Quality Systems Teams Up With 3M Health Information Systems - Analyst Blog

Quality Systems Inc. QSII revealed that its wholly owned subsidiary, NextGen Healthcare Information Systems, LLC has partnered with software and consulting services provider 3M Health Information Systems to offer the latter's web-based ICD-10 Education Program across the industry.

ICD-10 is the 10th revision of the International Statistical Classification of Diseases and Related Health Problems (ICD). It is a medical classification list provided by the World Health Organization (WHO) and codes for diseases, signs and symptoms, unusual findings, complaints, social circumstances, and external causes of injury or diseases.

3M Health Information Systems' ICD-10 Education Program is designed to simplify the transition from ICD-9 to ICD-10. It is available as a web-based subscription service and provides on-demand training. It can be easily accessed and reviewed frequently.

The ICD-10 Education Program offers 22 training modules with special emphasis on ICD-10 education for inpatient, outpatient and professional fee coders and documentation improvement specialists. These modules, lasting 90-minute, feature case studies, self-assessments, practice questions, tests and progress, and completion reports.

The ICD-10 program also helps physicians to focus on the ICD-10 issues, which are most relevant to their practice. It includes a review of ICD-10-CM coding guidelines, specialty-specific physician modules and other educational material.

Quality Systems continues to report a fall in earnings and revenues but we are still optimistic about the company given the continued strength in its NextGen subsidiary as well as the expected benefit from its Mirth acquisition.

In the recently completed fiscal 2014, Quality Systems' earnings plunged 40.0% to 66 cents per share while revenues fell 3.4% to $444.7 million. In the fiscal fourth quarter, adjusted earnings per share of 11 cents also missed the Zacks Consensus Estimate by 5 cents but revenues of $115.2 million rose 3.5% and beat the Zacks Consensus Estimate by roughly $3 million

Despite sluggish growth, revenues of the company continue to be largely boosted by the strength of the NextGen subsidiary. The NextGen Ambulatory EHR 5.8 and NextGen Practice Management 5.8 will help the company's clients meet ICD-10 and Meaningful Use Stage 2 requirements.

Quality Systems is also benefiting from its acquisition of Mirth Corporation. Mirth's revenue streams include software license fees, maintenance fees, implementation and training fees, as well as hosting services. The acquisition would help the company develop advanced technologies and products, which could attract new clients looking for advanced connectivity solutions.

Currently, Quality Systems retains a Zacks Rank #4 (Sell). Some better-ranked stocks in the broader healthcare sector include Cardica Inc. CRDC, NeuroMetrix Inc. NURO, and PositiveID Corporation (PSID). All of them carry a Zacks Rank #2 (Buy).