NextGen Healthcare Inc (NXGN) 2007 Q1 法說會逐字稿

Good afternoon. My name is Jason, and I will be your conference operator. At this time, I would like to welcome everyone to the Quality Systems First Quarter Fiscal Year 2007 Conference Call. All lines have been placed on mute to present any background noise. After the speakers' remarks, there will be a question-and-answer session. [OPERATOR INSTRUCTIONS] Mr. Silverman, you may begin your conference.

Thank you Jason, and welcome everyone to Quality Systems fiscal 2007 first quarter conference call. Paul Holt, our CFO; Greg Flynn, our Executive Vice President and General Manager at the QSI Division; and Pat Cline, President of the NextGen Healthcare Information Systems Division, once again, joining me on this afternoon's call.

Please note that the comments made on this call may include statements that are forward-looking within the meaning of the securities laws, including without limitation, statements related to anticipated industry trends, the Company's plans, products and strategies, projected operating results, capital and equity initiative, pending litigation and the implementation and potential impact of legal, regulatory and accounting requirements.

Actual events or results may differ materially from our expectations and projections and you should refer to our prior SEC filings including our Forms 8-K, 10-K and 10-Q for discussions of the risk factors, management discussion and analysis and other information that could impact our actual performance. We undertake no obligation to update any projections or forward-looking statements in the future.

Also, as I have mentioned on each and every call for the past many quarters, please continue to note that the Company's past performance is not necessarily indicative of future performance.

I'll now provide some summary comments on the quarter. Paul, Greg and Pat will follow with additional details.

For the June quarter, Company revenue totaled $36.1 million, up approximately 32% over the prior year. Fully diluted earnings per share $0.28 was up 47% over the $0.19 earned in the same quarter of the prior year. The $0.28 reported for the quarter is inclusive of the approximate $0.02 per share expense tied to the adoption of FAS 123R, which is the new accounting pronouncement for accounting for stock options.

NextGen Healthcare revenues for the quarter up $32.2 million represents a 36% year-over-year increase. The NextGen Division's operating income was $13.4 million, a 54% increase over prior year. The QSI Division's $3.9 million in quarterly revenue was up slightly over prior year performance while operating income for the division increased by about $200,000 year-over-year.

Corporate expenses were up 46% year-over-year to $2.2 million. EDI revenue for the quarter came in at $4 million, up 28% over the prior year, with bulk of the increase coming from the NextGen division.

I once again remind listeners that EDI revenue is reported as part of divisional revenue total of each quarter, for each division. Cash and cash equivalents were $67 million at quarter end up from $57.2 million in the prior quarter. Headcount at quarter end was 551.

Regarding investor conferences, as you know the summer is a very quite period. We have received numerous invitations for the fall conference season. At present, we are scheduled to present at the Thomas Weisel conference, the Bear Stearns conference, as well as the Credit Suisse, JMP and Piper conferences.

At present we have no additional updates to provide, regarding the legal actions of company director Mr. Hussein, beyond that information which is part of our previously and publicly filed reports. Investors should note the 8-K filed on Monday of this week regarding certain Board actions regarding executive compensation for fiscal '07.

In closing, my prepared comments for this afternoons call, I want to once again clearly point out as I have over the past many quarter that there are no guarantees that the Company or either of its division will meet or exceed their current level of performance in the future periods. It's possible that this quarters' performance will cause investors or analysts to set new short, medium or long-term expectations for the Company.

In response to this possibility, please continue to note that we don't give out financial guidance to the investment community and we don't comment on guidance advanced by members of the financial community. The work of the company's senior management team continues to be strong. Once again my sincere thanks go out to Pat, Paul and Greg for their continued leadership and to our operating and corporate team members for their efforts and excellence.

Over to Paul Holt.

Thanks Lou. Hello everyone. Our consolidated system sales rose to $18 million this quarter, an increase of 16% compared to $15.5 million in the prior year quarter. Maintenance, EDI and other services revenue rose 51% to $18.1 million, compared to $12 million in the prior year quarter. Continued growth in NextGen's customer base contributed to the increase in maintenance, EDI and other services revenue.

Our consolidated gross profit margin this quarter came in at 68.2%, that's up from 64.4% a year ago. And as I've said in the past, our gross profit margins can fluctuate depending up on how much hardware we have and we had a relatively low amount in hardware this quarter compared to a year ago.

Total SG&A expense increased approximately $2.2 million, at $10.2 million this quarter that compares to $8 million a year ago. $1.5 million of that increase came from the NextGen division and consisted of increases in selling and administrative, salaries and benefits, commissions, travel expenses and other SG&A expenses.

