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8-K - 8-K - NEXTGEN HEALTHCARE, INC.d808202d8k.htm

Exhibit 99.1

 

 

LOGO

 

For Further Information, Contact:  
Quality Systems, Inc.   Susan J. Lewis

18111 Von Karman Avenue, Suite 700

  Phone: (954) 389-3700

Irvine, CA 92612

  slewis@qsii.com

Phone: (949) 255-2600

 

Paul Holt, EVP/CFO, pholt@qsii.com

 
FOR IMMEDIATE RELEASE  
        OCTOBER 23, 2014  

QUALITY SYSTEMS, INC. REPORTS FISCAL 2015 SECOND QUARTER RESULTS

Revenue Grows Nine Percent, Reaching Record Levels while

Pipeline Expands for Eighth Consecutive Quarter

IRVINE, Calif. … October 23, 2014 …Quality Systems, Inc. (NASDAQ:QSII) announced today results for its fiscal 2015 second quarter ended September 30, 2014.

Revenues for the fiscal 2015 second quarter reached a record $120.5 million, an increase of nine percent when compared with $111.1 million reported in the same period last year. Net income for the 2015 second quarter was $4.8 million versus $10.1 million, a decrease of $5.3 million from the 2014 second quarter.

On a GAAP basis, fully diluted earnings per share was $0.08 in the fiscal 2015 second quarter versus fully diluted earnings per share of $0.17 for the comparable period a year ago. On a non-GAAP basis, fully diluted earnings per share for the fiscal 2015 second quarter was $0.13, a decline from $0.22 reported in the fiscal 2014 second quarter.

During the quarter, the Company’s pipeline grew to $161.8 million, improving for the eighth consecutive quarter. At quarter-end, the Company’s liquidity position was strong, with $123.5 million of cash and investments.

“During the fiscal 2015 second quarter, we saw marked improvement across all fronts within the organization. The significant progress we are making is having a cumulative effect, which is creating positive momentum in our business and our results,” noted Steven T. Plochocki, president and chief executive officer.

“We continue to realize benefits from the initiatives we have put into place over the past year, including the restructuring of our functional organizations, the cross selling of our products and services and the release of new solutions that cater to the evolving healthcare marketplace. Revenue Cycle Management, population health and interoperability are all among the key areas that are impacting the Company’s sales and marketing efforts, in terms of both net new deals as well as cross selling into our growing client base. All of this strengthens our position as we head into the second half of this fiscal year,” added Plochocki.

 

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Quality Systems

Fiscal 2015 Second 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 December 12, 2014 with an anticipated distribution date of January 2, 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.

Quality Systems will host a conference call to discuss its fiscal 2015 second quarter results on Thursday, October 23, 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 #22384931. 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 #22384931. The replay will be available from approximately 1:00 PM ET on Thursday, October 23, 2014, through 11:59 PM ET on Thursday, October 30, 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 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

 

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Quality Systems

Fiscal 2015 Second Quarter Results

Page 3

 

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.

FINANCIAL TABLES ATTACHED

 


QUALITY SYSTEMS, INC.

CONSOLIDATED STATEMENTS OF INCOME

(IN THOUSANDS, EXCEPT PER SHARE DATA)

(UNAUDITED)

 

     Three Months Ended September 30,     Six Months Ended September 30,  
     2014     2013     2014     2013  

Revenues:

        

Software and hardware

   $ 14,230      $ 15,562      $ 28,973      $ 31,534   

Implementation and training services

     7,040        7,809        13,306        14,384   
  

 

 

   

 

 

   

 

 

   

 

 

 

System sales

     21,270        23,371        42,279        45,918   

Maintenance

     42,135        40,313        82,940        78,921   

Electronic data interchange services

     18,906        16,545        37,225        33,237   

Revenue cycle management and related services

     17,432        15,467        34,125        31,482   

Other services

     20,776        15,385        41,844        31,052   
  

 

 

   

 

 

   

 

 

   

 

 

 

Maintenance, EDI, RCM and other services

     99,249        87,710        196,134        174,692   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     120,519        111,081        238,413        220,610   
  

 

 

   

 

 

   

 

 

   

 

 

 

Cost of revenue:

        

Software and hardware

     6,521        4,779        13,162        9,713   

Implementation and training services

     6,688        6,972        13,839        14,106   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total cost of system sales

     13,209        11,751        27,001        23,819   

Maintenance

     6,785        5,262        13,699        10,564   

Electronic data interchange services

     12,015        10,650        24,014        21,446   

Revenue cycle management and related services

     13,202        11,007        25,908        22,408   

Other services

     11,562        9,012        22,341        17,517   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total cost of maintenance, EDI, RCM and other services

     43,564        35,931        85,962        71,935   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total cost of revenue

     56,773        47,682        112,963        95,754   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     63,746        63,399        125,450        124,856   

Operating expenses:

        

Selling, general and administrative

     38,681        38,578        75,411        73,674   

Research and development costs

     16,898        7,615        33,134        13,229   

Amortization of acquired intangible assets

     908        1,260        1,891        2,454   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     56,487        47,453        110,436        89,357   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income from operations

