athenahealth, Inc. Updates Fiscal Year 2012 Guidance and Initiates Guidance for Fiscal Year 2013

athenahealth, Inc. Updates Fiscal Year 2012 Guidance and Initiates Guidance for Fiscal Year 2013

WATERTOWN, Mass.--(BUSINESS WIRE)-- athenahealth, Inc. (NAS: ATHN) (the "Company"), a leading provider of cloud-based electronic health record (EHR), practice management, and care coordination services to medical groups and health systems, today updated financial guidance for fiscal year 2012 and announced financial guidance for fiscal year 2013. The Company will host its Fifth Annual Investor Summit tomorrow, Thursday, December 6, 2012, starting at 8:30 a.m. Eastern Time to provide an update on the Company's business and share management's outlook for future financial and operational performance.

The Company's fiscal year 2012 and 2013 guidance is presented below:

For the Fiscal Year Ending:

December 31, 2012

December 31, 2013

GAAP Total Revenue

$420 - $425 million

$525 - $550 million

Non-GAAP Adjusted Gross Margin

62% - 63%

62% - 63%

Non-GAAP Adjusted Operating Income

$61 - $65 million

$75 - $82 million

Non-GAAP Adjusted Net Income per Diluted Share

$0.95 - $1.00

$1.15 - $1.25

GAAP Effective Tax Rate

45% - 46%

43% - 44%


"We believe that athenahealth's business model of innovative, integrated cloud-based services is the platform of the future," said Tim Adams, the Company's Chief Financial Officer. "athenahealth is uniquely positioned to help medical care givers thrive in a rapidly changing and complex environment. We are excited about our growth opportunities and are pleased to present our ambitious expectations for fiscal year 2013. We continue to build plans that give us the opportunity to achieve our 30% annual top-line growth objective. Accordingly, we will continue to invest wisely towards achieving our growth objectives and look to deliver higher profitability and shareholder value over the long term."

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. 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.

Webcast Information

A live webcast of athenahealth's Fifth Annual Investor Summit can be accessed via the Investors section of athenahealth's website at http://www.athenahealth.com. A replay of this webcast will be available on the website within 24 hours following the event and will remain available through March 6, 2013.

About athenahealth

athenahealth, Inc. is a leading provider of cloud-based Best in KLAS electronic health record (EHR), practice management, and care coordination services to medical groups and health systems. athenahealth's mission is to be the most trusted service to medical care givers, helping them do well by doing the right thing. 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 and operating expenditures, expected growth, and business outlook; statements regarding the benefits of and potential market for the Company's service offerings; statements about the Company's investments in growth; and statements found under the Company's "Reconciliation of Non-GAAP Financial Measures to Comparable GAAP Measures For Fiscal Year 2012 Guidance" and "Reconciliation of Non-GAAP Financial Measures to Comparable GAAP Measures For Fiscal Year 2013 Guidance" sections 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 Healthcare Data Services and 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 http://www.athenahealth.com and on the SEC's website at http://www.sec.gov.

athenahealth, Inc.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

TO COMPARABLE GAAP MEASURES FOR FISCAL YEAR 2012 GUIDANCE

(Unaudited, in millions, except per share amounts)

Please note that the figures presented below may not sum exactly due to rounding.

Non-GAAP Adjusted Gross Margin Guidance

Set forth below is a presentation of the Company's "Non-GAAP Adjusted Gross Profit" and "Non-GAAP Adjusted Gross Margin" guidance for fiscal year 2012, which represents Non-GAAP Adjusted Gross Profit as a percentage of total revenue.

LOW

HIGH

Fiscal Year Ending December 31, 2012

Total revenue

$

420.0

$

425.0

Direct operating expense

168.2

165.9

Total revenue less direct operating expense

$

251.8

$

259.1

Add: Stock-based compensation expense

5.6

5.6

allocated to direct operating expense

Add: Amortization of purchased intangibles

3.0

3.0

Non-GAAP Adjusted Gross Profit

$

260.4

$

267.7

Non-GAAP Adjusted Gross Margin

62.0

%

63.0

%

Non-GAAP Adjusted Operating Income Guidance

Set forth below is a reconciliation of the Company's "Non-GAAP Adjusted Operating Income" and "Non-GAAP Adjusted Operating Income Margin" guidance for fiscal year 2012, which represents Non-GAAP Adjusted Operating Income as a percentage of total revenue.

