JP Morgan Healthcare Conference January 14, 2009

Transcription

1 JP Morgan Healthcare Conference January 14, 2009

2 SAFE HARBOR PROVISIONS FOR FORWARD LOOKING STATEMENTS: Statements made during this presentation, the proxy statements filed with the Securities and Exchange Commission ( Commission ), communications to shareholders, press releases and oral statements made by our representatives that are not historical in nature, or that state our or management s intentions, hopes, beliefs, expectations or predictions of the future, may constitute forward looking statements within the meaning of Section 21E of the Securities and Exchange Act of 1934, as amended. Forward looking statements can often be identified by the use of forward looking terminology, such as could, should, will, will be, will lead, will assist, intended, continue, believe, may, expect, hope, anticipate, goal, forecast, plan, or estimate or variations thereof or similar expressions. Forwardlooking statements are not guarantees of future performance. Forward looking statements involve risks, uncertainties and assumptions. It is important to note that any such performance and actual results, financial condition or business, could differ materially from those expressed in such forward looking statements. Factors that could cause or contribute to such differences include, but are not limited to, the risk factors discussed under Risk Factors in our Annual Report on Form 10 K for fiscal year ended March 31, 2008, as well as factors discussed elsewhere in other reports and documents we file with the Commission. Other unforeseen factors not identified herein could also have such an effect. We undertake no obligation to update or revise forwardlooking statements to reflect changed assumptions, the occurrence of unanticipated events or changes in future operating results, financial condition or business over time unless required by law. Interested persons are urged to review the risks described under Risk Factors and in Management s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10 K for fiscal year ended March 31, 2008, as well as in our other public disclosures and filings with the Commission.

3 Quality Systems: Company Snapshot Through our NextGen and QSI divisions, we develop and provide computer based practice management, medical records, and e business applications for U.S. medical and dental group practices The company derives most of its revenue and growth from physician group business and its high functionality practice management suites Quality Systems is managed with an eye toward pursuing organic growth, while concurrently maintaining a strategy of aggressive reinvestment in new product and service development initiatives Quality Systems has an industry leading track record of strong financial and shareholder returns, and a dedication to the highest corporate governance standards

4 A Track Record of Success The growth strategy developed by the Quality Systems management team has delivered results: We believe the company has been growing at a faster rate than the industry average and taking market share from our competitors Our revenue stream is diversified, with two thirds of sales to mid sized and large customers and the rest to smaller customers The company has successfully leveraged its strength in the practice management business into the emerging medical record market Currently 75% of our customers buy products in both categories By investing in new products and services, we can anticipate customers unique needs and provide the solutions they demand

5 A Track Record of Success The results are evident in our ongoing financial performance and track record of delivering shareholder value: A nearly 400% stock price increase the past five years Financial results that rank Quality Systems among the most profitable companies and strongest cash flow generators in its sector during the same period Solid first quarter FY 09 earnings that included a 31% jump in net revenues and 40% increase in net income A corporate governance record predicated on pro shareholder policies

6 Industry Growth Drivers Growth Drivers Public Sector Initiatives HIPAA State / Local CCHIT Certification P4P Incentives Relaxation of Stark Regulations Technology Flexibility ROI Personal Health Records (PHR) Purchaser Influence Payors Employers Quality Incentives Group Initiatives

7 Corporate Headquarters Irvine, CA NextGen Division 866 Employees* Corporate Admin. 48 Employees QSI Division 69 Employees Horsham, PA (Acq d 1996) Atlanta, GA (Acq d 1997) HSI St. Louis, MO (Acq d 2008) PMP Baltimore, MD (Acq d 2008) Software Irvine, CA Depot Santa Ana, CA * Does not include PMP employees

8 Experienced Management Team Title Years of Industry Experience Steven Plochocki 36 Chief Executive Officer, Quality Systems, Inc. Patrick Cline 27 President, NextGen Healthcare Information Systems Paul Holt 13 Chief Financial Officer, Quality Systems, Inc. Donn Neufeld 28 Executive Vice President and General Manager, Quality Systems, Inc. Fred Neufeld 30 Executive Vice President and General Manager, NextGen Healthcare Scott Decker 12 Senior Vice President, NextGen Healthcare Tim Eggena 15 Executive Vice President, NextGen Practice Solutions, NextGen Healthcare

9 Quality Systems Today September 30, 2008 TTM Revenue: $213.5mm EPS: $1.57 TTM Revenue: $197.3mm (92% of total) TTM Revenue: $16.2mm (8% of total) Markets Served: Billing Sites (9/30/08): 1,199 Locations: Employees (9/30/08): 866 Physicians Practice Management EMR EDI Revenue Cycle Management Horsham, PA; Atlanta, GA; St. Louis, MO; Dallas, TX; Baltimore, MD Markets Served: Billing Sites (9/30/08): 249 Locations: Employees (9/30/08): 69 Dentists Practice Management EPR EDI Irvine, CA; Santa Ana, CA

