Technology Coming to Life 2 O O 3 A N N U A L R E P O R T PRESIDENT’S LETTER To Our Shareholders, Clients, Partners, and Associates: It is typically difficult to find a single theme that sums up the activities of an entire year. FY 2003 stands as a pleasant exception to this general rule. Reflecting upon the Company’s many achievements across multiple fronts, 2003 was a year that saw our “Technology Coming to Life.” Our technology came to life each day as our software products assisted growing numbers of healthcare pro- viders in improving the lives of their patients. Increasing numbers of physicians used NextGenemr and NextGenepm to enhance patient outcomes and practice economics. The wide range of services provided by our EDI/ Connectivity unit brought technology to the many interactions that form the day-to-day fabric of our nation’s healthcare system. The QSI Division’s dental practice management software and Clinical Product Suite are examples of technology that brightened the smiles of dental clients and their patients. As our technology continued to come to life, NextGen Healthcare’s flagship products were well recognized. At the 2003 HIMSS conference, NextGenemr was awarded first place by the Microsoft Healthcare Users Group (MS-HUG). NextGenepm followed suit in the practice management software arena. At the 2003 TEPR conference, NextGenemr was awarded first place among medical records packages serving our target market, and NextGenepm was similarly recognized in the practice management software arena. The markets for our technology increasingly came to life in FY 2003 as our NextGen Healthcare Information Systems Division extended its track record of accomplish- ment and turned in its best year ever. Positively impacted by increasing market recognition and driven by the unbounded energy of our team, the division used rev- enue growth of 37% and operating income growth of 91% over the prior year to set records in each area. Our QSI Division positively impacted the Company’s overall financial performance for the year as well with stability and a strong bottom line. These results drove record revenue and EPS performance for the Company as a whole. In reflecting on a year of “technology coming to life,” it is also important to acknowledge the continued support we’ve received from shareholders, clients and partners as well as the dedication of the QSI and NextGen Healthcare teams. The Company thanks you and enters FY 2004 energized and committed to con- tinuing our progress. Sincerely, Lou Silverman President & Chief Executive Officer FINANCIAL HIGHLIGHTS Total REVENUES dollars in millions OPERATING INCOME dollars in millions CASH AND CASH EQUIVALENTS dollars in millions EARNINGS PER SHARE (fully diluted, in dollars) $54.8 $10.7 $36.4 $1.10 $37.3 5.0 7.9 25.4 18.5 0.84 0.57 44.4 39.9 QSI Division 22.7 27.2 NextGen 2001 2002 2003 2001 2002 2003 2001 2002 2003 2001 2002 2003 RECENT AWARDS Forbes 2002 2001 77 of 200 158 of 200 Quality Systems, Inc. Quality Systems, Inc. 200 Best Small Companies in America 200 Best Small Companies in America The Medical Records Institute/TEPR 2003 NextGenEMR 2003 NextGenEPM 2002 NextGenEMR 2002 NextGenEMR 2002 NextGenEPM First Place First Place First Place First Place Second Place Medical Records; Medium/Large Practices Practice Management Systems Medical Records; Comprehensive Ambulatory Medical Records; Specialty or Department Practice Management; Comprehensive Ambulatory Microsoft Healthcare Users Group 2003 2003 First Place First Place NextGenEPM NextGenEMR Ambulatory Care; Administrative/Financial Systems Ambulatory Care; Clinical/Patient Information Systems AC Group 2003 First Place NextGenEMR Top Overall EMR Application Note: EMR = Electronic Medical Records / EPM = Enterprise Practice Management COMPANY PROFILE Quality Systems Inc. and its NextGen Healthcare Information Systems subsidiary develop and market computer-based practice management systems, electronic patient records systems, and connectivity applications for large medical and dental group practices. Products are marketed under the QSI and NextGen product names. Visit www.qsii.com and www.nextgen.com for additional information. m o c . s r o n n o c - n a r r u c . w w w / . c n I , s r o n n o C & n a r r u C y b d e n g i s e D CORPORATE INFORMATION Officers of the Company Louis Silverman President & Chief Executive Officer Patrick Cline President NextGen Healthcare Information Systems Division Greg Flynn Executive Vice President & General Manager QSI Division Paul Holt Chief Financial Officer Directors of the Company Sheldon Razin Chairman of the Board Ahmed Hussein Director Mohammed Tawfick El-Bardai CEO National Telecommunications Corporation Dale Hanson CEO American Partners Consulting Group Frank Meyer President Glenwood Holdings William Small Independent Management Consultant Legal Counsel Rutan & Tucker LLP Costa Mesa, California Independent Auditors Grant Thornton LLP Irvine, California Registrar and Transfer Agent U.S. Stock Transfer Corp. Glendale, California Investor Relations Consultants Coffin Communications Group Sherman Oaks, California 818.789.0100 Form 10-K A copy of the Company’s Annual Report on Form 10-K, as filed with the Securities and Exchange Commission, is available on the Company’s website at www.qsii.com or by contacting the Company at the address below. Corporate/QSI Division Headquarters Division Locations 18191 Von Karman Avenue Suite 450 Irvine, California 92612 949.255.2600 www.qsii.com 795 Horsham Road Second Floor Horsham, Pennsylvania 19044 215.657.7010 3340 Peachtree Road Suite 450 Atlanta, Georgia 30326 404.467.1500 www.nextgen.com