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Quality Systems (QSII) Beats Q4 Earnings, Issues FY18 View
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Irvine, CA-based Quality Systems Inc. reported fourth-quarter fiscal 2017 adjusted earnings of 18 cents per share, exceeding the Zacks Consensus Estimate by a penny. Earnings remained flat on a year-over-year basis.
Coming to fourth-quarter revenues, Quality Systems posted revenues of $132.4 million, surpassing the Zacks Consensus Estimate of $128 million. Revenues also increased 3.5% on a year-over-year basis.
Quality Systems, Inc. Price, Consensus and EPS Surprise
Over the last three months, the stock has added almost 10.3%, comparing favorably with the Zacks classified Medical Info Systems sub-industry’s return of 2.3%. The stock has a Zacks Rank #3 (Hold).
Furthermore, a long-term expected earnings growth rate of 12.67% instills confidence in investors.
Segment Details
Total software, hardware and related revenues increased 5.9% to $39.7 million, primarily driven by a 21.7% surge in Software-related subscription services.
However, massive growth at this section was partially offset by lower software license and hardware sales, which decreased almost 10.3% in the quarter.
Support and maintenance revenues increased 5.3% on a year-over-year basis to $41.9 million.
Professional services declined 26.6% to $6.8 million. Per management, the decline in revenues at the segment was primarily because of a tough comparison with the year-earlier quarter and unimpressive performance by the new software platform in recent quarters.
Coming to Electronic data interchange (EDI) services, revenues increased 11.9% on a year-over-year basis to almost $23.4 million.
Meanwhile, the company’s Revenue Cycle Management (RCM) business improved 0.7% to $20.5 million.
Bookings
Quality Systems registered bookings worth $33.8 million in the reported quarter, down by $6.1 million from the year-ago quarter.
Margin Details
Per management, Quality Systems’ gross margin expanded by 200 basis points (bps) and increased its percentage of recurring revenue by 400 bps.
Coming to operating expenses, the company recorded selling general & administrative (SG&A) expenses of $42.7 million, reflecting a rise of $6.1 million year over year. As a percentage of total revenue, SG&A expenses were 32.3% of revenues in the quarter, up 80 bps on a year-over-year basis.
Meanwhile, research and development (R&D) costs totaled $22.1 million, up from $16.1 million a year ago.
Guidance
Quality Systems provided an initial outlook for fiscal 2018.
For fiscal 2018, the company projects revenues in the band of $512 million to $530 million.
Adjusted earnings are forecasted in the range of 66 cents and 74 cents per share.
Our Take
Quality Systems posted a stellar fourth quarter of fiscal 2017, beating the Zacks Consensus Estimate on both the counts. Furthermore, over the past three months, the company has outperformed the broader industry with respect to price performance. We are particularly upbeat about the company’s solid performance at the System’s total software, hardware and related segments.
However, the segment's massive growth was partially offset by lower software license and hardware sales. Quality Systems continues to focus on growing its presence in the Revenue Cycle Management (RCM), population health and interoperability solution markets. However, a sluggish global economy, intensifying competition and a strict regulatory environment are primary headwinds.
Inogen promises a long-term adjusted earnings growth of almost 17.5%. The stock returned 84.9% over the last one year.
Luminex has an expected long-term adjusted earnings growth of almost 16.3%. The stock added roughly 10.9% over the last three months.
Hologic has a long-term expected earnings growth rate of 11.33%. The stock has a solid one-year return of roughly 30%.
Zacks' 2017 IPO Watch List
Before looking into the stocks mentioned above, you may want to get a head start on potential tech IPOs that are popping up on Zacks' radar. Imagine being in the first wave of investors to jump on a company with almost unlimited growth potential? This Special Report gives you the current scoop on 5 that may go public at any time.
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Quality Systems (QSII) Beats Q4 Earnings, Issues FY18 View
Irvine, CA-based Quality Systems Inc. reported fourth-quarter fiscal 2017 adjusted earnings of 18 cents per share, exceeding the Zacks Consensus Estimate by a penny. Earnings remained flat on a year-over-year basis.
