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athenahealth Hits 52-Week Low After Trump Election

Posted on Monday, Nov 14th 2016


The Affordable Care Act (ACA) or Obamacare was a big push for healthcare IT companies like athenahealth (NASDAQ: ATHN). As these subsidies and regulatory pressures decline, athenahealth is shifting its focus to develop services that enhance end-customers’ productivity. 
athenahealth’s Financials

Third quarter revenue grew 17% to $276.7 million missing analyst estimates of $280.9 million. GAAP Net Income soared to $13.9 million, or $0.35 per diluted share from GAAP Net Income of $5.8 million, or $0.15 per diluted share a year ago. Non-GAAP Adjusted Net Income was $24.1 million, or $0.60 per diluted share exceeding analyst estimates of $0.47.

During the quarter, athenahealth added 3,829 physicians and 5,092 providers to athenaCollector, 2,090 physicians and 2,844 providers to athenaClinicals, and 3,416 physicians and 4,478 providers to athenaCommunicator. Its national network today connects over 85,000 providers, 83 million unique patient records, and 140,000 network endpoints. By segment, revenue from Business Services grew 18.7% to $267.12 million and Implementation and Other declined 13.8% to $9.55 million.

For the current full year, the company expects revenue to be near the mid-point of the $1,085 million to $1,115 million. Non-GAAP Adjusted Gross Margin is expected to be near the mid-point of the 63.5% to 64.5%. Non-GAAP Adjusted Operating Income is expected to be near the mid-point of the $120 million to $135 million. Non-GAAP Adjusted Net Income per Diluted Share is expected to be near the mid-point of the $1.65 to $1.85. Analysts expect earnings of $1.74 per share on revenue of $1.1 billion.

athenahealth’s Acquisitions

This year, athenahealth has made two acquisitions, both through its acceleration program called More Disruption Please. In April, athenahealth acquired appointment scheduling company Arsenal Health for an undisclosed sum. The deal will make Arsenal Health’s schedule optimization solution widely available as a native part of athenaNet. It is also expected to accelerate athenahealth’s capabilities in machine learning and predictive analytics.

In August, athenahealth announced the acquisition of care coordination platform Filament Labs, which does business as Patient IO. The terms of the deal were not disclosed. Delivered as a mobile and web-based application, Patient IO turns care plans into actionable daily tasks for patients. It will form the basis for athenahealth’s patient-facing mobile application athenaWell.
athenahealth is growing in other areas. It has established a partnership with Intacct, a cloud-based enterprise resource planner. As a part of the agreement, athenahealth will package Intacct’s products with its revenue cycle management suite. By combining athenahealth’s revenue cycle management suite with Intacct’s enterprise resource planner, providers should be able to streamline their efforts in reporting on quality metrics, transitioning to value-based reimbursement models, and maintain hospital revenue cycle.

Following its earnings announcement in October, JP Morgan and Morgan Stanley downgraded the stock. Analysts expect moderating revenues mid to near term as the updated offerings will take time to gain traction.

athenahealth’s stock is trading at $102.81 with a market capitalization of $4.04 billion. It touched a 52-week high of $170.42 in November last year. It hit a 52-week low of $97.7 following its weak sales growth and the victory of Donald Trump in the US elections.

Trump had campaigned for a repeal of Obamacare. However, after the election he has indicated that he may retain two popular provisions of the Act: allowing children to stay on parent’s plan till age 26 and preventing insurance companies from denying coverage due to pre-existing conditions. The stock has now recovered somewhat.

Photo Credit: Images Money/

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