Quality Systems Does Not Have Quality Leadership, Says Clinton Group As It Contests Director Election At Upcoming Meeting


Activist Investor Clinton Group files proxy statement for the election of its seven nominees to the Quality Systems Board of Directors.

Quality Systems, Inc. is an IT company in the healthcare industry.

According to activist investor Clinton Group, Quality Systems (QSII) is not doing quality work for its shareholders.*  Clinton doesn’t understand how a healthcare IT company can lag in this era of ObamaCare handouts.  In the proxy statement, Clinton issued the following indictments:

  • The healthcare information technology sector has been the beneficiary of a recent government and health care provider push for improved quality of care and efficiencies, with regulatory mandates and economic incentives for increased automation and use of digital health records.
  • The company’s peers and competitors have taken full advantage of this improved environment; they have increased their median earnings per share 48% since the signing of [ObamaCare] in March 2010.
  • The stockholders of the company’s peers and competitors have been rewarded with median total stockholder returns since the signing of [ObamaCare] of 81%.
  • From the passage of [ObamaCare] through June 30, 2013, the company’s stock (on a total return basis) is down 35%.
  • And from the day President Obama was first elected in 2008, with a promise of bringing increased information technology resources into medicine, especially with respect to patient records, through the end of the last quarter, the company’s stock was essentially flat while the Russell 2000 Index increased by 79%, the S&P 500 increased by nearly 60%, and the peers and competitors produced total stockholder returns, on average, of 183%.

And then Clinton delivered this knee to the groin:

“The Company’s stock has performed worse than every one of the peers and competitors since President Obama’s election.”

Last we saw of Clinton, they were beating up on Stillwater Mining Company (SWC) and got four of their nominees on Stillwater’s board.  SWC closed at $12.56 on the day of the election and closed at $10.68 as of this writing.

Clinton’s proxy statement states that it initially invested in Quality Systems because it believed the stock was undervalued and represented a potentially profitable investment opportunity and that significant value can be created for all stockholders through better board leadership, corporate governance and oversight of management personnel, capital allocation, and strategic plan.

On June 13, 2013, Clinton delivered a notice to Quality Systems indicating its intent to nominate the seven candidates.  On that day, QSII closed at $18.12.  As of this writing, QSII closed at $19.31.

*Yeah, we used this same tired “comedic” device twice. So what of it?



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