athenahealth, Inc. Reports Second Quarter Fiscal Year 2011 Results
— 33% Revenue Growth Over Second Quarter of 2010 — GAAP Net Income of $5.2 Million, or $0.14 Per Diluted Share — Non-GAAP Adjusted Net Income of $7.9 Million, or $0.22 Per Diluted Share
WATERTOWN, Mass. (July 21, 2011) – athenahealth, Inc. (Nasdaq: ATHN), (the “Company”), a leading provider of Internet-based business services for physician practices, today announced financial and operational results for the second quarter of fiscal year 2011. The Company will conduct a conference call tomorrow, Friday, July 22, 2011, at 8:00 a.m. Eastern Time to discuss these results and management’s outlook for future financial and operational performance.
Total revenue for the three months ended June 30, 2011 was $77.9 million, compared to $58.6 million in the same period last year, an increase of 33%.
“Midway through the year, we are ecstatic to see athenahealth’s growth, operations and financial house in such good order because it gives us more time, money and energy to focus on our clients,” said Jonathan Bush, the Company’s Chairman, President, and Chief Executive Officer.
“Furthermore, we are pleased to announce the signing of a definitive agreement to acquire Proxsys LLC, a leading provider of services and technology focused on the front end of the revenue cycle for hospital systems,” continued Bush. “We believe this acquisition will position us to attack an additional area of inefficiency within the U.S. health care system, provide us with a new growth channel and enable us to offer more value to hospital systems as well as ambulatory medical groups.”
For the three months ended June 30, 2011, Non-GAAP Adjusted Gross Margin was 64.4%, up from 60.7% in the same period last year. Non-GAAP Adjusted EBITDA grew to $17.5 million, or 22.5% of total revenue, from Non-GAAP Adjusted EBITDA of $9.9 million, or 16.9% of total revenue, in the same period last year. For the three months ended June 30, 2011, GAAP net income was $5.2 million, or $0.14 per diluted share, and Non-GAAP Adjusted Net Income was $7.9 million, or $0.22 per diluted share. See “Use of Non-GAAP Financial Measures” below.
“athenahealth’s strong performance during Q2 2011 rounds out an impressive first half of 2011,” said Tim Adams, the Company’s Chief Financial Officer. “Given this strong performance year to date, we are pleased to update our guidance for fiscal year 2011, increasing our expectations for both revenue growth and profitability. This revised guidance includes the impact of increased investments in growth and innovation as well as our anticipated acquisition of Proxsys, LLC which is expected to close during Q3 2011.”
athenahealth’s revised fiscal year 2011 guidance is presented below:
| For the Fiscal Year Ending December 31, 2011 | |||
| GAAP Total Revenue | $315-325 million | ||
| Non-GAAP Adjusted Gross Margin | 62.5-63.5% | ||
| Non-GAAP Adjusted EBITDA | $59-67 million | ||
| Non-GAAP Adjusted Net Income per Diluted Share | $0.70-0.83 |
Please see athenahealth’s Q2 2011 Prepared Remarks, published in conjunction with this press release, for more detail on the anticipated acquisition of Proxsys, LLC as well as the Company’s revised fiscal year 2011 guidance.
Key metrics and milestones in the second quarter of fiscal year 2011 included the following:
- $1.8 billion in collections posted to client accounts in the second quarter of 2011, compared to $1.4 billion in the same quarter of 2010
- 39.1 average client Days in Accounts Receivable (DAR) in the second quarter of 2011, compared to 38.8 average client DAR in the same quarter of 2010
- 29,482 active medical providers using athenaCollector
- 4,848 active medical providers using athenaClinicals
- 1,936 active medical providers using athenaCommunicator
As of June 30, 2011, the Company had cash, cash equivalents, short and long-term investments of $124.7 million. During the quarter, the Company retired outstanding debt obligations, including the interest rate derivative liability and a real estate loan recorded within deferred rent, of approximately $12.0 million.
