Quality Systems Presentation 04/01/10


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  • As testimony to our position in the industry, one of the most recognized sources of EHR company comparisons, the AC Group, whose study is comprised of over 5,000 functional questions, has consistently ranked NG as the #1 product .
  • Quality Systems Presentation 04/01/10

    1. 1. April 2010
    2. 2. <ul><li>SAFE HARBOR PROVISIONS FOR FORWARD-LOOKING STATEMENTS: </li></ul><ul><li>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. Forward-looking statements are not guarantees of future performance. </li></ul><ul><li>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 forward-looking 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. </li></ul>Safe Harbor Provisions
    3. 3. Company Overview <ul><li>Quality Systems and its NextGen Healthcare Information Systems subsidiary develop and provide a broad range of computer-based business applications for U.S. medical and dental groups practices. These include practice management, electronic health records, revenue cycle management and e-business applications. </li></ul><ul><ul><li>Revenue primarily derived from physician group businesses that utilize the company’s high functionality practice management suites </li></ul></ul><ul><ul><li>Focused is on growing organically with a strong emphasis on reinvestment in new product and service development initiatives </li></ul></ul><ul><ul><li>Acquisitions of complimentary business lines also contribute to growth </li></ul></ul>
    4. 4. December 31, 2009 TTM Revenue: $279.1mm EPS: $1.63 Quality Systems Today TTM Revenue: $262.9mm (94% of total) Markets Served: <ul><li>Physicians </li></ul><ul><li>Practice Management </li></ul><ul><li>EHR </li></ul><ul><li>EDI </li></ul><ul><li>Revenue Cycle Management </li></ul>Locations: Horsham, PA; Atlanta, GA; St. Louis, MO; Dallas, TX; Hunt Valley, MD; Austin, TX Employees (2/11/10): 1,307 TTM Revenue: $16.2mm (6% of total) Markets Served: <ul><li>Dentists </li></ul><ul><li>Practice Management </li></ul><ul><li>EPR </li></ul><ul><li>EDI </li></ul>Locations: Irvine, CA; Santa Ana, CA Employees (12/31/09): 74
    5. 5. Organization
    6. 6. Opus Healthcare Solutions <ul><li>Acquired February 11, 2010 </li></ul><ul><li>Based in Austin, TX; </li></ul><ul><ul><li>$14 million in Revenue </li></ul></ul><ul><ul><li>$3.5 million EBITDA </li></ul></ul><ul><ul><li>20 Hospital Customers </li></ul></ul><ul><li>Accretive in FY 2011 </li></ul><ul><li>Small Hospital Market </li></ul><ul><ul><li>100 Beds or Less </li></ul></ul><ul><ul><li>1300 in U.S. </li></ul></ul><ul><li>CCHIT Certified </li></ul>
    7. 7. Experienced Management Team
    8. 8. Solution Evolution Community Health Solutions Acute Solutions Revenue Cycle Management
    9. 9. Product / Market Dynamics Penetration Opportunity Growth Clinical Dental Dental PM MPM EHR EDI High Penetration Low Penetration Low Growth High Growth RCM
    10. 10. New vs. Recurring Revenue QSI - Dental New 25% Recurring 75% NextGen New 44% Recurring 56% Company New 37% Recurring 63%
    11. 11. Current State of Adoption Source: The Coker Group – 8/1/08 Acute Care Ambulatory Care Small Practices Large Practices Hospital Outpatient Depts Inpatient Critical Care 90% Paper 5% Partial 5% Complete 10% Partial 10% Complete 80% Paper 50% Paper 49% Partial 1% Complete
    12. 12. <ul><li>American Recovery and Re-investment Act (ARRA) – 2/09 </li></ul><ul><ul><li>Over $60 billion in incentive and grant money to stimulate HIT adoption. </li></ul></ul><ul><ul><li>Stringent rules for providers to qualify for funds known as “meaningful use” </li></ul></ul><ul><ul><li>First time that state based Medicaid programs and Departments of Health have become major purchasers of health care information technology </li></ul></ul><ul><ul><li>Regional Extension Center initiative promoting large scale HIT adoption </li></ul></ul><ul><li>“ Stark” law exception stimulating health system ambulatory strategies </li></ul><ul><li>Pay-for-performance (P4P) programs, patient centered medical home, and other quality initiatives </li></ul><ul><li>Consumerism and Personal Health Records (PHR) </li></ul><ul><li>Interoperability and community-based data exchange </li></ul><ul><li>Market mindset has moved to “when” not “if” </li></ul><ul><li>IT Certification Process- CCHIT (Government-supported Certification Commission for Healthcare Information Technology, and other certifying bodies) </li></ul>Market Drivers
    13. 13. To improve patient care and reduce healthcare costs by providing industry leading systems and services while achieving the Gold Standard of customer satisfaction. NextGen Healthcare: Our Mission
