NextGen Healthcare Information Systems, a full subsidiary of
Quality Systems
(
QSII
), recently revealed that it inked a deal with Mowery Clinic of
Salina, Kansas to install NextGen offerings, such as NexGen
Ambulatory EHR.
Mowery Clinic is the biggest multi-specialty practice in Salina. It
has 33 physicians and other staff providing general surgery,
internal medicine, critical care, cardiology and other healthcare.
For its part, Mowery Clinic believes that it is gaining an
integrated platform from NextGen that will satisfy its specialty
specific needs.
NextGen products will enable Mowery Clinic to meet meaningful use
criteria. As per the agreement, Mowery Clinic will house a
composite platform centered on a unified database, which will meet
its multifaceted requirements. For example, usage of NextGen
know-how will provide Mowery Clinic with streamlined workflow and
better access to patient data. It will also contribute to outcome
based care.
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. On the positive side, we
observe the high proportion of recurring revenues. Of late,
however, growth of its pipeline metric has seen a falling trend
along with progressively lower number of signed deals on a
quarterly basis.
The company has made multiple acquisitions to bolster organic
growth. Its acquisitions are expected to facilitate its entry in
the small hospital segment. We are concerned about execution risk
emanating from Quality Systems' entry into the rural inpatient
market.
Moreover, competition is intense from well regarded players such as
Athenahealth
(
ATHN
),
Allscripts Healthcare Solutions
(
MDRX
),
Cerner Corporation
(
CERN
) and others. Price discounting is frequent, particularly on the
lower end, and Software as a Service (SaaS) based model appears to
have exacerbated pricing pressure.
Quality Systems has traditionally focused on providing solutions
for physician practices. However, core ambulatory EHR providers,
such as Quality Systems, will see opportunities shrinking for
selling their products as physician groups are increasingly getting
absorbed into hospitals.
Our Underperform recommendation is supported by a short-term Zacks
#5 Rank (Strong Sell).
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
To read this article on Zacks.com click here.
Zacks Investment
Research