athenahealth, Inc. (NASDAQ:ATHN) (“athenahealth” or “we”), a
leading provider of network-enabled services and mobile
applications for healthcare providers nationwide, today reaffirmed
financial guidance for fiscal year 2016 and announced financial
guidance for fiscal year 2017.
Our fiscal year 2017 guidance is presented
below:
For the Fiscal Year Ending December 31,
2017 |
Forward-Looking Guidance |
Financial Measures |
|
GAAP Total Revenue |
$1,290 million - $1,330 million |
GAAP Operating Income |
$61 million - $81 million |
Non-GAAP Adjusted Operating Income |
$170 million - $190 million |
Financial Metric |
|
Annual Bookings1 |
$400 million - $450 million |
In order to help the investment community better understand our
strategic investments and financial goals for our fiscal year 2017
performance expectations, we are providing the following additional
insight and points of interest:
- We expect to continue to deliver strong bookings and revenue
growth.
- We plan to continue to scale our operations and improve our
automation rates across each service offering.
- We plan to continue to invest in selling and marketing to
support our bookings goal.
- We plan to continue to invest in research and development to
support evolving our technology platform and building and improving
our core services and network services.
- We plan to scale general and administrative expenses.
- We plan to continue to improve our profitability margins and
operating cash flow.
1Management defines “Annual Bookings” as the sum of the expected
annualized recurring revenue from our athenahealth-branded services
and the contracted value from our Epocrates-branded services; net
of actual charge backs. Management considers this financial metric
to be an important indicator of future revenue.
Fiscal year 2016 guidance:
We are reaffirming our fiscal year 2016 guidance communicated on
December 10, 2015 at our Eighth Annual Investor Summit. As
disclosed in our Q3 2016 earnings materials filed on October 20,
2016, we expect to be near the mid-point of our guidance ranges for
each financial measure. Please refer to these Q3 2016 earnings
materials for a reconciliation of non-GAAP financial measures to
comparable GAAP measures for fiscal year 2016 guidance.
“We are a growth company and we continue to see expansive market
opportunities for our network-enabled services. As we look towards
2017, we will be focused on further evolving our platform and
further extending our technology assets so we can go deeper with
our core services and broader with our network services,” said Karl
Stubelis, chief financial officer, athenahealth. “As has been our
approach in the past, we will measure our success in 2017 by our
corporate balanced scorecard which includes stability, performance,
client satisfaction, and financial metrics that we believe best
reflect how we are progressing against our long-term vision of
building the healthcare internet. We are also a financially
disciplined company and we look forward to presenting our financial
plan for fiscal year 2017 at our Ninth Annual Investor Summit
tomorrow.”
Ninth Annual Investor Summit Webcast
Information
A webcast of our Ninth Annual Investor Summit tomorrow,
Thursday, December 15, 2016, starts at 8:30 a.m. Eastern Time. We
will provide an update on athenahealth’s business and share our
outlook for future financial and operational performance. A live
webcast of the Investor Summit can be accessed via the Investors
section of our website at http://www.athenahealth.com. A replay of
this webcast will be available on the website within 24 hours
following the event and will remain available through December 14,
2017.
Use of Non-GAAP Financial Measures
In our earnings releases, conference calls, slide presentations,
and webcasts, we may use or discuss non-GAAP financial measures, as
defined by Regulation G. The GAAP financial measure most directly
comparable to each non-GAAP financial measure used or discussed
herein, and a reconciliation of the differences between each
non-GAAP financial measure and the comparable GAAP financial
measure, are included in this press release. Our earnings press
releases containing such non-GAAP reconciliations can be found on
the Investors section of our website at
http://www.athenahealth.com.
About athenahealth, Inc.
athenahealth is a leading provider of network-enabled services
for electronic health records (EHR), revenue cycle management and
medical billing, patient engagement, care coordination, and
population health management, as well as Epocrates and other
point-of-care mobile apps. We connect care and drive meaningful,
measurable results for more than 85,000 healthcare providers
nationwide. For a view of network effect in action by exploring
data as it flows across athenahealth’s nationwide network, please
visit
https://insight.athenahealth.com/interactive-a-look-at-interoperability.
