-- 35% Revenue Growth, Compared to Same Quarter Last Year
-- Non-GAAP Adjusted Quarterly Net Income of $2.4 Million or $0.07
Per Share
-- 13% Adjusted EBITDA Margin, Compared to Breakeven in Same Quarter
Last Year
WATERTOWN, Mass., March 5, 2008 (PRIME NEWSWIRE) -- athenahealth, Inc. (Nasdaq:ATHN), a leading provider of internet-based business services for physician practices, today announced financial results for the fourth-quarter and the full-year of 2007.
Total revenue for the three months ended December 31, 2007 was $28.2 million, compared to $20.8 million for the same period last year, an increase of 35%. Full year 2007 revenue was $100.8 million, compared to full year 2006 revenue of $75.8 million, an increase of 33%.
"We are pleased with our 2007 financial performance and we are thrilled with the progress we have made in building out the depth and breadth of our national network for physicians," said Jonathan Bush, Chairman and Chief Executive Officer of athenahealth.
For the three months ended December 31, 2007, the Company's Non-GAAP Adjusted EBITDA of $3.7 million was 13% of revenue, compared to a breakeven Non-GAAP Adjusted EBITDA for the same period last year. GAAP net income in the quarter was $2.1 million, compared to a GAAP net loss of $2.7 million in the same period last year. Non-GAAP adjusted net income for the quarter was $2.4 million, compared to a Non-GAAP adjusted net loss of $2.3 million in the same period last year.
"We were pleased to achieve our 32nd consecutive quarter of organic revenue growth," said Carl Byers, Chief Financial Officer. "As we grow, we will look to expand profitability given our scalable operating model."
For the year ended December 31, 2007, the Company's Non-GAAP Adjusted EBITDA of $11.3 million was 11% of revenue, compared to Non-GAAP Adjusted EBITDA for 2006 of $0.7 million which was 1% of revenue. For 2007, the GAAP net loss was $3.5 million, compared to a GAAP net loss of $9.2 million in 2006. Non-GAAP adjusted net income for the year ended December 31, 2007 was $3.5 million, compared to a Non-GAAP adjusted net loss of $7.8 million in 2006.
Key metrics and milestones in the fourth-quarter and full-year 2007 included the following:
-- $769 million in cash collections posted to client accounts in the
fourth quarter of 2007, compared to $575 million in the same
quarter of 2006
-- $2.7 billion in cash collections posted to client accounts in all
of 2007, compared to $2.0 billion in all of 2006
-- 9,423 active physicians live in the fourth quarter of 2007,
compared to 7,393 in the same quarter of last year
-- Announced the purchase of an operations facility in Maine
-- During the fourth-quarter of 2007, the Company presented at the
Merrill Lynch Health Services Investor Conference and the 19th
Annual Piper Jaffray Health Care Conference
As of December 31, 2007, the Company had cash and short-term investments of $71.9 million and short- and long-term debt of $1.4 million. The Company retired approximately $22.2 million of debt in the fourth quarter of 2007, including $17.0 million retired on December 31st.
A reconciliation of the Company's financial results determined in accordance with United States generally accepted accounting principles (GAAP) to certain non-GAAP financial measures has been provided in the financial statement tables included in this press release. An explanation of these measures is also included below under the heading "Explanation of Non-GAAP Financial Measures."
Conference Call Information
athenahealth will conduct a conference call on Wednesday, March 5, 2008, at 5:00 p.m. Eastern Time to discuss its financial results, quarterly highlights and management's outlook for future financial and operational performance. To access athenahealth's live conference call and webcast, dial 888-778-8884 or 913-312-0841 (international), and use confirmation code: 4802096. A live webcast and replay will also be available shortly after the call is completed on the Company's investor web site: http://investors.athenahealth.com/events.cfm. A replay of the conference call will be available by calling 888-203-1112 or 719-457-0820 (international), pass code 4802096.
