athenahealth reported a better-than-expected third quarter of 2014.
Although earnings of $0.07 per share were almost halved from $0.14
reported in the year-ago quarter, it managed to beat the Zacks
Consensus Estimate by $0.01. Revenues surged 25.7% year over year
and were in line with the consensus mark. Most importantly, the
company continued to add physicians' at all three software suites.
athenahealth reiterated its full-year 2014 revenue and earnings
guidance and provided a conservative 2015 outlook. We believe that
the company's strong product portfolio, growing physician base and
solid business model are key tailwinds. However, lack of
enterprise-sized deals, winding up of government funded stimulus
and increasing competition are major concerns in the near term. We
maintain our Neutral recommendation and set a price target of
Headquartered in Watertown, MA, athenahealth Inc (ATHN) through
its cloud-based network athenaNet provides services that manage the
administrative duties of medical providers. The company's software
platform handles billing management, quality measurement and
reporting, clinical documentation and data exchange, patient
communication and referrals, and many other related tasks.
athenahealth posted revenues of $595 million in fiscal 2013. In
the nine months ended Sep 30, 2014, revenues jumped 27.4% year over
year to $539.4 million. athenahealth reports revenues in two
segments: Business Services (95% of total revenues in the nine
months) and Implementation and Other (5%).
Business Services revenue is typically 2% to 8% of a practice's
total collections, depending upon the services purchased, the size,
complexity, and other characteristics of the practice, plus a per
statement charge for certain billing statements that are generated
The Business Services segment comprises athenaCollector (revenue
cycle management or RCM), athenaClinicals (electronic health record
management or EHR), athenaCommunicator (patient communication
management), athenaCoordinator (referral cycle management) and
subscriptions, sponsored clinical information, and decision support
services for point of care clinical application (Epocrates).
Epocrates was acquired by athenahealth in Mar 2013. The company
offers subscription-based and sponsored clinical information and
decision support services under this brand.
Implementation revenues consist of amortization of deferred
revenue on implementation services, as well as third-party tenant
and other non-core revenues.
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