Quality Systems Reports Second Quarter Results

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

The Company posted net revenues of $17.6 million in the second quarter, an increase of 35% from $13.0 million for the same quarter last year. The Company reported net income of $2,408,000, an increase of 41% over net income of $1,710,000 for the comparable quarter of the prior year. Fully diluted earnings per share totaled $0.37 in the quarter, an increase of 37% over the fully diluted $0.27 per share earnings recorded in the same quarter of last year.

The revenue and net income results achieved in the quarter were records for the company. Results in the second quarter were driven by record revenue and profit in the company's NextGen Healthcare Information Systems division, which posted record revenue of $13.5 million, up 57% over the same-quarter prior year, and record operating income of $3.8 million, up 81% over the same-quarter prior year.

Quality Systems, Inc. will hold a conference call to discuss second quarter financial results today, Thursday, October 30, 2003, at 1:00 p.m. EST (10:00 a.m. PST). 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 Thursday, October 30, at 1:00 p.m. PST, through Thursday, November 6, at midnight EST. To access the replay, dial (800) 642-1687 and enter the conference ID number 3512337.

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 develop and market computer-based practice management, medical records, and connectivity applications for large 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 December 31,	Year Ended December 31,
Numbers by 1000's	---------------- 2003 2002 ------ ------	---------------- 2003 2002 ------ ------
Net Revenues: Sales of computer systems, upgrades and supplies Maintenance and other services	10,026 6,814 7,616 6,180 ------ ------ 17,642 12,994	19,500 13,239 14,448 12,062 ------ ------ 33,948 25,301
Cost of Products and Services	7,492 5,660 ------ ------	14,102 10,580 ------ ------
Gross Profit	10,150 7,334	19,846 14,721
Selling, General and Administrative Expenses Research and Development Costs	4,768 3,442 1,502 1,213 ------ ------	9,508 7,115 2,868 2,348 ------ ------
Income from Operations	3,880 2,679	4,470 5,258
Investment Income	89 123 ------ ------	189 227 ------ ------
Income before Provision for Income Taxes	3,969 2,802	7,659 5,485
Provision for Income Taxes	1,561 1,092 ------ ------	2,974 2,148 ------ ------
Net Income	$2,408 $1,710 ====== ======	$4,685 $3,337 ====== ======
Income per Share - Basic	$ 0.39 $ 0.28 ======= =======	$ 0.76 $ 0.55 ======= =======
Income per Share - Diluted	$ 0.37 $ 0.27 ======= =======	$ 0.72 $ 0.53 ======= =======
Weighted average number of shares outstanding - Basic	6,167 6,122 ======= =======	6,162 6,114 ======= =======
Weighted average number of shares outstanding - Diluted	6,491 6,351 ======= =======	6,479 6,347 ======= =======

Quality Systems, Inc. Consolidated Balance Sheets (in thousands) ASSETS
	Sept. 30 , 2003	March 31, 2003
	----	----
Current Assets: Cash and cash equivalents Short-term investments Accounts receivable, net Inventories Other current assets	$40,573 21,240 984 2,029 1,867 -------	$36,443 17,561 667 2,029 2,086 -------
Total current assets	66,693	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	1,797 3,020 1,819 1,840 972 -------	1,777 2,511 1,819 1,840 869 -------
Total assets	$76,141 =======	$67,602 =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities: Accounts payable Deferred service revenue Other current liabilities	$1,742 15,093 6,900 --------	$2,477 11,699 5,893 --------
Total liabilities	23,735	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 35,309 17,035 --------	62 35,121 12,350 --------
Total shareholders' equity	52,406	47,533
Total liabilities and Shareholders' equity	$76,141 =======	$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.