Quality Systems (QSII) 2012 Review

Quality Systems Inc develops and markets healthcare information systems in the US; they include systems that automate medical and dental practices and networks of practices such as physician hospital and management services organizations, ambulatory care centers and medical and dental schools.  In addition, QSII offers proprietary electronic medical records under the NextGen product name.  Its products include electronic health records, enterprise appointment scheduling, enterprise master patient index, NextGen image control systems, managed care server, electronic data interchange, system interfaces, Internet operability and patient-centric and provider-centric Wed portal solutions, NextGen Express for small practices, revenue cycle management services which include billing and collections services.  The company has grown profits and dividends at a 10-15%+ rate over the past five years earning a 20%+ return on equity.

The company witnessed a slowdown in profit growth as ambiguity in the regulatory environment dampened sales; however, as clarity is gained once the election is over, it should resume growth at an above average pace as a result of:

(1) expansion of its client base, its product offerings and the rising demand of its clients for its expertise,

(2) strong demand in its NextGen division,

(2) acquisitions.

Negatives:

(1) it is in a highly competitive industry,

(2) its business is overly concentrated in physician practice,

(3) weakness in the software environment.

QSII is rated B++ by Value Line, had no debt and its stock yields 4.0%

      Statistical Summary

                 Stock      Dividend         Payout      # Increases  

                Yield      Growth Rate     Ratio       Since 2005

QSII          4.0%           5%               48%             4*

Ind Ave      .3               4**              13               NA 

                Debt/                      EPS Down       Net        Value Line

               Equity         ROE      Since 2002      Margin       Rating

QSII          0%             24%            0                16%           B++

Ind Ave     18              10              NA                9             NA

* QSII has only paid a dividend for 6 years

**most companies in QSII industry do not pay dividends

     Chart

           

            Note: QSII stock made good initial progress off its December 2008 low, quickly surpassing the downtrend off its September 2008 high (straight red line) and the November 2008 trading high (green line). Long term the stock is in a trading range (blue lines).  As noted above, early this year, QSII reported disappointed revenue and profit growth and the stock declined.  The Aggressive Portfolio started to Sell its position when it traded below its Stop Loss Price.  Unfortunately, it Sold only one half before the stock gapped down.  At that point, given its proximity to its Buy Value Range,  it made a small trading purchase.  That has left the Portfolio with approximately a one half position.  The upper boundary of its Buy Value Range is $13.  The lower boundary of its Sell Half Range is $90.  The wiggly red line is the 50 day moving average.

  

http://finance.yahoo.com/q?s=QSII

10/12