LOW

HIGH

Fiscal Year Ending December 31, 2012

Total revenue

$

420.0

$

425.0

GAAP net income

16.4

18.5

Add: Provision for income taxes

13.5

15.5

Add (less): Total other (income) expense

(0.3

)

(0.3

)

Add: Stock-based compensation expense

28.4

28.4

Add: Amortization of purchased intangibles

3.0

3.0

Non-GAAP Adjusted Operating Income

$

61.0

$

65.0

Non-GAAP Adjusted Operating Income Margin

14.5

%

15.3

%

Non-GAAP Adjusted Net Income Guidance

Set forth below is a reconciliation of the Company's "Non-GAAP Adjusted Net Income" and "Non-GAAP Adjusted Net Income per Diluted Share" guidance for fiscal year 2012.

LOW

HIGH

Fiscal Year Ending December 31, 2012

GAAP net income

$

16.4

$

18.5

Add: Stock-based compensation expense

28.4

28.4

Add: Amortization of purchased intangibles

3.0

3.0

Sub-total of tax deductible items

$

31.4

$

31.4

(Less): Tax impact of tax deductible items (1)

(12.5

)

(12.5

)

Non-GAAP Adjusted Net Income

$

35.2

$

37.3

Weighted average shares - diluted

37.1

37.1

Non-GAAP Adjusted Net Income per Diluted Share

$

0.95

$

1.00

(1) Tax impact calculated using a statutory tax rate of 40%

LOW

HIGH

Fiscal Year Ending December 31, 2012

GAAP net income per share - diluted

$

0.44

$

0.50

Add: Stock-based compensation expense

0.76

0.76

Add: Amortization of purchased intangibles

0.08

0.08

Sub-total of tax deductible items

$

0.85

$

0.85

(Less): Tax impact of tax deductible items (1)

(0.34

)

(0.34

)

Non-GAAP Adjusted Net Income per Diluted Share

$

0.95

$

1.00

Weighted average shares - diluted

37.1

37.1

(1) Tax impact calculated using a statutory tax rate of 40%

athenahealth, Inc.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

TO COMPARABLE GAAP MEASURES FOR FISCAL YEAR 2013 GUIDANCE

(Unaudited, in millions, except per share amounts)

Please note that the figures presented below may not sum exactly due to rounding.

Non-GAAP Adjusted Gross Margin Guidance

Set forth below is a presentation of the Company's "Non-GAAP Adjusted Gross Profit" and "Non-GAAP Adjusted Gross Margin" guidance for fiscal year 2013, which represents Non-GAAP Adjusted Gross Profit as a percentage of total revenue.

LOW

HIGH

Fiscal Year Ending December 31, 2013

Total revenue

$

525.0

$

550.0

Direct operating expense

210.5

214.5

Total revenue less direct operating expense

$

314.5

$

335.5

Add: Stock-based compensation expense

7.1

7.1

allocated to direct operating expense

Add: Amortization of purchased intangibles

3.9

3.9

Non-GAAP Adjusted Gross Profit

$

325.5

$

346.5

Non-GAAP Adjusted Gross Margin

62.0

%

63.0

%

Non-GAAP Adjusted Operating Income Guidance

Set forth below is a reconciliation of the Company's "Non-GAAP Adjusted Operating Income" and "Non-GAAP Adjusted Operating Income Margin" guidance for fiscal year 2013, which represents Non-GAAP Adjusted Operating Income as a percentage of total revenue.

LOW

HIGH

Fiscal Year Ending December 31, 2013

Total revenue

$

525.0

$

550.0

GAAP net income

19.9

23.6

Add: Provision for income taxes

15.6

18.9

Add (less): Total other (income) expense

(0.2

)

(0.2

)

Add: Stock-based compensation expense

35.9

35.9

Add: Amortization of purchased intangibles

3.9

3.9

Non-GAAP Adjusted Operating Income

$

75.0

$

82.0

Non-GAAP Adjusted Operating Income Margin

14.3

%

14.9

%

Non-GAAP Adjusted Net Income Guidance

Set forth below is a reconciliation of the Company's "Non-GAAP Adjusted Net Income" and "Non-GAAP Adjusted Net Income per Diluted Share" guidance for fiscal year 2013.

LOW

HIGH

Fiscal Year Ending December 31, 2013

GAAP net income

$

19.9

$

23.6

Add: Stock-based compensation expense

35.9

35.9

Add: Amortization of purchased intangibles

3.9

3.9

Sub-total of tax deductible items

$

39.7

$

39.7

(Less): Tax impact of tax deductible items (1)

(15.9

)

(15.9

)

Non-GAAP Adjusted Net Income

$

43.7

$

47.5

Weighted average shares - diluted

37.9

37.9

Non-GAAP Adjusted Net Income per Diluted Share

$

1.15

$

1.25

(1) Tax impact calculated using a statutory tax rate of 40%

LOW

HIGH

Fiscal Year Ending December 31, 2013

GAAP net income per share - diluted

$

0.52

$

0.62

Add: Stock-based compensation expense

0.95

0.95

Add: Amortization of purchased intangibles

0.10

0.10