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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Quality Systems, Inc. (delisted) | NASDAQ:QSII | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 22.36 | 22.34 | 22.37 | 0 | 01:00:00 |
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California
(State or other jurisdiction of incorporation or organization)
18111 Von Karman Avenue, Suite 800, Irvine, California
(Address of principal executive offices)
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95-2888568
(IRS Employer Identification No.)
92612
(Zip Code)
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|
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(949) 255-2600
(Registrant’s telephone number, including area code)
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Large accelerated filer
þ
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Accelerated filer
o
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Non-accelerated filer
o
(Do not check if a smaller reporting company)
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Small reporting company
o
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Item
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Page
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PART I. FINANCIAL INFORMATION
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Item 1.
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Financial Statements.
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|
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Unaudited Consolidated Balance Sheets as of June 30, 2016 and March 31, 2016
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Unaudited Consolidated Statements of Comprehensive Income for the three months ended June 30, 2016 and 2015
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Unaudited Consolidated Statements of Cash Flows for the three months ended June 30, 2016 and 2015
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|
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Notes to Consolidated Financial Statements
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Management’s Discussion and Analysis of Financial Condition and Results of Operations.
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Item 3.
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Quantitative and Qualitative Disclosures about Market Risk.
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Item 4.
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Controls and Procedures.
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PART II. OTHER INFORMATION
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Item 1.
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Legal Proceedings.
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Item 1A.
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Risk Factors.
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Unregistered Sales of Equity Securities and Use of Proceeds.
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||
Item 3.
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Defaults Upon Senior Securities.
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Item 4.
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Mine Safety Disclosure.
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Item 5.
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Other Information.
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Item 6.
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Exhibits.
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Signatures
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June 30, 2016
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March 31, 2016
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||||
ASSETS
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|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
26,349
|
|
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$
|
27,176
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|
Restricted cash and cash equivalents
|
4,842
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|
|
5,320
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||
Marketable securities
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—
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|
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9,297
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||
Accounts receivable, net
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81,795
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|
94,024
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Inventories
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430
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|
555
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||
Income taxes receivable
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33,020
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32,709
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Prepaid expenses and other current assets
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16,631
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14,910
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||
Total current assets
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163,067
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|
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183,991
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||
Equipment and improvements, net
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26,683