The balance of the increase was primarily a $0.7 million increase in corporate-related expenses related to professional services and salaries and related benefits. The increase in corporate expenses was primarily driven by added accounting department staff and expenses and I'll leave it at that.

The Company's effective income tax rate was higher this quarter compared to the year ago at 39.9% compared to 38.4% a year ago. Reason for the increase in the effective tax rate was primarily due to two factors, the expiration of the R&D tax credits statute this year and the addition of certain non-deductible stock option expenses, which came about as a result of the Company's adoption of FASB 123R, which relates to expensing stock options.

If the R&D tax credit is reenacted then we will recognize a benefit for R&D tax credits like we have in past. Before I move to divisional performance, the adoption of FASB 123R this quarter resulted in $718,000 in additional pre-tax expenses. These additional expenses have been included in respective categories cost of good sold, SG&A and R&D.

The after-tax impact of our adoption was $550,000 or $0.02 per diluted share and the after-tax impact of our adoption is approximately equal to what would have been had we adopted in the prior year quarter.

In terms of divisional performance our system sales in the NextGen division rose to $17.4 million this quarter that compares to $15.0 million a year ago and continued growth in NextGen's base of installed users drove maintenance EDI and other revenue in that division 72% higher at $14.8 versus $8.6 million a year ago.

Operating income in the NextGen Division was up 54% to $13,394,000 compared to $8,703,000 a year ago. Our QSI Dental Division reported a slight increase of 1% in revenue, that's $3,890,000 compared to $3,833,00 year ago. Operating income in the QSI division was $913,000.

Moving on to our balance sheet, our cash increased by approximately $9.8 million this quarter to $67 million or $2.50 per share that compares to $57.2 million as of March 31 of this year, or $2.14 a share.

Our DSOs grew 7 days to 122 days versus 115 days last quarter. DSOs in the year ago quarter was 124. Our DSOs last quarter were unusually low due to the recognition of revenue from the prepaid Siemens sale, which we discussed in the prior call. DSOs by division this quarter was 88 days for the QSI Division and 126 days for the NextGen Division.

And our deferred maintenance and services revenue at $36.8 million, is up $0.9 million from the prior quarter, and $9.1 million compared to a year ago. Again, the primary drivers of the growth in deferred revenue compared to a year ago is deferred implementation training as well as maintenance services in the NextGen Division.

And like I always do, I give out our non-cash expenses for the quarter and those breakdown as follows -- total amortization expense, $722,000; $39,000 for QSI Division; $683,000 for the NextGen Division; total depreciation expense $422,000, that's $55,000 for QSI Division; $368,000 for the NextGen Division. And stock option compensation in total was $825,000.

Our investing activities for the quarter were as follows -- capitalized software, $1,045,000 That breaks down to $45,000 for the QSI Division and $1 million for the NextGen Division. And then we invested $636,000 in fixed assets -- that breaks down to $51,000 for the QSI Division and $585,000 for NextGen.

Again, I'd like to thank you all for being on our call and your interest in our Company and I'll now turn things over to Greg Flynn.

Thank you, Paul, and thanks to everyone who has an interest in our Company. The QSI Division and EDI numbers have been addressed in detail by Lou and Paul, so I'd like to briefly address other areas of the interest within the division.

The quarter saw two new joint QSI - NextGen clients purchasing the CPS product as well as other purchases, expansions to QSI Division exclusive clients. As you know our reference to CPS, the Clinical Product Suite is the dental electronic record equivalence, of EMR. We see increased synergy with our NextGen division in such joint sales and we see increased penetration with our client prospect base.

During the quarter we made a number of enhancements to CPS, which improved both range of functionality with the patient chair side and ease of use for practitioners in the [opertory].

Most noteworthy to me was expanded use chair side of CPS for patient treatment planning. This enables enhanced treatment reviews and treatment acceptance by patients. We will continue to enhance this product offering. We believe that is key to bring information, application functionality and flexibility to the dental operatory.

Per usual I'll comment on our sales, staffing and pipeline. Our sales staffing remains unchanged from last quarter and our pipeline is approximately $3.5 million. Our pipeline is defined as sales situations or QSIIs in the final three purchase choices and we believe that the sale will occur within a 180 days.

With that I will turn it over to Pat Cline, President of our NextGen division. Good quarter Pat.

