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Athenahealth Growing Nicely

Posted on Thursday, Jun 11th 2009

Athenahealth (NASDAQ: ATHN), a provider of the health industry’s billing and practice management solutions for helping physicians collect their reimbursements, saw significant growth over the year, but failed to meet the market’s expectations of their Q1 results.

Q1 revenues of $42.1 million grew 41% over the year with EPS of $0.07 growing by 40% compared to $0.05 earned a year ago. The Street was looking for revenues of $43.2 million with EPS of $0.12.

In some key metrics, collections posted to client accounts were $1.1 billion, compared to $0.8 billion a year ago. Active physicians grew by 35% over the year to nearly 13,200. The active medical providers’ database grew 55% as it neared 19,740 providers. Of these, nearly 950 medical providers were using athenaClinicalsSM compared to 412 providers a year ago.

The management attributed their performance to the fact that SaaS in healthcare has become of “growing significance”. During the quarter, they strengthened their position as a leader in the revenue cycle management and extended their expertise in managing complexity and cash flow within the electronic health record (EHR) space.

The Obama government continued to boost the healthcare IT industry, taking it closer to the CEO Jonathan Bush’s dream of creating a “national utility that could be used to innovate healthcare“. The recently proposed $19 billion funding towards documentation of electronic medical records would help push smaller medical practice providers to purchase electronic health record products. Analysts expect additional IT spending within the healthcare industry to nearly double in the next few years. Athenahealth will surely be a beneficiary of this trend.

The stock is currently trading around $32 with a market capitalization of nearly $1.05 billion.

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