July 18, 2012
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of medical billing software specialist athenahealth (Nasdaq: ATHN ) climbed 13% on Wednesday after the company landed a big contract with Health Management Associates (NYSE: HMA ) to provide cloud-based back-office services.
So what: While financial details weren't disclosed, the deal is easily athenahealth's largest given Health Management's expansive network of roughly 1,500 physicians operating in more than 300 locations across the country. Naturally, the news also deals a significant blow to rival Quality Systems (Nasdaq: QSII ) -- whose shares are down 10% today -- which will see its five-year-old partnership with Health Management finally come to an end.
Now what: Analysts estimate that the deal could add roughly $20 million to $30 million to athenahealth's top line. "We are excited for the opportunity to work with one of the nation's largest and most progressive hospital companies," said Chairman and CEO Jonathan Bush. "Health Management's physician network will benefit from the power of cloud technology to constantly iterate and extrapolate from the collective clinical and operational knowledge and best practices of thousands of medical groups around the nation already on the athenaNet platform." Of course, with the stock busting through its 52-week high today and up about 100% over the past year, much of that optimism might already be baked into the price.
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