) reported adjusted earnings of $16.5 million or 43 cents per
share (excluding amortization and integration and transaction
costs) in the fourth quarter of 2013, reflecting a more than
twofold increase from $6.6 million or 18 cents per share
(excluding amortization of intangible assets) in the comparable
quarter of 2012. With this, earnings also trounced the Zacks
Consensus Estimate of 28 cents per share.
Revenues in the quarter surged 47.5% to $171.6 million and
exceeded the Zacks Consensus Estimate of $169 million. Excluding
the Epocrates and other revenues (consisting of third-party
tenant revenues) totaling $22.6 million, core athenahealth
revenues rose 28% to $149.0 million in the quarter.
On a segment-wise basis, revenues from Business Services rose
44.4% year over year to $162.5 million (including $18.9 million
from Epocrates) while Implementation and Other revenues more than
doubled to $9.0 million from $3.7 million in the fourth quarter
Adjusted gross profits increased 54.4% to $111.5 million while
adjusted gross margin rose 290 basis points (bps) to 65.0% from
62.1% in the 2012-quarter. Adjusted operating earnings surged
95.3% to $24.8 million while adjusted operating margin increased
360 bps to 14.5% from 10.9% in the prior-year quarter.
Full Year Results
In 2013, athenahealth posted a 16.1% fall in adjusted earnings
per share to 47 cents (excluding amortization, integration and
transaction costs, and gain on early termination of lease) from
56 cents (excluding amortization of intangible assets) in 2012.
Nevertheless, earnings per share beat the Zacks Consensus
Estimate of 33 cents for the year. Net earnings declined 12.7% to
$18.1 million from $20.7 million a year ago.
Revenues in the year went up 40.9% to $595.0 million, exceeding
the Zacks Consensus Estimate of $592 million. Revenues were also
in line with the company's own guided range of $580 to $615
million. athenahealth expanded its physician network by 28%,
achieved its target of 30% bookings growth during the year.
Adjusted gross profits in the year rose 41.8% to $366.9 million
while adjusted gross margin increased 40 bps to 61.7% from 61.3%
in 2012. Adjusted operating earnings ebbed 20.3% to $30.3 million
while adjusted operating margin dipped 390 bps to 5.1% from 9.0%
in the prior-year due to higher operating expenses in the year.
athenahealth had cash and cash equivalents of $65.0 million as of
Dec 31, 2013, significantly down from $155.0 million as of Dec
31, 2012. Total debt stood at $188.75 million at the end of last
year compared with no debt at the end of 2012.
In 2013, cash flow from operating activities rose 32.9% to $93.3
million from $70.2 million in 2012. Capital expenditure surged
61.2% to $38.3 million compared with net capital expenditure of
$23.7 million in 2012.
We are encouraged by athenahealth's fourth quarter results due to
the stupendous rise in earnings and revenues that beat the Zacks
Consensus Estimates. We believe that the company will benefit
from cross-selling opportunities, Epocrates buyout and the
successful implementation of the Meaningful Use Stage 2 (MU2)
criteria across its nationwide, cloud-based network.
Despite athenahealth's strong presence and unique business model
in the health care information technology (HCIT) industry, we
remain cautious owing to the crowded field with larger players
Currently, athenahealth carries a Zacks Rank #4 (Sell). The Zacks
Consensus Estimates for 2014 revenues and earnings per share
stand at $748 million and 32 cents.
Some better-ranked stocks in the medical information systems
industry at this moment include
Computer Programs & Systems Inc.
). While Computer Programs & Systems carries a Zacks Rank #1
(Strong Buy), Omnicell has a Zacks Rank #2 (Buy).
ATHENAHEALTH IN (ATHN): Free Stock Analysis
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COMPUTER PRGRMS (CPSI): Free Stock Analysis
OMNICELL INC (OMCL): Free Stock Analysis
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