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25,790
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Capitalized software costs, net
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13,827
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13,250
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||
Deferred income taxes, net
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8,158
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|
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8,198
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Intangibles, net
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85,943
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91,675
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Goodwill
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188,837
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188,837
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Other assets
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18,559
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|
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19,049
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||
Total assets
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$
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505,074
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$
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530,790
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||||
LIABILITIES AND SHAREHOLDERS’ EQUITY
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|
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||||
Current liabilities:
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||||
Accounts payable
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$
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4,122
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$
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11,126
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Deferred revenue
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54,361
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|
|
57,935
|
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||
Accrued compensation and related benefits
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14,257
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18,670
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||
Income taxes payable
|
90
|
|
|
91
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|
||
Other current liabilities
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52,660
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50,238
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Total current liabilities
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125,490
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138,060
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Deferred revenue, net of current
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1,476
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1,335
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Deferred compensation
|
6,617
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6,357
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Line of credit
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88,000
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105,000
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Other noncurrent liabilities
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13,365
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10,661
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Total liabilities
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234,948
|
|
|
261,413
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|
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Commitments and contingencies (Note 13)
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|
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Shareholders’ equity:
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|
|
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||||
Common Stock
|
|
|
|
||||
$0.01 par value; authorized 100,000 shares; issued and outstanding 61,510 and 60,978 shares at June 30, 2016 and March 31, 2016, respectively
|
615
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|
|
610
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Additional paid-in capital
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212,765
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211,262
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Accumulated other comprehensive loss
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(593
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)
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(481
|
)
|
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Retained earnings
|
57,339
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|
|
57,986
|
|
||
Total shareholders’ equity
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270,126
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|
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269,377
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Total liabilities and shareholders’ equity
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$
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505,074
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|
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$
