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.

athenahealth, Inc.

CONSOLIDATED BALANCE SHEETS

(Unaudited, in thousands, except per share amounts)

December 31,
2012

December 31,
2011

Assets

Current assets:

Cash and cash equivalents

$

154,988

$

57,781

Short-term investments

38,092

62,084

Current portion of restricted cash

1,357

Accounts receivable - net

61,916

49,038

Deferred tax assets

6,907

5,245

Prepaid expenses and other current assets

10,924

8,988

Total current assets

274,184

183,136

Property and equipment - net

54,035

52,275

Restricted cash

5,007

Capitalized software costs - net

16,050

6,974

Purchased intangibles - net

21,561

20,052

Goodwill

48,090

47,307

Deferred tax assets

11,759

12,532

Investments and other assets

2,773

21,503

Total assets

$

428,452

$

348,786

Liabilities & Stockholders' Equity

Current liabilities:

Accounts payable

$

1,733

$

6,318

Accrued compensation

36,393

28,176

Accrued expenses

19,683

17,774

Current portion of deferred revenue

8,209

6,345

Current portion of deferred rent

799

960

Total current liabilities

66,817

59,573

Deferred rent, net of current portion

2,854

2,932

Deferred revenue, net of current portion

45,515

44,281

Other long-term liabilities

1,618

5,529

Total liabilities

116,804

112,315

Stockholders' equity:

Preferred stock, $0.01 par value: 5,000 shares authorized; no shares issued and outstanding at December 31, 2012, and December 31, 2011, respectively

Common stock, $0.01 par value: 125,000 shares authorized; 37,572 shares issued and 36,294 shares outstanding at December 31, 2012; 36,678 shares issued and 35,400 shares outstanding at December 31, 2011

376

367

Additional paid-in capital

303,547

247,131

Treasury stock, at cost, 1,278 shares

(1,200

)

(1,200

)

Accumulated other comprehensive loss

(81

)

(101

)

Retained earnings (accumulated deficit)

9,006

(9,726

)

Total stockholders' equity

311,648

236,471

Total liabilities and stockholders' equity

$

428,452

$

348,786

athenahealth, Inc.

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited, in thousands, except per share amounts)

Three Months Ended
December 31,

Twelve Months Ended
December 31,

2012

2011

2012

2011

Revenue:

Business services

$

112,581

$

89,293

$

408,496

$

312,768

Implementation and other

3,723

3,219

13,775

11,299

Total revenue

116,304

92,512

422,271

324,067

Expense:

Direct operating

45,208

34,810

166,886

122,795

Selling and marketing

27,580

23,235

104,300

79,775

Research and development

9,263

6,957

33,792

23,343

General and administrative

14,952

13,405

57,025

48,711

Depreciation and amortization

7,677

4,826

25,641

16,710

Total expense

104,680

83,233

387,644

291,334

Operating income

11,624

9,279

34,627

32,733

Other income (expense)

17

49

251

147

Income before income tax provision

11,641

9,328

34,878

32,880

Income tax provision

(5,701

)

(3,999

)

(16,146

)

(13,834

)

Net income

$

5,940

$

5,329

$

18,732

$

19,046

Net income per share - Basic

$

0.16

$

0.15

$

0.52

$

0.54

Net income per share - Diluted

$

0.16

$

0.15

$

0.50

$

0.53

Weighted average shares used in computing net income per share:

Basic

36,264

35,392

35,956

35,046

Diluted

37,420

36,492

37,133

36,050

athenahealth, Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in thousands)

Year Ended December 31,

2012

2011

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income

$

18,732

$

19,046

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

29,144

19,030

Amortization of premium on investments

1,270

1,579

Provision for uncollectible accounts

153

1,122

Excess tax benefit from stock-based awards

(14,179

)

(14,208

)

Deferred income tax

(890

)

(2,962

)

Change in fair value of contingent considerations

(5,118

)

40

Stock-based compensation expense

27,236

18,901

Other reconciling adjustments

(178

)

73

Changes in operating assets and liabilities:

Accounts receivable

(12,764

)

(12,130

)

Prepaid expenses and other current assets

12,096

11,787

Other long-term assets

111

489

Accounts payable

13

688

Accrued expenses

3,898

2,832

Accrued compensation

7,959

8,055

Deferred revenue

2,969

9,987

Deferred rent

(239

)

(3,565

)

Net cash provided by operating activities

70,213

60,764

CASH FLOWS FROM INVESTING ACTIVITIES:

Capitalized software development costs

(15,657

)

(7,779

)

Purchases of property and equipment

(23,904

)

(16,696

)

Proceeds from sales and disposals of property and equipment

172

Proceeds from sales and maturities of investments

160,340

168,083

Purchases of short-term and long-term investments

(118,919

)

(165,657

)

Payments on acquisition

(5,798

)

(34,882

)

Decrease in restricted cash

3,650

3,684

Net cash used in investing activities

(116

)

(53,247

)

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from issuance of common stock under stock plans and warrants

18,699

14,097

Taxes paid related to net share settlement of restricted stock awards

(4,248

)

Excess tax benefit from stock-based awards

14,179

14,208

Payment of contingent consideration accrued at acquisition date

(1,550

)

(3,355

)

Financing fee for line of credit

(741

)

Payment to terminate interest rate derivative contract

(563

)

Payments on long-term debt and capital lease obligations

(9,216

)

Net cash provided by financing activities