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8-K - FORM 8-K - NEXTGEN HEALTHCARE, INC.d763131d8k.htm

Exhibit 99.1

 

LOGO

 

For Further Information, Contact:     
Quality Systems, Inc.      Susan J. Lewis
18111 Von Karman Avenue, Suite 700      Phone: (303) 804-0494
Irvine, CA 92612      slewis@qsii.com
Phone: (949) 255-2600     
Paul Holt, EVP/CFO, pholt@qsii.com     

FOR IMMEDIATE RELEASE

        JULY 24, 2014

QUALITY SYSTEMS, INC. REPORTS FISCAL 2015 FIRST QUARTER RESULTS

Pipeline Increases to Highest Level in Two Years

IRVINE, Calif. … July 24, 2014 …Quality Systems, Inc. (NASDAQ:QSII) announced today results for its fiscal 2015 first quarter ended June 30, 2014.

Revenues for the fiscal 2015 first quarter reached $117.9 million, an increase of 8 percent when compared with $109.5 million for the fiscal 2014 first quarter. Net income for the 2015 first quarter was $5.2 million, down from $12.9 million reported in the comparable period a year ago.

On a GAAP basis, fully diluted earnings per share was $0.08 in the fiscal 2015 first quarter versus fully diluted earnings per share of $0.22 for same period last year. On a non-GAAP basis, fully diluted earnings per share for the fiscal 2015 first quarter was $0.13, a decline from $0.24 reported in the first quarter a year ago.

At quarter-end, the Company held a strong liquidity position, with $116.4 million of cash and investments.

“As we kick off fiscal 2015, we are pleased that the Company has demonstrated significant progress this quarter. We are beginning to realize results from all the initiatives we have employed over the past year, including the restructuring of our functional organization, cross-selling of our products and services and the release of new solutions that cater to the changing healthcare market. Areas such as Revenue Cycle Management, Population Health and interoperability are positively impacting sales and marketing, both in the form of net new deals as well as cross-selling into our growing client base,” explained Steven T. Plochocki, president and chief executive officer.

“During the first quarter, our pipeline hit the highest level we have seen in the past two years, which we believe demonstrates the success of our growth initiatives. We are pleased to begin the new fiscal year with a positive start. As the healthcare information technology industry continues to evolve, Quality Systems/NextGen remains front and center in helping our clients meet necessary criteria for Meaningful Use qualifications and healthcare reform,” Plochocki added.

 

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Quality Systems

Fiscal 2015 First Quarter Results

Page 2

 

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 September 12, 2014 with an anticipated distribution date of October 3, 2014. 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.

Quality Systems will host a conference call to discuss its fiscal 2015 first quarter results on Thursday, July 24, 2014 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 #73683318. 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 #73683318. The replay will be available from approximately 1:00 PM ET on Thursday, July 24, 2014, through 11:59 PM ET on Thursday, July 31, 2014.

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

 

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Quality Systems

Fiscal 2015 First Quarter Results

Page 3

 

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, and share-based compensation 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.

FINANCIAL TABLES ATTACHED


QUALITY SYSTEMS, INC.

CONSOLIDATED STATEMENTS OF INCOME (LOSS)

(IN THOUSANDS, EXCEPT PER SHARE DATA)

(UNAUDITED)

 

     Three Months Ended June 30,  
     2014      2013  

Revenues:

     

Software and hardware

   $ 14,743       $ 15,972   

Implementation and training services

     6,266         6,575   
  

 

 

    

 

 

 

System sales

     21,009         22,547   

Maintenance

     40,805         38,608   

Electronic data interchange services

     18,319         16,692   

Revenue cycle management and related services

     16,693         16,015   

Other services

     21,068         15,667   
  

 

 

    

 

 

 

Maintenance, EDI, RCM and other services

     96,885         86,982   
  

 

 

    

 

 

 

Total revenues

     117,894         109,529   
  

 

 

    

 

 

 

Cost of revenue:

     

Software and hardware

     6,641         4,934   

Implementation and training services

     7,151         7,134   
  

 

 

    

 

 

 

Total cost of system sales

     13,792         12,068   

Maintenance

     6,914         5,302   

Electronic data interchange services

     11,999         10,796   

Revenue cycle management and related services

     12,706         11,401   

Other services

     10,779         8,505   
  

 

 

    

 

 

 

Total cost of maintenance, EDI, RCM and other services

     42,398         36,004   
  

 

 

    

 

 

 

Total cost of revenue

     56,190         48,072   
  

 

 

    

 

 

 

Gross profit

     61,704         61,457   

Operating expenses:

