Athenahealth (ATHN) Earnings, Revenues Miss Estimates In Q1

Watertown, MA-based maker of billing and medical practice management software, athenahealth Inc. (NASDAQ:ATHN) reported adjusted earnings of 10 cents per share in the first quarter of fiscal 2017. Earnings missed the Zacks Consensus Estimate by a penny and declined almost 9% on a year-over-year basis.

The company posted revenues of $285.4 million, which also missed the Zacks Consensus Estimate of $297 million but increased 11.3% on a year-over-year basis.

Stock Performance

Year to date, athenahealth’s shares have decreased roughly 4.4%, comparing unfavorably with the Zacks categorized Medical Information Systems sub-industry’s addition of almost 19.2%. Moreover, the current level is way below the S&P 500’s return of 8.1% over the same time frame.

Quarter in Detail

athenahealth reported Business and Services revenues of $278.3 million, up 12.4% from the year-ago quarter. However, implementation and other segment posted revenues of $7.1 million, down 17.4% from the same quarter last year.

A strong client base has been a major growth driver for the company. Adjusted gross margin in the first quarter was 61.7% of net revenues compared with 62.0% a year ago.

The company registered operating margin of 7.7% in the first quarter compared with 9.4% in the year-ago quarter.

We believe applications like athenaClinicals, athenaClinicals-Streamlined, athenaInsight, athenaCommunicator, athenaOne, athenaCollector for Hospital and Health Systems are fortifying its market position.

Per management, the company expanded its network across ambulatory, hospital and population health platforms. The company’s network has grown to over 99,000 providers, 88 million patient records and 2.8 million covered lives at the end of the first quarter. Buoyed by stellar network expansion, the company is expected to see revenue and earnings growth over the long haul.

athenahealth, Inc. Price, Consensus and EPS Surprise

athenahealth, Inc. Price, Consensus and EPS Surprise | athenahealth, Inc. Quote

Guidance

For fiscal 2017, the company expects revenues in the band of $1,210–$1,250 million.

Adjusted operating income is projected in the range of $120–$140 million. Annual bookings are expected at around $350–$400 million.

Zacks Rank & Stocks to Consider

athenahealth has a Zacks Rank #5 (Strong Sell).

Better-ranked stocks in the broader medical sector include Neovasc Inc. (NASDAQ:NVCN) , Hologic, Inc. (NASDAQ:HOLX) and Sunshine Heart Inc (NASDAQ:SSH) . Notably, Neovasc and Hologic sport a Zacks Rank #1 (Strong Buy), while Sunshine Heart holds a Zacks Rank #2 (Buy) You can see the complete list of today’s Zacks #1 Rank stocks here.

Hologic has a long-term expected earnings growth rate of 11.33%. The stock has a solid one-year return of roughly 32.8%.

Sunshine Heart posted a positive earnings surprise of 58.24% in the last reported quarter. The stock recorded a stellar EPS growth rate (last 3–5 years of actual earnings) of almost 22%.

Neovasc saw a stellar gain of 14% over the last three months. The company projects sales growth of 102.88% for the current year.

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