We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
athenahealth (ATHN) Beats on Q2 Earnings, Raises '19 View
Read MoreHide Full Article
Maintaining its streak of positive earnings surprises, athenahealth Inc. reported adjusted earnings of $1.09 per share in the second quarter of 2018, which beat the Zacks Consensus Estimate by 18.5%. Notably, adjusted earnings reported in the year-ago quarter were 51 cents.
The Watertown, MA-based maker of billing and medical practice management software posted revenues of $323.3 million, missing the Zacks Consensus Estimate of $334 million. Revenues increased 7.4% year over year.
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 $331.9 million, up 10% year over year.
athenahealth carries a Zacks Rank #4 (Sell).
athenahealth, Inc. Price, Consensus and EPS Surprise
Excluding the impact of the new revenue recognition standard, revenues in the Business and Services unit were $323.6 million, up 10.4% from the year-ago quarter.
However, revenues in the Implementation and other segment were $8.3 million, down 2.5% 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 second quarter of 2018, athenahealth added eight new hospitals.
The company’s network has 115,724 Collector Providers, 64,317 Clinical Providers and 74,333 Communicator Providers, up 15%, 17% and 18%, respectively, on a year-over-year basis.
In the athenaOne (Hospital) platform, number of discharged beds surged 136% year over year.
In the Population Health platform, number of covered lives increased 20% 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.
Bookings
During the second quarter, athenahealth recognized $75 million of bookings, $67 million of which was recurring business and $8 million nonrecurring. The figure was down 5.1% year over year.
athenahealth saw relative strength in core ambulatory services. However, independent medical group bookings were down slightly from the prior-year quarter’s level. Hospital bookings were down year over year.
Margin Analysis
A strong client base has been a major growth driver for the company.
Considering the new revenue recognition standard, gross profit in the quarter was $171.3 million, up 8.9% year over year. As a percentage of revenues, gross margin in the second quarter was 53% compared with 52.2% in the year-ago quarter. The figire was up 80 basis points (bps).
Adjusted gross margin was 54.5% during the second quarter compared with 54.2% in the year-ago quarter.
Considering the new revenue recognition standard, athenahealth’s operating income increased 253.2% year over year to $43.1 million, driven by top-line growth and cost-saving initiatives. Adjusted operating income increased 70% year over year to $61 million.
Guidance
Under the new revenue recognition standard, athenahealth expects revenues in the range of $1.34-$1.37 billion, up from the previous guidance of $1.31-$1.38 billion. Meanwhile, the Zacks Consensus Estimate for revenues is pegged at $1.35 billion, which lies within the range.
The company expects adjusted operating income in the range of $244-$270 million, up from previous guidance of $210-$235 million.
Adjusted operating margin is expected in the band of 18.3-19.8% of net revenues for 2018, up from the previous guidance of 16-17%.
In Conclusion
athenahealth exited the second quarter of 2018 on a solid note, with earnings outpacing the Zacks Consensus Estimate. An upbeat fiscal 2018 guidance instills investor’s optimism.
Lackluster performance in the Implementation and other segment has been a persistent headwind for athenahealth. Among other concerns, athenahealth’s EHR solution faces significant competition from Allscripts Healthcare Solutions and more. Further, athenahealth fell short of its bookings goals in the quarter.
Despite these headwinds, we believe unique 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. Strength in core ambulatory services is a positive. A strong client base has been a key catalyst. Business and Services revenues have consistently witnessed growth.
Q2 Earnings of MedTech Majors at a Glance
A few better-ranked stocks in the broader medical space, which reported solid earnings this season are, Stryker Corporation (SYK - Free Report) , Intuitive Surgical, Inc (ISRG - Free Report) and Illumina, Inc (ILMN - Free Report) .
Intuitive Surgical reported adjusted earnings of $2.76 per share in the second quarter of 2018, which beat the Zacks Consensus Estimate of $2.48. Adjusted Earnings improved 38% year over year.
Stryker reported second-quarter 2018 adjusted earnings per share of $1.76, beating the Zacks Consensus Estimate by 1.7%. Earnings improved 15% year over year and also exceeded the high end of the company’s guidance.
