Quality Systems (QSII) is among the few health care IT companies that are expected to comply with the next phase of implementation of electronic health records, and the company maintains steady cash flows while trading at a discount to peers, says Brian Frank, President at Frank Capital Partners LLC.
“A good smaller-cap technology is Quality Systems, and the ticker is QSII. They do health care information technology. So they do electronic health records for physicians and hospitals and laboratories. And there are lots of companies in this space, but QSII is in the top five, and only about the top five competitors will be able to comply with the next phase of implementation. So there is kind of a land grab going on right now,” Frank said.
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Frank says QSII will survive the round of consolidation in the health care IT industry, and its recurring-revenue business model along with the valuation make it attractive.
“There is a lot of consolidation, but what we like specifically about QSII is the valuation. It’s a lot cheaper than most of its competitors, and within the top five, they all have very steady cash flows. Once you install this information technology software, you have to pay maintenance fees every month, and its very high-margin stuff. So it’s a very steady business, it’s not linked to economy and it’s trading very cheap,” Frank said.
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