NextGen Healthcare Information Systems, a full subsidiary of
), recently revealed an agreement with Nipro Diagnostics to
integrate its own NextGen Ambulatory EHR with the latter's
TRUEresult blood glucose monitoring system.
The Nipro Diagnostic Blood Glucose system extracts readings (as
obtained by the Trueresult offering) of glucose in the blood stream
into NextGen Healthcare's Ambulatory EHR. With this agreement,
NextGen Ambulatory EHR customers will get quick access to
information provided by patients, using the TRUEresult blood
glucose monitoring system at their residence.
In other words, under the new relationship, medical
practitioners may utilize one program to view blood glucose levels
as gauged by the TRUEresult system.
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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 acquisitions. 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
Furthermore, greenfield opportunities are shrinking. The company is
faced with the loss of a critical customer in the replacement
The company has made multiple acquisitions to bolster organic
growth with acquisitions 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
Moreover, competition is intense from well regarded players such as
Allscripts Healthcare Solutions
) 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
product sales as physician groups are increasingly absorbed into
Nipro Diagnostics has a core competence in managing diabetes. Its
offerings are co-branded under the title of TRUE.
Our Underperform recommendation for Quality Systems is supported by
a short-term Zacks #5 Rank (Strong Sell).