 million
were flat with the year-ago quarter. On a GAAP basis, net loss for
the 2017 first quarter was $0.6 million, compared with net income
of $6.4 million in the 2016 first quarter. Non-GAAP net income for
the 2017 first quarter was $9.3 million compared with non-GAAP net
income of $9.6 million in the 2016 first quarter.
On a GAAP basis, fully diluted loss per share was $(0.01) in the
fiscal 2017 first quarter compared with $0.10 earnings per share
for the same period a year ago. On a non-GAAP basis, fully diluted
earnings per share for the fiscal 2017 first quarter was $0.15
versus $0.16 reported in the first quarter a year ago.
Fiscal 2017 Financial Outlook
Customer order volume in a given quarter typically has an impact
on revenues in that quarter, as well as revenues in future
quarters, due to the recurring nature of a significant portion of
our revenue streams. For the first quarter of fiscal 2017, order
volume and revenues warranted a reassessment of our full year 2017
outlook. Based upon this reassessment, the Company currently
expects the following for fiscal 2017:
- Revenue of between $494 million and
$510 million
- Non-GAAP EPS of between $0.75 and
$0.81
Conference Call Information
Quality Systems will host a conference call to discuss its
fiscal 2017 first quarter results on Thursday, July 28, 2016 at
5:00 PM ET (2:00 PM PT). Shareholders and interested participants
may listen to a live broadcast of the conference call by dialing
866-900-9499 or 937-502-2136 for international callers, and
referencing participant code 51021073 approximately 15 minutes
prior to the call. A live webcast of the conference call will be
available on the investor relations section of the company’s web
site and an audio file of the call will also be archived for 90
days at investor.qsii.com. After the conference call, a replay will
be available until August 4, 2016 and can be accessed by dialing
800-585-8367 or 404-537-3406 for international callers, and
referencing participant code 51021073. 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. (QSI) and its
subsidiary, NextGen Healthcare Information Systems, develop and
provide a range of software and services for medical and dental
group practices, including practice management and electronic
health record applications, patient portal, interoperability and
connectivity products, and population health management and
analytics offerings. Services include managed cloud services,
revenue cycle management, claims clearinghouse, data interchange
and value-add consulting. The Company's solution portfolio is
readily integrated and collectively positioned to drive low total
cost of ownership for its client partners, as well as enable the
transition to value-based healthcare. 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, 2016 and subsequently
filed Quarterly Reports on Form 10-Q, 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 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;
disruptions caused by acquisitions of companies, products, or
technologies; 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. These forward-looking
statements speak only as of the date hereof. 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 presentation of non-GAAP financial information is not intended
to be considered in isolation or as a substitute for, or superior
to, financial information prepared and presented in accordance with
GAAP. The Company calculates non-GAAP diluted earnings per share by
excluding acquisition costs, amortization of acquired intangible
assets, amortization of deferred debt issuance costs, net
securities litigation defense costs, share-based compensation, and
other non-run-rate expenses from GAAP income (loss) before
provision for (benefit of) income taxes. The Company utilizes a
normalized non-GAAP tax rate to provide better consistency across
the interim reporting periods within a given fiscal year by
eliminating the effects of non-recurring and period-specific items,
which can vary in size and frequency, and which are not necessarily
reflective of the Company’s longer-term operations. The normalized
non-GAAP tax rate applied to each quarter of fiscal year 2016 and
expected to be applied for each quarter of fiscal year 2017 period
is 30.5%. The determination of this rate is based on the
consideration of both historic and projected financial results. The
Company intends to re-evaluate this normalized non-GAAP tax rate on
an annual basis or more frequently if any significant events occur
that may materially affect this rate, such as merger and
acquisition activity, changes in business outlook, or changes in
expectations regarding tax regulations.
The Company’s future period guidance in this release includes
adjustments for items not indicative of the Company’s core
operations. Such adjustments are generally expected to be of a
nature similar to those adjustments applied to the Company’s
historic GAAP financial results in the determination of the
Company’s non-GAAP diluted earnings per share. Such adjustments,
however, may be affected by changes in ongoing assumptions and
judgments as to the items that are excluded in the calculation of
non-GAAP adjusted net income and adjusted diluted earnings per
share, as described in this release. The exact amount and probable
significance of these adjustments, including acquisition costs, net
securities litigation defense costs, and other non-run-rate
expenses, are not currently determinable without unreasonable
efforts, but may be significant. These items cannot be reliably
quantified or forecasted due to the combination of their historic
and expected variability. It is therefore not practicable to
reconcile this non-GAAP guidance to the most comparable GAAP
measures.
