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8-K - 8-K - NEXTGEN HEALTHCARE, INC.d88504d8k.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

John Stumpf, Interim Chief Financial Officer

jstumpf@qsii.com

FOR IMMEDIATE RELEASE

JULY 23, 2015

QUALITY SYSTEMS, INC. REPORTS FISCAL 2016 FIRST QUARTER RESULTS

IRVINE, Calif. … July 23, 2015 Quality Systems, Inc. (NASDAQ:QSII) announced today results for its fiscal 2016 first quarter ended June 30, 2015.

Revenues for the fiscal 2016 first quarter reached $122.2 million, an increase of four percent, versus $117.9 million reported in the fiscal 2015 first quarter.

Net income for the 2016 first quarter was $6.4 million, increasing 23 percent when compared with $5.2 million for the same period a year ago.

On a GAAP basis, fully diluted earnings per share was $0.10 in the fiscal 2016 first quarter versus $0.08 in the comparable period last year. On a non-GAAP basis, fully diluted earnings per share for the fiscal 2016 first quarter was $0.16 compared with $0.13 reported in the fiscal 2015 first quarter.

At quarter-end, the Company’s liquidity position remained strong with $116.8 million of cash and investments.

“As we kick off fiscal 2016 and I begin to settle into my new role, my immediate priority is centered on Quality Systems’ clients and our employees, as previously stated. To this end, during my first few weeks on the job, I have spent the majority of my time meeting with clients to ensure we are delivering a positive, productive and effective experience for them. I have also visited with many of our employees at QSI offices throughout the country. These initiatives have allowed me to quickly gain a keener understanding of the culture and communication – both internal and external – here at Quality Systems. I believe this is critical to the process involved in moving this Company forward in the dynamic healthcare environment in which we operate,” explained Rusty Frantz, president and chief executive officer, who officially began his employment with the Company in this capacity on July 1, 2015.

“Having one of the largest installed user bases in the healthcare information technology space affords us the chance to make a significant impact on our clients’ abilities to navigate changing healthcare models. I am gratified to learn that we are continuing to make progress in the Company’s efforts to enhance the client experience and bring new capabilities and solutions that enable them to stay relevant and flourish, both today and into the future,” Frantz said.

 

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Quality Systems

Fiscal 2016 First Quarter Results

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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 11, 2015 with an anticipated distribution date of October 5, 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 2016 first quarter results on Thursday, July 23, 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 #80827836. 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 #80827836. The replay will be available from approximately 1:00 PM ET on Thursday, July 23, 2015, through 11:59 PM ET on Thursday, July 30, 2015.

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, 2015, 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

 

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Quality Systems

Fiscal 2016 First Quarter Results

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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. Historically, the Company calculated a non-GAAP effective tax rate each quarter, based on non-GAAP pre-tax income (or loss) for the period, to determine the corresponding non-GAAP provision for (benefit of) income taxes. Beginning in the first quarter of fiscal year 2016, the Company began utilizing 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 expected to be applied to each quarter of fiscal year 2016 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.

FINANCIAL TABLES ATTACHED

 


QUALITY SYSTEMS, INC.

CONSOLIDATED STATEMENTS OF INCOME

(IN THOUSANDS, EXCEPT PER SHARE DATA)

(UNAUDITED)

 

     Three Months Ended June 30,  
     2015     2014  

Revenues:

    

Software license and hardware

   $ 16,189      $ 19,761   

Software related subscription services

     12,246        9,715   
  

 

 

   

 

 

 

Total software, hardware and related

  28,435      29,476   

Support and maintenance

  43,713      40,805   

Revenue cycle management and related services

  20,243      16,693   

Electronic data interchange and data services

  20,189      18,319   

Professional services

  9,584      12,601   
  

 

 

   

 

 

 

Total revenues

  122,164      117,894   
  

 

 

   

 

 

 

Cost of revenue:

Software license and hardware

  7,041      7,556   

Software related subscription services

  5,958      4,451   
  

 

 

   

 

 

 

Total software, hardware and related

  12,999      12,007   

Support and maintenance

  7,943      6,914   

Revenue cycle management and related services

  14,512      12,706   

Electronic data interchange and data services

  12,326      11,999   

Professional services

  8,197      12,564   
  

 

 

   

 

 

 

Total cost of revenue

  55,977      56,190   
  

 

 

   

 

 

 

Gross profit

  66,187      61,704   

Operating expenses:

