Provider of Electronic Health Record (EHR) services, Quality Systems ( QSII - Analyst Report ) recently revealed that it received as many as seven bronze, five silver and two gold Stevie awards at the Tenth Annual American Business Awards.

The Stevie Awards are given in four categories: The International Business Awards, the Stevie Awards for Women in Business, the Stevie Awards for Sales & Customer Service and The American Business Awards.

The American Business Awards are among the foremost business awards program in the country. Entities functioning in the U.S., including private and public, non-profit and commercial, may vie for selection. This year, the event attracted 3,000 entries in over 100 categories.

Quality Systems won two gold awards, one of which was for executive of the year and the other for a marketing brochure. The awards ceremony was held in New York City on June 18, 2012. The award winners were chosen by 270 executives who took part in the selection process.

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 acquisition. 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 quarterly basis.

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 market.

Moreover, competition is intense from well regarded players such as Athenahealth ( ATHN - Analyst Report ) , Allscripts Healthcare Solutions ( MDRX - 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.

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 selling their products as physician groups are increasingly getting absorbed into hospitals.

Our Underperform recommendation is supported by a short-term Zacks #5 Rank (Strong Sell).