athenahealth, Inc. Reports Fourth Quarter and Full Year 2012 Results

athenahealth, Inc. Reports Fourth Quarter and Full Year 2012 Results

Q4 2012 Financial Results

• 26% Revenue Growth Over Fourth Quarter of 2011

• GAAP Net Income of $5.9 Million, or $0.16 Per Diluted Share

• Non-GAAP Adjusted Net Income of $10.8 Million, or $0.29 Per Diluted Share

Full Year 2012 Financial Results

• 30% Revenue Growth Over Full Year 2011

• GAAP Net Income of $18.7 Million, or $0.50 Per Diluted Share

• Non-GAAP Adjusted Net Income of $37.2 Million, or $1.00 Per Diluted Share

WATERTOWN, Mass.--(BUSINESS WIRE)-- athenahealth, Inc. (NAS: ATHN) (the "Company," "we," or "athenahealth"), a leading provider of cloud-based electronic health record (EHR), practice management, and care coordination services to medical groups and health systems, today announced financial and operational results for the fourth quarter and full year 2012. The Company will conduct a conference call tomorrow, Friday, February 8, 2013, 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, 2012, was $116.3 million, compared to $92.5 million in the same period last year, an increase of 26%. Full year 2012 revenue was $422.3 million, compared to full year 2011 revenue of $324.1 million, an increase of 30%.

"2012 was a pivotal year for athenahealth. We delivered strong top and bottom line performance and made marked progress on our mission to be medical care givers' most trusted service," said Jonathan Bush, the Company's Chairman and Chief Executive Officer. "While information liquidity in health care is mostly an abstract concept, our effort to build a sustainable, market-based national health information backbone is slowly gaining traction. Our information services cover the life cycle of a claim, the chart, the patient relationship and the hospital admission, but they are still small. We have the right model and together with our nearly 40,000 forward-thinking providers who are tapped into our cloud-based network, we are slowly connecting the synapses of health care."

For the three months ended December 31, 2012, Non-GAAP Adjusted Gross Margin was 63.4%, down from 64.2% in the same period last year, as the Company continues to invest in its newest service offering, athenaCoordinator^®. Non-GAAP Adjusted EBITDA increased 31%, to $27.1 million, or 23.3% of total revenue, from Non-GAAP Adjusted EBITDA of $20.7 million, or 22.4% of total revenue, in the same period last year. For the three months ended December 31, 2012, GAAP net income was $5.9 million, or $0.16 per diluted share, compared to $5.3 million, or $0.15 per diluted share, in the same period last year. Non-GAAP Adjusted Net Income was $10.8 million, or $0.29 per diluted share, up from $9.3 million, or $0.26 per diluted share, in the same period last year. See "Use of Non-GAAP Financial Measures" below.

"The athenahealth team delivered another great year. We achieved our revenue growth goal of 30% for the 13th year in a row and continued our efforts to improve operational efficiencies across each of our service offerings," said Tim Adams, the Company's Chief Financial Officer. "Our investments in growth and innovation are a sign of our commitment to our 30% growth target and to our vision of becoming an information backbone that helps health care work as it should."

For the year ended December 31, 2012, Non-GAAP Adjusted Gross Margin was 62.6%, down from 63.8% for full year 2011. Non-GAAP Adjusted EBITDA grew to $90.9 million, or 21.5% of total revenue from Non-GAAP Adjusted EBITDA for 2011 of $70.6 million, or 21.8% of total revenue. For full year 2012, GAAP net income was $18.7 million, or $0.50 per diluted share. Non-GAAP Adjusted Net Income for the year was $37.2 million, or $1.00 per diluted share. See "Use of Non-GAAP Financial Measures" below.

Key metrics and milestones in the fourth quarter and full year 2012 included the following:

• $2.5 billion in collections posted to client accounts in the fourth quarter of 2012, compared to $2.0 billion in the same quarter of 2011

• $9.2 billion in collections posted to client accounts in all of 2012, compared to $7.3 billion in all of 2011

• 36.4 average client Days in Accounts Receivable (DAR) in the fourth quarter of 2012, compared to 38.9 average client DAR in the same quarter of 2011

• 39,752 active medical providers using athenaCollector^® at December 31, 2012, 28,011 of whom were physicians, compared to 32,740 providers and 23,210 physicians at December 31, 2011

• 10,926 active medical providers using athenaClinicals^® at December 31, 2012, 7,949 of whom were physicians, compared to 6,525 providers and 4,662 physicians at December 31, 2011

• 14,065 active medical providers using athenaCommunicator^® at December 31, 2012, 10,153 of whom were physicians, compared to 5,830 providers and 4,098 physicians at December 31, 2011

As of December 31, 2012, the Company had cash, cash equivalents, and available-for-sale investments of $193.1 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 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 847-413-3238for international calls) using conference code No. 34078406, 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. 34078406. A webcast replay will also be archived on the Company's website.

About athenahealth

athenahealth is a leading provider of cloud-based Best in KLAS electronic health record (EHR), practice management, 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, 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 the Company's service offerings; statements regarding changes in the health care industry, including an increased emphasis on coordinated care and health information exchange, and the Company's positioning in regard to those changes; 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 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.