Athenahealth (ATHN) Surges 20% Despite Missing Top and Bottom Line Estimates

Shares of Athenahealth (ATHN) surged last week, although the company reported earnings and revenue which both missed analyst estimates. For its third quarter, the company earned $0.03 per share, or $1.2 million, down sharply from the $0.17 per share, or $6.2 million, it reported in the prior year quarter. Excluding one-time items, especially its acquisition of medical reference app Epocrates, earnings came in at $0.29 per share, falling short of the analyst estimate of $0.31 per share.

Revenue rose 43% to $151.5 million, again mainly due to the Epocrates acquisition. However, it also came up short of the consensus estimate of $154.8 million. Daily Chart
Athenahealth provides doctors with electronic health records (EHRs), medical billing software, and other healthcare business services. It ties these services together across the cloud to simplify data organization tasks for physicians. There are currently two major growth catalysts fueling this stockâ s growth. The first major deal is its acquisition of Epocrates in January. Epocrates is one of two extremely popular mobile medical reference apps, the other one being WebMDâ s WBMD MedScape app. These mobile apps are widely used my medical students, physicians, and even patients to quickly look up drugs, their side effects, and potentially dangerous combinations. The second catalyst is a deal with Clinical Holdings Corporation, the physician services segment of Ascension Health Alliance, that it signed in July. The deal adds an additional 2,700 doctors to Athenahealthâ s system, which could generate an additional $42.5 million in annual revenue for the company. The deal increases Athenahealthâ s size by 10%. There is a growing demand for mobile EHR and medical reference apps in hospitals. According to a survey conducted earlier this year by Manhattan Research, 72% of physicians now use tablets, with half of them preferring Appleâ s (AAPL) iPad. Based on that shift, more companies are now producing â

Published on Oct 22, 2013
By Leo Sun
Leo Sun
Leo Sun is a freelance finance writer and position trader. He focuses on a combination of value and momentum investing, with a strong interest in the trading philosophies of Warren Buffett and Peter Lynch. Leo also has experience writing articles to help small business owners acquire loans and manage their finances. He regularly contributes to the Stock of the Day analysis.

Copyrighted 2016. Content published with author's permission.

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