Quality Systems Reports First Quarter Results

IRVINE, Calif.--(BUSINESS WIRE)--July 28, 2003--Quality Systems, Inc. (Nasdaq:QSII - News) today announced the results of operations for its fiscal 2004 first quarter ended June 30, 2003.

The Company posted net revenues of $16.3 million in the first quarter, an increase of 33% from $12.3 million for the same quarter last year. The Company reported net income of $2,277,000, an increase of 40% over net income of $1,626,000 for the comparable quarter of the prior year. Fully diluted earnings per share totaled $0.35 in the quarter, an increase of 35% over the fully diluted $0.26 per share earnings recorded in the same quarter last year.

The revenue, net income, and earnings per share results achieved in the quarter were records for the Company. Results in the quarter were driven by record revenue and profits in the Company's NextGen Healthcare Information Systems division. For the quarter, the Company's NextGen Healthcare division posted record revenues of $12.2 million, up 51% from the same quarter of the prior year, and record operating income of $3.4 million, up 62% over the same quarter of the prior year.

Quality Systems, Inc. will hold a conference call to discuss first-quarter financial results today, Monday, July 28, 2003 at 1:00 p.m. EDT (10:00 a.m. PDT). To participate in the call, please call 877-586-7724 five to ten minutes prior to the scheduled conference call time. There is no pass code required for this call. If you are unable to participate in the call at this time, a replay will be available on Monday, July 28 at 1:00 p.m. PDT, through Monday, August 4 at midnight PDT; call 800-642-1687 and enter the conference ID number 1836697.

A transcript of the conference call will be made available on the QSII Web site (www.qsii.com). Quality Systems, Inc. and its NextGen Healthcare Information Systems subsidiary are developers and providers of computer-based practice management, medical records, and connectivity applications for medical and dental group practices. Visit www.qsii.com and www.nextgen.com for additional information.

Quality Systems, Inc. Consolidated Statements of Operations and Comprehensive Income (in thousands) (unaudited)
	Three Months Ended June 30,
Numbers by 1000's	---------------- 2003 2002 ------ ------
Net Revenues: Sales of computer systems, upgrades and supplies Maintenance and other services	9,474 6,425 5,832 5,882 ------ ------ 15,305 12,307
Cost of Products and Services	6,610 4,920 ------ ------
Gross Profit	9,696 7,387
Selling, General and Administrative Expenses Research and Development Costs	4,740 3,673 1,355 1,135 ------ ------
Income from Operations	3,590 2,579
Investment Income	100 104 ------ ------
Income before Provision for Income Taxes	3,690 2,683
Provision for Income Taxes	1,413 1,057 ------ ------
Net Income	$2,277 $1,626 ====== ======
Income per Share - Basic	$ 0.37 $ 0.27 ======= =======
Income per Share - Diluted	$ 0.35 $ 0.26 ======= =======
Weighted average number of shares outstanding - Basic	6,157 6,106 ======= =======
Weighted average number of shares outstanding - Diluted	6,466 6,332 ======= =======

Quality Systems, Inc. Consolidated Balance Sheets (in thousands) ASSETS
	June 30 , 2003	March 31, 2003
	(unaudited)	----
Current Assets: Cash and cash equivalents Short-term investments Accounts receivable, net Inventories Other current assets	$38,976 19,039 1,152 2,029 1,432 -------	$36,443 17,561 667 2,029 2,086 -------
Total current assets	66,628	58,786
Equipment and Improvements, net Capitalized Software Costs, net Deferred Tax Asset Excess of Cost Over Net Assets of Acquired Business, net Other Assets	1,734 2,760 1,819 1,840 861 -------	1,777 2,511 1,819 1,840 869 -------
Total assets	$76,642 =======	$67,602 =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities: Accounts payable Deferred service revenue Other current liabilities	$1,483 13,979 6,298 --------	$2,477 11,699 5,893 --------
Total liabilities	21,760	20,069
Commitments and Contingencies
Shareholders' Equity: Common stock, $0.01 par value, 20,000 shares authorized, 6,208 and 6,201 shares issued and outstanding, respectively Additional paid-in capital Accumulated deficit	62 35,193 14,627 --------	62 35,121 12,350 --------
Total shareholders' equity	49,882	47,533
Total liabilities and Shareholders' equity	$71,642 =======	$67,602 =======

Contact:
Quality Systems Inc., Irvine
Lou Silverman, 949/255-2600
www.qsii.com
or
Coffin Communications Group, Sherman Oaks, Calif.
William F. Coffin/Sean Collins, 818/789-0100
www.coffincg.com

This news release may contain forward-looking statements, including those related to revenue and net income, that involve a number of risks and uncertainties. Among the important factors that could impact actual results are volume and timing of systems sales and installations; length of sales cycles and installation process; the possibility that the products will not achieve market acceptance; seasonal patterns of sales and customer buying behavior; the development by competitors of new or superior technologies; delays in product development; undetected errors or bugs in software; product liability; changing economic, political or regulatory influences in the health-care industry; changes in product-pricing policies; competitive pressures; possible regulation of the company's software by the U.S. Food and Drug Administration; general economic conditions; and the risk factors detailed from time to time in Quality Systems' periodic reports and registration statements filed with the Securities and Exchange Commission.