Powering the Next Wave of Healthcare
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QUALITY SYSTEMS, INC. 2014 ANNUAL REPORT ANNUAL 2014 INC. SYSTEMS, QUALITY CORPORATE HEADQUARTERS/QSIDENTAL LOCATION 18111 Von Karman Avenue, Suite 700 Irvine, California 92612 949.255.2600 QSI/NEXTGEN LOCATIONS 1701 E. Edinger, Suite E5 1836 Lackland Hill Parkway Santa Ana, California 92705 St. Louis, Missouri 63146 5619 Scotts Valley Drive 5200 Stoneham Road, Suite 210 Scotts Valley, California 9506 North Canton, Ohio 44720 3340 Peachtree Road NE, Suite 2700 795 Horsham Road Atlanta, Georgia 30326 Horsham, Pennsylvania 19044 2840 Hillcreek Drive 12301-B Riata Trace Parkway, Suite 200 Augusta, Georgia 30909 Austin, Texas 78727 187 Northside Offi ce Park, Suite 202 1440 Civic Place Milledgeville, Georgia 31061 Building 5A, Unit 139 Southlake, Texas 76092 11350 McCormick Road Executive Plaza IV, Suite 600 16701 N.E. 80th Street, Suite 102 Hunt Valley, Maryland 21031 Redmond, Washington 98015 333 Washington Avenue N., Suite 300 Minneapolis, Minnesota 55401 QSI HEALTHCARE PRIVATE LIMITED LOCATION Pritech Park SEZ Block 11, First Floor Outer Ring Road, Bellandur Post Bangalore – 560103 Karnataka India POWERING THE NEXT WAVE OF HEALTHCARE www.qsii.com www.nextgen.com 2014 ANNUAL REPORT COMPANY PROFILE CORPORATE INFORMATION Quality Systems, Inc. (NASDAQ:QSII) and its NextGen Healthcare BOARD OF DIRECTORS ANNUAL MEETING Sheldon Razin 2014 Annual Shareholders’ Meeting is scheduled to be held on subsidiary (QSI/NextGen) develop and market a wide range of cutting- Chairman of the Board and Founder Monday, August 11, 2014 at 1:00 PM Pacifi c Time. Quality Systems, Inc. The meeting will be held at: The Marriott Hotel edge healthcare information technology software and services, including Steven T. Plochocki 18000 Von Karman Avenue President and Chief Executive Officer Irvine, California 92612 Quality Systems, Inc. practice management solutions, electronic health records, revenue cycle The meeting may be subject to change or postponement by Craig A. Barbarosh Quality Systems’ Board of Directors. management services and patient engagement tools along with Partner, Katten Muchin Rosenman LLP George H. Bristol FORM 10-K Managing Director, Janas Associates connectivity and interoperability applications. The Company serves A copy of the Company’s Annual Report on Form 10-K, fi led with the Securities and Exchange Commission, is available on James C. Malone the Company’s website at www.qsii.com or by contacting the medical and dental group practices as well as rural and community Chief Financial Officer and Company at: Executive Vice President of American Well, Inc. hospitals. The QSI/NextGen suite of products is designed to address Quality Systems, Inc. Jeffrey H. Margolis Attention: Investor Relations Chairman and Chief Executive Officer, Welltok, Inc. 18111 Von Karman Avenue, Suite 700 the changing healthcare landscape and evolving models. Irvine, California 92612 Morris Panner 949.255.2600 Chief Executive Officer of DICOM Grid D. Russell Pflueger FORWARD-LOOKING STATEMENTS Chairman and Chief Executive Officer Quiescence Medical, Inc. Statements made in this Annual Report to Shareholders and in our Annual Report on Form 10-K (“Form 10-K”) contained herein (collectively, this “Report”), other reports and proxy Fiscal Year 2014 Lance E. Rosenzweig Chief Executive Officer, Aegis USA, Inc. statements fi led with the Securities and Exchange Commission Revenue: $444.7 million Photography Olson Peter (“Commission”), communications to shareholders, press releases Diluted EPS: $0.26 • and oral statements made by our representatives that are not OFFICERS OF THE COMPANY historical in nature, or that state our or management’s intentions, hopes, beliefs, expectations or predictions of the future, may Steven T. Plochocki constitute “forward-looking statements” within the meaning President and Chief Executive Officer of Section 21E of the Securities and Exchange Act of 1934, as Paul A. Holt amended. Forward-looking statements can often be identifi ed Executive Vice President, Chief Financial Officer by the use of forward-looking terminology, such as “could,” “should,” “will,” “will be,” “will lead,” “will assist,” “intended,” Jocelyn A. Leavitt “continue,” “believe,” “may,” “expect,” “hope,” “anticipate,” Dan Knudson Productions Knudson Dan Executive Vice President, General Counsel “goal,” “forecast,” “plan,” “potentially” or “estimate” or varia- and Secretary tions thereof or similar expressions. Forward-looking statements Revenue: $341.1 million Revenue: $19.8 million Revenue: $68.1 million Revenue: $15.6 million are not guarantees of future performance. Forward-looking (77% of Total) (4% of Total) (15% of Total) (4% of Total) Daniel J. Morefield statements involve risks, uncertainties