For more information, please visit www.athenahealth.com.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended, including statements reflecting management’s expectations
for future financial and operational performance and operating
expenditures, expected growth, and business outlook, including
fiscal 2016 and fiscal 2017 guidance; statements regarding our
bookings, revenue growth, profitability margins and operating cash
flow; statements regarding our plans to scale our operations and
improve our automation rates; statements about our investments to
support our growth goals and our evolving technology platform;
statements regarding scaling of our expenses; statements regarding
our market opportunities and our focus in 2017; and statements
found under our “Reconciliation of Non-GAAP Financial Measures to
Comparable GAAP Measures For Fiscal Year 2017 Guidance” section of
this release. Forward-looking statements may be identified with
words such as “will,” “may,” “expect,” “plan,” “anticipate,”
“upcoming,” “believe,” “estimate” or similar terminology, and the
negative of these terms. Forward-looking statements are not
promises or guarantees of future performance, and are subject to a
variety of risks and uncertainties, many of which are beyond our
control, which could cause actual results to differ materially from
those contemplated in these forward-looking statements. These risks
and uncertainties include: our highly competitive industry and our
ability to compete effectively and remain innovative; the
development of the market for cloud-based healthcare information
technology services; changes resulting from a change in
administration in the United States; changes in the healthcare
industry and their impact on the demand for our services; our
ability to effectively manage our growth; our ability to protect
our intellectual property; current and future litigation, including
for intellectual property infringement; our dependence on
third-party providers; risks and costs associated with our
worldwide operations; our ability to attract and retain highly
skilled employees; our ability to successfully implement any
transitions in our management; our fluctuating operating results;
our ability to retain our clients and maintain client revenue; our
tax liability; our variable sales and implementation cycles; the
timing at which we recognize certain revenue and our ability to
evaluate our prospects; defects and errors in our software or
services, or interruptions or damages to our systems or those of
third parties on which we rely; a data security breach; limitations
on our use of data; the effect of payer and provider conduct; the
failure of our services to provide accurate and timely information;
changes in government regulation and the costs and challenges of
compliance; the potential for illegal behavior by employees or
subcontractors; and the price volatility of our common stock.
Forward-looking statements speak only as of the date hereof and,
except as required by law, we undertake no obligation to update or
revise these forward-looking statements. For additional information
regarding these and other risks faced by us, refer to our public
filings with the Securities and Exchange Commission (“SEC”),
available on the Investors section of our website at
www.athenahealth.com and on the SEC’s website at www.sec.gov.
athenahealth,
Inc.RECONCILIATION OF NON-GAAP FINANCIAL
MEASURESTO COMPARABLE GAAP MEASURES FOR FISCAL
YEAR 2017 GUIDANCE(Unaudited, in
millions)
Please note that the figures presented below may not sum exactly
due to rounding.
Non-GAAP Adjusted Operating Income GuidanceSet
forth below is a reconciliation of our “Non-GAAP Adjusted Operating
Income” and “Non-GAAP Adjusted Operating Income Margin” guidance
for fiscal year 2017, which represents Non-GAAP Adjusted Operating
Income as a percentage of total revenue.
|
|
LOW |
HIGH |
|
|
Fiscal Year Ending December 31,
2017 |
Total
revenue |
|
$ |
1,290.0 |
|
$ |
1,330.0 |
|
|
|
|
|
GAAP
operating income |
|
$ |
61.0 |
|
$ |
81.0 |
|
|
|
|
|
GAAP
operating income margin |
|
4.7 |
% |
6.1 |
% |
|
|
|
|
Add:
Stock-based compensation expense |
|
85.0 |
|
85.0 |
|
Add:
Amortization of capitalized stock-based compensation related to
software development |
|
3.0 |
|
3.0 |
|
Add:
Amortization of purchased intangible assets |
|
17.0 |
|
17.0 |
|
Add:
Integration and transaction costs |
|
5.0 |
|
5.0 |
|
Add: Exit
costs, including restructuring1 |
|
— |
|
— |
|
Add: Gain
or loss on investments1 |
|
— |
|
— |
|
|
|
|
|
Non-GAAP
Adjusted Operating Income |
|
$ |
170.0 |
|
$ |
190.0 |
|
|
|
|
|
Non-GAAP
Adjusted Operating Income Margin |
|
13.2 |
% |
14.3 |
% |
|
1We currently do not anticipate exit costs, including
restructuring or gain or loss on investments during fiscal year
2017. However, if these items occur in fiscal year 2017, we would
exclude these items from our Non-GAAP Adjusted Operating Income and
Non-GAAP Adjusted Operating Income Margin.