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530,790
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Three Months Ended June 30,
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||||||
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2016
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2015
|
||||
Revenues:
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|
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||||
Software license and hardware
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$
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14,789
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$
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16,189
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Software related subscription services
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19,875
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|
|
12,246
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Total software, hardware and related
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34,664
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28,435
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Support and maintenance
|
38,007
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43,713
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Revenue cycle management and related services
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21,053
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20,243
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Electronic data interchange and data services
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22,124
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20,189
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Professional services
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6,357
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|
9,584
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Total revenues
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122,205
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|
122,164
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Cost of revenue:
|
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|
|
||||
Software license and hardware
|
7,120
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|
7,041
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Software related subscription services
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9,087
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|
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5,958
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Total software, hardware and related
|
16,207
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|
12,999
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Support and maintenance
|
6,568
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|
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7,943
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|
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Revenue cycle management and related services
|
14,231
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14,512
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Electronic data interchange and data services
|
12,763
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12,326
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|
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Professional services
|
7,046
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|
8,197
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Total cost of revenue
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56,815
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55,977
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|
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Gross profit
|
65,390
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|
66,187
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|
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Operating expenses:
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|
||||
Selling, general and administrative
|
40,581
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|
39,171
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|
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Research and development costs, net
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18,224
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|
|
17,085
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Amortization of acquired intangible assets
|
2,704
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|
897
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|
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Restructuring costs
|
3,753
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|
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—
|
|
||
Total operating expenses
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65,262
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|
|
57,153
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Income from operations
|
128
|
|
|
9,034
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|
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Interest income
|
8
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|
|
302
|
|
||
Interest expense
|
(1,013
|
)
|
|
—
|
|
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Other expense, net
|
(87
|
)
|
|
(50
|
)
|
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Income (loss) before provision for (benefit of) income taxes
|
(964
