athenahealth Misses, Sees Q1 Loss - Analyst Blog

athenahealth Inc. ATHN posted adjusted loss of $3.0 million or 8 cents per share in the first quarter of 2014 in stark contrast to earnings of $6.0 million or 16 cents per share in the same quarter of 2013. The loss per share was broader than the Zacks Consensus Estimate of a loss of a penny for the quarter.

Reported loss was $8.1 million, or 21 cents per share compared with earnings of $0.7 million, or 2 cents per share, in the first quarter of 2013.

Revenues in the quarter rose 29.8% to $163.0 million but lagged the Zacks Consensus Estimate of $170 million. Excluding the Epocrates and other revenues (consisting of third-party tenant revenues) totaling $14.8 million, core athenahealth revenues rose 23% to $148.2 million in the quarter.

On a segment-wise basis, revenues from Business Services rose 26.8% year over year to $154.5 million while Implementation and Other revenues more than doubled to $8.5 million from $4.1 million in the first quarter of 2013.

Adjusted gross profits escalated 27.9% to $94.8 million but adjusted gross margin fell 80 basis points to 58.2% from 59.0% in the 2012-quarter. Adjusted operating loss was $3.6 million or 2.2% of sales in the quarter versus $4.3 million or 3.4% of sales in the prior-year quarter.

Financial Position

athenahealth had cash and cash equivalents of $51.3 million as of Mar 31, 2014, significantly down from $65.0 million as of Dec 31, 2013. Long-term debt stood at $185.0 million as of Mar 31, 2014 compared with $188.75 million as of Dec 31, 2013.

In the quarter, cash flow from operating activities was $14.1 million compared with an outflow of $5.5 million in the first quarter of 2013. Capital expenditure dipped 51.6% to $5.3 million from $11.0 million in 2013-quarter.

Zacks Rank

Currently, athenahealth carries a Zacks Rank #3 (Hold). The Zacks Consensus Estimates for 2014 revenues and earnings per share stand at $752 million and 33 cents.

Some better-ranked stocks in the medical products industry at this moment include Enzymotec Ltd. ENZY, Edwards Lifesciences Corp. EW, and St. Jude Medical Inc. STJ. Enzymotec sports a Zacks Rank #1 (Strong Buy), while both Edwards Lifesciences Corp. and St. Jude Medical retain a Zacks Rank #2 (Buy).