Coming to fourth-quarter revenues, Quality Systems posted revenues of $132.4 million, surpassing the Zacks Consensus Estimate of $128 million. Revenues also increased 3.5% on a year-over-year basis.
Quality Systems, Inc. Price, Consensus and EPS Surprise
Quality Systems, Inc. Price, Consensus and EPS Surprise | Quality Systems, Inc. Quote
Favorable Stock Performance
Over the last three months, the stock has added almost 10.3%, comparing favorably with the Zacks classified Medical Info Systems sub-industry’s return of 2.3%. The stock has a Zacks Rank #3 (Hold).
Furthermore, a long-term expected earnings growth rate of 12.67% instills confidence in investors.
Segment Details
Total software, hardware and related revenues increased 5.9% to $39.7 million, primarily driven by a 21.7% surge in Software-related subscription services.
However, massive growth at this section was partially offset by lower software license and hardware sales, which decreased almost 10.3% in the quarter.
Support and maintenance revenues increased 5.3% on a year-over-year basis to $41.9 million.
Professional services declined 26.6% to $6.8 million. Per management, the decline in revenues at the segment was primarily because of a tough comparison with the year-earlier quarter and unimpressive performance by the new software platform in recent quarters.
Coming to Electronic data interchange (EDI) services, revenues increased 11.9% on a year-over-year basis to almost $23.4 million.
Meanwhile, the company’s Revenue Cycle Management (RCM) business improved 0.7% to $20.5 million.
Bookings
Quality Systems registered bookings worth $33.8 million in the reported quarter, down by $6.1 million from the year-ago quarter.
Margin Details
Per management, Quality Systems’ gross margin expanded by 200 basis points (bps) and increased its percentage of recurring revenue by 400 bps.
Coming to operating expenses, the company recorded selling general & administrative (SG&A) expenses of $42.7 million, reflecting a rise of $6.1 million year over year. As a percentage of total revenue, SG&A expenses were 32.3% of revenues in the quarter, up 80 bps on a year-over-year basis.
Meanwhile, research and development (R&D) costs totaled $22.1 million, up from $16.1 million a year ago.
Guidance
Quality Systems provided an initial outlook for fiscal 2018.
For fiscal 2018, the company projects revenues in the band of $512 million to $530 million.
Adjusted earnings are forecasted in the range of 66 cents and 74 cents per share.
Our Take
Quality Systems posted a stellar fourth quarter of fiscal 2017, beating the Zacks Consensus Estimate on both the counts. Furthermore, over the past three months, the company has outperformed the broader industry with respect to price performance. We are particularly upbeat about the company’s solid performance at the System’s total software, hardware and related segments.
However, the segment's massive growth was partially offset by lower software license and hardware sales. Quality Systems continues to focus on growing its presence in the Revenue Cycle Management (RCM), population health and interoperability solution markets. However, a sluggish global economy, intensifying competition and a strict regulatory environment are primary headwinds.
Key Picks
Better-ranked stocks in the broader medical sector include Luminex Corporation , Hologic, Inc. (HOLX - Free Report) and Inogen Inc (INGN - Free Report) . Notably, Inogen and Luminex sport a Zacks Rank #1 (Strong Buy), while Hologic carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Inogen promises a long-term adjusted earnings growth of almost 17.5%. The stock returned 84.9% over the last one year.
Luminex has an expected long-term adjusted earnings growth of almost 16.3%. The stock added roughly 10.9% over the last three months.
Hologic has a long-term expected earnings growth rate of 11.33%. The stock has a solid one-year return of roughly 30%.
Zacks' 2017 IPO Watch List
Before looking into the stocks mentioned above, you may want to get a head start on potential tech IPOs that are popping up on Zacks' radar. Imagine being in the first wave of investors to jump on a company with almost unlimited growth potential? This Special Report gives you the current scoop on 5 that may go public at any time.
One has driven from 0 to a $68 billion valuation in 8 years. Four others are a little less obvious but already show jaw-dropping growth. Download this IPO Watch List today for free >>