Please ensure Javascript is enabled for purposes of website accessibility

Here's What's Lifting athenahealth, Inc. Today

By Cory Renauer - Feb 2, 2018 at 11:05AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

A fourth-quarter report boasting rising sales and falling expenses is giving investors a reason to cheer.

What happened

Shares of athenahealth, Inc. (ATHN) are on the rise after the provider of network-enabled services for U.S. healthcare providers smashed through analyst estimates with a glowing fourth-quarter earnings report. The stock was up around 13.3% as of 11:28 a.m. EST on Friday.

So what 

The average analyst was expecting athenahealth to report adjusted earnings of just $0.63-per-share profit in the fourth quarter. Instead, management delivered an adjusted profit of $1.11 per share, a whopping 79% gain over the prior-year period.

Still life with stethoscope and money.

Image source: Getty Images.

Management deserves a pat on the back for using less to bring in more. In 2017, the company increased the number of providers on its network by 15% even though management shaved 1.7% off total selling and marketing expenses during the year.

Now what

Even though athenahealth isn't growing its top line as fast as in past years, spending less to sign up an impressive number of new customers suggests a network effect could accelerate profit growth in the quarters ahead and well into the long term.

It's never been a better time to become an indispensable weapon in the fight against embarrassingly inefficient healthcare spending. Amazon.com, Berkshire Hathaway, and JPMorgan Chase are so fed up that they've combined forces to find technological solutions that will lower healthcare costs.

JPHathazon will begin trying to lower costs for around 1 million of its own employees, at first. The initial announcement was light on details, but investors need to brace for the day the combined entity becomes a competitive threat or a suitor is willing to acquire athenahealth's rapidly growing business.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

athenahealth, Inc. Stock Quote
athenahealth, Inc.
ATHN

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
336%
 
S&P 500 Returns
115%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/26/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.