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athenahealth (ATHN) Q3 Earnings Beat, Bookings Down Y/Y
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athenahealth Inc. reported adjusted earnings of $1.08 per share in the third quarter of 2018, which beat the Zacks Consensus Estimate by 10.2%. Adjusted earnings in the year-ago quarter were 56 cents.
The Watertown, MA-based maker of billing and medical practice management software posted revenues of $329.5 million, missing the Zacks Consensus Estimate of $337 million. Revenues increased 8.2% year over year.
For investors’ notice, the company adopted a new revenue recognition standard on Jan 1, 2018. Total revenues prior to the impact of the new revenue recognition standard were $331.4 million, up 8.8% year over year.
Over the past year, the Zacks Rank #3 (Hold) stock has rallied 5.1% against the industry’s 4.9% decline. The current level is however lower than the S&P 500 index’s 5.4% rise.
Q3 Details
Segment Details
Excluding the impact of the new revenue recognition standard, revenues at the Business and Services unit were $322.7 million, up 9.1% from the year-ago quarter.
However, revenues at the Implementation and other segment were $8.7 million, down slightly from the year-ago $8.8 million.
athenahealth, Inc. Price, Consensus and EPS Surprise
Per management, the company expanded its network across ambulatory and hospital platforms.
The company’s network has 120,194 Collector Providers, 67,667 Clinical Providers and 78.290 Communicator Providers, up 13%, 17% and 16%, respectively, on a year-over-year basis.
In the athenaOne (Hospital) platform, number of discharged beds surged a whopping 101% year over year.
However, in the Population Health platform, number of covered lives dropped 5% year over year.
Bookings
In the reported quarter, athenahealth’s total bookings were $46.6 million, down a significant 29.1%. Per management, third-quarter bookings included a large enterprise client chargeback originally signed in 2016.
Margin Analysis
Considering the new revenue recognition standard, gross profit in the quarter was $175.1 million, up 9% year over year. As a percentage of revenues, reported gross margin in the third quarter was 53.1%, up 40 basis points (bps). Per management, adjusted gross margin in the reported quarter was 54.9%, up 90 bps.
Considering the new revenue recognition standard, athenahealth’s adjusted operating income increased 105.4% year over year to $38.2 million in the third quarter. Adjusted operating margin was 11.6%, up considerably from 5.1% of the prior-year quarter.
Per management, athenahealth’s adjusted operating income in the quarter was $61 million or 18.5% of revenues.
Guidance Intact
Under the new revenue recognition standard, athenahealth expects 2018 revenues in the range of $1.34-$1.37 billion. Meanwhile, the Zacks Consensus Estimate for revenues is pegged at $1.35 billion, within the guided range.
The company expects adjusted operating income in the range of $244-$270 million for 2018.
Adjusted operating margin is expected in the band of 18.3-19.8% of net revenues for 2018.
In Conclusion
athenahealth exited the third quarter of 2018 on a solid note. We believe unique applications like athenaClinicals, athenaClinicals-Streamlined, athenaInsight, athenaCommunicator and athenaOne favor the company. Strength in core ambulatory services and client base have been key catalysts for athenahealth. Business and Services revenues have been consistently growing.
On the flip side, lackluster performance by the Implementation and other segment has been a concern. Further, athenahealth failed to meet its bookings goals in the quarter. Population Health performance also saw a soft third quarter. Among other concerns, athenahealth’s EHR solution faces stiff competition from Allscripts Healthcare Solutions and more.
Intuitive Surgical reported third-quarter 2018 adjusted earnings per share of $2.83, which exceeded the Zacks Consensus Estimate of $2.65. Revenues came in at $920.9 million, surpassing the consensus estimate of $918.6 million.
Stryker posted third-quarter 2018 adjusted earnings per share of $1.69, which beat the Zacks Consensus Estimate by a penny. Operating margin was 17.8%, up 30 bps.
Merit Medical reported third-quarter 2018 adjusted earnings per share of 47 cents, which trumped the Zacks Consensus Estimate of 42 cents. Revenues of $221.6 million edged past the consensus estimate of $218 million.
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Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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athenahealth (ATHN) Q3 Earnings Beat, Bookings Down Y/Y
athenahealth Inc. reported adjusted earnings of $1.08 per share in the third quarter of 2018, which beat the Zacks Consensus Estimate by 10.2%. Adjusted earnings in the year-ago quarter were 56 cents.