Illumina reported adjusted earnings of $1.43 per share beating the Zacks Consensus Estimate of $1.11.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
Image: Bigstock
athenahealth (ATHN) Beats on Q2 Earnings, Raises '19 View
Maintaining its streak of positive earnings surprises, athenahealth Inc. reported adjusted earnings of $1.09 per share in the second quarter of 2018, which beat the Zacks Consensus Estimate by 18.5%. Notably, adjusted earnings reported in the year-ago quarter were 51 cents.
The Watertown, MA-based maker of billing and medical practice management software posted revenues of $323.3 million, missing the Zacks Consensus Estimate of $334 million. Revenues increased 7.4% year over year.
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 $331.9 million, up 10% year over year.
athenahealth carries a Zacks Rank #4 (Sell).
athenahealth, Inc. Price, Consensus and EPS Surprise
athenahealth, Inc. Price, Consensus and EPS Surprise | athenahealth, Inc. Quote
Q2 Details
Segment Details
Excluding the impact of the new revenue recognition standard, revenues in the Business and Services unit were $323.6 million, up 10.4% from the year-ago quarter.
However, revenues in the Implementation and other segment were $8.3 million, down 2.5% 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 second quarter of 2018, athenahealth added eight new hospitals.
The company’s network has 115,724 Collector Providers, 64,317 Clinical Providers and 74,333 Communicator Providers, up 15%, 17% and 18%, respectively, on a year-over-year basis.
In the athenaOne (Hospital) platform, number of discharged beds surged 136% year over year.
In the Population Health platform, number of covered lives increased 20% 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.
Bookings
During the second quarter, athenahealth recognized $75 million of bookings, $67 million of which was recurring business and $8 million nonrecurring. The figure was down 5.1% year over year.
athenahealth saw relative strength in core ambulatory services. However, independent medical group bookings were down slightly from the prior-year quarter’s level. Hospital bookings were down year over year.
Margin Analysis
A strong client base has been a major growth driver for the company.
Considering the new revenue recognition standard, gross profit in the quarter was $171.3 million, up 8.9% year over year. As a percentage of revenues, gross margin in the second quarter was 53% compared with 52.2% in the year-ago quarter. The figire was up 80 basis points (bps).
Adjusted gross margin was 54.5% during the second quarter compared with 54.2% in the year-ago quarter.
Considering the new revenue recognition standard, athenahealth’s operating income increased 253.2% year over year to $43.1 million, driven by top-line growth and cost-saving initiatives. Adjusted operating income increased 70% year over year to $61 million.
Guidance
Under the new revenue recognition standard, athenahealth expects revenues in the range of $1.34-$1.37 billion, up from the previous guidance of $1.31-$1.38 billion. Meanwhile, the Zacks Consensus Estimate for revenues is pegged at $1.35 billion, which lies within the range.
The company expects adjusted operating income in the range of $244-$270 million, up from previous guidance of $210-$235 million.
Adjusted operating margin is expected in the band of 18.3-19.8% of net revenues for 2018, up from the previous guidance of 16-17%.
In Conclusion
athenahealth exited the second quarter of 2018 on a solid note, with earnings outpacing the Zacks Consensus Estimate. An upbeat fiscal 2018 guidance instills investor’s optimism.
Lackluster performance in the Implementation and other segment has been a persistent headwind for athenahealth. Among other concerns, athenahealth’s EHR solution faces significant competition from Allscripts Healthcare Solutions and more. Further, athenahealth fell short of its bookings goals in the quarter.
Despite these headwinds, we believe unique 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. Strength in core ambulatory services is a positive. A strong client base has been a key catalyst. Business and Services revenues have consistently witnessed growth.
Q2 Earnings of MedTech Majors at a Glance
A few better-ranked stocks in the broader medical space, which reported solid earnings this season are, Stryker Corporation (SYK - Free Report) , Intuitive Surgical, Inc (ISRG - Free Report) and Illumina, Inc (ILMN - Free Report) .
While Intuitive Surgical and Illumina sport Zacks Rank #1 (Strong Buy), Stryker carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Intuitive Surgical reported adjusted earnings of $2.76 per share in the second quarter of 2018, which beat the Zacks Consensus Estimate of $2.48. Adjusted Earnings improved 38% year over year.
Stryker reported second-quarter 2018 adjusted earnings per share of $1.76, beating the Zacks Consensus Estimate by 1.7%. Earnings improved 15% year over year and also exceeded the high end of the company’s guidance.
Illumina reported adjusted earnings of $1.43 per share beating the Zacks Consensus Estimate of $1.11.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>