Explanation of Non-GAAP Financial Measures
We report our financial results in accordance with accounting
principles generally accepted in the United States of America, or
GAAP. However, management believes that, in order to properly
understand our short-term and long-term financial and operational
trends, investors may wish to consider the impact of certain
non-cash or non-recurring items, when used as a supplement to
financial performance measures in accordance with GAAP. These items
result from facts and circumstances that vary in frequency and
impact on continuing operations. Management also uses results of
operations before such items to evaluate the operating performance
of athenahealth and compare it against past periods, make operating
decisions, and serve as a basis for strategic planning. These
non-GAAP financial measures provide management with additional
means to understand and evaluate the operating results and trends
in our ongoing business by eliminating certain non-cash expenses
and other items that management believes might otherwise make
comparisons of our ongoing business with prior periods more
difficult, obscure trends in ongoing operations, or reduce
management’s ability to make useful forecasts. Management believes
that these non-GAAP financial measures provide investors additional
means of evaluating period-over-period operating performance. In
addition, management understands that some investors and financial
analysts find this information helpful in analyzing our financial
and operational performance and comparing this performance to our
peers and competitors.
Management defines “Non-GAAP Adjusted Operating Income” as the
sum of GAAP operating income before stock-based compensation
expense; amortization of capitalized stock-based compensation
related to software development; amortization of purchased
intangible assets; integration and transaction costs; exit costs,
including restructuring costs; and gain or loss on investments; and
“Non-GAAP Adjusted Operating Income Margin” as Non-GAAP Adjusted
Operating Income as a percentage of total revenue.
Management excludes or adjusts each of the items identified
below from the applicable non-GAAP financial measure referenced
above for the reasons set forth with respect to that excluded
item:
- Stock-based compensation expense and amortization of
capitalized stock-based compensation related to software
development — excluded because these are non-cash expenditures that
management does not consider part of ongoing operating results when
assessing the performance of our business, and also because the
total amount of the expenditure is partially outside of our control
because it is based on factors such as stock price, volatility, and
interest rates, which may be unrelated to our performance during
the period in which the expenses are incurred.
- Amortization of purchased intangible assets — purchased
intangible assets are amortized over their estimated useful lives
and generally cannot be changed or influenced by management after
the acquisition. Accordingly, this item is not considered by
management in making operating decisions. Management does not
believe such charges accurately reflect the performance of our
ongoing operations for the period in which such charges are
incurred.
- Integration and transaction costs — Integration costs are the
severance payments and retention bonuses for certain employees
related to specific transactions. Transaction costs are costs
related to strategic transactions. Accordingly, management believes
that such expenses do not have a direct correlation to future
business operations, and therefore, these costs are not considered
by management in making operating decisions. Management does not
believe such charges accurately reflect the performance of our
ongoing operations for the period in which such charges are
incurred.
- Exit costs, including restructuring costs — represents costs
related to workforce reductions and to terminate certain lease or
other contract agreements for strategic realignment purposes.
Management does not believe such costs accurately reflect the
performance of our ongoing operations for the period in which such
costs are incurred.
- Gain or loss on investments — represents gains or losses on the
sales or conversions of our investments, such as marketable
securities and More Disruption Please (“MDP”) Accelerator
investments. Management does not believe such gains or losses
accurately reflect the performance of our ongoing operations for
the period in which such gains or losses are reported.
Explanation of Financial Metric
Management defines “Annual Bookings” as the sum of the expected
annualized recurring revenue from our athenahealth-branded services
and the contracted value from our Epocrates-branded services; net
of actual charge backs. Management considers this financial metric
to be an important indicator of future revenue.
Contacts:
Dana Quattrochi
athenahealth, Inc. (Investors)
investorrelations@athenahealth.com
(617) 402-1329
Holly Spring
athenahealth, Inc. (Media)
media@athenahealth.com
(617) 402-1631
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