About athenahealth
athenahealth is a leading provider of internet-based business services for physician practices. The Company's service offerings are based on proprietary web-native practice management and electronic medical record (EMR) software, a continuously updated payer knowledge-base and integrated back-office service operations. For more information visit www.athenahealth.com or call (888) 652-8200.
Explanation of Non-GAAP Financial Measures
athenahealth management believes that in order to properly understand the Company's short-term and long-term financial trends, investors may wish to consider the impact of certain non-cash or non-recurring items, when used as a supplement to financial performance measures in accordance with GAAP. These items result from facts and circumstances that vary in frequency and/or impact on continuing operations. In addition, management uses results of operations before such items to evaluate the operational performance of the company and as a basis for strategic planning. Investors should consider these non-GAAP measures in addition to, and not as a substitute for, financial performance measures in accordance with GAAP. In addition to the description provided below, reconciliation of GAAP to non-GAAP results is provided in the financial statement tables included in this press release.
In this press release, the Company has reported a non-GAAP financial measure it refers to as "adjusted EBITDA," which the Company defines as GAAP (generally accepted accounting principles) net income (loss) before provision for income taxes, net interest expense, other expense, depreciation and amortization, stock-based compensation expense and cumulative effect of change in accounting principle. The Company has also reported in this press release a non-GAAP financial measure it refers to as "adjusted net income (loss)," which the Company defines as GAAP net income (loss) before other expense, stock-based compensation expense and cumulative effect of change in accounting principle. In its upcoming conference call, the Company may report a non-GAAP financial measure it refers to as "adjusted gross margin" which the Company defines as total revenues less direct operating expense plus stock-based compensation expense allocated to direct operating expense divided by total revenues. These non-GAAP financial measures, as the Company defines them, may not be similar to non-GAAP measures used by other companies.
Management believes that "adjusted EBITDA", "adjusted gross margin" and "adjusted net income (loss)" provide useful information to investors about the Company's performance because it eliminates the effects of period-to-period changes in costs associated with capital investments, net income from interest on the Company's cash and marketable securities, stock-based compensation expense and similar expense which are not directly attributable to the underlying performance of the Company's business operations. Management uses "adjusted EBITDA", "adjusted gross margin" and "adjusted net income (loss)" in evaluating the overall performance of the Company's business operations and believes this performance measure provides useful information to investors.
With respect to stock-based compensation expense, the Company advises investors that it adopted FASB Statement No. 123R, Share-Based Payments, effective January 1, 2006, which requires that share-based payments, including employee stock options, be measured at their fair value and recorded as compensation expense in the Company's financial statements. Prior to the adoption of FAS 123R, the Company was required to record stock-based compensation expense using the awards' intrinsic value which generally resulted in no compensation expense being recorded in the financial statements. In accordance with the modified prospective method the Company used to adopt FAS 123R, the Company's financial statements for prior periods have not been restated to reflect, and do not include, changes in the method to expense share-based payments, including employee stock options, at their fair values.
Though management finds "adjusted EBITDA", "adjusted gross margin" and "adjusted net income (loss)" useful for evaluating aspects of the Company's business, its reliance on these measures is limited because excluded items can have a material effect on the Company's earnings (or losses) calculated in accordance with GAAP. Therefore, management uses "adjusted EBITDA", "adjusted gross margin" and "adjusted net income (loss)" in conjunction with GAAP earnings (loss) in evaluating the overall performance of the Company's business operations. The Company believes that "adjusted EBITDA", "adjusted gross margin" and "adjusted net income (loss)" provides investors with an additional tool for evaluating the Company's core performance, which management uses in its own evaluation of overall performance, and a base-line for assessing the future earnings potential of the Company. While the GAAP results are more complete, the Company prefers to allow investors to have this supplemental metric since, with reconciliation to GAAP, it may provide greater insight into the Company's financial results. Management does not intend the presentation of this non-GAAP financial measure to be considered in isolation or as a substitute for results prepared in accordance with GAAP. These non-GAAP financial measures should be read only in conjunction with the Company's consolidated financial statements prepared in accordance with GAAP.
