Orange County Business Journal

Quality Finally Feels Effects of Stimulus Spending

HEALTHCARE: Revenue, profits jump in “solid finish to fiscal year” Vita Reed Sunday, June 5, 2011

Quality began that effort two years ago with its buy of Texas’ Opus Healthcare Solutions Inc., a maker of electronic medical records used in smaller hospitals. Opus gave Quality entry into hospitals with 100 or fewer beds.

“We continue to target the small hospital market,” said Pat Cline, Quality’s president. “At some point in the future, we’ll likely move upmarket, but right now the small market has many more targets.”

The company plans to continue its relationship with Siemens AG’s Medical Solutions unit, Cline said. Siemens Medical Solutions sells NextGen to its customers.

In April, Quality bought another hospital software company, IntraNexus in Virginia.

Quality acknowledged that it would have been tough to get its software into hospitals with 150 to 300 beds, something that IntraNexus should help it overcome.

The company also is looking to sell software in the accountable care organization market, Decker said. Accountable care organizations, a feature of federal healthcare reform, are designed to provide financial incentives for doctors, hospitals and insurers to work together to cut healthcare costs.

Fluctuating Stock

Quality has been one of the hotter stocks among Orange County’s publicly traded companies for some time but shares cooled off last year as investors awaited the arrival of federal spending.

So far this year, Quality’s shares are up 22% with a recent market value of $2.5 billion.

Shares dropped slightly on recent results, a turn that might have been driven by short sellers looking to change their positions.

Quality didn’t provide any specific financial guidance in its release or earnings call, as is its custom.

Analysts expect profits of $17.8 million in the current quarter. Revenue is seen coming in at $98.5 million.

Quality’s rivals include Cerner Corp. of North Kansas City, Mo., Epic Software Corp., a privately held company from Milwaukee, Athenahealth Inc. of Watertown, Mass., and San Francisco’s McKesson Corp., a diversified healthcare company that offers electronic medical records.

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