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athenahealth (ATHN) Tops Earnings & Revenue Estimates in Q1
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Maintaining its streak of positive earnings surprises, athenahealth Inc. reported adjusted earnings of $1.25 per share in the first quarter of 2018, which beat the Zacks Consensus Estimate by 71.2%. Notably, adjusted earnings reported in the year-ago quarter were 32 cents.
The Watertown, MA-based maker of billing and medical practice management software posted revenues of $329.4 million, beating the Zacks Consensus Estimate of $319 million. Revenues increased 12% year over year.
athenahealth carries a Zacks Rank #3 (Hold).
Q1 Details
Segment Details
Revenues in the Business and Services were $313.3 million, up 12.6% from the year-ago quarter.
However, revenues in the Implementation and other segment were $7 million, down 1.4% year over year.
Network Expansion
Per management, the company expanded its network across ambulatory, hospital and population health platforms. Recently, athenahealth surpassed the 100-million patient threshold and currently serves more than 100,000 healthcare providers. During the first quarter of 2018, athenahealth added eight new hospitals. The company ended the quarter with 70 hospitals in its network.
The company’s network has 114,265 Collector Providers, 62,631 Clinical Providers and 71,972 Communicator Providers, up 15%, 20% and 20%, respectively, on a year-over-year basis.
In the athenaOne (Hospital) platform, number of discharged beds increased a whopping 194% year over year.
In the Population Health platform, number of covered lives increased 21% year over year.
Buoyed by stellar network expansion, the company is expected to fortify its foothold in the Revenue Cycle Management (RCM) space and drive revenues and earnings over the long haul.
A strong client base has been a major growth driver for the company. Adjusted gross margin in the first quarter was 53%, compared with 51.5% in the year-ago quarter.
athenahealth’s operating income increased 146% year over year to $54 million, driven by top-line growth and cost-saving initiatives. The company saw an operating margin of 16.9% of total revenues, up 920 basis points year over year.
Guidance
athenahealth reiterated its fiscal 2018 financial guidance.
The company expects revenues in the range of $1.31-$1.38 billion. Meanwhile, the Zacks Consensus Estimate for revenues is pegged at $1.35 billion.
The company expects adjusted operating income in the range of $210-$235 million. Adjusted operating margin is expected in the band of 16% to 17% of net revenues for 2018.
In Conclusion
athenahealth exited the first quarter of 2018 on a solid note, with earnings and revenues outpacing the Zacks Consensus Estimate. We believe that applications like athenaClinicals, athenaClinicals-Streamlined, athenaInsight, athenaCommunicator, athenaOne, athenaCollector for Hospital and Health Systems and the brand promise of ‘Unbreak Healthcare’ are fortifying its market position in terms of exclusiveness of services provided. A strong client base has been a key catalyst. Business and Services revenues witnessed year-over-year growth while the same in the Implementation and other segment declined.
Among major concerns, athenahealth’s EHR solution faces significant competition from the likes of Allscripts Healthcare Solutions and others. Further, athenahealth fell short of its bookings goals in the quarter under review. Deteriorated client retention rates also add to the company’s woes.
Q1 Earnings of MedTech Majors at a Glance
A few better-ranked stocks in the broader medical space, which reported solid earnings this season are, Baxter International Inc. (BAX - Free Report) , Chemed Corporation (CHE - Free Report) and Intuitive Surgical, Inc. (ISRG - Free Report) .
Intuitive Surgical reported adjusted earnings of $2.44 per share, which surpassed the Zacks Consensus Estimate by 22.6%. Revenues totaled $848 million, which beat the Zacks Consensus Estimate by 10.6%.
Baxter reported first-quarter 2018 adjusted earnings per share of 70 cents, which beat the Zacks Consensus Estimate by 12.9% and improved from the year-ago quarter’s figure of 58 cents.
Chemed posted adjusted earnings of $2.72 per share, outpacing the Zacks Consensus Estimate of $2.37. Revenues came in at $439.2 million, beating the Zacks Consensus Estimate of $420 million.