|
)
|
|
9,286
|
|
||
Provision for (benefit of) income taxes
|
(317
|
)
|
|
2,924
|
|
||
Net income (loss)
|
$
|
(647
|
)
|
|
$
|
6,362
|
|
Other comprehensive income (loss):
|
|
|
|
||||
Foreign currency translation, net of tax
|
(122
|
)
|
|
(72
|
)
|
||
Unrealized gain (loss) on marketable securities, net of tax
|
10
|
|
|
(4
|
)
|
||
Comprehensive income (loss)
|
$
|
(759
|
)
|
|
$
|
6,286
|
|
Net income (loss) per share:
|
|
|
|
||||
Basic
|
$
|
(0.01
|
)
|
|
$
|
0.11
|
|
Diluted
|
$
|
(0.01
|
)
|
|
$
|
0.10
|
|
Weighted-average shares outstanding:
|
|
|
|
||||
Basic
|
61,179
|
|
|
60,312
|
|
||
Diluted
|
61,179
|
|
|
61,064
|
|
||
Dividends declared per common share
|
$
|
—
|
|
|
$
|
0.175
|
|
|
Three Months Ended June 30,
|
||||||
|
2016
|
|
2015
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net income (loss)
|
$
|
(647
|
)
|
|
$
|
6,362
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation
|
2,554
|
|
|
2,279
|
|
||
Amortization of capitalized software costs
|
2,371
|
|
|
2,439
|
|
||
Amortization of other intangibles
|
5,732
|
|
|
1,800
|
|
||
Amortization of debt issuance costs
|
269
|
|
|
—
|
|
||
Loss on disposal of equipment and improvements
|
40
|
|
|
—
|
|
||
Provision for bad debts
|
762
|
|
|
575
|
|
||
Provision for inventory obsolescence
|
130
|
|
|
57
|
|
||
Share-based compensation
|
1,259
|
|
|
684
|
|
||
Deferred income taxes
|
40
|
|
|
81
|
|
||
Change in fair value of contingent consideration
|
2,574
|
|
|
403
|
|
||
Restructuring costs, net of amounts paid
|
1,308
|
|
|
—
|
|
||
Changes in assets and liabilities, net of amounts acquired:
|
|
|
|
||||
Accounts receivable
|
11,467
|
|
|
7,120
|
|
||
Inventories
|
(5
|
)
|
|
(82
|
)
|
||
Accounts payable
|
(7,029
|
)
|
|
887
|
|
||
Deferred revenue
|
(3,433
|
)
|
|
(4,557
|
)
|
||
Accrued compensation and related benefits
|
(5,721
|
)
|
|
(8,406
|
)
|
||
Income taxes
|
(423
|
)
|
|
(7,140
|
)
|
||
Deferred compensation
|
260
|
|
|
635
|
|
||
Other assets and liabilities
|
1,425
|
|
|
570
|
|
||
Net cash provided by operating activities
|
12,933
|
|
|
3,707
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Additions to capitalized software costs
|
(2,948
|
)
|
|
(3,635
|
)
|
||
Additions to equipment and improvements
|
(3,462
|
)
|
|
(3,337
|
)
|
||
Proceeds from sales and maturities of marketable securities
|
9,291
|
|
|
1,120
|
|
||
Purchases of marketable securities
|
—
|
|
|
(1,514
|
)
|
||
Net cash provided by (used in) investing activities
|
2,881
|
|
|
(7,366
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Principal repayments on line of credit
|
(17,000
|
)
|
|
—
|
|
||
Proceeds from issuance of shares under employee plans
|
359
|
|
|
225
|
|
||
Dividends paid
|
—
|
|
|
(10,700
|
)
|
||
Net cash used in financing activities
|
(16,641
|
)
|
|
(10,475
|
)
|
||
Net increase (decrease) in cash and cash equivalents
|
(827
|
)
|
|
(14,134
|
)
|
||
Cash and cash equivalents at beginning of period
|
27,176
|
|
|
118,993
|
|
||
Cash and cash equivalents at end of period
|
$
|
26,349
|
|
|
$
|
104,859
|
|
|
Three Months Ended June 30,
|
||||||
|
2016
|
|
2015
|
||||
Supplemental disclosures of cash flow information:
|
|
|
|
||||
Cash paid during the period for income taxes, net of refunds
|
$
|
65
|
|
|
$
|
9,661
|
|
Cash paid for interest
|
$
|
736
|
|
|
$
|
—
|
|
Non-cash investing and financing activities:
|
|
|
|
||||
Tenant improvement allowance from landlord
|
$
|
3,094
|
|
|
$
|
—
|
|
Dividends declared but not paid
|
—
|
|
|
10,703
|
|
||
Unpaid additions to equipment and improvements
|
$
|
25
|
|
|
$
|
190
|
|
|
Three Months Ended June 30,
|
||||||
|
2016
|
|
2015
|
||||
Costs and expenses:
|
|
|
|
||||
Cost of revenue
|
$
|
149
|
|
|
$
|
97
|
|
Research and development costs, net
|
83
|
|
|
110
|
|
||
Selling, general and administrative
|
1,027
|
|
|
477
|
|
||
Total share-based compensation
|
1,259
|
|
|
684
|
|
||
Income tax benefit
|
(412
|
)
|
|
(200
|
)
|
||
Decrease in net income
|
$
|
847
|
|
|
$
|
484
|
|
|
Balance at
|
|
Quoted Prices in Active Markets for Identical Assets (Level 1)
|
|
Significant Other Observable Inputs (Level 2)
|
|
Unobservable Inputs (Level 3)
|
||||||||
|
June 30,
2016 |
|
|
|
|||||||||||
ASSETS
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents
(1)
|
$
|
26,349
|
|
|
$
|
26,349
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Restricted cash and cash equivalents
|
4,842
|
|
|
4,842
|
|
|
—
|
|
|
—
|
|
||||
|
$
|
31,191
|
|
|
$
|
31,191
|
|
|
$
|
—
|
|
|
$
|
—
|
|
LIABILITIES
|
|
|
|
|
|
|
|
||||||||
Contingent consideration related to acquisitions
|
$
|
26,417
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
26,417
|
|
|
$
|
26,417
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
26,417
|
|
|
Balance at
|
|
Quoted Prices in Active Markets for Identical Assets (Level 1)
|
|
Significant Other Observable Inputs (Level 2)
|
|
Unobservable Inputs (Level 3)
|
||||||||
|
March 31,
2016 |
|
|
|
|||||||||||
ASSETS
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents
(1)
|
$
|
27,176
|
|
|
$
|
27,176
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Restricted cash and cash equivalents
|
5,320
|
|
|
5,320
|
|
|
—
|
|
|
—
|
|
||||
Marketable securities
(2)
|
9,297
|
|
|
9,297
|
|
|
—
|
|
|
—
|
|
||||
|
$
|
41,793
|
|
|
$
|
41,793
|
|
|
$
|
—
|
|
|
$
|
—
|
|
LIABILITIES
|
|
|
|
|
|
|
|
||||||||
Contingent consideration related to acquisitions
|
$
|
23,843
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
23,843
|
|
|
$
|
23,843
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
23,843
|
|
|
|
Total Liabilities
|
||