Selling, general and administrative

  39,171      36,730   

Research and development costs

  17,085      16,236   

Amortization of acquired intangible assets

  897      983   
  

 

 

   

 

 

 

Total operating expenses

  57,153      53,949   
  

 

 

   

 

 

 

Income from operations

  9,034      7,755   

Interest income, net

  302      54   

Other income (expense), net

  (50   9   
  

 

 

   

 

 

 

Income before provision for income taxes

  9,286      7,818   

Provision for income taxes

  2,924      2,655   
  

 

 

   

 

 

 

Net income

$ 6,362    $ 5,163   

Net income per share:

Basic

$ 0.11    $ 0.09   

Diluted

$ 0.10    $ 0.08   

Weighted-average shares outstanding:

Basic

  60,312      60,230   

Diluted

  61,064      60,770   

Dividends declared per common share

$ 0.175    $ 0.175   


QUALITY SYSTEMS, INC.

CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS)

(UNAUDITED)

 

     June 30,     March 31,  
     2015     2015  

ASSETS

    

Current assets:

    

Cash and cash equivalents

   $ 104,859      $ 118,993   

Restricted cash and cash equivalents

     3,765        2,419   

Marketable securities

     11,938        11,592   

Accounts receivable, net

     99,974        107,669   

Inventories

     647        622   

Income taxes receivable

     2,662        3,147   

Deferred income taxes, net

     24,078        24,080   

Other current assets

     11,357        11,535   
  

 

 

   

 

 

 

Total current assets

  259,280      280,057   

Equipment and improvements, net

  22,055      20,807   

Capitalized software costs, net

  41,593      40,397   

Intangibles, net

  25,889      27,689   

Goodwill

  73,571      73,571   

Other assets

  18,501      18,000   
  

 

 

   

 

 

 

Total assets

$ 440,889    $ 460,521   
  

 

 

   

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities:

Accounts payable

$ 11,095    $ 10,018   

Deferred revenue

  61,863      66,343   

Accrued compensation and related benefits

  15,645      24,051   

Income taxes payable

  2,686      10,048   

Dividends payable

  10,703      10,700   

Other current liabilities

  37,026      33,924   
  

 

 

   

 

 

 

Total current liabilities

  139,018      155,084   

Deferred revenue, net of current

  1,272      1,349   

Deferred compensation

  6,385      5,750   

Other noncurrent liabilities

  14,260      14,798   
  

 

 

   

 

 

 

Total liabilities

  160,935      176,981   

Commitments and contingencies

Shareholders’ equity:

Common stock $0.01 par value; authorized 100,000 shares; issued and outstanding 60,317 and 60,303 shares at June 30, 2015 and March 31, 2015, respectively

  603      603   

Additional paid-in capital

  199,481      198,650   

Accumulated other comprehensive loss

  (268   (192

Retained earnings

  80,138      84,479   
  

 

 

   

 

 

 

Total shareholders’ equity

  279,954      283,540   
  

 

 

   

 

 

 

Total liabilities and shareholders’ equity

$ 440,889    $ 460,521   
  

 

 

   

 

 

 


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,  
         2015              2014      

Income before provision for income taxes - GAAP

   $ 9,286       $ 7,818   

Plus items included in cost of revenue:

     

Amortization of acquired software technology

     903         858   

Share-based compensation

     97         86   
  

 

 

    

 

 

 

Total adjustments to cost of revenue

  1,000      944   

Plus items included in operating expenses:

Acquisition costs

  517      1,123   

Amortization of acquired intangible assets

  897      983   

Securities litigation defense costs

  538      278   

Share-based compensation

  587      704   

Other non-run-rate expenses*

  938      —     
  

 

 

    

 

 

 

Total adjustments to operating expenses

  3,477      3,088   
  

 

 

    

 

 

 

Total adjustments to GAAP income before provision for income taxes:

  4,477      4,032   
  

 

 

    

 

 

 

Income before provision for income taxes - Non-GAAP

  13,763      11,850   

Provision for income taxes

  4,198      4,061   
  

 

 

    

 

 

 

Net income - Non-GAAP

$ 9,565    $ 7,789   
  

 

 

    

 

 

 

Diluted net income per share - Non-GAAP

$ 0.16    $ 0.13   

Weighted-average shares outstanding (diluted):

  61,064      60,770   

 

* For the three months ended June 30, 2015, the $938 of other non-run-rate expenses consists of non-recurring incremental costs related to the change in the Company’s Chief Executive Officer, including recruitment fees and severance payments.

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