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athenahealth (ATHN) Tops Earnings & Revenue Estimates in Q1
Maintaining its streak of positive earnings surprises, athenahealth Inc. reported adjusted earnings of $1.25 per share in the first quarter of 2018, which beat the Zacks Consensus Estimate by 71.2%. Notably, adjusted earnings reported in the year-ago quarter were 32 cents.
The Watertown, MA-based maker of billing and medical practice management software posted revenues of $329.4 million, beating the Zacks Consensus Estimate of $319 million. Revenues increased 12% year over year.
athenahealth carries a Zacks Rank #3 (Hold).
Q1 Details
Segment Details
Revenues in the Business and Services were $313.3 million, up 12.6% from the year-ago quarter.
However, revenues in the Implementation and other segment were $7 million, down 1.4% year over year.
Network Expansion
Per management, the company expanded its network across ambulatory, hospital and population health platforms. Recently, athenahealth surpassed the 100-million patient threshold and currently serves more than 100,000 healthcare providers. During the first quarter of 2018, athenahealth added eight new hospitals. The company ended the quarter with 70 hospitals in its network.
The company’s network has 114,265 Collector Providers, 62,631 Clinical Providers and 71,972 Communicator Providers, up 15%, 20% and 20%, respectively, on a year-over-year basis.
In the athenaOne (Hospital) platform, number of discharged beds increased a whopping 194% year over year.
In the Population Health platform, number of covered lives increased 21% year over year.
Buoyed by stellar network expansion, the company is expected to fortify its foothold in the Revenue Cycle Management (RCM) space and drive revenues and earnings over the long haul.
athenahealth, Inc. Price and Consensus
athenahealth, Inc. Price and Consensus | athenahealth, Inc. Quote
Margin Analysis
A strong client base has been a major growth driver for the company. Adjusted gross margin in the first quarter was 53%, compared with 51.5% in the year-ago quarter.
athenahealth’s operating income increased 146% year over year to $54 million, driven by top-line growth and cost-saving initiatives. The company saw an operating margin of 16.9% of total revenues, up 920 basis points year over year.
Guidance
athenahealth reiterated its fiscal 2018 financial guidance.
The company expects revenues in the range of $1.31-$1.38 billion. Meanwhile, the Zacks Consensus Estimate for revenues is pegged at $1.35 billion.
The company expects adjusted operating income in the range of $210-$235 million. Adjusted operating margin is expected in the band of 16% to 17% of net revenues for 2018.
In Conclusion
athenahealth exited the first quarter of 2018 on a solid note, with earnings and revenues outpacing the Zacks Consensus Estimate. We believe that applications like athenaClinicals, athenaClinicals-Streamlined, athenaInsight, athenaCommunicator, athenaOne, athenaCollector for Hospital and Health Systems and the brand promise of ‘Unbreak Healthcare’ are fortifying its market position in terms of exclusiveness of services provided. A strong client base has been a key catalyst. Business and Services revenues witnessed year-over-year growth while the same in the Implementation and other segment declined.
Among major concerns, athenahealth’s EHR solution faces significant competition from the likes of Allscripts Healthcare Solutions and others. Further, athenahealth fell short of its bookings goals in the quarter under review. Deteriorated client retention rates also add to the company’s woes.
Q1 Earnings of MedTech Majors at a Glance
A few better-ranked stocks in the broader medical space, which reported solid earnings this season are, Baxter International Inc. (BAX - Free Report) , Chemed Corporation (CHE - Free Report) and Intuitive Surgical, Inc. (ISRG - Free Report) .
While Intuitive Surgical sports a Zacks Rank #1 (Strong Buy), Baxter and Chemed carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Intuitive Surgical reported adjusted earnings of $2.44 per share, which surpassed the Zacks Consensus Estimate by 22.6%. Revenues totaled $848 million, which beat the Zacks Consensus Estimate by 10.6%.
Baxter reported first-quarter 2018 adjusted earnings per share of 70 cents, which beat the Zacks Consensus Estimate by 12.9% and improved from the year-ago quarter’s figure of 58 cents.
Chemed posted adjusted earnings of $2.72 per share, outpacing the Zacks Consensus Estimate of $2.37. Revenues came in at $439.2 million, beating the Zacks Consensus Estimate of $420 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 >>