Quality System Beats on Record Rev - Analyst Blog
August 01 2011 - 11:00AM
Zacks
Quality Systems
(QSII) reported first-quarter fiscal 2012 (ended June 30) earnings
per share of 65 cents, beating the Zacks Consensus Estimates of 62
cents and surpassing the corresponding year-ago earnings of 42
cents. Net income jumped 57% year over year to $19 million in the
reported quarter buttressed by higher revenues and backed by a
moderate increase in selling, general and administrative (SG&A)
expense.
Revenues
Sales aggregated to a record $100.4
million in the first quarter, up 21% year over year, beating the
Zacks Consensus Estimate of $99 million.
Segment-wise
Results
System sales amounted to $34.4
million, up 18.3% year over year. Sales from the two subcomponents
were $28.9 million (up 16.8% year over year) from Software,
Hardware and Supplies and $5.5 million (up 27%) from Implementation
and Training Services.
Maintenance, EDI, Revenue Cycle
Management and other Services revenue was $66.1 million, a 22.6%
year-over-year increase. Segment revenues were reported under four
headings. Maintenance charges were $31.5 million, higher 23.4%.
Electronic data interchange services sales were $12.1 million, an
increase of 23.8%. Revenue Cycle Management sales of $11.9 million
leaped 10.3%, and the “Other” sub-segment stood at $10.6 million,
up 35.8%.
Margin
Gross margin was 65.2% in the first
quarter, higher than 61.6% achieved in the prior-year quarter.
Operating margin was 28.7%, greater than 22.9% in the year-ago
quarter.
Balance Sheet
Cash, cash equivalents and
marketable securities were $125.2 million at the end of the fourth
quarter, up 24% year over year.
Other
Quality Systems announced that, on
July 27, 2011, its board of directors approved a two-for-one split
of its common stock. The new shares will be distributed on October
26, 2011.
Our Take
Quality Systems runs a pure-play
business model, in an attractive industry, with a large number of
catalysts, which provoke frequent speculation about mergers and
acquisition. The company continues to grow recurring revenues. In
recent times, Quality Systems has not only well managed its
ambulatory clinical deals but, in addition, it has nicely executed
several enterprise contracts.
Quality Systems continues to
benefit from the federal Stimulus to promote usage of Electronic
Health Record (EHR). However, the company continues to face stiff
competition across all of its operating platforms with established
Health IT players such as Cerner
Corporation (CERN), Allscripts Healthcare
Solutions (MDRX) and Athenahealth (ATHN)
posing a threat to the company.
In the end, we believe that Quality
Systems is one of the more expensive names in the healthcare IT
universe. We currently have a Neutral recommendation on the
stock.
ATHENAHEALTH IN (ATHN): Free Stock Analysis Report
CERNER CORP (CERN): Free Stock Analysis Report
ALLSCRIPTS HLTH (MDRX): Free Stock Analysis Report
QUALITY SYS (QSII): Free Stock Analysis Report
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