     

Selling, general and administrative

     36,730         35,096   

Research and development costs

     16,236         5,614   

Amortization of acquired intangible assets

     983         1,194   
  

 

 

    

 

 

 

Total operating expenses

     53,949         41,904   
  

 

 

    

 

 

 

Income from operations

     7,755         19,553   

Interest income, net

     54         31   

Other income (expense), net

     9         (254
  

 

 

    

 

 

 

Income before income taxes

     7,818         19,330   

Provision for income taxes

     2,655         6,385   
  

 

 

    

 

 

 

Net income

   $ 5,163       $ 12,945   

Net income per share:

     

Basic

   $ 0.09       $ 0.22   

Diluted

   $ 0.08       $ 0.22   

Weighted-average shares outstanding:

     

Basic

     60,230         59,559   

Diluted

     60,770         59,572   

Dividends declared per common share

   $ 0.175       $ 0.175   


QUALITY SYSTEMS, INC.

CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS)

(UNAUDITED)

 

     June 30,     March 31,  
     2014     2014  

ASSETS

    

Current assets:

    

Cash and cash equivalents

   $ 107,748      $ 103,145   

Restricted cash

     2,605        4,351   

Marketable securities

     8,687        10,656   

Accounts receivable, net

     111,842        110,181   

Inventories

     755        834   

Income taxes receivable

     6,330        8,366   

Deferred income taxes, net

     11,757        11,690   

Other current assets

     9,768        11,135   
  

 

 

   

 

 

 

Total current assets

     259,492        260,358   

Equipment and improvements, net

     22,915        22,801   

Capitalized software costs, net

     38,452        39,152   

Intangibles, net

     31,175        33,016   

Goodwill

     72,804        72,804   

Other assets

     16,943        16,927   
  

 

 

   

 

 

 

Total assets

   $ 441,781      $ 445,058   
  

 

 

   

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

    

Current liabilities:

    

Accounts payable

   $ 8,850      $ 7,888   

Deferred revenue

     70,692        71,077   

Accrued compensation and related benefits

     13,894        15,953   

Dividends payable

     10,690        10,686   

Other current liabilities

     20,616        18,282   
  

 

 

   

 

 

 

Total current liabilities

     124,742        123,886   

Deferred revenue, net of current

     2,001        2,187   

Deferred compensation

     5,182        4,809   

Other noncurrent liabilities

     19,316        19,086   
  

 

 

   

 

 

 

Total liabilities

     151,241        149,968   

Commitments and contingencies

    

Shareholders’ equity:

    

Common stock $0.01 par value; authorized 100,000 shares; issued and outstanding 60,221 and 60,206 shares at June 30, 2014 and March 31, 2014, respectively

     602        602   

Additional paid-in capital

     195,733        194,739   

Accumulated other comprehensive loss

     (198     (182

Retained earnings

     94,403        99,931   
  

 

 

   

 

 

 

Total shareholders’ equity

     290,540        295,090   
  

 

 

   

 

 

 

Total liabilities and shareholders’ equity

   $ 441,781      $ 445,058   
  

 

 

   

 

 

 


QUALITY SYSTEMS, INC.

NON-GAAP FINANCIAL MEASURES

RECONCILIATION OF NON-GAAP DILUTED EARNINGS PER SHARE

(IN THOUSANDS, EXCEPT PER SHARE DATA)

 

     Three Months Ended June 30,  
     2014      2013  

Income before provision for income taxes - GAAP

   $ 7,818       $ 19,330   

Plus items included in cost of revenue:

     

Amortization of acquired software technology

     858         672   

Share-based compensation

     86         74   
  

 

 

    

 

 

 

Total adjustments to cost of revenue

     944         746   

Plus items included in operating expenses:

     

Acquisition costs

     1,123         65   

Amortization of acquired intangible assets

     983         1,194   

Shareholder litigation expense

     278         —     

Share-based compensation

     704         467   
  

 

 

    

 

 

 

Total adjustments to operating expenses

     3,088         1,726   
  

 

 

    

 

 

 

Total adjustments to GAAP income before provision for income taxes:

     4,032         2,472   
  

 

 

    

 

 

 

Income before provision for income taxes - Non-GAAP

     11,850         21,802   

Provision for income taxes

     4,061         7,216   
  

 

 

    

 

 

 

Net income - Non-GAAP

   $ 7,789       $ 14,586   
  

 

 

    

 

 

 

Diluted net income per share - Non-GAAP

   $ 0.13       $ 0.24   

Weighted-average shares outstanding (diluted):

     60,770         59,572   

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