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Quality Systems (QSII) Completes EagleDream Health Buyout

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NextGen Healthcare Information Systems, a wholly-owned subsidiary of Irvine, CA-based Quality Systems, Inc. , recently completed the acquisition of EagleDream Health Inc. for roughly $26 million in cash.

EagleDream Health is a cloud-based analytics that optimizes understanding across clinical, financial and administrative data to enhanced practice performance.

Following the acquisition, NextGen Healthcare will gain facilities to provide enriching care experience and accelerate patient engagement for ambulatory clinics and health systems. Management further expects to achieve per capita cost efficiency as well as enhanced work-life balance for clinicians and staff.

Interestingly, the company has been in on an acquisition spree for long. Earlier this year, NextGen Healthcare had acquired Entrada, Inc. –provider of cloud-based solutions for healthcare – for $34 million. The company has already started gaining from this deal. Per the first-quarter fiscal 2018 results, Subscription revenues were significantly up on strength in Entrada. We believe the EagleDream Health acquisition will also prove accretive to the company.

Notably, the company has successfully added Revenue Cycle Management (RCM) solutions, Analytics, Patient Management and Regulatory and Clinical tools to its product portfolio through acquisitions. We believe that the company will continue to pursue strategic acquisitions that will not only expand its product portfolio but also strengthen its competitive position.

Per a report byMedGadget, the healthcare information systems market is expected to reach a value of $53.2 billion by 2019, at a CAGR of 7.1%.

Considering the market potential and Quality Systems’ current developments, this acquisition seems to be a strategic one.

Quality Systems has been gaining investor confidence on consistent positive results. Over the past three months, the company’s share price has outperformed the industry. The stock has gained 13.1%, higher than the industry’s gain of 4.6%. The company has also outperformed the 4.3% gain of the S&P 500 market over the same time frame.

However, the healthcare information systems and services market is highly competitive. Also, the industry is exceedingly fragmented and includes numerous players like athenahealth, Inc. ATHN and McKesson Corporation MCK, among others. 

Zacks Rank & A Key Pick

Quality Systems currently has a Zacks Rank #3 (Hold). A better-ranked medical stock is Edwards Lifesciences Corporation EW, with a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Edwards Lifesciences has a long-term expected earnings growth rate of 15.2%. The stock has gained around 28.8% over the last six months.

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