Quality Systems Sees Sluggish Growth, but NextGen Helps - Analyst Blog

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On Aug 18, we have updated our research report on Quality Systems Inc. ( QSII ). The Irvine, CA-based healthcare information systems provider continues to report a fall in earnings, but we are still optimistic given the continued strength in its NextGen division as well as the expected benefit from its Mirth acquisition.

Quality Systems' fiscal 2015 first quarter adjusted earnings per share came in at 12 cents, reflecting a significant decline of 50% from the year-ago earnings of 24 cents. However, adjusted earnings were in line with the Zacks Consensus Estimate.

On a reported basis, net earnings per share for the quarter significantly declined by 63.6% to 8 cents from 22 cents in the first quarter of fiscal 2014. Net earnings fell 46.8% to $5.2 million from the prior-year earnings of $12.9 million.

Revenues in the quarter stood at $117.9 million, representing an increase of 7.6% from the year-ago revenues of $109.5 million and also inched past the Zacks Consensus Estimate of $115 million.

Despite sluggish earnings growth, revenue growth continues to be largely boosted by the strength of the NextGen Healthcare Information Systems division. Quality Systems also expects to benefit from its acquisition of Mirth Corporation. Mirth's revenue streams include software license fees, maintenance fees, implementation and training fees, as well as hosting services.

The healthcare information systems and services market is very competitive. The industry is highly fragmented and includes numerous players. Quality Systems competes with larger players such as Allscripts Healthcare Solutions ( MDRX ), and Cerner Corp. ( CERN ), among others.

Quality Systems carries a Zacks Rank #3 (Hold). Currently, Merge Healthcare Inc. ( MRGE ) with a Zacks Rank #2 (Buy) is a better-ranked stock from the medical information systems industry.

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QUALITY SYS (QSII): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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