athenahealth, Inc. (NASDAQ:ATHN) (“athenahealth” or “we”), a
leading provider of network-enabled services for hospital and
ambulatory clients nationwide, will host its 2018 Investor
Summit tomorrow, Thursday, February 15, 2018, at 8:30 a.m. Eastern
Time. We will provide an overview of our strategies and growth
initiatives and share our outlook for future financial and
operational performance.
“We have made significant progress on our strategic initiatives
to create a more focused and efficient company,” said Marc Levine,
chief financial officer, athenahealth. “In the year ahead, we plan
to build on this success as we work to create healthcare’s first
true platform. At our upcoming Investor Summit, we look forward to
sharing our product strategy roadmap and our plans to drive strong
revenue and earnings growth in fiscal year 2018.”
Fiscal Year 2018 Guidance
athenahealth management expects to achieve the following results
for fiscal year ending December 31, 2018. Our fiscal year 2018
guidance is prior to the impact of any new accounting standards,
including ASC 606, to allow for comparability against historical
results.
For the Fiscal Year Ending December 31,
2018 |
Forward-Looking Guidance |
Financial Measures |
|
Total Revenue |
$1,310 million - $1,380 million |
GAAP Operating Income |
$108 million - $152 million |
GAAP Operating Margin |
8% - 11% |
Non-GAAP Operating Income |
$210 million - $235 million |
Non-GAAP Operating Margin |
16% - 17% |
As part of our fiscal year 2018 performance, we expect to:
- Drive strong revenue growth in our core services and build on
our progress in our network services;
- Balance service automation with investments in our client work
reduction efforts;
- Invest in research and development to support our product,
technology, and platform strategies;
- Improve efficiency and increase scale in all other areas of the
business; and
- Increase operating margin and operating cash flow.
2018 Investor Summit Webcast Information
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
February 14, 2019.
Use of Non-GAAP Financial Measures
In our press 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 the most universally-connected healthcare
network in the country. Everything we do is to enhance the
experience and outcomes of healthcare. Today, we connect 111,000
providers and 106 million patients through clinical and financial
services like electronic health records, population health tools,
revenue cycle management, and care coordination. And, because we
believe that collaboration and innovation will make healthcare work
as it should, we’re building the nation’s only platform where
providers, patients, payers and innovators can partner to transform
care, together. 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 2018 guidance; statements regarding our revenue growth,
operating margins and operating cash flow; statements regarding our
plans to scale our operations and improve efficiency; statements
about our investments to support our strategies; statements
regarding our focus in 2018; and statements found under our
“Reconciliation of Non-GAAP Financial Measures to Comparable GAAP
Measures For Fiscal Year 2018 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; the impact of
implementation of our strategic plan to improve operational
efficiency; 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.
Contacts:Dana Quattrochiathenahealth, Inc.
(Investors)investorrelations@athenahealth.com(617) 402-1329
Holly Springathenahealth, Inc.
(Media)media@athenahealth.com(617) 402-1631
athenahealth,
Inc.RECONCILIATION OF NON-GAAP FINANCIAL
MEASURESTO COMPARABLE GAAP MEASURES FOR FISCAL
YEAR 2018 GUIDANCE(Unaudited, in
millions)
Please note that the figures presented below may not sum exactly
due to rounding.
Non-GAAP Operating Income GuidanceSet forth
below is a reconciliation of our “Non-GAAP Operating Income” and
“Non-GAAP Operating Margin” guidance for fiscal year 2018, which
represents Non-GAAP Operating Income as a percentage of total
revenue.
|
LOW |
HIGH |
|
Fiscal Year Ending December 31,
2018 |
Total
revenue |
$ |
1,310 |
|
$ |
1,380 |
|
|
|
|
GAAP operating
income |
$ |
108 |
|
$ |
152 |
|
|
|
|
GAAP operating
margin |
8.2 |
% |
11.0 |
% |
|
|
|
Add:
Stock-based compensation expense |
61 |
|
50 |
|
Add:
Amortization of capitalized stock-based compensation related to
software development |
2 |
|
2 |
|
Add:
Amortization of purchased intangible assets |
20 |
|
19 |
|
Add:
Integration and transaction costs |
13 |
|
10 |
|
Add: Exit
costs, including restructuring |
6 |
|
2 |
|
|
|
|
Non-GAAP
Operating Income |
$ |
210 |
|
$ |
235 |
|
|
|
|
Non-GAAP
Operating Margin |
16.0 |
% |
17.0 |
% |
|
Note: Fiscal year 2018 guidance is prior to the impact of any
new accounting standards, including ASC 606, to allow for
comparability against historical results. We will present our
Condensed Consolidated Statements of Net Income for our fiscal year
2018 results including the impacts of new accounting standards and
will provide a separate reconciliation to results prior to the
impacts resulting from any new accounting standards, including ASC
606. Finally, the Non-GAAP adjusting line items should not be
relied upon individually, as we are not guiding on individual line
items, but upon the total operating income metrics, as included
within our guidance table above.
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 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; and exit costs, including
restructuring costs; and “Non-GAAP Operating Margin” as Non-GAAP
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 or metric
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 — represent costs
incurred as a result of strategic realignments including those
related to workforce reductions, termination of certain lease or
other agreements, and non-cash charges related to the write down of
certain assets. 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 unrecognized or
recognized gains or losses on the fair value, sales, 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. Upon adoption of new accounting standards effective for
2018, we present gains or losses on investments in Other (income)
expense on our Condensed Consolidated Statement of Net Income which
is not included in Operating Income but is included in the subtotal
Income before income tax provision.
- Non-GAAP tax rate — our statutory tax rate of 25% is applied to
normalize the tax impact to our Non-GAAP Net Income per Diluted
Share based on the fact that a relatively small change in pre-tax
GAAP income (loss) in any one period could result in a volatile
GAAP effective tax rate.
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