    14. 14. <ul><li>Integrated Solutions </li></ul><ul><li>Flexibility overcomes physician acceptance issues </li></ul><ul><li>26+ specialty-specific clinical knowledge bases </li></ul><ul><li>Market leader in Pay-for-performance (P4P) and Patient Centered Medical Home (PCMH) </li></ul><ul><li>Proven Industry Leadership (CCHIT certification) </li></ul><ul><li>Proven Customer Results </li></ul><ul><li>Experienced Management Team </li></ul><ul><li>Financial strength vs. competition </li></ul>Competitive Advantages
    15. 15. Competitive Advantages Functionality Assessment of EHR Solutions Source: The AC Group – 12/09 Ranking 10-24 Physicians Ranking 25-99 Physicians Ranking 100+ Physicians 1 NextGen Healthcare 1 NextGen Healthcare 1 NextGen Healthcare 2 Medical Communications 2 Medical Communications 2 Epic 3 eClinicalWorks 3 eClinicalWorks 3 eClinicalWorks 4 Practice Partner 4 Practice Partner 4 Sage Software 5 GEMMS 5 GE Centricity 5 Allscripts Enterprise 6 Pulse Systems 6 Pulse Systems 6 GE Healthcare Flowcast 7 E-MDs 7 Allscripts Enterprise 7 N/A 8 Greenway Medical 8 Greenway Medical 8 N/A
    16. 16. Representative Customers
    17. 17. Historical Performance Revenue (US $ mm) Operating Income (US $ mm) CAGR = 29% CAGR = 32% $157.2 $89.0 $245.5 $186.5 $119.3 $35.8 $24.6 $59.7 $50.9 $72.4 FYE 03/31/09
    18. 18. Financial Highlights (in thousands, except per share amounts) Fiscal year ended March 31, 2009 2008 2007 2006 2005 Revenue $ 245,515 $ 186,500 $ 157,165 $ 119,287 $ 88,961 Net income 46,119 40,078 33,232 23,322 16,109 Diluted earnings per share $1.62 $1.44 $1.21 $0.85 $0.61 Cash dividends declared per share $1.15 $1.00 $1.00 $0.875 $0.75 Total shareholders’ equity $ 155,567 $ 113,705 $ 91,246 $ 72,409 $ 62,731
    19. 19. <ul><li>Recent Price $62.80/share </li></ul><ul><li>Book Value $6.02/share </li></ul><ul><li>Cash & Marketable Securities $3.00/share </li></ul><ul><li>P/E – LTM 38.53 </li></ul><ul><ul><li>Incl. Cash & Marketable Securities </li></ul></ul><ul><li>P/E – LTM 36.69 </li></ul><ul><ul><li>Excl. Cash & Marketable Securities </li></ul></ul><ul><li>Market Cap $1.8B </li></ul><ul><li>Shares Outstanding (FD) 28.7M </li></ul>Equity Profile as of 12/31/09
    20. 20. Third-Party Recognition <ul><li>Forbes ranked QSI one of the 200 Best Small Companies for the ninth consecutive year – #3 in 2009 </li></ul><ul><li>Forbes named QSI #23 in 2009 of 25 Fastest Growing Technology Companies </li></ul><ul><li>Fortune ranked QSI #52 in 2008 list of 100 Fastest Growing Small Public Companies </li></ul><ul><li>Business Week named QSI to 100 Hot Growth Companies list #19 in 2007 </li></ul><ul><li>2009 Awards </li></ul><ul><ul><li>Innovation Award Winners - MS-HUG Clinical Care – NextGen EHR </li></ul></ul><ul><ul><ul><li>Award Partner: Elmhurst Clinic, Elmhurst Memorial Healthcare </li></ul></ul></ul><ul><li>2008 Awards </li></ul><ul><ul><li>Innovation Award Winners - MS-HUG Disease Surveillance – NextGen EMR </li></ul></ul><ul><ul><ul><li>Award Partner: St. Joseph Family Medicine Residency, Medical College of Wisconsin </li></ul></ul></ul><ul><ul><li>Finalist - MS-HUG Innovation Award Outcomes Reporting – NextGen EMR/EPM </li></ul></ul><ul><ul><ul><li>Award Partner: Medical Clinic of North Texas </li></ul></ul></ul>
    21. 21. Why Quality Systems? Proven Growth and Profitability <ul><ul><ul><li>Proven track record of organic growth and profitability </li></ul></ul></ul><ul><ul><ul><ul><li>Five-year revenue CAGR of 29% and Net Income CAGR of 37% </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Most profitable company in market segment with 30%+ EBITDA margins </li></ul></ul></ul></ul><ul><ul><ul><li>Self-funded, highly profitable growth strategy </li></ul></ul></ul><ul><ul><ul><ul><li>Recurring revenue base provides stable cash flow </li></ul></ul></ul></ul>Substantial Customer Base <ul><ul><ul><li>Over 2,200 group practices representing 58,000 physicians and dentists </li></ul></ul></ul><ul><ul><ul><li>Substantial cross-selling opportunities </li></ul></ul></ul><ul><ul><ul><li>Relationships with key health care institutions </li></ul></ul></ul>Leading Suite of HCIT Products <ul><ul><ul><li>Scalable technology platform with significant adoption in mid/large physician practice </li></ul></ul></ul>Positive HCIT Industry Trends <ul><ul><ul><li>Increasing focus on technology benefits in healthcare </li></ul></ul></ul><ul><ul><ul><li>Stark law relaxation </li></ul></ul></ul><ul><ul><ul><li>Pay for Performance initiatives </li></ul></ul></ul><ul><ul><ul><li>Economic Stimulus Package/Obama Plan from U.S. Government </li></ul></ul></ul>Experienced Management Team <ul><ul><ul><li>Extensive years of experience and working collaboratively as a management team </li></ul></ul></ul>Robust Sales Pipeline <ul><ul><ul><li>$113 million NextGen Healthcare sales pipeline @ 12/31/09 </li></ul></ul></ul>