Forward-Looking Statements
This press release contains forward-looking statements which are made pursuant to the safe harbor provisions of Private Securities Litigation Reform Act of 1995, including statements regarding expectations for future financial performance, expected growth and business outlook, and the benefits of the Company's service offerings. The forward-looking statements in this release do not constitute guarantees of future performance. These statements are neither promises nor guarantees, and are subject to a variety of risks and uncertainties, many of which are beyond our control, which could cause actual results to differ materially from those contemplated in these forward-looking statements. In particular, the risks and uncertainties include, among other things: our history of operating losses and fluctuating operating results; our variable sales and implementation sales cycles, which may result in fluctuations in our quarterly results; risk associated with our expectations regarding the timing and likelihood of achieving profitability; the highly competitive industry in which we operate and the relative immaturity of the market for our service offerings; the risk that our services offerings will not operate in the manner that we expect, including interruptions in service or errors or omissions that may occur in our rules engine and databases; and the evolving and complex government regulatory compliance environment in which we and our clients operate. Existing and prospective investors are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. athenahealth, Inc. undertakes no obligation to update or revise the information contained in this press release, whether as a result of new information, future events or circumstances or otherwise. For additional disclosure regarding these and other risks faced by athenahealth, Inc., see the disclosure contained in our public filings with the Securities and Exchange Commission, available on its investor relations website at http://www.athenahealth.com and on the SEC's website at http://www.sec.gov.
athenahealth, Inc.
CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands, except per share amounts)
December 31 December 31
2007 2006
------------------------
Assets
Current assets:
Cash and cash equivalents $ 71,891 $ 4,191
Short-term investments -- 5,545
Accounts receivable, net of allowance of
$775 and $565 at December 31, 2007 and
2006, respectively 14,155 10,009
Prepaid expenses and other current assets 2,643 1,610
---------- ----------
Total current assets 88,689 21,355
Property and equipment - net 11,298 13,481
Restricted cash 1,713 3,170
Software development costs - net 1,851 1,720
Other assets 85 247
---------- ----------
Total assets $ 103,636 $ 39,973
========== ==========
Liabilities, Convertible Preferred Stock and Stockholders' Equity
(Deficit)
Current liabilities:
Line of credit $ -- $ 7,204
Current portion of long-term debt 463 3,116
Accounts payable 1,048 1,130
Accrued compensation expenses 6,451 5,025
Accrued expenses 3,725 2,609
Deferred revenue 4,243 3,614
Current portion of deferred rent 1,029 948
---------- ----------
Total current liabilities 16,959 23,646
Warrant liability -- 2,423
Deferred rent, net of current portion 10,223 11,108
Long term debt, net of current portion 935 16,973
---------- ----------
Total liabilities 28,117 54,150
========== ==========
Convertible preferred stock, $0.01 par
value - no shares authorized, issued or
outstanding at December 31, 2007; 26,390
shares authorized, 22,332 shares issued
and 21,531 shares outstanding at December
31, 2006; at redemption value -- 50,094
Stockholders' equity (deficit):
Preferred stock, $0.01 par value - 5,000
shares authorized and no shares issued and
outstanding at December 31, 2007; no
shares issued no shares authorized, issued
and outstanding at December 31, 2006: -- --
Common stock, $0.01 par value - 125,000
shares authorized, 33,613 shares issued,
32,335 shares outstanding at December 31,
2007; 50,000 shares authorized, 5,281
shares issued and 4,804 shares outstanding
at December 31, 2006 336 53
Additional paid-in capital 144,994 2,090
