Quality Systems, Inc. Reports Record Fiscal 2012 Second Quarter Results; Board-Approved 2:1 Stock Split Effective Today

IRVINE, Calif.--(BUSINESS WIRE)--Quality Systems, Inc. (NASDAQ:QSII) announced today results for its fiscal 2012 second quarter ended September 30, 2011.

Results reflect the previously announced, Board-approved 2:1 stock split which became effective yesterday for shareholders of record as of October 6, 2011. Each shareholder of record at the close of business on October 6, 2011 received one additional share for every outstanding share held as of the record date. Today, the Company’s shares will begin trading on the Nasdaq Stock Market at the new split-adjusted price. All share and per share data provided herein have been adjusted to reflect the impact of the stock split.

The Company reported record net revenues of $107.6 million for the fiscal 2012 second quarter, an increase of 32 percent versus $81.5 million for the fiscal 2011 second quarter. Net income for the fiscal 2012 second quarter reached a record $20.5 million, up 53 percent compared with $13.4 million for the same period a year ago. Fully diluted earnings per share were $0.35 in the second quarter of fiscal 2012, versus $0.23 for the fiscal 2011 second quarter, an increase of 52 percent.

“The extraordinary growth and our solid performance stem from sales resulting from decisions made, in part based on the stimulus plan. As the stimulus continues to gain momentum, and our pipeline fills, we are realizing the benefits of the positioning and preparation we did in advance. The quarterly results reflect the ongoing acceptance of our solutions and strength of our services in the marketplace,” explained Steven T. Plochocki, Quality Systems’ chief executive officer.

Quality Systems, Inc. also announced that the Company’s 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 20, 2011 with an anticipated distribution date of January 5, 2012. The $0.175 per share cash dividend, which has been adjusted to reflect the 2:1 stock split that became effective yesterday, is consistent with the Company’s current policy to pay a regular quarterly dividend on the Company’s outstanding shares of Common Stock, subject to further 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 2012 second quarter results on Thursday, October 27, 2011 at 10:00 AM ET (7:00 AM PT). All participants should dial 877-941-1468 at least ten minutes prior to the start of the call. International callers should dial 480-629-9869. 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 800-406-7325 or 303-590-3030 and enter reservation identification number 4478711. The replay will be available from approximately 12:00 PM ET on Thursday, October 27, 2011, through 11:59 PM ET on Thursday, November 3, 2011.

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. Statements regarding future events, developments, 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 and net income), are forward-looking statements within the meaning of these laws and involve a number of risks and uncertainties. Management believes that these forward looking statements are reasonable and are based on reasonable assumptions and forecasts, however, undue reliance should not be placed on such statements that speak only as of the date hereof. Moreover, these forward-looking statements are subject to a number of risks and uncertainties, some of which are outlined below. As a result, actual results may vary materially from those anticipated by the forward-looking statements. Among the important factors that could cause actual results to differ materially from those indicated by such forward-looking statements are: 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; uncertainties concerning threatened, pending and new litigation against the Company including related professional services fees; uncertainties concerning the amount and timing of professional fees incurred by the Company generally; changes of accounting estimates and assumptions used to prepare the prior periods' financial statements; general economic conditions; and the risk factors detailed from time to time in the Company’s periodic reports and registration statements filed with the Securities and Exchange Commission. A significant portion of the Company's quarterly sales of software product licenses and computer hardware is concluded in the last month of the 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.

QUALITY SYSTEMS, INC. CONSOLIDATED STATEMENTS OF INCOME (IN THOUSANDS) (UNAUDITED)
	Three Months Ended September 30,					Six Months Ended September 30,
	2011			2010		2011			2010
Revenues:
Software, hardware and supplies	$	31,860		$	20,375	$	60,771		$	45,131
Implementation and training services		6,094			4,499		11,566			8,807
System sales		37,954			24,874		72,337			53,938
Maintenance		35,214			27,529		66,716			53,065
Electronic data interchange services		11,985			10,142		24,077			19,906
Revenue cycle management and related services		11,142			11,175		23,023			21,947
Other services		11,339			7,737		21,923			15,528
Maintenance, EDI, RCM and other services		69,680			56,583		135,739			110,446
Total revenues		107,634			81,457		208,076			164,384
Cost of revenue:
Software, hardware and supplies		4,187			4,696		8,801			10,908
Implementation and training services		5,050			3,475		9,125			6,465
Total cost of system sales		9,237			8,171		17,926			17,373
Maintenance		3,994			3,238		7,848			6,692
Electronic data interchange services		7,964			6,773		15,926			13,482
Revenue cycle management and related services		8,456			8,222		17,282			16,367
Other services		6,369			3,724		11,966			8,073
Total cost of maintenance, EDI, RCM and other services		26,783			21,957		53,022			44,614
Total cost of revenue		36,020			30,128		70,948			61,987
Gross profit		71,614			51,329		137,128			102,397
Operating expenses:
Selling, general and administrative		32,169			24,829		61,555			51,067
Research and development costs		7,358			5,232		14,185			10,688
Amortization of acquired intangible assets		520			445		1,002			792
Total operating expenses		40,047			30,506		76,742			62,547
Income from operations		31,567			20,823		60,386			39,850
Interest income		75			129		157			189
Other income (expense), net		(144	)		65		(182	)		59
Income before provision for income taxes		31,498			21,017		60,361			40,098
Provision for income taxes		11,002			7,587		20,882			14,576
Net income	$	20,496		$	13,430	$	39,479		$	25,522
Net income per share:
Basic	$	0.35		$	0.23	$	0.67		$	0.44
Diluted	$	0.35		$	0.23	$	0.67		$	0.44
Weighted average shares outstanding:
Basic		58,664			57,870		58,511			57,830
Diluted		59,005			58,156		58,902			58,132
Dividends declared per common share	$	0.175		$	0.15	$	0.35		$	0.30

QUALITY SYSTEMS, INC. CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED)
	September 30,		March 31,
	2011		2011
ASSETS
Current assets:
Cash and cash equivalents	$	125,775	$	116,617
Restricted cash		2,848		3,787
Marketable securities		1,098		1,120
Accounts receivable, net		150,224		139,772
Inventories		2,791		1,933
Income taxes receivable		3,230		-
Deferred income tax assets, net		10,466		10,397
Other current assets		9,814		8,768
Total current assets		306,246		282,394
Equipment and improvements, net		14,853		12,599
Capitalized software costs, net		17,395		15,150
Intangibles, net		22,541		16,890
Goodwill		51,156		46,721
Other assets		4,535		4,932
Total assets	$	416,726	$	378,686
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	6,369	$	6,686
Deferred revenue		83,291		76,695
Accrued compensation and related benefits		9,793		10,247
Income taxes payable		-		3,530
Dividends payable		10,290		10,162
Other current liabilities		18,178		29,316
Total current liabilities		127,921		136,636
Deferred revenue, net of current		1,272		1,099
Deferred income tax liabilities, net		11,384		11,384
Deferred compensation		2,756		2,488
Other noncurrent liabilities		4,334		2,409
Total liabilities		147,667		154,016
Commitments and contingencies
Shareholders' equity:
Common stock
$0.01 par value; authorized 100,000 shares; issued and outstanding 58,818 and 58,068 shares at September 30, 2011 and March 31, 2011, respectively		588		580
Additional paid-in capital		158,394		132,969
Retained earnings		110,077		91,121
Total shareholders' equity		269,059		224,670
Total liabilities and shareholders' equity	$	416,726	$	378,686