CERN Cerner Corporation

Leading provider of Internet-based business services for physician practices, Athenahealth (ATHN) reported first-quarter fiscal 2011 adjusted (excluding one-time items other than stock-based compensation expense) earnings of 10 cents per share topping the Zacks Consensus Estimate of 6 cents.

Net income (as reported) for the quarter zoomed manifold to $3.3 million (or 9 cents per share) riding on higher revenues. The company posted a profit of roughly $0.3 million (or a cent per share) a year ago.

Revenues

Revenues for the reported quarter spiked 28.4% year over year to $69.9 million, beating the Zacks Consensus Estimate of $69 million. The company posted collections of $1.6 billion, up 23.1%.

As for the two segments, revenues from Business Services grew 28.4% to $67.5 million while Implementation and Other revenue moved up 27.8% to $2.4 million.

Revenues were boosted by sustained adoption of the Watertown, Massachusetts-based company’s flagship revenue cycle management solution athenaCollector and electronic health record (“EHR”) service athenaClinicals by physicians.

Use of athenaCollector by medical providers and physicians rose 16.5% and 20.8% year over year, respectively, in the first quarter. Moreover, utilization of athenaClinicals by medical providers more than doubled year over year. The company continues to witness double and triple-barrel deals in which clients seek multiple solutions.

Margins

Adjusted gross margin for the quarter increased to 62.5% from 58.5% a year ago while adjusted EBITDA margin rose to 19.1% from 11.7%. Adjusted operating margin climbed to 14.3% from 7.3% from a year ago.  

Balance Sheet & Cash Flow

Athenahealth ended the quarter with cash, cash equivalents and short-term investments of $102.7 million, up 29.9% year over year. Total debt and capital lease obligations fell 31.7% to $5.8 million.

Outlook

Athenahealth is a leading provider of cloud-based and web-based business services for physician practices with an increasing role in enterprise projects. The company’s services range from revenue cycle management and EHR to its latest athenaCommunicator service.

Last February, Athenahealth and Microsoft (MSFT) announced a strategic alliance to offer a new product offering that integrates Athenahealth’s products with Microsoft’s Amalga, an enterprise health intelligence platform.  

Athenahealth faces stiff competition across all of its operating platforms from established Health IT players such as Cerner (CERN), Allscripts-Misys (MDRX) and Quality Systems (QSII). Nevertheless, the company remains optimistic about the growth prospects in each of its end markets due to the federal stimulus program, which promotes EHR adoption in ambulatory and hospital settings.

 
ATHENAHEALTH IN (ATHN): Free Stock Analysis Report
 
CERNER CORP (CERN): Free Stock Analysis Report
 
ALLSCRIPTS HLTH (MDRX): Free Stock Analysis Report
 
MICROSOFT CORP (MSFT): Free Stock Analysis Report
 
QUALITY SYS (QSII): Free Stock Analysis Report
 
Zacks Investment Research