Thanks Greg. Hi, everyone. In the first quarter of fiscal '07 NextGen received orders from approximately 70 new customers. Again, representing more than one new customer every business day on average.

Within past quarters, over two-thirds of our contracts were for both our electronic medical record system and our practice management system, the combination of the two. The balance was about evenly split with a slide edge going to the EMR. Our sales force is grown now to 51 people, a significant increase over the last quarter and our pipeline has increased to $65 million.

We continue to fair very well against our competition and the market for our products is as robust as ever. I continue to be excited about NextGen's performance and about our prospects for the future. And in closing, I would like to thank NextGen's customers for their faith in us, and NextGen's employees for their outstanding contribution.

Jason, we are ready for questions.

[OPERATOR INSTRUCTIONS] Our first question comes from the line of Richard [Close].

Yes. Looking at the maintenance and other services line item in the quarter, came in quite a bit ahead of what we were looking for. Was there anything specific that you can point to in those lines -- in that line item for the quarter?

Yes. Richard, this is Paul. We had good performance out of maintenance EDI, as well as, services that we delivered to existing customers. I think that constitutes the majority of what was going on there.

Okay. So there wasn't anything essentially unusual for the quarter?

I think, that's pretty much the answer there, we've had good performance.

Okay. Excuse me. I guess moving on to the 51 sales people you added I guess about 10 or so there. When were they added during the quarter on the NextGen side?

They were added all through the quarter. This is Pat. Early in the quarter, late in the quarter, we continue to interview and follow an aggressive expansion plan in the sales department and we bring them on us as we find good people.

Okay. And how quickly can they get productive?

A lot of that depends on the individual. We like to see a new sales person start to make sales within the first three or four months. Usually that's about the sales cycle, and it takes a little while for them to build a pipeline. On the other hand, if it's an expansion of a division of existing territory, there maybe some pipeline that they can inherit and do even better than that.

Okay. And are you guys are seeing success on the NextGen side in any particular geographic or physician size in terms of practices?

No. It hasn't been, I would say any different than it has been previously. We continue to sell all over the country, and we continue to sell in our sweet spot, which tends to be the mid-range and high-end though, as I have mentioned on prior calls. We have also expanded our focus to include the smaller practice and we're doing relatively well in that space too.

Okay. Thank you.

Our next question comes from the line of Van Brady.

Yes. Good quarter Gentlemen. I had two questions about other competitive entities in the market and I'd like to ask them one at a time maybe you could answer that way. There is a company called Advent -- that, I think that's right. Their approach to market really is solving practitioners' receivable problems and they combine, I guess some a lot of exhaustive work in terms of individual pay orders, claims reporting procedures, latest questions, latest codes anything -- and they are -- but they promise the customers that they can have far fewer return claims and therefore reduce receivables and get the doctors' practice paid much sooner. And they have combined these functions with both the PMS and a PMR and they seem to be growing very, very rapidly. You know their -- I think their last sales -- their last -- It's a private company and their last sales in, I think, '05 were about $50 million, but they are advertising very rapid growth. So, I just wondered, if you had seen them in the marketplace, and if you had, if you care to make any comments?

Unfortunately, I have not heard of that company. I don't believe that we are out there bumping heads with them. I hope that if we do that we take them down as we do most of our other competition. I wrote the name down on my pad, and I'll take a look and see what I can learn.

And that name is not resonating with anybody else on the call Van.

Okay. I may not have it right, it might be Ascent or something like that, but maybe you'd have Sean get back to me, I'll have it by that time. The other question was, I am sure you are aware of it, Allscripts reported a very good quarter, and looked like there was very rapid pick up in their sales force or may be A4 sales force of their product line, at least A4 seems to be growing faster, since the acquisition than they had before, and I just wonder, whether you're bumping into them or seeing a lot -- to what waves they are causing the marketplace?

Well, we do compete with Allscripts. We loose a few sales to them from time to time and they loose a lot of sales to NextGen. They are in a lot of deals. They got quite a PR and marketing engine, so they tend to compete with us on a fair number of deals. But as I mentioned in my prepared comments, we tend to fair pretty well.

Yes, I was thinking more as to the lower end of the market where A4 has been pointed. Is there anything you can tell us about that market, since they were acquired?

No, we don't bump into A4 all that much, we do compete with them from time to time, and again, we fair pretty well against them.

Okay. Thank you.

Thank you.

Our next question comes from the line of Sean Wieland.

Hi. Great job on the quarter. Just a couple of quick questions. Can you tell us what the revenue was from Siemens in the quarter? Was that consistent with what your projections were?