Balance as of March 31, 2016
|
|
$
|
23,843
|
|
Fair value adjustments
|
|
2,574
|
|
|
Balance as of June 30, 2016
|
|
$
|
26,417
|
|
Initial purchase price
|
$
|
165,000
|
|
Contingent consideration
|
16,700
|
|
|
Preliminary working capital and other adjustments
|
1,349
|
|
|
Total preliminary purchase price
|
$
|
183,049
|
|
|
January 4, 2016
|
||
Preliminary fair value of the net tangible assets acquired and liabilities assumed:
|
|
||
Acquired cash and cash equivalents
|
$
|
2,225
|
|
Accounts receivable, net
|
1,514
|
|
|
Prepaid expenses and other current assets
|
4,645
|
|
|
Equipment and improvements, net
|
767
|
|
|
Capitalized software costs, net
|
307
|
|
|
Other assets
|
700
|
|
|
Accounts payable
|
(1,085
|
)
|
|
Accrued compensation and related benefits
|
(533
|
)
|
|
Deferred revenue
|
(1,067
|
)
|
|
Deferred income taxes, net
|
(12,027
|
)
|
|
Other liabilities
|
(2,721
|
)
|
|
Total preliminary net tangible assets acquired and liabilities assumed
|
(7,275
|
)
|
|
Preliminary fair value of identifiable intangible assets acquired:
|
|
||
Software technology
|
42,500
|
|
|
Customer relationships
|
28,500
|
|
|
Trade name
|
4,000
|
|
|
Goodwill
|
115,324
|
|
|
Total preliminary identifiable intangible assets acquired
|
190,324
|
|
|
Total preliminary purchase price
|
$
|
183,049
|
|
|
June 30,
2016 |
|
March 31,
2016 |
||||
NextGen Division
|
$
|
149,258
|
|
|
$
|
149,258
|
|
RCM Services Division
|
32,290
|
|
|
32,290
|
|
||
QSI Dental Division
(1)
|
7,289
|
|
|
7,289
|
|
||
Total goodwill
|
$
|
188,837
|
|
|
$
|
188,837
|
|
|
June 30, 2016
|
||||||||||||||
|
Customer Relationships
|
|
Trade Name and Contracts
|
|
Software Technology
|
|
Total
|
||||||||
Gross carrying amount
|
$
|
50,550
|
|
|
$
|
7,368
|
|
|
$
|
67,810
|
|
|
$
|
125,728
|
|
Accumulated amortization
|
(22,043
|
)
|
|
(3,174
|
)
|
|
(14,568
|
)
|
|
(39,785
|
)
|
||||
Net intangible assets
|
$
|
28,507
|
|
|
$
|
4,194
|
|
|
$
|
53,242
|
|
|
$
|
85,943
|
|
|
March 31, 2016
|
||||||||||||||
|
Customer Relationships
|
|
Trade Name and Contracts
|
|
Software Technology
|
|
Total
|
||||||||
Gross carrying amount
|
$
|
50,550
|
|
|
$
|
7,370
|
|
|
$
|
67,810
|
|
|
$
|
125,730
|
|
Accumulated amortization
|
(19,618
|
)
|
|
(2,895
|
)
|
|
(11,542
|
)
|
|
(34,055
|
)
|
||||
Net intangible assets
|
$
|
30,932
|
|
|
$
|
4,475
|
|
|
$
|
56,268
|
|
|
$
|
91,675
|
|
For the year ended March 31,
|
|
||
2017 (remaining nine months)
|
$
|
16,729
|
|
2018
|
19,115
|
|
|
2019
|
16,703
|
|
|
2020
|
15,706
|
|
|
2021
|
10,974
|
|
|
2022 and beyond
|
6,716
|
|
|
Total
|
$
|
85,943
|
|
|
June 30,
2016 |
|
March 31,
2016 |
||||
Gross carrying amount
|
$
|
99,648
|
|
|
$
|
96,699
|
|
Accumulated amortization
|
(85,821
|
)
|
|
(83,449
|
)
|
||
Net capitalized software costs
|
$
|
13,827
|
|
|
$
|
13,250
|
|
For the year ended March 31,
|
|
||
2017 (remaining nine months)
|
$
|
5,300
|
|
2018
|
3,900
|
|
|
2019
|
3,100
|
|
|
2020
|
1,527
|
|
|
2021
|
—
|
|
|
2022 and beyond
|
—
|
|
|
Total
|
$
|
13,827
|
|
|
June 30,
2016 |
|
March 31,
2016 |
||||
Accounts receivable, gross
|
$
|
93,266
|
|
|
$
|
104,467
|
|
Sales return reserve
|
(8,434
|
)
|
|
(7,541
|
)
|
||
Allowance for doubtful accounts
|
(3,037
|
)
|
|
(2,902
|
)
|
||
Accounts receivable, net
|
$
|
81,795
|
|
|
$
|
94,024
|
|
|
June 30,
2016 |
|
March 31,
2016 |
||||
Computer systems and components
|
$
|
430
|
|
|
$
|
555
|
|
|
June 30,
2016 |
|
March 31,
2016 |
||||
Prepaid expenses
|
$
|
11,530
|
|
|
$
|
11,804
|
|
Other current assets
|
5,101
|
|
|
3,106
|
|
||
Prepaid expenses and other current assets
|
$
|
16,631
|
|
|
$
|
14,910
|
|
|
June 30,
2016 |
|
March 31,
2016 |
||||
Computer equipment
|
$
|
32,514
|
|
|
$
|
32,213
|
|
Internal-use software
|
10,201
|
|
|
10,201
|
|
||
Furniture and fixtures
|
11,304
|
|
|
9,799
|
|
||
Leasehold improvements
|
12,995
|
|
|
13,408
|
|
||
|
67,014
|
|
|
65,621
|
|
||
Accumulated depreciation and amortization
|
(40,331
|
)
|
|
(39,831
|
)
|
||
Equipment and improvements, net
|
$
|
26,683
|
|
|
$
|
25,790
|
|
|
June 30,
2016 |
|
March 31,
2016 |
||||
Professional services
|
$
|
22,013
|
|
|
$
|
23,128
|
|
Software license, hardware and other
|
15,095
|
|
|
14,913
|
|
||
Support and maintenance
|
11,052
|
|
|
11,902
|
|
||
Software related subscription services
|
6,201
|
|
|
7,992
|
|
||
Deferred revenue, current
|
$
|
54,361
|
|
|
$
|
57,935
|
|
|
June 30,
2016 |
|
March 31,
2016 |
||||
Vacation
|
$
|
8,585
|
|
|
$
|
8,987
|
|
Payroll, bonus and commission
|
5,672
|
|
|
9,683
|
|
||
Accrued compensation and related benefits
|
$
|
14,257
|
|
|
$
|
18,670
|
|
|
June 30,
2016 |
|
March 31,
2016 |
||||
Contingent consideration and other liabilities related to acquisitions
|
$
|
26,417
|
|
|
$
|
24,153
|
|
Care services liabilities
|
4,842
|
|
|
5,339
|
|
||
Customer credit balances and deposits
|
4,801
|
|
|
4,123
|
|
||
Accrued EDI expense
|
2,405
|
|
|
2,382
|
|
||
Accrued royalties
|
2,390
|
|
|
2,341
|
|
||
Self insurance reserve
|
1,742
|
|
|
1,862
|
|
||
Accrued outsourcing costs
|
1,609
|
|
|
1,604
|
|
||
Deferred rent
|
1,308
|
|
|
828
|
|
||
Accrued consulting and outside services
|
1,197
|
|
|
3,650
|
|
||
Accrued legal expense
|
819
|
|
|
864
|
|
||
Other accrued expenses
|
5,130
|
|
|
3,092
|
|
||
Other current liabilities
|
$
|
52,660
|
|
|
$
|
50,238
|
|
|
|
|
|
||||
Deferred rent
|
$
|
9,281
|
|
|
$
|
6,577
|
|
Uncertain tax position and related liabilities
|
4,084
|
|
|
4,084
|
|
||
Other noncurrent liabilities
|
$
|
13,365
|
|
|
$
|
10,661
|
|
|
Three Months Ended June 30,
|
||||||
|
2016
|
|
2015
|
||||
Earnings (loss) per share — Basic:
|
|
|
|
||||
Net income (loss)
|
$
|
(647
|
)
|
|
$
|
6,362
|
|
Weighted-average shares outstanding — Basic
|
61,179
|
|
|
60,312
|
|
||
Net income (loss) per common share — Basic
|
$
|
(0.01
|
)
|
|
$
|
0.11
|
|
|
|
|
|
||||
Earnings (loss) per share — Diluted:
|
|
|
|
||||
Net income (loss)
|
$
|
(647
|
)
|
|
$
|
6,362
|
|
Weighted-average shares outstanding
|
61,179
|
|
|
60,312
|
|
||
Effect of potentially dilutive securities
|
—
|
|
|
752
|
|
||
Weighted-average shares outstanding — Diluted
|
61,179
|
|
|
61,064
|
|
||
Net income (loss) per common share — Diluted
|
$
|
(0.01
|
)
|
|
$
|
0.10
|
|
|
|
Number of
Shares
|
|
Weighted-
Average
Exercise
Price
per Share
|
|
Weighted-
Average
Remaining
Contractual
Life (years)
|
|
Aggregate
Intrinsic
Value
(in thousands)
|
|||||
Outstanding, April 1, 2016
|
|
2,447,286
|
|
|
$
|
19.55
|
|
|
6.3
|
|
574
|
|
|
Granted
|
|
856,500
|
|
|
12.87
|
|
|
7.9
|
|
|
|
||
Forfeited/Canceled
|
|
(88,355
|
)
|
|
21.80
|
|
|
4.8
|
|
|
|
||
Outstanding, June 30, 2016
|
|
3,215,431
|
|
|
$
|
17.59
|
|
|
5.8
|
|
$
|
238
|
|
Vested and expected to vest, June 30, 2016
|
|
2,358,931
|
|
|
$
|
17.59
|
|
|
5.8
|
|
$
|
238
|
|
Exercisable, June 30, 2016
|
|
773,346
|
|
|
$
|
26.19
|
|
|
2.3
|
|
$
|
143
|
|
Option Grant Date
|
|
Number of Shares
|
|
Exercise Price
|
|
Vesting Terms
(1)
|
|
Expiration
|
|||
May 31, 2016
|
|
100,000
|
|
|
$
|
12.71
|
|
|
Five years
|
|
May 31, 2024
|
May 25, 2016
|
|
216,500
|
|
|
$
|
12.78
|
|
|
Four years
|
|
May 25, 2024
|
May 24, 2016
|
|
540,000
|
|
|
$
|
12.93
|
|
|
Four years
|
|
May 24, 2024
|
Total
|
|
856,500
|
|
|
|
|
|
|
|
|
|
Non-Vested
Number of
Shares
|
|
Weighted-
Average
Grant-Date
Fair Value
per Share
|
|||
Outstanding, April 1, 2016
|
|
1,859,750
|
|
|
$
|
4.67
|
|
Granted
|
|
856,500
|
|
|
4.92
|
|
|
Vested
|
|
(226,845
|
)
|
|
5.96
|
|
|
Forfeited/Canceled
|
|
(47,320
|
)
|
|
4.53
|
|
|
Outstanding, June 30, 2016
|
|
2,442,085
|
|
|
$
|
4.64
|
|
|
|
Number of
Shares
|
|
Weighted-
Average
Grant-Date
Fair Value
per Share
|
|||
Outstanding, April 1, 2016
|
|
191,247
|
|
|
$
|
14.44
|
|
Granted
|
|
498,898
|
|
|
12.79
|
|
|
Vested
|
|
(567
|
)
|
|
20.20
|
|
|
Outstanding, June 30, 2016
|
|
689,578
|
|
|
$
|
13.24
|
|
|
|
Three Months Ended June 30,
|
||||||
|
|
2016
|
|
2015
|
||||
Revenue:
|
|
|
|
|
||||
NextGen Division
|
|
$
|
95,556
|
|
|
$
|
91,615
|
|
RCM Services Division
|
|
22,365
|
|
|
22,462
|
|
||
QSI Dental Division
|
|
4,284
|
|
|
4,418
|
|
||
Hospital Solutions Division
(1)
|
|
—
|
|
|
3,669
|
|
||
Consolidated revenue
|
|
$
|
122,205
|
|
|
$
|
122,164
|
|
|
|
|
|
|
||||
Operating income:
|
|
|
|
|
|
|||
NextGen Division
|
|
$
|
45,649
|
|
|
$
|
44,858
|
|
RCM Services Division
|
|
4,458
|
|
|
4,417
|
|
||
QSI Dental Division
|
|
1,877
|
|
|
950
|
|
||
Hospital Solutions Division
(1)
|
|
—
|
|
|
955
|
|
||
Corporate and unallocated
|
|
(51,856
|
)
|
|
(42,146
|
)
|
||
Consolidated operating income
|
|
$
|
128
|
|
|
$
|
9,034
|
|
|
|
Three Months Ended June 30,
|
||||||
|
|
2016
|
|
2015
|
||||
Research and development costs, net
|
|
$
|
18,224
|
|
|
$
|
17,085
|
|
Amortization of capitalized software costs
|
|
2,371
|
|
|
2,439
|
|
||
Marketing expense
|
|
2,943
|
|
|
3,816
|
|
||
Restructuring costs (see Note 15)
|
|
3,753
|
|
|
—
|
|
||
Other corporate and overhead costs
(1)
|
|
24,565
|
|
|
18,806
|
|
||
Total corporate and unallocated
|
|
$
|
51,856
|
|
|
$
|
42,146
|
|
•
|
Focus on the ambulatory client segment.
In October 2015, we sold our Hospital Solutions Division to focus on our core ambulatory clients. Further, a recent operational reorganization better allows us to serve the needs of our ambulatory clients through a simpler, more nimble, and focused organization. We believe it is essential to protect, build and sell new capabilities within our ambulatory platform. We are focused on our core by increasing quality and the serviceability of our solutions. We intend to continue to enhance the capabilities of our NextGen Ambulatory flagship product.
|
•
|
Cloud transition.
Through our acquisition of HealthFusion in January 2016, we acquired a highly scalable, pure cloud-based and mobile-enabled platform that operates under the tradename MediTouch®. We intend to expand the capability of this platform to serve the requirements of larger ambulatory practices. When combined with our Mirth-branded products, we can offer our clients a full suite of cloud-based solutions that better enable our clients to focus on care delivery.
|
•
|
Solutions selling.
We believe there is significant opportunity to extend the solutions we offer existing and new clients through value added services such as RCM, EDI, interoperability solutions and professional services. This will evolve our relationships from being a seller of products and services to delivering a consistent solution suite and experience for our clients.
|
•
|
Population health software and services.
We are migrating into applications, analytics and services that we believe will enable our clients to be successful in managing the health of patient populations. We are establishing strong development partners within our core client base, participating in shared-risk contracts, and working together to determine population health solutions.
|
•
|
More effective use of capital.
From cessation of the dividend, leveraging our balance sheet for future opportunities, to managing our cost structure, we are transforming our capital strategy. Our recent reorganization was formulated to result in a more efficient, integrated and streamlined organization.
