NextGen Healthcare Information Systems, a fully owned subsidiary of Electronic Health Record (“EHR”) service provider Quality Systems Inc. (QSII), recently revealed that Northeast Valley Health Corporation (“NEVHC”) and Community Health Center Network (“CHCN”) have chosen NextGen’s know-how to facilitate their meaningful use quest and business expansion target.
NextGen Healthcare enlisted 32 additional community health centers (“CHCs”) and health center controlled networks (“HCCNs”) toward its expanding customer list, in the fourth quarter ended March 31, 2011, thereby reaching an aggregate of over 365 health centers across the nation.
According to a company spokesperson, NextGen Healthcare now serves more than 265 federally qualified health centers and 100 tribal and rural health centers across the nation, with a concentration of 70 centers in California alone. Its knowledge-base addresses a large number of operating and clinical challenges for health centers, which are even more onerous due to health care reform.
CHCN, a health center controlled network, based in Alameda County of California, chose NextGen Ambulatory EHR to support its 8 participating health centers’ efforts to satisfy meaningful use criteria. NextGen’s well-recognized product offers a wide range of attributes to support its intended purpose.
NEVHC is one of the country’s largest non-profit CHCs. It operates 25 facilities in California’s San Fernando and Santa Clarita Valleys. It will utilize NextGen Practice Management to grow revenues through measures such as avoiding document storage fees and improving operating efficiency.
The NextGen Ambulatory EHR will gel with NEVHC’s scheduling, clinical, dental and pharmacy offerings. This will lead to a rigorous medical management platform and facilitate achievement of meaningful use targets. NEVHC also bought the NextGen Patient Portal to stage electronic transmission between patients and doctors, one of the anticipated criteria for Stage 2 Meaningful Use.
Quality Systems reported robust results for the fourth quarter, which may be attributed to the federal Stimulus that has provided a fillip to the industry in general. However, competition is intense from well regarded players such as Athenahealth (ATHN), Allscripts Healthcare Solutions (MDRX), Cerner Corporation (CERN) and others. Price discounting is frequent, particularly on the lower end, and Software as a service (SaaS) based model appears to have exacerbated pricing pressure.
Quality Systems has traditionally focused on providing solutions for physician practices. However, core ambulatory EHR providers, such as Quality Systems, will see opportunities shrinking for selling their products as physician groups are increasingly getting absorbed into hospitals. On the positive side, we derive comfort from the high proportion of recurring revenues and steady growth in NextGen pipeline. Our Neutral recommendation on the stock is supported by a short-term Zacks #3 Rank (Hold).
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