10 Product / Market Dynamics Low Growth High Growth Growth MPM Dental PM EDI/ Connectivity EMR Clinical Dental High Penetration Penetration Opportunity Low Penetration

11 New vs. Recurring Revenue QSI Division NextGen Division Recurring 75% New 25% Company Recurring 43% New 57% Recurring 46% New 54%

12 NextGen Healthcare Current State of Adoption 5% Complete 5% Partial 10% Complete 10% Partial 1% Complete 49% Partial 90% Paper 80% Paper 50% Paper Small Practices Large Practices Hospital Outpatient Depts Inpatient Critical Care Ambulatory Care Acute Care Source: The Coker Group 8/1/08

13 Acquisitions HSI: Closed in May 2008 St. Louis, MO Revenue Cycle Management Revenue $4.2M in September Quarter PMP: Closed in October 2008 Baltimore, MD Revenue Cycle Management

14 Our Strategy Is Working Revenue Revenue (in thousands) $200 $180 $160 $140 $120 $100 $80 $60 $40 $20 $0 3/31/03 3/31/04 3/31/05 3/31/06 3/31/07 3/31/08 Earnings Per Share $1.60 $1.40 $1.20 $1.00 EPS $0.80 $0.60 $0.40 $0.20 $0.00 3/31/2003 3/31/2004 3/31/05 3/31/2006 3/31/2007 3/31/2008

15 Our Strategy is Working Cash Flow from Operations Cash Flow from Ops (in thousands) $45 $40 $35 $30 $25 $20 $15 $10 $5 $0 3/31/03 3/31/04 3/31/05 3/31/06 3/31/07 3/31/08 Net Income Margin 25.0% Net Income Margin 20.0% 15.0% 10.0% 5.0% 0.0% 3/31/03 3/31/04 3/31/05 3/31/06 3/31/07 3/31/08

16 Ongoing Strong Financial Performance Maintenance Revenues $60 $50 Maintenance (in thousands) $40 $30 $20 $10 $0 3/31/03 3/31/04 3/31/05 3/31/06 3/31/07 3/31/08 System Sales $90 $80 System Sales (in thousands) $70 $60 $50 $40 $30 $20 $10 $0 3/31/03 3/31/04 3/31/05 3/31/06 3/31/07 3/31/08

17 We Are Generating Meaningful Results for Shareholders

18 Awards & Honors Forbes named QSI to the 200 Best Small Companies list for eight consecutive years #4 in 2008 Quality Systems Highlights Fortune list of 100 Fastest Growing Small Public Companies #41 in 2007 Business Week s list of 100 Hot Growth Companies #19 in 2007 Business 2.0 list of 100 Fastest Growing Technology Companies #78 in 2007 #1 Rating 2007/2008 -AC Group EMR/EHR for multi-specialty, community health, FQHC s, large, mid-size, and small practice categories TEPR awards at 2001, 2002, 2003, 2004 conferences NextGen Highlights HIMSS/HUG awards at 2003, 2004, 2005, 2006, 2007 and 2008 conferences Administrative / Financial Systems Clinical / Patient Information Systems Interoperability / RHIO Disease Surveillance Expanded trade journal coverage: Healthcare Informatics, Health Data Management, Health Management Technology, Modern Healthcare

19 Future Vision Maximize top/bottom line growth at NextGen and EDI/Connectivity Maximize profit at QSI Division Stepped investments in Sales, Marketing, Implementation, Support and Development Continued improvements compensation and process HSI acquisition expands revenue cycle management division service capabilities Prioritize organic growth selectively evaluate inbound acquisition opportunities Market share Niche products Channel expansion

20 Investment Highlights Proven Growth and Profitability Track record of organic growth and profitability 5 year revenue CAGR of 28% and Net Income CAGR of 42% most profitable company in market segment with 30%+ EBITDA margins Self-funded, highly profitable growth strategy recurring revenue base provides stable cash flow Forbes list of Best 200 Small Companies eight consecutive years Robust Sales Pipeline $85 million NextGen sales 9/30/08 Substantial Customer Base Over 1,400 billing sites Substantial cross-selling opportunities Relationships with key health care institutions Leading Suite of HCIT Products NextGen products awarded top honors at HIMSS and TEPR trade shows Ranked highly by AC Group and KLAS Scalable technology platform with significant adoption in mid/large physician practices Positive HCIT Industry Trends Increasing focus on technology benefits in healthcare Stark law relaxation Pay for Performance initiatives Experienced Management Team 7+ years working collaboratively as a management team

21 Equity Profile (NASDAQ: QSII) as of 9/30/08 Recent Price $37.50/share Book Value $5.00/share Cash & marketable securities $2.92/share P/E LTM 23.9 Incl. cash & marketable securities P/E LTM 22.0 Excl. cash & marketable securities Market cap $1.0B Shares Outstanding (FD) 28.3M