Attached files
| file | filename |
|---|---|
| 8-K - 8-K - NEXTGEN HEALTHCARE, INC. | q2fy20168-kpressrelease.htm |
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
OCTOBER 22, 2015
QUALITY SYSTEMS, INC. REPORTS FISCAL 2016 SECOND QUARTER RESULTS
Revenues and Net Income Increase; Company's Divestiture of Hospital Solutions Division Enables Focus on Core Competency
IRVINE, Calif. … October 22, 2015 … Quality Systems, Inc. (NASDAQ:QSII) announced today results for its fiscal 2016 second quarter ended September 30, 2015.
Revenues for the fiscal 2016 second quarter reached $125.4 million, up four percent when compared with $120.5 million for the fiscal 2015 second quarter.
Net income for the 2016 second quarter reached $8.3 million, versus $4.8 million for the comparable period last year, an increase of 75 percent.
On a GAAP basis, fully diluted earnings per share was $0.14 in the second quarter of 2016 compared with $0.08 for the same period last year. On a non-GAAP basis, fully diluted earnings per share for the fiscal 2016 second quarter was $0.21 versus $0.13 reported in the fiscal 2015 second quarter.
At quarter-end, the Company’s liquidity position remained strong with $110.8 million of cash and investments.
“As part of our ongoing strategy, we remain focused on further expanding upon the Company’s leadership position in the ambulatory space by delivering the client experience, software and services that help our clients navigate the transition to a value-based healthcare economy. The just-announced divestiture of our Hospital Solutions division helps pave a clearer path for our commitment to our core ambulatory business," explained Rusty Frantz, president and chief executive officer.
“We are also pleased to show continued progress again this quarter in terms of improving the Company’s financial performance as well as demonstrating the benefits of our increased focus on cost containment initiatives. These efforts aid in ensuring availability of continued capital to reinvest in the growth and future of our business and platform,” Frantz 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,
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Quality Systems
Fiscal 2016 Second Quarter Results
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payable to shareholders of record as of December 11, 2015 with an anticipated distribution date of January 4, 2016. 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 second quarter results on Thursday, October 22, 2015 at 5:00 PM ET (2:00 PM PT). All participants should dial 1-866-900-9499 at least ten minutes prior to the start of the call and reference conference ID #58999378. 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 #58999378. The replay will be available from approximately 8:00 PM ET on Thursday, October 22, 2015, through 11:59 PM ET on Thursday, October 29, 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 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-
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Quality Systems
Fiscal 2016 Second Quarter Results
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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
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QUALITY SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
Three Months Ended September 30, | Six Months Ended September 30, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Revenues: | |||||||||||||||
Software license and hardware | 19,687 | 19,316 | 35,876 | 39,077 | |||||||||||
Software related subscription services | 12,437 | 9,687 | 24,683 | 19,402 | |||||||||||
Total software, hardware and related | 32,124 | 29,003 | 60,559 | 58,479 | |||||||||||
Support and maintenance | 42,176 | 42,135 | 85,889 | 82,940 | |||||||||||
Revenue cycle management and related services | 20,793 | 17,432 | 41,036 | 34,125 | |||||||||||
Electronic data interchange and data services | 20,581 | 18,906 | 40,770 | 37,225 | |||||||||||
Professional services | 9,695 | 13,043 | 19,279 | 25,644 | |||||||||||
Total revenues | 125,369 | 120,519 | 247,533 | 238,413 | |||||||||||
Cost of revenue: | |||||||||||||||
Software license and hardware | 6,578 | 7,475 | 13,619 | 15,031 | |||||||||||
Software related subscription services | 5,963 | 5,384 | 11,921 | 9,835 | |||||||||||
Total software, hardware and related | 12,541 | 12,859 | 25,540 | 24,866 | |||||||||||
Support and maintenance | 8,394 | 6,785 | 16,337 | 13,699 | |||||||||||
Revenue cycle management and related services | 14,680 | 13,202 | 29,192 | 25,908 | |||||||||||
Electronic data interchange and data services | 12,539 | 12,015 | 24,865 | 24,014 | |||||||||||
Professional services | 8,444 | 11,912 | 16,641 | 24,476 | |||||||||||
Total cost of revenue | 56,598 | 56,773 | 112,575 | 112,963 | |||||||||||
Gross profit | 68,771 | 63,746 | 134,958 | 125,450 | |||||||||||
Operating expenses: | |||||||||||||||
Selling, general and administrative | 37,396 | 38,681 | 76,567 | 75,411 | |||||||||||
Research and development costs | 17,981 | 16,898 | 35,066 | 33,134 | |||||||||||