|
|
Three Months Ended June 30,
|
||||
|
2016
|
|
2015
|
||
Revenues:
|
|
|
|
||
Software license and hardware
|
12.1
|
%
|
|
13.3
|
%
|
Software related subscription services
|
16.3
|
|
|
10.0
|
|
Total software, hardware and related
|
28.4
|
|
|
23.3
|
|
Support and maintenance
|
31.1
|
|
|
35.8
|
|
Revenue cycle management and related services
|
17.2
|
|
|
16.6
|
|
Electronic data interchange and data services
|
18.1
|
|
|
16.5
|
|
Professional services
|
5.2
|
|
|
7.8
|
|
Total revenues
|
100.0
|
|
|
100.0
|
|
Cost of revenue:
|
|
|
|
|
|
Software license and hardware
|
5.8
|
|
|
5.8
|
|
Software related subscription services
|
7.4
|
|
|
4.9
|
|
Total software, hardware and related
|
13.3
|
|
|
10.6
|
|
Support and maintenance
|
5.4
|
|
|
6.5
|
|
Revenue cycle management and related services
|
11.6
|
|
|
11.9
|
|
Electronic data interchange and data services
|
10.4
|
|
|
10.1
|
|
Professional services
|
5.8
|
|
|
6.7
|
|
Total cost of revenue
|
46.5
|
|
|
45.8
|
|
Gross profit
|
53.5
|
|
|
54.2
|
|
Operating expenses:
|
|
|
|
|
|
Selling, general and administrative
|
33.2
|
|
|
32.1
|
|
Research and development costs, net
|
14.9
|
|
|
14.0
|
|
Amortization of acquired intangible assets
|
2.2
|
|
|
0.7
|
|
Restructuring costs
|
3.1
|
|
|
—
|
|
Total operating expenses
|
53.4
|
|
|
46.8
|
|
Income from operations
|
0.1
|
|
|
7.4
|
|
Interest income
|
—
|
|
|
0.2
|
|
Interest expense
|
(0.8
|
)
|
|
—
|
|
Other expense, net
|
(0.1
|
)
|
|
—
|
|
Income (loss) before provision for (benefit of) income taxes
|
(0.8
|
)
|
|
7.6
|
|
Provision for (benefit of) income taxes
|
(0.3
|
)
|
|
2.4
|
|
Net income (loss)
|
(0.5
|
)%
|
|
5.2
|
%
|
|
Three Months Ended June 30,
|
||||||
|
2016
|
|
2015
|
||||
Revenues:
|
|
|
|
||||
Software license and hardware
|
$
|
14,789
|
|
|
$
|
16,189
|
|
Software related subscription services
|
19,875
|
|
|
12,246
|
|
||
Total software, hardware and related
|
34,664
|
|
|
28,435
|
|
||
|
|
|
|
||||
Support and maintenance
|
38,007
|
|
|
43,713
|
|
||
Revenue cycle management and related services
|
21,053
|
|
|
20,243
|
|
||
Electronic data interchange and data services
|
22,124
|
|
|
20,189
|
|
||
Professional services
|
6,357
|
|
|
9,584
|
|
||
Total revenues
|
$
|
122,205
|
|
|
$
|
122,164
|
|
|
Three Months Ended June 30,
|
||||||
|
2016
|
|
2015
|
||||
Total cost of revenue
|
$
|
56,815
|
|
|
$
|
55,977
|
|
Gross profit
|
65,390
|
|
|
66,187
|
|
||
Gross margin %
|
53.5
|
%
|
|
54.2
|
%
|
|
Three Months Ended June 30,
|
||||||
|
2016
|
|
2015
|
||||
Selling, general and administrative
|
$
|
40,581
|
|
|
$
|
39,171
|
|
Selling, general and administrative, as a percentage of revenue
|
33.2
|
%
|
|
32.1
|
%
|
|
Three Months Ended June 30,
|
||||||
|
2016
|
|
2015
|
||||
Gross expenditures
|
$
|
21,172
|
|
|
$
|
20,720
|
|
Capitalized software costs
|
(2,948
|
)
|
|
(3,635
|
)
|
||
Research and development costs, net
|
$
|
18,224
|
|
|
$
|
17,085
|
|
|
|
|
|
||||
Research and development costs, net, as a percentage of revenue
|
14.9
|
%
|
|
14.0
|
%
|
||
Capitalized software costs as a percentage of gross expenditures
|
13.9
|
%
|
|
17.5
|
%
|
|
Three Months Ended June 30,
|
||||||
|
2016
|
|
2015
|
||||
Amortization of acquired intangible assets
|
$
|
2,704
|
|
|
$
|
897
|
|
|
Three Months Ended June 30,
|
||||||
|
2016
|
|
2015
|
||||
Interest income
|
$
|
8
|
|
|
$
|
302
|
|
Interest expense
|
(1,013
|
)
|
|
—
|
|
||
Other expense, net
|
(87
|
)
|
|
(50
|
)
|
|
Three Months Ended June 30,
|
||||||
|
2016
|
|
2015
|
||||
Provision for (benefit of) income taxes
