athenahealth, Inc. Reports Second Quarter Fiscal Year 2012 Results

33% Revenue Growth Over Second Quarter of 2011 GAAP Net Income of $4.2 Million, or $0.11 Per Diluted Share Non-GAAP Adjusted Net Income of $9.0 Million, or $0.24 Per Diluted Share

WATERTOWN, Mass. (July 19, 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 second quarter of fiscal year 2012. The Company will conduct a conference call tomorrow, Friday, July 20, 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 June 30, 2012, was $103.5 million, compared to $77.9 million in the same period last year, an increase of 33%.

“I am very pleased with our execution so far this year and our continued focus on becoming medical care givers most trusted service,” said Jonathan Bush, the Company’s Chairman and Chief Executive Officer. “Be it confirmation of the Affordable Care Act or the results of our third annual Physician Sentiment Index, all evidence suggests that cloud-based services are on the right side of history. The athenahealth team understands the growing cost of care coordination placed on medical care givers today and remains focused on improving that experience in a sustainable way. During the past quarter, we brought athenaNet mobile with the launch of our iPhone application, expanded our service offerings to include credentialing and eligibility denials, and expanded our client training and support through the athenaCareSM service. By listening to our clients and understanding their concerns, athenahealth will remain better equipped to help our clients manage change while improving their financial and operational performance regardless of how their services are paid for.”

For the three months ended June 30, 2012, Non-GAAP Adjusted Gross Margin was 62.6%, down from 64.4% in the same period last year, as the Company continues to invest in its newest service offering, athenaCoordinator®. Non-GAAP Adjusted EBITDA increased 18%, to $20.6 million, or 19.9% of total revenue, from Non-GAAP Adjusted EBITDA of $17.5 million, or 22.5% of total revenue, in the same period last year. For the three months ended June 30, 2012, GAAP net income was $4.2 million, or $0.11 per diluted share, compared to $5.2 million, or $0.14 per diluted share, in the same period last year. Non-GAAP Adjusted Net Income was $9.0 million, or $0.24 per diluted share, up from $7.9 million, or $0.22 per diluted share, in the same period last year. See “Use of Non-GAAP Financial Measures” below.

“We continued to enjoy strong revenue growth and increased adoption of our service offerings during Q2 2012, rounding out an impressive first half of 2012,” said Tim Adams, the Company’s Chief Financial Officer. “Our quarterly revenue surpassed the $100 million mark for the first time in Company history, and we continued to exceed 30% top-line growth. Given this strong performance year to date, we are pleased to update our guidance for fiscal year 2012, increasing our expectations for both revenue growth and profitability. Thus, for full year 2012, we currently expect to achieve revenue growth of 31% to 33% and Non-GAAP Adjusted Net Income per Diluted Share of $0.90 to $1.00.”

athenahealth’s revised fiscal 2012 guidance is presented below:

For the Fiscal Year Ending December 31, 2012 Forward-Looking Guidance
GAAP Total Revenue $425-$430 million
Non-GAAP Adjusted Gross Margin 62.0%-63.0%
Non-GAAP Adjusted Operating Income $59-$65 million
Non-GAAP Adjusted Net Income Per Diluted Share $0.90-$1.00

In addition, our anticipated fiscal year 2012 GAAP effective tax rate is approximately 45%-46%. Please see athenahealth’s Q2 2012 Prepared Remarks, published in conjunction with this press release for more information on the Company’s revised fiscal year 2012 guidance.

Key metrics and milestones in the second quarter of fiscal year 2012 included the following:

  • $2.3 billion in collections posted to client accounts in the second quarter of 2012, compared to $1.8 billion in the same quarter of 2011
  • 38.2 average client Days in Accounts Receivable (DAR) in the second quarter of 2012, compared to 39.1 average client DAR in the same quarter of 2011
  • 35,409 active medical providers using athenaCollector
  • 8,558 active medical providers using athenaClinicals
  • 8,642 active medical providers using athenaCommunicator

As of June 30, 2012, the Company had cash, cash equivalents, and available-for-sale investments of $156.9 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

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. 32573331, or visit the Investors section of the Company’s web site at 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. 32573331. 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 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 benefits of the Company’s service offerings, statements regarding 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 to Comparable GAAP 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 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, please 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 and on the SEC’s website at

athenahealth, Inc. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited, in thousands, except per share amounts)
June December
30, 2012 31, 2011
Current assets:
Cash and cash equivalents $ 92,330 $ 57,781
Short-term investments 63,029 62,084
Current portion of restricted cash 3,344
Accounts receivable – net 50,885 49,038
Deferred tax assets 5,971 5,245
Prepaid expenses and other current assets 13,975 8,988
Total current assets 229,534 183,136
Property and equipment – net 52,503 52,275
Restricted cash, net of current portion 856 5,007
Software development costs – net 9,372 6,974
Purchased intangibles – net 18,546 20,052
Goodwill 47,307 47,307
Deferred tax assets 12,229 12,532
Investments and other assets 4,323 21,503
Total assets $ 374,670 $ 348,786
Liabilities & Stockholders’ Equity
Current liabilities:
Accounts payable $ 2,755 $ 6,318
Accrued compensation 27,493 28,176
Accrued expenses 17,200 17,774
Current portion of deferred revenue 6,301 6,345
Current portion of deferred rent 996 960
Total current liabilities 54,745 59,573
Deferred rent, net of current portion 2,458 2,932
Deferred revenue, net of current portion 45,433 44,281
Other long-term liabilities 3,109 5,529
Total liabilities 105,745 112,315
Stockholders’ equity:
Preferred stock, $0.01 par value: 5,000 shares authorized; no shares issued
and outstanding at June 30, 2012 and December 31, 2011, respectively
Common stock, $0.01 par value: 125,000 shares authorized; 37,240 shares
issued, and 35,962 shares outstanding at June 30, 2012; 36,678 shares
issued and 35,400 shares outstanding at December 31, 2011. 372 367
Additional paid-in capital 272,981 247,131
Treasury stock, at cost, 1,278 shares (1,200 ) (1,200 )
Accumulated other comprehensive loss (84 ) (101 )
Accumulated retained deficit (3,144 ) (9,726 )
Total stockholders’ equity 268,925 236,471
Total liabilities and stockholders’ equity $ 374,670 $ 348,786
athenahealth, Inc. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited, in thousands, except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
2012 2011 2012 2011
Business services $ 100,110 $ 75,349 $ 193,659 $ 142,835
Implementation and other 3,405 2,536 6,422 4,980
Total revenue 103,515 77,885 200,081 147,815
Direct operating 41,014 29,020 79,812 56,290
Selling and marketing 27,389 18,815 51,117 35,756
Research and development 8,615 5,166 15,783 10,245
General and administrative 13,961 11,718 30,160 23,437
Depreciation and amortization 5,795 3,737 11,281 7,135
Total expense 96,774 68,456 188,153 132,863
Operating income 6,741 9,429 11,928 14,952
Other income (expense) 12 (77 ) 146 (44 )
Income before income taxes 6,753 9,352 12,074 14,908
Income tax provision (2,599 ) (4,166 ) (5,492 ) (6,471 )
Net income $ 4,154 $ 5,186 $ 6,582 $ 8,437

Source: athenahealth