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Quality Systems (QSII) Q1 Earnings & Revenues Beat Estimates

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Quality Systems (QSII) Q1 Earnings & Revenues Beat Estimates

Quality Systems (QSII) gains from solid bookings in Q2; growing pipeline encourages.

Quality Systems, Inc. (QSII) reported first-quarter fiscal 2019 adjusted earnings of 19 cents, which beat the Zacks Consensus Estimate by a penny. However, earnings rose 11.8% year over year.

Meanwhile, shares of Quality Systems have rallied 32.6% compared with the  industry’s gain of 3.9% in a year’s time.

The stock carries a Zacks Rank #4 (Sell).

Revenue in Detail

Revenues in the fiscal first quarter totaled $133.2 million, which edged past the Zacks Consensus Estimate of $133 million. Revenues also rose 1.7% on a year-over-year basis.

Per management, the company saw continued momentum in quarterly bookings, which rose 23% year over year to $29.1 million in the reported quarter. Management further stated that the company’s growing pipeline and coveted RCM (Revenue Cycle Management) services platform mainly drove bookings.

Segment Details

The company reported fiscal first-quarter 2019 revenues under the following segments:

Total recurring revenues grossed $120 million, up 0.7% from the year-ago quarter.

Total software, hardware and other non-recurring revenues came in at $13.2 million, up 12.3% on a year-over-year basis driven by large professional consulting engagements.

Per management, the company’s professional services revenues grew on the back of their flagship NextGen Mobile solution. Moreover, the NextGen Office solution and earlier acquisitions have continued to drive subscription revenues.

Margins

In the quarter under review, gross profit totaled $71.3 million, down 0.6% from the prior-year quarter.

Gross margin in the quarter was 53.6%, down 120 basis points (bps).

Operating income totaled $3.4 million, which declined a significant 49.3%. Operating margin was 2.6%, down 250 bps in the quarter.

Guidance

For fiscal 2019, Quality Systems expects revenues within $532 million to $548 million. Notably, the Zacks Consensus Estimate is pegged at $542 million, within the guided range.

Full-year earnings per share are expected between 70 cents and 78 cents. The Zacks Consensus Estimate is pinned at 74 cents, within the projected range.

In Conclusion

Quality Systems saw a solid fiscal first quarter with earnings and revenues beating estimates. Strong year-over-year growth in bookings is a positive. The company continues to gain from its coveted RCM platform, which is currently seeing a surge in customer base. Growth in the company’s pipeline and rising R&D expenses also reflect the company’s focus on innovation. Moreover, the flagship NextGen Mobile and NextGen Office solutions acted as drivers. In fact, management foresees an expansion in client base of the NextGen platform.

On the flip side, plummeting operating income and gross profit raise concern. The company’s margins also remain dented in the quarter. Quality Systems is also broadly exposed to integration risks. Cutthroat competition in the niche space adds to the woes.

Earnings of MedTech Majors at a Glance

A few better-ranked stocks in the broader medical space, which reported solid earnings this season, are Chemed Corporation (CHE), Intuitive Surgical, Inc (ISRG) and Illumina, Inc (ILMN).

While Intuitive Surgical and Illumina sport Zacks Rank #1 (Strong Buy), Chemed carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Intuitive Surgical reported adjusted earnings of $2.76 per share in the second quarter of 2018, which beat the Zacks Consensus Estimate of $2.48. Adjusted earnings improved 38% year over year.

 

Illumina reported adjusted earnings of $1.43 per share, beating the Zacks Consensus Estimate of $1.11.

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Quality Systems, Inc. QSII reported first-quarter fiscal 2019 adjusted earnings of 19 cents, which beat the Zacks Consensus Estimate by a penny. However, earnings rose 11.8% year over year.

 

Meanwhile, shares of Quality Systems have rallied 32.6% compared with the industry’s gain of 3.9% in a year’s time.

 

The stock carries a Zacks Rank #4 (Sell).

 

Revenue in Detail

 

Revenues in the fiscal first quarter totaled $133.2 million, which edged past the Zacks Consensus Estimate of $133 million. Revenues also rose 1.7% on a year-over-year basis.

 

Per management, the company saw continued momentum in quarterly bookings, which rose 23% year over year to $29.1 million in the reported quarter. Management further stated that the company’s growing pipeline and coveted RCM (Revenue Cycle Management) services platform mainly drove bookings.

Quality Systems, Inc. Price, Consensus and EPS Surprise

Quality Systems, Inc. Price, Consensus and EPS Surprise | Quality Systems, Inc. Quote

 

Segment Details

 

The company reported fiscal first-quarter 2019 revenues under the following segments:

 

Total recurring revenues grossed $120 million, up 0.7% from the year-ago quarter.

 

Total software, hardware and other non-recurring revenues came in at $13.2 million, up 12.3% on a year-over-year basis driven by large professional consulting engagements.

 

Per management, the company’s professional services revenues grew on the back of their flagship NextGen Mobile solution. Moreover, the NextGen Office solution and earlier acquisitions have continued to drive subscription revenues.

 

Margins

 

In the quarter under review, gross profit totaled $71.3 million, down 0.6% from the prior-year quarter.

 

Gross margin in the quarter was 53.6%, down 120 basis points (bps).

 

Operating income totaled $3.4 million, which declined a significant 49.3%. Operating margin was 2.6%, down 250 bps in the quarter.

 

Guidance

 

For fiscal 2019, Quality Systems expects revenues within $532 million to $548 million. Notably, the Zacks Consensus Estimate is pegged at $542 million, within the guided range.

 

Full-year earnings per share are expected between 70 cents and 78 cents. The Zacks Consensus Estimate is pinned at 74 cents, within the projected range.

 

In Conclusion

 

Quality Systems saw a solid fiscal first quarter with earnings and revenues beating estimates. Strong year-over-year growth in bookings is a positive. The company continues to gain from its coveted RCM platform, which is currently seeing a surge in customer base.

 

Growth in the company’s pipeline and rising R&D expenses also reflect the company’s focus on innovation. Moreover, the flagship NextGen Mobile and NextGen Office solutions acted as drivers. In fact, management foresees an expansion in client base of the NextGen platform.

 

On the flip side, plummeting operating income and gross profit raise concern. The company’s margins also remain dented in the quarter. Quality Systems is also broadly exposed to integration risks. Cutthroat competition in the niche space adds to the woes.

 

Earnings of MedTech Majors at a Glance

 

A few better-ranked stocks in the broader medical space, which reported solid earnings this season, are Chemed Corp. CHE, Intuitive Surgical, Inc ISRG and Illumina, Inc ILMN.

 

While Intuitive Surgical and Illumina sport Zacks Rank #1 (Strong Buy), Chemed carries a Zacks Rank #2 (Buy). You can see  the complete list of today’s Zacks #1 Rank stocks here .

 

Intuitive Surgical reported adjusted earnings of $2.76 per share in the second quarter of 2018, which beat the Zacks Consensus Estimate of $2.48. Adjusted earnings improved 38% year over year.

 

Chemed's second-quarter 2018 adjusted earnings per share were $2.81, up 30.7% from a year ago. The figure also surpassed the Zacks Consensus Estimate of $2.68.

 

Illumina reported adjusted earnings of $1.43 per share, beating the Zacks Consensus Estimate of $1.11.

 

Will You Make a Fortune on the Shift to Electric Cars?

 

Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.

 

With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.

 

It's not the one you think.

 

See This Ticker Free >>


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Quality Systems, Inc. (QSII) : Free Stock Analysis Report
 
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