The ability to quickly get a picture of patient condition depends on dashboards prepared by the primary care physician that quickly illustrate any noteworthy conditions that a patient may present.
Markets at $1.8 billion in 2006 are anticipated to reach $3.2 billion by 2013.
Worldwide enterprise electronic medical record (EMR) software markets will grow substantially as vendors are able to leverage the EMR expertise to provide competitive advantage from automation of process using IT infrastructure."
But back to Quality Systems (QSII).
It was the announcement of 1st Quarter 2009 earnings after the close of trading yesterday that drove the stock higher in trading today. Revenue for the quarter ended June 30, 2008, came in at $55.2 million, up 31% from the $42.0 million in the same quarter the prior year. Net income worked out to $11.1 million, up 40% over the $7.9 million last year. Fully diluted earnings per share were $.40, up 38% from the $.29/share last year.
As 'icing on the cake' the company announced a 20% increase in the cash dividend to $.30/share from the prior $.25/share payment.
QSII beat expectations--analysts had been expecting earnings of $.37/share (they came in at $.40), on revenue of $51.9 million (they came in at $55.2 million).
Regarding longer-term results, we can review the Morningstar.com "5-Yr Restated" financials on QSII and see that we had a reason why we have liked this stock in the past!
Revenue growth has been steady from $71 million in 2004 to $187 million in 2008.
Earnings have grown without interruption from $.40/share in 2004 to $1.40/share in 2008. The company initiated a dividend in 2008 at $1.00/share and now have increased it to a $1.20/share rate.
Outstanding shares are quite stable with 26 million in 2004 increasing less than 10% to 28 million in 2008. (During this same period sales increased by over 100%, earnings by over 200%---so this share dilution is quite modest in comparison.)
Free cash flow is positive and overall growing from $28 million in 2006 to $41 million in 2008.
The balance sheet is solid. As reported by Morningstar.com, the company has $59 million in cash and $91 million in other current assets. This total of $150 million in current assets yields a current ratio over just over 2 when compared to the $70.2 million in current liabilities. Long-term liabilities are quite modest at only $4 million.
Looking at a few valuation numbers, we can see on the Yahoo "Key Statistics" page on QSII, that the company is a small cap stock with a market capitalization of only $1.04 billion. The trailing p/e is a modest 26.20 with a forward p/e (fye 31-Mar-10) of 18.90. With the rapid growth in earnings expected, valuation works out to be quite reasonable in terms of the PEG Ratio of .99 (5 yr expected).
Yahoo reports 27.45 million shares outstanding with 17.70 million that float. As of 7/10/08, there were 5.77 million shares out short. Compared to the average trading volume of only 246,872 shares (3 month average), this works out to a short ratio of 31 days! I personally utilize a '3 day rule' for significance, so this 31 day figure is quite convincing! With the great results out today, and the stock climbing sharply, this could well represent a short-squeeze for investors.
In addition to the great financial results, the company now pays over a 3% dividend, and last split its stock 2:1 March 27, 2006.
And a chart?
Looking at the "point & figure" chart on Quality Systems (QSII), we can see that the stock has been trading 'sideways' since February, 2006, when the stock peaked at $42. The stock has hit that level several times only to pull back to lower levels. The stock with the current move has broken through resistance once again. It would be nice seeing this stock trade above $44 to confirm this rally has staying power.
To summarize, I chose to step out of my Lufkin (LUFK) even though I still respect the underlying fundamentals in that stock. I am concerned about the pressures of a continuing decline in the price of oil. If oil turns around tomorrow, I shall be demonstrating a public lack of any sense of timing. In any case, I hate to have any of my holdings to be as tied to a commodity price as I suspect, or fear that this stock has been.
Quality Systems (QSII) beat expectations yesterday and came in with strong revenue growth, earnings growth, and also raised their dividend. The sharp price appreciation was probably driven in part by the oversized short interest outstanding on this stock. Meanwhile, QSII demonstrates real quality with steady revenue growth, earnings growth, stable outstanding shares, an increasing dividend, growing free cash flow, and a solid balance sheet.
