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Quality Systems Inc. (QSII - Analyst Report), a player in the health care information technology market, revealed that it won two gold, four silver and six bronze Stevie awards at the 11th Annual American Business Awards.

Quality Systems was awarded a gold medal in the Health Products and Services entry. It won a second gold medal in the category of Best Marketing or Sales Brochure or Kit.

The American Business Awards are the country’s leading business awards event. All entities, including commercial or non-profit, private or public, big or small may submit their entries. This year the committee received over 3,200 entries.

The American Business Awards in 2013 are handed out at two ceremonies. The first event took place on Jun 17, 2013 in Chicago. The second awards ceremony is scheduled to occur on Sep 16 at San Francisco.         

Quality Systems runs a pure-play business model in an industry with a number of catalysts, which provoke frequent speculation about mergers and acquisitions. We however note that the condition of its pipeline metric has not been too encouraging lately.

QSII 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 the execution risk emanating from Quality Systems’ entry into the rural inpatient market.

Moreover, competition is intense from well-regarded players such as Athenahealth (ATHN - Analyst Report), Cerner Corporation (CERN - Analyst Report) 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. While fresh projects have shrunk in number, the replacement market is growing.

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 #5 (Strong Sell). We expect other stocks in the industry, such as Omnicell Inc. (OMCL - Analyst Report), which carries a Zacks Rank #2 (Buy), to do well.

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