The Watertown, MA-based maker of billing and medical practice management software posted revenues of $329.5 million, missing the Zacks Consensus Estimate of $337 million. Revenues increased 8.2% year over year.
For investors’ notice, the company adopted a new revenue recognition standard on Jan 1, 2018. Total revenues prior to the impact of the new revenue recognition standard were $331.4 million, up 8.8% year over year.
Over the past year, the Zacks Rank #3 (Hold) stock has rallied 5.1% against the industry’s 4.9% decline. The current level is however lower than the S&P 500 index’s 5.4% rise.
Q3 Details
Segment Details
Excluding the impact of the new revenue recognition standard, revenues at the Business and Services unit were $322.7 million, up 9.1% from the year-ago quarter.
However, revenues at the Implementation and other segment were $8.7 million, down slightly from the year-ago $8.8 million.
athenahealth, Inc. Price, Consensus and EPS Surprise
athenahealth, Inc. Price, Consensus and EPS Surprise | athenahealth, Inc. Quote
Network Expansion
Per management, the company expanded its network across ambulatory and hospital platforms.
The company’s network has 120,194 Collector Providers, 67,667 Clinical Providers and 78.290 Communicator Providers, up 13%, 17% and 16%, respectively, on a year-over-year basis.
In the athenaOne (Hospital) platform, number of discharged beds surged a whopping 101% year over year.
However, in the Population Health platform, number of covered lives dropped 5% year over year.
Bookings
In the reported quarter, athenahealth’s total bookings were $46.6 million, down a significant 29.1%. Per management, third-quarter bookings included a large enterprise client chargeback originally signed in 2016.
Margin Analysis
Considering the new revenue recognition standard, gross profit in the quarter was $175.1 million, up 9% year over year. As a percentage of revenues, reported gross margin in the third quarter was 53.1%, up 40 basis points (bps). Per management, adjusted gross margin in the reported quarter was 54.9%, up 90 bps.
Considering the new revenue recognition standard, athenahealth’s adjusted operating income increased 105.4% year over year to $38.2 million in the third quarter. Adjusted operating margin was 11.6%, up considerably from 5.1% of the prior-year quarter.
Per management, athenahealth’s adjusted operating income in the quarter was $61 million or 18.5% of revenues.
Guidance Intact
Under the new revenue recognition standard, athenahealth expects 2018 revenues in the range of $1.34-$1.37 billion. Meanwhile, the Zacks Consensus Estimate for revenues is pegged at $1.35 billion, within the guided range.
The company expects adjusted operating income in the range of $244-$270 million for 2018.
Adjusted operating margin is expected in the band of 18.3-19.8% of net revenues for 2018.
In Conclusion
athenahealth exited the third quarter of 2018 on a solid note. We believe unique applications like athenaClinicals, athenaClinicals-Streamlined, athenaInsight, athenaCommunicator and athenaOne favor the company. Strength in core ambulatory services and client base have been key catalysts for athenahealth. Business and Services revenues have been consistently growing.
On the flip side, lackluster performance by the Implementation and other segment has been a concern. Further, athenahealth failed to meet its bookings goals in the quarter. Population Health performance also saw a soft third quarter. Among other concerns, athenahealth’s EHR solution faces stiff competition from Allscripts Healthcare Solutions and more.
Earnings of MedTech Majors at a Glance
A few better-ranked stocks in the broader medical space that reported impressive earnings this season are Intuitive Surgical (ISRG - Free Report) , Stryker Corporation (SYK - Free Report) and Merit Medical Systems, Inc. (MMSI - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Intuitive Surgical reported third-quarter 2018 adjusted earnings per share of $2.83, which exceeded the Zacks Consensus Estimate of $2.65. Revenues came in at $920.9 million, surpassing the consensus estimate of $918.6 million.
Stryker posted third-quarter 2018 adjusted earnings per share of $1.69, which beat the Zacks Consensus Estimate by a penny. Operating margin was 17.8%, up 30 bps.
Merit Medical reported third-quarter 2018 adjusted earnings per share of 47 cents, which trumped the Zacks Consensus Estimate of 42 cents. Revenues of $221.6 million edged past the consensus estimate of $218 million.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>