Athenahealth Beats on Both Top and Bottom Lines

Athenahealth (Nasdaq: ATHN  ) reported earnings on May 2. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended March 31 (Q1), Athenahealth beat expectations on revenues and beat expectations on earnings per share.

Compared to the prior-year quarter, revenue increased significantly. Non-GAAP earnings per share increased significantly. GAAP earnings per share contracted significantly.

Margins shrank across the board.

Revenue details
Athenahealth tallied revenue of $125.6 million. The 14 analysts polled by S&P Capital IQ foresaw revenue of $121.1 million on the same basis. GAAP reported sales were 30% higher than the prior-year quarter's $96.6 million.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
EPS came in at $0.38. The 16 earnings estimates compiled by S&P Capital IQ averaged $0.23 per share. Non-GAAP EPS of $0.38 for Q1 were 171% higher than the prior-year quarter's $0.14 per share. GAAP EPS of $0.02 for Q1 were 71% lower than the prior-year quarter's $0.07 per share.

Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 57.7%, 210 basis points worse than the prior-year quarter. Operating margin was -9.5%, much worse than the prior-year quarter. Net margin was 0.6%, 190 basis points worse than the prior-year quarter. (Margins calculated in GAAP terms.)

Looking ahead
Next quarter's average estimate for revenue is $132.6 million. On the bottom line, the average EPS estimate is $0.29.

Next year's average estimate for revenue is $542.3 million. The average EPS estimate is $1.21.

Investor sentiment
The stock has a two-star rating (out of five) at Motley Fool CAPS, with 194 members out of 252 rating the stock outperform, and 58 members rating it underperform. Among 67 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 54 give Athenahealth a green thumbs-up, and 13 give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Athenahealth is hold, with an average price target of $91.54.

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Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor of Motley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. The Motley Fool recommends Athenahealth. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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5/25/2016 12:38 PM
ATHN $125.25 Down -0.67 -0.53%
Athenahealth CAPS Rating: **