I must admit to a degree of uncertainty about Quality Systems (NASDAQ:QSII) a week ago when the shares fell about $9 (or 15%) in a single day on huge volume. Approximately 2.5 million shares traded on June 2, compared with the average volume of slightly more than 300,000 shares changing hands daily. With only 13.1 million shares outstanding, that means close to 20% of the shares of the company found new owners in a single day. The striking thing about this event was this: There was NO NEWS!

Typically, that would be a signal to investors that something is afoot, especially when it happens a week before quarterly earnings are scheduled to be released (read: somebody leaked results). Fortunately, the company's 4th-quarter results, announced after the market close on Monday, show nothing out of the ordinary. In fact, they're downright impressive.

Total revenues rose 36%, a noticeable acceleration over the first nine months of the year, which showed revenue gains of 22%. Net income of $4.8 million grew 54%, and earnings per share (EPS) of $0.36 beat analyst expectations by $0.04. Note that competitors, such as Cerner (NASDAQ:CERN), WebMD (NASDAQ:HLTH), and IDX (NASDAQ:IDXC), have also been beating the analyst consensus in recent quarters.

So what's to worry about? Nothing definite, but there are a couple of items to watch. Operating earnings growth was not quite as robust as the EPS numbers would indicate. The company recognized a tax benefit in the 4th quarter from previous research and development (R&D) expenditures. The one-time benefit reduced taxes by about $400,000. Excluding the tax benefit, income from operations grew about 36%, not as impressive as 54%.

That puts the earnings growth in line with revenue growth, but keep in mind that since 2001 the company has grown earnings 46% per year on average -- double its average revenue growth rate of 22%. The company explained on the conference call that it incurred higher than average Sarbanes-Oxley implementation expenses during the quarter, so this may only be a blip on the radar screen. On the other hand, with pre-tax income approaching 30% of sales, margin expansion could be slowing.

The other item is accounts receivable, which swelled to 119 days outstanding, up from 99 days for the same quarter ended last year. Again the company did not express concern on the call, but holders of the shares should keep an eye on these receivables.

Otherwise all systems appear to remain in "go" status. Sales of new installations are growing faster than maintenance revenues. The company reported that its marketing alliance with Siemens Medical Solutions (announced in February) is progressing nicely. Since the two companies sell products that interface, the marriage makes a lot of sense. Although Quality Systems didn't include a cash flow statement in its quarterly release, its cash balance fell by only $15 million for the quarter in the wake of a $20 million special dividend paid to shareholders in March. So, presumably free cash flow (FCF) continued at the anticipated $4 million to $5 million quarterly pace.

Quality Systems is a volatile stock. As you can see from this chart of the past six months, the shares have tended to move steadily upward for a few months, followed by a sharp drop. That's not unusual for a small-cap stock that is somewhat thinly traded, and for a company in which insiders hold more than 40% of the shares. I'm not surprised by profit taking when a stock makes a nice run. Also with the company trading at more than 40 times trailing 12-month earnings, you can expect volatility.

Is this a chance to buy into this Motley Fool Stock Advisor pick? Although holders of the shares have done very well over the past few years, there is clearly some risk to buying in at the current price level. After the earnings release, the stock traded down about $4, or 10%, on upbeat quarterly results. So it's possible someone out there knows something the rest of us can't see.

In addition, the company does not provide future guidance and does not comment on analyst forecasts, so there is less warning for investors of an impending shortfall. On the other hand, Quality Systems has trounced analyst expectations for the past four quarters. Until I see evidence of a material slowing of revenue growth, or profitability problems, I see no reason to doubt that the company remains very well positioned in the highly competitive, but fragmented medical information system industry.

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Fool contributor Timothy M. Otte welcomes comments on his articles, and he doesn't own the stock of any company mentioned in this article.