Quality Systems Probed: Fool by Numbers

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On Feb. 5, medical-records software maker and Motley Fool Stock Advisor recommendation Quality Systems (Nasdaq: QSII) released "preliminary results" for the third-quarter period ended Dec. 31.

• The numbers below are considered preliminary because management "received written notification from the Securities and Exchange Commission stating that the Commission has initiated an investigation of trading activity in the Company's securities." The probe revolves around CFO Paul Holt.
• That news didn't sit well with investors, and the stock closed around 10% lower yesterday.
• Net revenue increased by 44% to $38.5 million, and gross margin improved by 220 basis points.
• The stock carries a relatively healthy four-star rating in Motley Fool CAPS.

(Figures in thousands, except per-share data)

Income Statement Highlights

	Q3 2007	Q3 2006	Change
Sales	$38,496	$26,752	43.9%
Net Profit	$8,721	$4,815	81.1%
EPS	$0.32	$0.18	77.8%
Diluted Shares	27,507	27,372	0.5%

Get back to basics with a look at the income statement.

Margin Checkup

	Q3 2007	Q3 2006	Change*
Gross Margin	67.0%	64.9%	2.2
Operating Margin	32.7%	26.6%	6.1
Net Margin	22.7%	18.0%	4.7

*Expressed in percentage points.

Margins are the earnings engine. See how they work.

Balance Sheet Highlights

Assets	Q3 2007	Q3 2006	Change
Cash + ST Invest.	$80,410	$75,228	6.9%
Accounts Rec.	$59,015	$37,861	55.9%
Inventory	$1,311	$670	95.7%

Liabilities	Q3 2007	Q3 2006	Change
Accounts Payable	$3,274	$3,371	(2.9%)
Long-Term Debt	--	--	--

Learn the ways of the balance sheet.

Cash Flow Highlights
Sadly, no cash flow statement was provided.

Find out why Fools always follow the money.

Related Companies:

• Emdeon (Nasdaq: HLTH)
• TriZetto Group (Nasdaq: TZIX)
• Merge Technologies (Nasdaq: MRGE)
• Mediware Information Systems (Nasdaq: MEDW)
• Healthaxis (Nasdaq: HAXS)

Related Foolishness:

• Best Small Cap: Quality Systems
• Foolish Forecast: Scandal Saps Sapient's Strength
• Emdeon's Checkup

Quality Systems is a Stock Advisor recommendation.

Fool by Numbers is designed to give you the raw earnings information in a timely fashion, putting all the numbers you need in one easy-to-read place. But at The Motley Fool, we believe numbers tell only part of the story, so check Fool.com for more of our in-depth discussion of what the numbers mean. This data has been provided by Netscribes. To provide feedback on this article, please click on the "feedback" button below.