     7,259        15,946        15,014        35,499   

Interest income (expense), net

     69        (205     123        (174

Other expense, net

     (26     (155     (17     (409
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

     7,302        15,586        15,120        34,916   

Provision for income taxes

     2,552        5,465        5,207        11,850   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

   $ 4,750      $ 10,121      $ 9,913      $ 23,066   

Net income per share:

        

Basic

   $ 0.08      $ 0.17      $ 0.16      $ 0.39   

Diluted

   $ 0.08      $ 0.17      $ 0.16      $ 0.39   

Weighted-average shares outstanding:

        

Basic

     60,247        59,734        60,238        59,647   

Diluted

     60,788        59,751        60,782        59,663   

Dividends declared per common share

   $ 0.175      $ 0.175      $ 0.35      $ 0.35   


QUALITY SYSTEMS, INC.

CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS)

(UNAUDITED)

 

     September 30,
2014
    March 31,
2014
 

ASSETS

    

Current assets:

    

Cash and cash equivalents

   $ 114,980      $ 103,145   

Restricted cash

     2,445        4,351   

Marketable securities

     8,536        10,656   

Accounts receivable, net

     106,652        110,181   

Inventories

     745        834   

Income taxes receivable

     3,698        8,366   

Deferred income taxes, net

     11,754        11,690   

Other current assets

     9,780        11,135   
  

 

 

   

 

 

 

Total current assets

     258,590        260,358   

Equipment and improvements, net

     23,193        22,801   

Capitalized software costs, net

     38,404        39,152   

Intangibles, net

     29,408        33,016   

Goodwill

     72,804        72,804   

Other assets

     17,708        16,927   
  

 

 

   

 

 

 

Total assets

   $ 440,107      $ 445,058   
  

 

 

   

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

    

Current liabilities:

    

Accounts payable

   $ 8,965      $ 7,888   

Deferred revenue

     69,627        71,077   

Accrued compensation and related benefits

     15,949        15,953   

Dividends payable

     10,697        10,686   

Other current liabilities

     31,413        18,282   
  

 

 

   

 

 

 

Total current liabilities

     136,651        123,886   

Deferred revenue, net of current

     1,813        2,187   

Deferred compensation

     5,312        4,809   

Other noncurrent liabilities

     10,950        19,086   
  

 

 

   

 

 

 

Total liabilities

     154,726        149,968   

Commitments and contingencies

    

Shareholders’ equity:

    

Common stock $0.01 par value; authorized 100,000 shares; issued and outstanding 60,269 and 60,206 shares at September 30, 2014 and March 31, 2014, respectively

     603        602   

Additional paid-in capital

     196,552        194,739   

Accumulated other comprehensive loss

     (232     (182

Retained earnings

     88,458        99,931   
  

 

 

   

 

 

 

Total shareholders’ equity

     285,381        295,090   
  

 

 

   

 

 

 

Total liabilities and shareholders’ equity

   $ 440,107      $ 445,058   
  

 

 

   

 

 

 


QUALITY SYSTEMS, INC.

NON-GAAP FINANCIAL MEASURES

(IN THOUSANDS, EXCEPT PER SHARE DATA)

RECONCILIATION OF NON-GAAP DILUTED EARNINGS PER SHARE

 

     Three Months Ended September 30,      Six Months Ended September 30,  
     2014      2013      2014      2013  

Income before provision for income taxes - GAAP

   $ 7,302       $ 15,586       $ 15,120       $ 34,916   

Plus items included in cost of revenue:

           

Amortization of acquired software technology

     859         936         1,717         1,608   

Share-based compensation

     92         89         178         163   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total adjustments to cost of revenue

     951         1,025         1,895         1,771   

Plus items included in operating expenses:

           

Acquisition costs

     621         429         1,744         494   

Amortization of acquired intangible assets

     908         1,260         1,891         2,454   

Securities litigation defense costs

     1,009         1,721         1,287         1,721   

Share-based compensation

     775         495         1,479         962   

Other non-run-rate expenses

     315         —           315         —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total adjustments to operating expenses

     3,628         3,905         6,716         5,631   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total adjustments to GAAP income before provision for income taxes:

     4,579         4,930         8,611         7,402   
  

 

 

    

 

 

    

 

 

    

 

 

 

Income before provision for income taxes - Non-GAAP

     11,881         20,516         23,731         42,318   

Provision for income taxes

     4,159         7,160         8,220         14,377   
  

 

 

    

 

 

    

 

 

    

 

 

 

Net income - Non-GAAP

   $ 7,722       $ 13,356       $ 15,511       $ 27,941   
  

 

 

    

 

 

    

 

 

    

 

 

 

Diluted net income per share - Non-GAAP

   $ 0.13       $ 0.22       $ 0.26       $ 0.47   

Weighted-average shares outstanding (diluted):

     60,788         59,751         60,782         59,663   

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