) posted adjusted earnings of $3.7 million or 9 cents per share in
the second quarter of 2014 in stark contrast to a loss of $9.3
million or 25 cents per share in the same quarter of 2013. Earnings
per share in the quarter surpassed the Zacks Consensus Estimate by
However, shares of the company dipped 2.5% to $124.60 following the
earnings announcement. The fall can be attributable to the
company's escalating costs (24.6%) in the reported quarter and
lower ROE (6.0%) compared to its peer group (9.7%). The stock is
also highly overvalued compared to the industry average.
On a reported basis, athenahealth posted a narrower loss of $2.2
million, or 6 cents per share, in the quarter compared with $12.4
million, or 34 cents per share, in the second quarter of 2014.
Athenahealth, Inc - Earnings Surprise |
Revenues in the quarter rose 27.1% to $185.9 million and edged
past the Zacks Consensus Estimate of $182 million. athenahealth
added 2,500 healthcare providers to its network, which implies 26%
a rise to more than 55,000 providers in athenaNet.
Revenues from athenahealth-branded services rose 32% to $170.3
million in the quarter. However, revenues from Epocrates-branded
services slid 23% to $11.3 million. Other revenues went up 95% to
On a segment-wise basis, revenues from Business Services rose 27.6%
year over year to $175.9 million while Implementation and Other
revenues grew 19.0% to $10.0 million in the second quarter of 2014.
Adjusted gross profits escalated 27.5% to $113.9 million while
adjusted gross margin rose 20 basis points (bps) to 61.2% from
61.0% in the 2013-quarter. Adjusted operating loss increased more
than eight fold to $7.4 million or 4.0% of sales in the quarter
from $874 thousand or 0.6% of sales in the prior-year quarter.
athenahealth had cash and cash equivalents of $56.2 million as of
Jun 30, 2014, down 13.5% from $65.0 million as of Dec 31, 2013.
Long-term debt stood at $181.25 million as of Jun 30, 2014, down
4.0% compared with $188.75 million as of Dec 31, 2013. With this,
long term debt-to-capitalization ratio declined 280 bps to 29.7%
from 32.5% as of Dec 31, 2013.
In the first half of 2014, cash flow from operating activities
increased more than threefold to $63.8 million from $19.8 million
in the same period of 2013, due to improved earnings and higher
depreciation and amortization. Capital expenditure surged 74.6% to
$29.0 million from $16.6 million in the first half of 2013.
For the full year 2014, athenahealth projected revenues of $725 to
$755 million. The current Zacks Consensus Estimate of $742 million
lies within the company's projected band.
For the full year, athenahealth also provided estimates for
adjusted gross margin of 62.5-63.5%, adjusted operating income
of $70 to $80 million and adjusted net earnings
per share of 98 cents to $1.10.
Currently, athenahealth carries a Zacks Rank #3 (Hold). Some
better-ranked stocks in the medical products industry at this
OraSure Technologies, Inc.
Wright Medical Group Inc.
St. Jude Medical Inc.
). Both OraSure Technologies and Wright Medical Group sport a Zacks
Rank #1 (Strong Buy), while St. Jude Medical retain a Zacks Rank #2
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