|
$
|
(317
|
)
|
|
$
|
2,924
|
|
Effective tax rate
|
32.9
|
%
|
|
31.5
|
%
|
|
Three Months Ended June 30,
|
||||||
|
2016
|
|
2015
|
||||
Net income (loss)
|
$
|
(647
|
)
|
|
$
|
6,362
|
|
Net income (loss) per share:
|
|
|
|
||||
Basic
|
$
|
(0.01
|
)
|
|
$
|
0.11
|
|
Diluted
|
$
|
(0.01
|
)
|
|
$
|
0.10
|
|
|
Three Months Ended June 30,
|
||||||
|
2016
|
|
2015
|
||||
Revenue:
|
|
|
|
||||
NextGen Division
|
$
|
95,556
|
|
|
$
|
91,615
|
|
RCM Services Division
|
22,365
|
|
|
22,462
|
|
||
QSI Dental Division
|
4,284
|
|
|
4,418
|
|
||
Hospital Solutions Division
(1)
|
—
|
|
|
3,669
|
|
||
Consolidated revenue
|
$
|
122,205
|
|
|
$
|
122,164
|
|
|
|
|
|
||||
Operating income:
|
|
|
|
||||
NextGen Division
|
$
|
45,649
|
|
|
$
|
44,858
|
|
RCM Services Division
|
4,458
|
|
|
4,417
|
|
||
QSI Dental Division
|
1,877
|
|
|
950
|
|
||
Hospital Solutions Division
(1)
|
—
|
|
|
955
|
|
||
Corporate and unallocated
|
(51,856
|
)
|
|
(42,146
|
)
|
||
Consolidated operating income
|
$
|
128
|
|
|
$
|
9,034
|
|
|
|
Three Months Ended June 30,
|
||||||
|
|
2016
|
|
2015
|
||||
Research and development costs, net
|
|
$
|
18,224
|
|
|
$
|
17,085
|
|
Amortization of capitalized software costs
|
|
2,371
|
|
|
2,439
|
|
||
Marketing expense
|
|
2,943
|
|
|
3,816
|
|
||
Restructuring costs
|
|
3,753
|
|
|
—
|
|
||
Other corporate and overhead costs
(1)
|
|
24,565
|
|
|
18,806
|
|
||
Total corporate and unallocated
|
|
51,856
|
|
|
42,146
|
|
|
Three Months Ended June 30,
|
||||||
|
2016
|
|
2015
|
||||
Cash and cash equivalents and marketable securities
|
$
|
26,349
|
|
|
$
|
116,797
|
|
Unused portion of revolving credit agreement
(1)
|
162,000
|
|
|
—
|
|
||
Total liquidity
|
$
|
188,349
|
|
|
$
|
116,797
|
|
|
|
|
|
||||
Net income (loss)
|
$
|
(647
|
)
|
|
$
|
6,362
|
|
Net cash provided by operating activities
|
$
|
12,933
|
|
|
$
|
3,707
|
|
|
|
Three Months Ended June 30,
|
||||||
|
|
2016
|
|
2015
|
||||
Net income (loss)
|
|
$
|
(647
|
)
|
|
$
|
6,362
|
|
Non-cash expenses
|
|
17,039
|
|
|
8,318
|
|
||
Cash from net income (loss), as adjusted
|
|
16,392
|
|
|
14,680
|
|
||
|
|
|
|
|
||||
Change in other assets and liabilities
|
|
(3,459
|
)
|
|
(10,973
|
)
|
||
Net cash provided by operating activities
|
|
$
|
12,933
|
|
|
$
|
3,707
|
|
|
|
For the year ended March 31,
|
|||||||||||||||||||
Contractual Obligations
|
Total
|
2017
(remaining nine months) |
2018
|
2019
|
2020
|
2021
|
2022 and beyond
|
||||||||||||||
Operating lease obligations
(1)
|
$
|
71,167
|
|
$
|
7,527
|
|
$
|
10,339
|
|
$
|
9,364
|
|
$
|
8,444
|
|
$
|
8,421
|
|
$
|
27,072
|
|
Line of credit obligations
|
$
|
88,000
|
|
—
|
|
$
|
—
|
|
$
|
—
|
|
—
|
|
88,000
|
|
—
|
|
||||
Contingent consideration and other acquisition related liabilities (excluding share-based payments)
|
$
|
17,600
|
|
17,600
|
|
$
|
—
|
|
$
|
—
|
|
—
|
|
—
|
|
—
|
|
||||
Total
|
$
|
176,767
|
|
$
|
25,127
|
|
$
|
10,339
|
|
$
|
9,364
|
|
$
|
8,444
|
|
$
|
96,421
|
|
$
|
27,072
|
|
|
|
QUALITY SYSTEMS, INC.
|
|
Date:
|
July 28, 2016
|
By:
|
/s/ John R. Frantz
|
|
|
|
John R. Frantz
|
|
|
|
Chief Executive Officer (Principal Executive Officer)
|
|
|
|
|
Date:
|
July 28, 2016
|
By:
|
/s/ James R. Arnold
|
|
|
|
James R. Arnold
|
|
|
|
Chief Financial Officer (Principal Financial Officer)
|
|
|
|
|
Date:
|
July 28, 2016
|
By:
|
/s/ John K. Stumpf
|
|
|
|
John K. Stumpf
|
|
|
|
Principal Accounting Officer
|
1 Year Quality Systems Chart |
1 Month Quality Systems Chart |
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