Quality Systems CEO Razin Resigns

Sheldon Razin, 62, president and chief executive of Quality Systems Inc., announced his retirement Tuesday, eight months after bowing to dissident shareholders’ demands and replacing the majority of the company’s board.

Razin will remain chairman of the Tustin-based company that he founded in 1974.

Patrick Cline, executive vice president, has been named interim president and chief executive of the company, a developer of medical information-management systems.

“We’ve got some wonderful products in the pipeline and a good leader in Pat Cline,” Razin said. “I think I’m leaving the company in good hands and in a good position.”

Quality Systems stock has jumped 240% in the last 12 months, nearly 65% since the beginning of the year. Its shares closed Tuesday at $12.75, down $1.88, in Nasdaq trading.

In August, the company averted a full-scale rebellion by agreeing to replace all but one member of its seven-person board with outside directors. The move ended a bitter two-year feud between Razin and minority shareholders over the company’s management and performance. The board now consists of Razin; dissident shareholder Ahmed Hussein, who owns 18.4% of Quality Systems; two of his allies; a director suggested by another critic; Lawndale Capital, a San Francisco investment firm; and two directors nominated by Razin.

Andrew Shapiro, president of Lawndale Capital, which owns about 10% of the company’s stock, said he believes Quality Systems will benefit from the changes at the top.

“This is an event we had fought for for a long time,” Shapiro said.

Indeed, Shapiro at one point portrayed the company’s former board as “grossly deficient in the most basic corporate governance knowledge.”

Razin declined to comment on the criticisms.

In putting the dispute behind it, Quality Systems has been able to focus on business, Razin said.

For the third quarter ended Dec. 31, Quality Systems reported that net income climbed 29% to $475,000, or 8 cents a share, although sales were flat at $8.8 million.

The Micromed unit, which makes software that allows physicians to store patient charts electronically, turned a profit and accounted for nearly half the firm’s revenues, Rezin said.

Cline, the new interim CEO, has presided over the unit, which Quality Systems created last year by merging two companies that had been acquired in 1996 and 1997.