In terms of specific number, Sean, as we talked about on the last call with we -- our goal or our plan was to go back to where we had been in terms of just treating Siemens as we would, any other customer therefore not putting up a specific Siemens scoreboard.

Okay.

I think we're going to stay with that position.

Okay. Could you comment on some industry happenings this quarter namely CCHIT certification and the relaxation to [Stark] loss, which occurred earlier this week, if you could comment on what you think, if any impact to the market and your competitiveness in the market would be from those two angles?

If Pat wanted to go first and then if I have anything to add, I'll do that.

Sure. We are proud that NextGen was one of the first vendors to be CCHIT certified. My hope is that prospective customers use certification as a starting point and not the only criteria. All certified vendors are not alike, I think, there were 18 or 20 vendors certified in the first round. But again all are not alike, one system maybe far easier to use than another certified system. One system maybe far more functional than another certified system. So, we are again -- we are proud to be one of the first one certified and we look forward frankly to the CCHIT organization raising the bar a little bit relative to the criteria, we think that will really separate the men from the boys in the coming years.

On the Stark relaxations, the other part of your question, a number of our hospital customers have indicated that they are going to be more likely to purchase technology for their affiliated physicians and perhaps provide that technology at low cost or help physicians more with infrastructure, network, bandwidth and those types of things, if they don't have to worry about the anti-kickback regulations. So, I think overall that's terrific for the market and good for our company.

Okay. And just one other thing on CCHIT. Are your customers or prospects, are they paying attention to the vendors that were on that list or was it, I mean, is the market paying attention to that?

We think so. The way, we think that's going is that the consultants are paying attention, the people in the industry are paying attention and the consultants are guiding their customers to CCHIT certified vendors and away from those that are not certified.

Okay. And then, one final question. Can you comment on the percentage of deals or revenues that NextGen is bringing in from resellers and perhaps directionally, which way that percentage is going?

I don't want to get into a fixed -- to reporting a percentage quarter by quarter. But I will say that directionally it's about the same as it has been. We do have a small reseller channel, though our primary mode of operation is direct sales, we do have some resellers that truly add value and we value them as sort of partners. But I wouldn't say that our reseller revenue is way up or way down in this quarter.

Okay. All right. Well, thank you very much.

Thank you.

Our next question comes from the line of Gene Mannheimer.

Thank you. Nice quarter.

Thanks Gene.

Thank you.

Question Lou or Paul, if we were to back out the $2.5 million of Siemens revenue that you took in the March quarter, then it looks like system sales revenues were roughly flat sequentially from the March to the June quarter. Can you offer an explanation for that? Is it seasonality or further deferrals, any color on that?

Gene I don't know if I really have a lot of other color on that. I think you identified that we had a large amount of licensed revenue from Siemens last quarter, which you've taken into perspective. But outside of that the numbers are the numbers.

Gene this is Pat. I'll follow up on a little bit to that because system sales are something that we pay attention to. System sales is something that's tough to look at quarter-over-quarter, I think you really have to look at a longer time horizon. In fact, if you look at -- if you take every year in the last five years, there've been certain quarters where system sales have been, in fact, a pretty good number of quarters where system sales have been flat or in four, five quarters over the last number of years down.

But over that same period, obviously, if you look at our overall revenue and overall bottom line and I think our stock prices are up some 900% in the last five years. The system sales is certainly an important metric for us to watch. But a lot of things that are sold, bundled into a new contract, wind up showing up in other buckets; in services buckets and EDI buckets and those kinds of things.

Okay. That's help. Thank you. And you mentioned that your pipeline is up to about $65 million on the NextGen side, what is that compared to last quarter?

Last quarter I think it was a little over $60 million.

Okay. Great. And then last question just digging a little more into your small office strategy. You say that its meeting with a relative success. Can you quantify that either in terms of number of demos, win rates and who do you go up against mostly at that level if not A4? Thank you for the answer.

I can't quantify relative to number of demos and win rates. We're still making a lot of adjustments because we think we can do a lot better. But it seems that quarter to quarter to quarter we do a little better and a little better. We're trying to do things with the small practices; to help the small practices get into more sophisticated technology. Do some things with the user interface. Do some things with how that the product is delivered, both with respect to technology and also implementation and training.

For example, more web based training and automated and computer based training and those types of things that allow us to scale without substantially increasing the cost of delivery. And with respect to the question on competition, at the low end it tends to be just all kinds of different players. They are all over the place and they -- we may sell a lower end system for between $5 and $10,000 per provider. We go up against organization that are selling software for $3 and $400 per provider. Still winning a fair amount of those based on our functionality but a lot of different names. Again, once in a while its A4 but there are a bunch of them.

