athenahealth (ATHN) Allies with CoverMyMeds for Faster ePA

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Headquartered in Watertown, MA, athenahealth Inc.ATHN recently entered into a strategic partnership with CoverMyMeds. The deal will automate the electronic prior authorization (ePA) process for providers with the help of athenaClinicals electronic health record service.

Stock Performance

The price performance of athenahealth since the beginning of this month was encouraging. The stock added 1.40% comparing favorably with the Zacks classified Medical Information Systems sub-industry's gain of 1.17%. Also, the stock's performance compares favorably with the S&P 500's loss of 0.34% over the same time frame. Added to this, a long-term expected earnings growth rate of 23.00% instills confidence in investors.

Along with the bullish price trend, estimate revision for the stock has been quite encouraging. The full year saw one estimate move north over the last two months, compared with no movement in the opposite direction. As a result, the stock rose to $1.19 over the same time frame. These bullish sentiments justify the stock's Zacks Rank #1 (Strong Buy).

Coming back to the news, athenaClinicals electronic health record service ePA solution, transacts an electronic prior authorization for patients, substituting the expensive, time-consuming and labor-intensive process of manual prior authorization. The digital approach helps effectively reduce the necessity for follow-up phone calls, faxes and other manual procedures related to retrospective pre-authorization.

Per management, the use of athenaClinicals would reduce administrative work by almost half and the insurance approval process from nine days to three. This is important because domestically almost 185 million prescriptions are generated annually that require prior authorization from payers.

This is a noteworthy development for athenahealth, considering the fact that CoverMyMeds is one of the major ePA platforms in the U.S. and influences nearly three fourth of all the prescriptions issued in the country. We feel that the partnership will help athenahealth software gain higher market traction, which, in turn, will generate better sales. Partnerships and new contracts have been the core area of focus for athenahealth, when it comes to expanding the reach of its solutions.

Going forward, athenahealth's foothold in the cloud-based health solution market makes us optimistic about it. In this regard, the global Healthcare Information Technology (HCIT) market by product is expected to reach a worth of $228.7 billion by 2020, growing at a CAGR of 13.4% (Markets And Markets).

We are also upbeat about athenahealth's unique business model, which makes it a strong niche provider of revenue cycle management (RCM) services to small physician practices.

Other Key Picks

Other stocks to consider in the broader medical sector include Inogen Inc. INGN , Hologic, Inc. HOLX and Sunshine Heart Inc SSH . Notably, all these stocks also sport a Zacks Rank #1. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

Inogen has a long-term expected earnings growth rate of 17.50%. The stock registered an impressive one-year return of 67.2%.

Hologic has a long-term expected earnings growth rate of 11.33%. The stock has a stellar one-year return of roughly 22%.

Sunshine Heart posted a positive earnings surprise of 58.24% in the last reported quarter. The stock has a stellar historical EPS growth record (last 3-5 years of actual earnings) of almost 22%.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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