Use of Non-GAAP Financial Measures
In the Company’s earnings releases, conference calls, slide presentations, and webcasts, the Company may use or discuss non-GAAP financial measures as defined by SEC Regulation G. The GAAP financial measure most directly comparable to each non-GAAP financial measure used or discussed, and a reconciliation of the differences between each non-GAAP financial measure and the comparable GAAP financial measure, are included in this press release after the condensed consolidated financial statements. The Company’s earnings press releases containing such non-GAAP reconciliations can be found on the Investors section of the Company’s web site at http://www.athenahealth.com.
Conference Call Information
To participate in the Company’s live conference call and webcast, please dial 800-447-0521 (or 847-413-3238 for international calls) using conference code No. 30150497, or visit the Investors section of the Company’s web site at www.athenahealth.com. A replay will be available for one week following the conference call at 888-843-7419 (and 630-652-3042 for international calls) using conference code No. 30150497. A webcast replay will also be archived on the Company’s website.
About athenahealth
athenahealth, Inc. is a leading provider of cloud-based business services for physician practices. athenahealth’s service offerings are based on proprietary web-native practice management and electronic health record (EHR) software, a continuously updated payer knowledge-base, integrated back-office service operations, and automated and live patient communication services. For more information, please visit www.athenahealth.com or call (888) 652-8200.
Forward-Looking Statements
This press release contains forward-looking statements, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including statements reflecting management’s expectations for future financial and operational performance and operating expenditures, expected growth and business outlook, statements regarding the expected benefits resulting from the planned Proxsys, LLC acquisition and the expected closing that acquisition, the benefits of the Company’s current service offerings, and statements found under the Company’s Reconciliation of Non-GAAP Financial Measures section of this release. The forward-looking statements in this release do not constitute guarantees of future performance. These statements are neither promises nor guarantees, and are subject to a variety of risks and uncertainties, many of which are beyond the Company’s control, which could cause actual results to differ materially from those contemplated in these forward-looking statements. In particular, the risks and uncertainties include, among other things: the Company’s fluctuating operating results; risks associated with the acquisition and integration of companies and new technologies; the Company’s variable sales and implementation cycles, which may result in fluctuations in its quarterly results; risks associated with its expectations regarding its ability to maintain profitability; the impact of increased sales and marketing expenditures, including whether increased expansion in revenues is attained and whether impact on margins and profitability is longer term than expected; changes in tax rates or exposure to additional tax liabilities; the highly competitive industry in which the Company operates and the relative immaturity of the market for its service offerings; and the evolving and complex governmental and regulatory compliance environment in which the Company and its clients operate. Existing and prospective investors are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The Company undertakes no obligation to update or revise the information contained in this press release, whether as a result of new information, future events or circumstances, or otherwise. For additional disclosure regarding these and other risks faced by the Company, see the disclosures contained in its public filings with the Securities and Exchange Commission, available on the Investors section of the Company’s website at http://www.athenahealth.com and on the SEC’s website at http://www.sec.gov.
