Group Increases Stake in Quality Systems

<i> Times Staff and Wire Services</i>

An investment group that has been pressuring Tustin-based Quality Systems Inc. to take steps to boost the company’s stock has increased its stake in the company to 8.4%, according to regulatory documents filed this week.

The group, which includes Lawndale Capital Management, has suggested that Quality Systems launch a stock buyback program and has nominated a candidate to the company’s board. Quality Systems has announced a stock buyback program, but it has not been executed, according to the filing Wednesday with the Securities and Exchange Commission.

The company, according to the group, said that Lawndale’s candidate is one of several under consideration and that the company has been unable to fully evaluate candidates in time for the annual meeting Sept. 9.

Depending on the company’s response, Lawndale said it may not vote on the reelection of the company’s current board. The group, which held a 6.2% stake in January, holds 527,000 common shares of the company, a provider of computer management systems for medical and dental practices.


Quality Systems stock closed Thursday at $6.25 a share, off 13 cents. The shares had hit a 52-week high of $11.25 on June 10 before retreating to $5.38 on July 21.

The group has profited in the past by investing in Quality Systems. In 1995, it bought a large block of the stock for about $350,000 on Valentine’s Day and cashed in later in the year for $3.5 million.