Morgan Stanley Thinks Strong 4Q Beat Bodes Well for athenahealth

In a report published Friday, Morgan Stanley analyst Ricky R. Goldwasser reiterated an Equal-Weight rating on

. In the report, Morgan Stanley noted, “ATHN reported 4Q revenues of $171.6M, up 47.5% y/y and 13.2% seq, vs. cons/MS est. of $168.4/$168.8M. Top-line helped by Epocrates revenues of $18.9M, up 41.2% seq vs. MS est. of $15.0M. Ex-Epoc, core ATHN revenues up 28.1% y/y and 11.0% seq vs. LT goal of 30% growth. While not disclosed, bookings met goal of 30% growth in 2013. Gross margin of 66.2% was up 284 bps y/y and 432 bps seq, vs. MS est. of 65.4%. EBIT of $34.1M was above MS est. of $30.1M and cons' $29.2M. EBIT margin of 19.9% was up 317 bps y/y and up 716 bps seq, above MS est. of 17.8%. Collector physician adds of 2,094 up 6% seq and 7% y/y and ahead of our est. of 2,055. Total Provider adds were 3,017, of which 1/3rd were from Ascension Health go lives (~1,000 out of ~4,000 providers). Hospital Physician Partners (HPP), the next largest deal in the implementation pipeline at ~2,000 providers is expected to go live starting in 2014. Clinical adds of 987 were up 12.4% y/y and 8.7% seq. ATHN signed 6 population health management deals for Clarity, which is now being rebranded as part of a broader Coordinator offering. Coordinator in-network orders grew modestly to 7.1%, after the large jump from 1.3% in 2Q to 6.7% in Q3 driven by success in signing labs to the network.” athenahealth closed on Thursday at $139.08.