QUALITY SYSTEMS, INC. CONSOLIDATED STATEMENTS OF
INCOME (LOSS)
(In thousands, except per share data)
(Unaudited)
Three Months Ended June 30, 2016 2015 Revenues:
Software license and hardware $ 14,789 $ 16,189 Software related
subscription services 19,875 12,246 Total software,
hardware and related 34,664 28,435 Support and maintenance 38,007
43,713 Revenue cycle management and related services 21,053 20,243
Electronic data interchange and data services 22,124 20,189
Professional services 6,357 9,584 Total revenues
122,205 122,164 Cost of revenue: Software license and
hardware 7,120 7,041 Software related subscription services 9,087
5,958 Total software, hardware and related 16,207
12,999 Support and maintenance 6,568 7,943 Revenue cycle management
and related services 14,231 14,512 Electronic data interchange and
data services 12,763 12,326 Professional services 7,046
8,197 Total cost of revenue 56,815 55,977
Gross profit 65,390 66,187 Operating expenses: Selling, general and
administrative 40,581 39,171 Research and development costs, net
18,224 17,085 Amortization of acquired intangible assets 2,704 897
Restructuring costs 3,753 — Total operating expenses
65,262 57,153 Income from operations 128 9,034
Interest income 8 302 Interest expense (1,013 ) — Other expense,
net (87 ) (50 ) Income (loss) before provision for (benefit of)
income taxes (964 ) 9,286 Provision for (benefit of) income taxes
(317 ) 2,924 Net income (loss) $ (647 ) $ 6,362 Net
income (loss) per share: Basic $ (0.01 ) $ 0.11 Diluted $ (0.01 ) $
0.10 Weighted-average shares outstanding: Basic 61,179 60,312
Diluted 61,179 61,064 Dividends declared per common share $ — $
0.175
QUALITY SYSTEMS, INC. CONSOLIDATED
BALANCE SHEETS
(In thousands, except per share data)
(Unaudited)
June 30, 2016 March 31, 2016 ASSETS Current assets:
Cash and cash equivalents $ 26,349 $ 27,176 Restricted cash and
cash equivalents 4,842 5,320 Marketable securities — 9,297 Accounts
receivable, net 81,795 94,024 Inventories 430 555 Income taxes
receivable 33,020 32,709 Prepaid expenses and other current assets
16,631 14,910 Total current assets 163,067 183,991
Equipment and improvements, net 26,683 25,790 Capitalized software
costs, net 13,827 13,250 Deferred income taxes, net 8,158 8,198
Intangibles, net 85,943 91,675 Goodwill 188,837 188,837 Other
assets 18,559 19,049 Total assets $ 505,074 $
530,790 LIABILITIES AND SHAREHOLDERS’ EQUITY Current
liabilities: Accounts payable $ 4,122 $ 11,126 Deferred revenue
54,361 57,935 Accrued compensation and related benefits 14,257
18,670 Income taxes payable 90 91 Other current liabilities 52,660
50,238 Total current liabilities 125,490 138,060
Deferred revenue, net of current 1,476 1,335 Deferred compensation
6,617 6,357 Line of credit 88,000 105,000 Other noncurrent
liabilities 13,365 10,661 Total liabilities 234,948
261,413 Commitments and contingencies Shareholders’ equity: Common
Stock $0.01 par value; authorized 100,000 shares; issued and
outstanding 61,510 and 60,978 shares at June 30, 2016 and March 31,
2016, respectively 615 610 Additional paid-in capital 212,765
211,262 Accumulated other comprehensive loss (593 ) (481 ) Retained
earnings 57,339 57,986 Total shareholders’ equity
270,126 269,377 Total liabilities and shareholders’
equity $ 505,074 $ 530,790
QUALITY
SYSTEMS, INC. NON-GAAP FINANCIAL MEASURES
(In thousands, except per share data)
RECONCILIATION OF
NON-GAAP DILUTED EARNINGS PER SHARE
Three Months Ended June 30 2016 2015 Income before
provision for income taxes - GAAP $ (964 ) $ 9,286 Non-GAAP
adjustments: Acquisition costs 2,736 517 Amortization of acquired
intangible assets 5,732 1,800 Amortization of deferred debt
issuance costs 269 — Restructuring costs 3,753 — Securities
litigation defense costs, net of insurance 364 538 Share-based
compensation 1,156 684 Other non-run-rate expenses* 401 938
Total adjustments to GAAP income before provision for income taxes:
14,411 4,477 Income before provision for income taxes -
Non-GAAP 13,447 13,763 Provision for income taxes 4,101
4,198 Net income - Non-GAAP $ 9,346 $ 9,565 Diluted net
income per share - Non-GAAP $ 0.15 $ 0.16 Weighted-average shares
outstanding (diluted): 61,676 61,064
* For the three months ended June 30, 2016, other non-run-rate
expenses consist primarily of professional services costs not
related to ongoing core operations.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160728006600/en/
Investor Contact:Westwicke PartnersBob East or Asher
Dewhurst443-213-0500
Quality Systems (NASDAQ:QSII)
Historical Stock Chart
From Mar 2024 to Apr 2024
Quality Systems (NASDAQ:QSII)
Historical Stock Chart
From Apr 2023 to Apr 2024