Quality Systems Plans 2nd Offering After Hot Stock Performance

Quality Systems Inc., which makes office management software for dental and medical practices, has moved to take advantage of a sharp rise in its stock price by proposing a second public stock offering.

In a document filed Thursday with the Securities and Exchange Commission, the company said it plans to sell 1 million shares of common stock, and that existing shareholders will sell an additional 500,000 shares. At Thursday’s closing price of $23.625 per share, and factoring in a standard underwriters’ fee, the company would collect more than $21 million, and selling shareholders would pocket more than $10 million.

Sheldon and Janet Razin, the chief executive and corporate secretary of the company, respectively, plan to sell 471,000 shares, leaving them with 1.73 million shares after the offering.

Sheldon Razin said the company will use part of the proceeds to boost its stake in Clinitec International Inc., a Pennsylvania-based software company, from 25% to 51%. Quality Systems will use the remainder for general corporate purposes and possible acquisitions, said Razin, who acknowledged that the company is hoping to take advantage of a dramatic surge in the value of its stock over the past year.

Quality Systems’ stock was trading at just $2 per share last February, but has soared to as high as $32.25 in recent weeks. “We thought it would be a good time to go to the market,” Razin said.

The underwriters of the offering, which could take place in March, are Pacific Growth Equities and Cruttenden Roth Inc.