NextGen Healthcare Information Systems, a full subsidiary of
), recently revealed a noteworthy agreement with Medline
Industries. As per their agreement, among other provisions,
Medline's sales team of over 1,100 reps will collaborate with
NextGen Healthcare to jointly sell NextGen offerings to Medline's
clientele at over 100,000 addresses comprising hospitals,
doctor's practices and other arrangements.
Based in Mundelein, Illinois, Medline is America's biggest
privately owned producer and distributor of healthcare offerings.
It distributes over 125,000 offerings to doctors' offices,
hospitals and other medical settings.
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.
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
Moreover, competition is intense from well regarded players
Allscripts Healthcare Solutions
) and others. Price discounting is frequent, particularly at 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 for
product sales shrink, as physician groups are increasingly
absorbed into hospitals.
Currently, Quality Systems retains a Zacks Rank #3 (Hold),
which supports its Neutral recommendation for the long term.
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