Amortization of acquired intangible assets | 898 | 908 | 1,795 | 1,891 | |||||||||||
Total operating expenses | 56,275 | 56,487 | 113,428 | 110,436 | |||||||||||
Income from operations | 12,496 | 7,259 | 21,530 | 15,014 | |||||||||||
Interest income, net | 41 | 69 | 343 | 123 | |||||||||||
Other expense, net | (54 | ) | (26 | ) | (104 | ) | (17 | ) | |||||||
Income before provision for income taxes | 12,483 | 7,302 | 21,769 | 15,120 | |||||||||||
Provision for income taxes | 4,168 | 2,552 | 7,092 | 5,207 | |||||||||||
Net income | $ | 8,315 | $ | 4,750 | $ | 14,677 | $ | 9,913 | |||||||
Net income per share: | |||||||||||||||
Basic | $ | 0.14 | $ | 0.08 | $ | 0.24 | $ | 0.16 | |||||||
Diluted | $ | 0.14 | $ | 0.08 | $ | 0.24 | $ | 0.16 | |||||||
Weighted average shares outstanding: | |||||||||||||||
Basic | 60,461 | 60,247 | 60,387 | 60,238 | |||||||||||
Diluted | 61,194 | 60,788 | 61,129 | 60,782 | |||||||||||
Dividends declared per common share | $ | 0.175 | $ | 0.175 | $ | 0.35 | $ | 0.35 | |||||||
QUALITY SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
(UNAUDITED)
September 30, | March 31, | ||||
2015 | 2015 | ||||
ASSETS | |||||
Current assets: | |||||
Cash and cash equivalents | 98,647 | 118,993 | |||
Restricted cash and cash equivalents | 3,982 | 2,419 | |||
Marketable securities | 12,130 | 11,592 | |||
Accounts receivable, net | 98,393 | 107,669 | |||
Inventories | 649 | 622 | |||
Income taxes receivable | 5,077 | 3,147 | |||
Deferred income taxes, net | 24,074 | 24,080 | |||
Other current assets | 12,955 | 11,535 | |||
Total current assets | 255,907 | 280,057 | |||
Equipment and improvements, net | 22,537 | 20,807 | |||
Capitalized software costs, net | 42,155 | 40,397 | |||
Intangibles, net | 24,088 | 27,689 | |||
Goodwill | 73,571 | 73,571 | |||
Other assets | 17,884 | 18,000 | |||
Total assets | 436,142 | 460,521 | |||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||
Current liabilities: | |||||
Accounts payable | 10,965 | 10,018 | |||
Deferred revenue | 57,683 | 66,343 | |||
Accrued compensation and related benefits | 16,321 | 24,051 | |||
Income taxes payable | 61 | 10,048 | |||
Dividends payable | 10,722 | 10,700 | |||
Other current liabilities | 37,593 | 33,924 | |||
Total current liabilities | 133,345 | 155,084 | |||
Deferred revenue, net of current | 1,163 | 1,349 | |||
Deferred compensation | 6,325 | 5,750 | |||
Other noncurrent liabilities | 7,812 | 14,798 | |||
Total liabilities | 148,645 | 176,981 | |||
Commitments and contingencies | |||||
Shareholders' equity: | |||||
Common stock | |||||
$0.01 par value; authorized 100,000 shares; issued and outstanding 60,863 and 60,303 shares at September 30, 2015 and March 31, 2015, respectively | 609 | 603 | |||
Additional paid-in capital | 209,638 | 198,650 | |||
Accumulated other comprehensive loss | (481 | ) | (192 | ) | |
Retained earnings | 77,731 | 84,479 | |||
Total shareholders' equity | 287,497 | 283,540 | |||
Total liabilities and shareholders' equity | 436,142 | 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 September 30, | Six Months Ended September 30, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Income before provision for income taxes - GAAP | $ | 12,483 | $ | 7,302 | $ | 21,769 | $ | 15,120 | |||||||
Plus items included in cost of revenue: | |||||||||||||||
Amortization of acquired software technology | 904 | 859 | 1,807 | 1,717 | |||||||||||
Share-based compensation | 102 | 92 | 199 | 178 | |||||||||||
Total adjustments to cost of revenue | 1,006 | 951 | 2,006 | 1,895 | |||||||||||
Plus items included in operating expenses: | |||||||||||||||
Acquisition costs | 775 | 621 | 1,292 | 1,744 | |||||||||||
Amortization of acquired intangible assets | 898 | 908 | 1,795 | 1,891 | |||||||||||
Securities litigation defense costs | 2,256 | 1,009 | 2,794 | 1,287 | |||||||||||
Share-based compensation | 799 | 775 | 1,386 | 1,479 | |||||||||||
Other non-run-rate expenses* | 449 | 315 | 1,387 | 315 | |||||||||||
Total adjustments to operating expenses | 5,177 | 3,628 | 8,654 | 6,716 | |||||||||||
Total adjustments to GAAP income before provision for income taxes: | 6,183 | 4,579 | 10,660 | 8,611 | |||||||||||
Income before provision for income taxes - Non-GAAP | 18,666 | 11,881 | 32,429 | 23,731 | |||||||||||
Provision for income taxes | 5,693 | 4,159 | 9,891 | 8,220 | |||||||||||
Net income - Non-GAAP | $ | 12,973 | $ | 7,722 | $ | 22,538 | $ | 15,511 | |||||||
Diluted net income per share - Non-GAAP | $ | 0.21 | $ | 0.13 | $ | 0.37 | $ | 0.26 | |||||||
Weighted-average shares outstanding (diluted): | 61,194 | 60,788 | 61,129 | 60,782 | |||||||||||
* For the three months ended September 30, 2015, the $449 of other non-run-rate expenses consists of certain non-recurring professional services costs not related to ongoing core operations and non-recurring severance costs. Other non-run-rate expenses for the six months ended September 30, 2015 also includes $938 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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