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athenahealth (ATHN) Beats on Earnings & Revenues in Q1

athenahealth Inc. ATHN reported earnings of 34 cents per share in the first quarter of 2016, which surged 41.7% on a year-over-year basis. Including stock-based compensation and amortization of capitalized stock-based compensation related to software development, earnings were 11 cents per share, much better than the Zacks Consensus Estimate of a breakeven.

The year-over-year growth can be primarily attributed to the strong revenue growth of 24.1%. Revenues totaled $256.1 million with Business Services improving 25.2% that fully offset a 0.6% decline in Implementation and Other revenues. Revenues were also better than the Zacks Consensus Estimate of $248 million.

Adjusted gross margin contracted 70 basis points (bps) on a year-over-year basis to 60.1%.

Total operating expenses, as a percentage of revenues, fell 580 bps to 99.9%. Selling & marketing (S&M), research & development (R&D) and general & administrative (G&A) expenses declined 340 bps, 170 bps and 160 bps, respectively. Depreciation & amortization (D&A) expenses increased 60 bps in the quarter.

Adjusted operating income (including stock-based compensation) was $7.8 million as agianst an operating loss of $0.6 million.

Physician Details

During the quarter, athenahealth added 1,816 physicians to athenaCollector, 1,302 physicians to athenaClinicals, and 1,643 physicians to athenaCommunicator. The figures reflect an increase from 1,639 physicians, 985 physicians and 1,415 physicians added in the year-ago quarter, respectively.


For full-year 2016, athenahealth maintains total revenue projection at the range of $1.085–$1.115 billion. Adjusted earnings are forecasted in the $1.65–$1.85 per share band.

Adjusted gross margin are projected in the range of 63.5%–64.5%, while operating income is estimated in the band of $120–$135 million.

Zacks Rank & Key Picks

Currently, athenahealth carries a Zacks Rank #3 (Hold).

Better-ranked stocks in the same space include Computer Programs & Systems CPSI, Medidata Solutions MDSO and Quality Systems QSII. All the three stocks carry a Zacks Rank #2 (Buy).

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ATHENAHEALTH IN (ATHN): Free Stock Analysis Report
QUALITY SYS (QSII): Free Stock Analysis Report
MEDIDATA SOLUTN (MDSO): Free Stock Analysis Report
COMPUTER PRGRMS (CPSI): Free Stock Analysis Report
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