Okay. Thanks very much.

Thank you.

Okay. Our next question comes from the line of Stephanie Sun.

Hi. Great quarter results, congratulations.

Thank you.

I have a question about your sales force productivity. You mentioned you brought out quite a few sales people and also you are expecting high growth, so what are you doing to increase their productivity?

Well, we just had a large national sales meeting with our entire sales and marketing force in one place. That is meant to teach them about our product, about our offerings, new releases and how to make them more productive, out on the marketplace. It's a tough question to answer because there are so many answers to the question but another thing that we have done is we have recently slightly restructured the sales force. A restructuring that's design to apply the right resources to the right opportunity.

How is your sales force is structured?

Well, we have more senior people calling on the large and strategically important opportunities. Sales people are typically assigned territories in their -- within their territory. There maybe other more junior sales people that call on the smaller accounts. We also have an inside sales force that is responsible for sales both to existing customers and also to new customers in remote areas. We have three regional sales vice presidents that sales reps and sales executives report to. Does that help?

Yes, it does. Also do you have any strategic alliances with other vendors who can sell your software indirectly?

Absolutely, the main one of note is our relationship with Siemens of course.

Okay. Thank you.

Thank you.

Our next question comes from the line of George Hill.

Hi, good afternoon guys.

Hi, George.

I'll say first a comment, is I'd bet money that Van was referring to Athena health, which I'm sure you guys probably heard of?

Okay.

Second question is can you talk about the evolution of business mix, the average deal size during the quarter maybe not necessarily with a number, but directionally and the mix of whether you're selling to more larger practices, more smaller practices or where you're seeing more success and how that's changed compared to the previous quarter and maybe a year ago?

Well, I don't know about a year ago comparison, I'd have to go figure that out, George, but I think quarter-over-quarter. And again I'll say that its really tough to look at this business on a quarter-over-quarter basis, because you'll have one very large order in one quarter that can really push the numbers one way or another or the Siemens order, for example. But I think if you look at this quarter and the prior quarter average new sales size was slightly down.

Okay.

I don't think that's a trend, but --

Well, you guys had mentioned before that you might see a mix towards smaller practices, which could lower the average deal size, but increase the number of deals. Is that what we're beginning to see?

I would say that's what you saw in this quarter to a degree, but again I'm not sure that that's a trend.

Okay.

It bounces around an often a lot George. So on Pat's point, its very hard to look at a single quarter and draw conclusions about trends or anything else.

Okay. And then the next, would you guys speak to anything about what your observations are on market penetration. Do you have any sense for where it is and I guess how far do you think we are from the point -- or I'll just ask where do you think market penetration is right about now for your solution?

Well, for this type of solution in the market that is -- Are you asking how many medical practices are using these types of solutions?

Yes.

I think that's about 20%.

Okay.

George, I'm not recalling the exact source of it, but I had just saw coming through on some of the new sources that I have studied it seems like it was fairy well done, I didn't go back to look at the exact statistic, the size of the pool, but somebody had just released the study that suggested penetration was around 24%.

Yes. I think that was CDC.

Okay.

Also depends how you draw the lines. There are some studies that look at electronic health record systems and they include component technologies --

Right.

-- prescribing or document imaging systems and it really depends how you look at it, but a full blown electronic health record system, I think you probably under 15% and depending on how you define the rest of the market, I think you might get as high as 24%, 25%.

Okay. Do you guys have a sense for you feel at what point in the penetration cycle do we see a situation where the incremental sales are harder to come across?

I'm going to guess that's three or four or five years out.

Okay. All right. Thank you.

Okay. Our next question comes from the line of Chris Sansone.

Good afternoon and congratulations on a great quarter.

Thank you.

I was wondering, if you could elaborate as to who your competitors are for the NextGen product? You've said that at least at the small end it's very fragmented, but who do you compete against mostly at the larger end?

On the high end it would be Epic, sometime Allscripts, sometimes GE, if it's an IPA type of situation or large network. It also depends whether we're talking electronic medical records or practice management or both as I mentioned a lot of our customers are out there shopping for both. And a lot of the entrenched practice management systems, sort of the legacy vendors have electronic health record systems also that would include companies like [Myses] and Medical Manager, [Ambion] or those types of farms.

