athenahealth, Inc. Reports Fourth Quarter and Full Year 2011 Results

33% Revenue Growth Over Fourth Quarter of 2010 GAAP Net Income of $5.3 Million, or $0.15 Per Diluted Share Non-GAAP Adjusted Net Income of $9.3 Million, or $0.26 Per Diluted Share

WATERTOWN, Mass. (February 15, 2012) – athenahealth, Inc. (NASDAQ: ATHN) (the “Company”), a leading provider of cloud-based practice management, electronic health record (EHR), and care coordination services to medical groups, today announced financial and operational results for the fourth quarter and full year 2011. The Company will conduct a conference call tomorrow, Thursday, February 16, 2012, 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 December 31, 2011, was $92.5 million, compared to $69.4 million in the same period last year, an increase of 33%. Full year 2011 revenue was $324.1 million, compared to full year 2010 revenue of $245.5 million, an increase of 32%.

“During 2011, athenahealth gained a new set of game stakes in our ongoing effort to build a national health information backbone. With the advent of athenaCoordinator and permission from the government to form a two-sided market for health information exchange, this new service platform positions athenahealth to create a healthy, sustainable market for health information exchange and the beginning of a market for improving the quality of care,” said Jonathan Bush, the Company’s Chairman, President, and Chief Executive Officer. “We have everything we need to incubate health care’s first high-security social network.”

Bush continued, “Meanwhile, our core business kept true to our mission of becoming medical care givers’ most trusted service. We turned in great numbers, increased our credibility with our clients through Meaningful Use and ANSI 5010 preparation, and were gratified with excellent client satisfaction and top KLAS rankings for our athenaCollector and athenaClinicals service offerings. We remain focused on differentiating our service offerings from the legacy software model and will be expanding the swath of work we do for our clients. We have a lot to execute on during 2012, and the athenahealth team is already marching forward.”

For the three months ended December 31, 2011, Non-GAAP Adjusted Gross Margin was 64.2%, down from 66.3% in the same period last year. Non-GAAP Adjusted EBITDA increased slightly to $20.7 million, or 22.4% of total revenue, from Non-GAAP Adjusted EBITDA of $20.2 million, or 29.1% of total revenue, in the same period last year. For the three months ended December 31, 2011, GAAP net income was $5.3 million, or $0.15 per diluted share, and Non-GAAP Adjusted Net Income was $9.3 million, or $0.26 per diluted share. See “Use of Non-GAAP Financial Measures” below.

“We delivered strong top line and bottom line results during 2011 and exceeded our internal goals across the board,” said Tim Adams, the Company’s Chief Financial Officer. “We achieved over 30% revenue growth for the 12th year in a row and increased our installed base across all of our existing service offerings. As we look forward to 2012, we will invest in both growth and innovation in order to continue our 30% growth trajectory and to capitalize on our unique market position.”

For the year ended December 31, 2011, Non-GAAP Adjusted Gross Margin was 63.8%, up from 62.4% for full year 2010. Non-GAAP Adjusted EBITDA grew to $70.6 million, or 21.8% of total revenue, from Non-GAAP Adjusted EBITDA for 2010 of $51.0 million, or 20.8% of total revenue. For full year 2011, GAAP net income was $19.0 million, or $0.53 per diluted share. Non-GAAP Adjusted Net Income for the year was $31.8 million, or $0.88 per diluted share. See “Use of Non-GAAP Financial Measures” below.

Key metrics and milestones in the fourth quarter and full year 2011 included the following:

• $2.0 billion in collections posted to client accounts in the fourth quarter of 2011, compared to $1.6 billion in the same quarter of 2010
• $7.3 billion in collections posted to client accounts in all of 2011, compared to $5.9 billion in all of 2010
• 38.9 average client Days in Accounts Receivable (DAR) in the fourth quarter of 2011, compared to 38.8 average client DAR in the same quarter of 2010
• 32,740 active medical providers using athenaCollector
• 6,525 active medical providers using athenaClinicals
• 5,830 active medical providers using athenaCommunicator

As of December 31, 2011, the Company had cash, cash equivalents, and available-for-sale investments of $138.5 million. The Company does not have any outstanding debt obligations.

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 800-446-2782 (or 847-413-3235 for international calls) using conference code No. 31557729, 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. 31557729. 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 care coordination services. For more information, please visit http://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, growth, and business outlook; statements regarding the benefits of the Company’s service offerings, the creation of a sustainable market for health information exchange and a social network for health care, the security of the Company’s services, the expansion of the types of tasks the Company performs for its clients, and the Company’s continued investment in growth and development; 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; the Company’s variable sales and implementation cycles, which may result in fluctuations in its quarterly results; risks associated with the acquisition and integration of companies and new technologies, including those related to the Company’s ability to successfully integrate the athenaCoordinator SM service and successfully scale the Proxsys services and technologies to achieve expected synergies; 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.

Source: athenahealth