and assumptions. It is 80,000+ 10,000+ 6,500+ 300+ Executive Vice President, Chief Operating Officer important to note that any such performance and actual results, Physicians Dentists Physicians Hospitals PHOTOGRAPHY: fi nancial condition or business, could differ materially from Market Physicians Market Dentists Market Physicians Market Small Hospitals Stephen K. Puckett those expressed in such forward-looking statements. Factors Served: Served: Served: Served: Executive Vice President, Chief Technology Officer that could cause or contribute to such differences include, but • Practice • Practice • Revenue Cycle • Financials are not limited to, the risk factors discussed in Item 1A of our Management Management Management • Clinical INDEPENDENT AUDITORS Form 10-K as well as factors discussed elsewhere in this and RR Donnelley • Electronic • Electronic • Other Services other reports and documents we fi le with the Commission. Health Records Health Records • Surgery PricewaterhouseCoopers LLP Scheduling Other unforeseen factors not identifi ed herein could also have • EDI • EDI Irvine, California such an effect. We undertake no obligation to update or revise forward-looking statements to refl ect changed assumptions, the PRINTING: occurrence of unanticipated events or changes in future oper- STOCK TRANSFER AGENT ating results, fi nancial condition or business over time unless & REGISTRAR required by law. Interested persons are urged to review the Computershare risks described under Item 1A, “Risk Factors” and in Item 7, Glendale, California “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Form 10-K, as well as in our Barker Design, Inc. other public disclosures and fi lings with the Commission. DESIGN: LETTER TO SHAREHOLDERS SEA CHANGE best describes the signifi cant transformation the healthcare information technology (HCIT) industry has been under- going, particularly over the past fi ve years. Steven T. Plochocki Sheldon Razin President and Chairman of the Board Healthcare reform initiatives, such Chief Executive Offi cer and Founder as Obamacare, are driving much of this transformation. As a result, one-fi fth of the economy – healthcare – is shifting from paper to automation as emerging payment models and innovative technologies become the catalyst for propelling the healthcare industry into a new era. Quality Systems, Inc. (QSI) is helping its clients adoption and use of the Electronic Health Record navigate the reform and a new regulatory environ- (EHR) but also supports the electronic exchange ment, all of which are shaping the future of our of health information for every individual in the nation’s healthcare delivery system. U.S. The new levels of HCIT functionality will allow Since the enactment of the Health Information systems to interoperate with one another, which Technology for Economic and Clinical Health Act will be required for healthcare reform to succeed. (HITECH Act), part of the 2009 American Recovery With the advent of the EHR come many and Reinvestment Act (ARRA), stimulus incen- rules and requirements. Whether it’s various tives have been offered to physicians and medical stages of Meaningful Use (MU) or the transition groups as they transition to an electronic platform, to the International Classifi cation of Disease thereby driving the shift toward a new healthcare 10th revision (ICD-10), there are many elements system. The HITECH Act not only promotes the to operating successfully amid today’s rapidly Quality Systems, Inc. | 1 QSI: Navigating 40 years of Healthcare IT 1973 2008 2011 - 2013 Dental Market Entry RMC Market Entry Recent Additions Opus Healthcare QSIDental Micromed HSI NextDDS Solutions Intranexus ViaTrack Poseidon Formed Acquired Acquired Launched Acquired Acquired Acquired Acquired 1973 1997 2008 2009 2010 2011 2011 2012 Clinitec NextGen PMP ARRA Sphere Meaningful CQI Matrix Mirth Acquired Healthcare Acquired Enacted Healthcare Use Acquired Acquired Acquired 1996 Formed 2008 2009 Acquired Established 2011 2012 2013 2001 2009 2010 Ambulatory Market Entry Inpatient Solutions Market Entry 1996 2009 A willingness to reinvest and reinvent to better compete changing healthcare environment. MU refers Today, we are at the forefront of ambulatory to the standards defi ned by the Centers for care technology solutions, having spent more than Medicare and Medicaid Services (CMS) EHR 20 years devoted to this area of healthcare. Our Incentive Programs for the use of EHR, allowing NextGen® Ambulatory EHR lies at the core of our eligible providers and hospitals to earn incentive integrated ambulatory solution suite and offers payments by meeting specifi c criteria. ICD-10 customized EHR capabilities across 26 different requires specifi c codes be used when identifying medical specialties. medical diagnoses for proper