Okay. And then of the practices that get one of your systems, have they at least anecdotally, or have you ever encouraged them or helped them, to determine improvements in productivity and/or costs that either you could use for marketing purposes or that through word of mouth from them they would spread to people that don't have systems like yours?

That's a terrific question, but I'm going to have to tell you that I think we are a step ahead of you. We've had a marketing campaign that we're very proud of running for a few years. We call it our proven campaign and in that campaign we actually highlight customer-by-customer and I think we've showcased maybe 10 or 15 customers at this point and the actual results that they have achieved and its been a very successful campaign for us one that we've stuck through, through the years because its been so successful.

And so, for those clients that you have calibrated -- what kind of business metrics can you provide us in term of what kind of savings or improvements in productivity that they get?

There's a wide range but many of our practices are seeing that the system is paid for itself inside of six months. I think more typically it's a year or two, but again it's a wide range. The key is that the system does provide a positive, in fact very healthy return on investment and frankly that's one of the things that allow us to protect our pricing premium. We price our product sort of at the high end of the scale and the more sophisticated practices and networks look at value as opposed to cost.

Okay. Final question. Let's switch over to CPS, since most dentists are solo practitioners, where do you think that they are in the adoption of the systems like CPS and corollary question is do you ever envision entering into some sort of partnership with a manufacturer that would allow you to sell digital inter-oral cameras coupled with the CPS?

In the first place, we typically do not focus on solo practitioner market. My sense is a true number of other vendors that that's moderately penetrated. Within our market, which is typically six or more dentists, in one or more offices, that penetration is probably at about the 20% level. In terms of entering into agreements with third party vendors to market their equipment as well as joint marketing, we already have some of those. They are something as confidential so I won't disclose who they are, but we've done that over the years.

Okay. Thank you.

Our next question from the line of Richard Close.

Yes. Just a really quick. I missed the differed revenue, maintenance and services. Could you give that to me again?

Yeah. You are talking about from my prepared comments.

Yes.

The differed services in total $36.8 million.

Okay. And with respect to the competition, as a follow on Chris's, I guess question. With the Stark [lobby and relaxed], do you feel that the likes of a Metasyn, a Cerener, an Epic are all which -- well Epic had a pretty good ambulatory product, but Cerener and Metasyn have increasingly talked about it. Are you bumping into them at all as we speak today?

Yes we are. In fact, we recently took a couple of existing customers away from a couple of those companies that you mentioned. But, we do compete with those companies. They don't do very well. If we are losing to those companies, typically it's because we are not in the deal. When we are going after the large integrated network and its an acute care and ambulatory care opportunity, we are looking toward our partnership with Siemens to go in hand-in-hand and cover both sides.

Okay. Thank you.

Thank you.

Our next question is a follow-up from Van Brady.

Well I located the name of the company that I was asking about and George has supplied it before I did, so that my question has been answered. Athena Healthcare was the company I was asking about.

And I am going to have to change my answer, because I have heard of Athena. It's a company out of New England. I know the people that put the company together. It's a good company and a reasonable model. Where we compete with them, which is very infrequently, because they have a very different sales model than we do as you mentioned. They do a lot of revenue cycle management along with sort of providing systems to help them in that endeavor. They are not very strong on the clinical side. A lot of our market is driven by the market for electronic medical records or electronic health record systems. And in that arena they can't compete.

Well, [I can tell you] our doctors are really up against cash flow and will buy systems they think can help them, rather than doctors who are really looking for better clinical solutions -- have now. Is that a fair statement?

I think a lot of that statement is accurate. Typically as I understand it, Athena's model is that they don't go in and sell a system. Though they will, I think probably 90% or more of their customers pay them on a percentage of collections basis.

That's right.

They essentially share in the revenue and if they can boost the revenue and boost the practices income, they fair well along the way. The system is something that they provide to the practice and the scope of that contract to help them reach those goals. So it's a very different model than companies like NextGen and all the companies that we compete with.

Sure. Okay. Thank you, Pat.

You're welcome.

Our next question comes from the line of George Hill.

Hey guys. Last question just a housekeeping question. Will you be filing the 10-Q today?

We'll be -- I don't have an exact date for you George, we're working on it.

Okay.

But I -- we'll file it just as soon as it's ready to file.

Thank you very much.

[OPERATOR INSTRUCTIONS] And Mr. Silverman, at this time there are no further questions on the phone lines.

All right. Thank you everyone for joining us on the call. And we hope to see you on the future call. Thanks.

Thank you Gentlemen that does conclude today's teleconference. If you have joined us via telephone you may now disconnect.