| athenahealth, Inc. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited, in thousands, except per share amounts) | ||||||||||
| June | December | |||||||||
| 30, 2011 | 31, 2010 | |||||||||
| Assets | ||||||||||
| Current assets: | ||||||||||
| Cash and cash equivalents | $ | 47,370 | $ | 35,944 | ||||||
| Short-term investments | 57,038 | 80,231 | ||||||||
| Accounts receivable – net | 43,927 | 36,870 | ||||||||
| Deferred tax assets | 4,818 | 3,856 | ||||||||
| Prepaid expenses and other current assets | 7,189 | 6,749 | ||||||||
| Total current assets | 160,342 | 163,650 | ||||||||
| Property and equipment – net | 41,289 | 31,899 | ||||||||
| Restricted cash | 5,804 | 8,691 | ||||||||
| Software development costs – net | 4,812 | 3,642 | ||||||||
| Purchased intangibles – net | 11,731 | 12,651 | ||||||||
| Goodwill | 22,450 | 22,450 | ||||||||
| Deferred tax assets | 10,816 | 10,959 | ||||||||
| Investments and other assets | 22,728 | 7,228 | ||||||||
| Total assets | $ | 279,972 | $ | 261,170 | ||||||
| Liabilities & Stockholders’ Equity | ||||||||||
| Current liabilities: | ||||||||||
| Current portion of long-term debt and capital lease obligations | $ | – | $ | 2,909 | ||||||
| Accounts payable | 1,348 | 559 | ||||||||
| Accrued compensation | 18,196 | 19,178 | ||||||||
| Accrued expenses | 11,316 | 10,981 | ||||||||
| Current portion of deferred revenue | 5,528 | 4,978 | ||||||||
| Interest rate derivative liability | – | 490 | ||||||||
| Current portion of deferred rent | 896 | 1,497 | ||||||||
| Total current liabilities | 37,284 | 40,592 | ||||||||
| Deferred rent, net of current portion | 3,258 | 5,960 | ||||||||
| Deferred revenue, net of current portion | 39,998 | 35,661 | ||||||||
| Other long-term liabilities | 1,394 | 1,897 | ||||||||
| Debt and capital lease obligations, net of current portion | – | 6,307 | ||||||||
| Total liabilities | 81,934 | 90,417 | ||||||||
| Stockholders’ equity: | ||||||||||
| Preferred stock, $0.01 par value: 5,000 shares authorized; no shares issued | – | – | ||||||||
| Common stock, $0.01 par value: 125,000 shares authorized; 36,245 shares | 362 | 358 | ||||||||
| Additional paid-in capital | 219,153 | 200,339 | ||||||||
| Treasury stock, at cost, 1,278 shares | (1,200 | ) | (1,200 | ) | ||||||
| Accumulated other comprehensive income | 58 | 28 | ||||||||
| Accumulated deficit | (20,335 | ) | (28,772 | ) | ||||||
| Total stockholders’ equity | 198,038 | 170,753 | ||||||||
| Total liabilities and stockholders’ equity | $ | 279,972 | $ | 261,170 |
| athenahealth, Inc. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited, in thousands, except per share amounts) | ||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||
| Revenue: | ||||||||||||||||
| Business services | $ | 75,349 | $ | 56,399 | $ | 142,835 | $ | 108,964 | ||||||||
| Implementation and other | 2,536 | 2,153 | 4,980 | 4,065 | ||||||||||||
| Total revenue | 77,885 | 58,552 | 147,815 | 113,029 | ||||||||||||
| Expense: | ||||||||||||||||
| Direct operating | 29,020 | 24,101 | 56,290 | 47,620 | ||||||||||||
| Selling and marketing | 18,815 | 12,693 | 35,756 | 24,753 | ||||||||||||
| Research and development | 5,166 | 4,824 | 10,245 | 8,898 | ||||||||||||
| General and administrative | 11,718 | 11,403 | 23,437 | 23,080 | ||||||||||||
| Depreciation and amortization | 3,737 | 2,657 | 7,135 | 5,077 | ||||||||||||
| Total expense | 68,456 | 55,678 | 132,863 | 109,428 | ||||||||||||
| Operating income | 9,429 | 2,874 | 14,952 | 3,601 | ||||||||||||
| Other income (expense): | ||||||||||||||||
| Interest income | 109 | 66 | 216 | 144 | ||||||||||||
| Interest expense | (54 | ) | (118 | ) | (231 | ) | (335 | ) | ||||||||
| Loss on interest rate derivative contract | (138 | ) | (304 | ) | (73 | ) | (364 | ) | ||||||||
| Other income | 6 | 33 | 44 | 63 | ||||||||||||
| Total other expense | (77 | ) | (323 | ) | (44 | ) | (492 | ) | ||||||||
| Income before income taxes | 9,352 | 2,551 | 14,908 |
Source: athenahealth
