Leading vendor of cloud-based services for physician practices
) reported fourth quarter 2012 adjusted (excluding one-time items
other than stock-based compensation expense) earnings per share
of 18 cents beating the Zacks Consensus Estimate of 16 cents per
Reported net income in the fourth quarter increased 11.5% year
over year to $5.9 million (or 16 cents per share).
For 2012, adjusted earnings per share of 56 cents missed the
Zacks Consensus Estimate of 57 cents.
Revenues climbed 26% year over year to $116.3 million in the
quarter missing the Zacks Consensus Estimate of $117 million. The
company posted collections of $2.5 billion in the fourth quarter,
For 2012, sales were $422.3 million, up 30%, missing the Zacks
Consensus Estimate of $423 million. The company recorded
collections of $9.2 billion in 2012, up 26%.
On a segment-wise basis, revenues from Business Services
surged 26.1% year over year to $112.6 million while
Implementation and Other revenues improved 15.7% to $3.7
Utilization of athenaCollector by medical providers and
physicians grew 21.4% and 20.7% respectively, year over year in
the fourth quarter. Furthermore, the use of athenaClinicals by
medical providers and physicians jumped 67.4% and 70.5%
respectively, year over year. The utilization of
athenaCommunicator increased almost two and a half times to
14,065 medical providers (of whom 10,153 were physicians) from
5,830 medical providers (of whom 4,098 were physicians) in the
Adjusted gross margin decreased 80 basis points year over year
to 63.4% whereas adjusted operating margin dropped 30 basis
points to 16.9% in the quarter. Adjusted EBITDA margin improved
to 23.3% from 22.4% a year ago.
Athenahealth ended the fourth quarter with cash and cash
equivalents and short-term investments of $193.1 million, up
61.1% year over year.
Athenahealth's web-based deployment provides a low-cost
scalable service while its flexible rules engine leads to higher
efficiency in claims settlement. The Software-as-a-Service
(SaaS)-based approach allows for a more flexible delivery
mechanism that helps Athenahealth win deals. The company has
traditionally enjoyed high customer satisfaction rates, which
facilitates a larger number of referrals.
Athenahealth's unique business model makes it a strong
provider of RCM services (athenaCollector) designed for small
physician practices. Its EHR product (athenaClinical) is a key
player in ambulatory settings.
We believe that sales of athenaClinical are likely to remain
robust. In addition, the company will harness its newer products,
namely athenaCommunicator and athenaCoordinator.
Athenahealth should benefit from its extensive athenaCollector
client base, as only a minority of its subscriber base also
utilizes athenaClinicals. Cross selling represents a real growth
opportunity in the near term. In this regard, Athenahealth has
made rapid strides in capturing the EHR business of physician
practices. However, this segment is shrinking, as hospitals
increasingly absorb physician's medical practices.
Athenahealth is geared to enter the enterprise segment through
its strategic alliance with
) and the acquisition of Proxsys, both completed in 2011. The
company has recently signed on, and executed several
enterprise-sized deals, which provide it with a credible and
referenceable client base. In early Jan 2013, Athenahealth signed
a definitive agreement to take over
), a provider of point-of-care digital solutions in the
healthcare industry. The acquisition will enable Athenahealth to
increase its user network and improve its brand awareness.
Though the federal stimulus is winding down, the replacement
market has been growing. Competition is fierce and larger
competitors may benefit from the incumbency factor. Industry
stalwarts such as
) offer long-standing seamless products which integrate inpatient
and ambulatory-care systems.
Allscripts Healthcare Solutions, Inc.
) is another competitor in a crowded field.
Athenahealth carries a Zacks Rank #3 (Hold).
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