Treasury stock, at cost, 1,278 shares (1,200) (1,200)
Accumulated other comprehensive income
(loss) 72 (34)
Accumulated deficit (68,683) (65,180)
---------- ----------
Total stockholders' equity (deficit) 75,519 (64,271)
---------- ----------
Total liabilities, convertible preferred
stock and stockholders' equity (deficit) $ 103,636 $ 39,973
========== ==========
athenahealth, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except per share amounts)
Three Months Ended Year Ended
December 31, December 31,
------------------ ------------------
2007 2006 2007 2006
-------- -------- -------- --------
(in thousands except per share data)
Revenue:
Business services $ 26,534 $ 19,485 $ 94,182 $ 70,652
Implementation and other 1,631 1,361 6,591 5,161
-------- -------- -------- --------
Total revenue 28,165 20,846 100,773 75,813
-------- -------- -------- --------
Expenses(1):
Direct operating 12,235 9,906 46,135 36,530
Selling and marketing 4,569 4,397 17,212 15,645
Research and development 2,025 2,257 7,476 6,903
General and administrative 6,010 4,426 19,922 16,347
Depreciation and amortization 1,216 1,650 5,541 6,238
-------- -------- -------- --------
Total expenses 26,055 22,636 96,286 81,663
-------- -------- -------- --------
Operating income (loss) 2,110 (1,790) 4,487 (5,850)
Other income (expense):
Interest income 1,059 121 1,415 372
Interest expense (1,283) (788) (3,682) (2,671)
Other expense -- (257) (5,689) (702)
-------- -------- -------- --------
Total other expense (224) (924) (7,956) (3,001)
-------- -------- -------- --------
Income (loss) before income
taxes and cumulative
effect of change in accounting
principle 1,886 (2,714) (3,469) (8,851)
Income tax provision 183 -- (34) --
-------- -------- -------- --------
Income (loss) before
cumulative effect of change
in accounting principle 2,069 (2,714) (3,503) (8,851)
Cumulative effect of change in
accounting principle -- -- -- (373)
-------- -------- -------- --------
Net income (loss) $ 2,069 $ (2,714) $ (3,503) $ (9,224)
======== ======== ======== ========
Net income (loss) per share -
basic before cumulative
effect of change in
accounting principle $ 0.06 $ (0.58) $ (0.28) $ (1.88)
Cumulative effect of change
in accounting principle -- -- -- (0.08)
-------- -------- -------- --------
Net income (loss) per share -
basic $ 0.06 $ (0.58) $ (0.28) $ (1.96)
======== ======== ======== ========
Net income (loss) per share -
diluted before cumulative
effect of change in
accounting principle $ 0.06 $ (0.58) $ (0.28) $ (1.88)
Cumulative effect of change
in accounting principle -- -- -- (0.08)
-------- -------- -------- --------
Net income (loss) per share
- diluted $ 0.06 $ (0.58) $ (0.28) $ (1.96)
======== ======== ======== ========
Weighted average shares
Basic 32,315 4,708 12,568 4,708
Diluted 34,891 4,708 12,568 4,708
(unaudited, in thousands) Three months ended Year ended
December 31, December 31,
------------------ ------------------
2007 2006 2007 2006
-------- -------- -------- --------
(1) Stock-based compensation
charged to:
Direct operating $ 45 $ 21 $ 181 $ 64
Selling and marketing 13 12 97 43
Research and development 82 16 260 53
General and administrative 234 136 773 196
-------- -------- -------- --------
Total $ 374 $ 185 $ 1,311 $ 356
======== ======== ======== ========
(unaudited, in thousands) Three months ended Year ended
December 31, December 31,
------------------ ------------------
2007 2006 2007 2006
-------- -------- -------- --------
Revenue $ 28,165 $ 20,846 $100,773 $ 75,813
Net income (loss) 2,069 (2,714) (3,503) (9,224)
Provision for income taxes (183) -- 34 --
Interest expense, net 224 667 2,267 2,299
Other expense -- 257 5,689 702
Depreciation and amortization 1,216 1,650 5,541 6,238
Stock-based compensation
expense 374 185 1,311 356
Cumulative effect of change in
accounting principle -- -- -- 373
-------- -------- -------- --------
Adjusted EBITDA $ 3,700 $ 45 $ 11,339 $ 744
======== ======== ======== ========
Adjusted EBITDA margin 13.1% 0.2% 11.3% 1.0%
======== ======== ======== ========
Set forth below is a breakout of stock-based compensation expense for the year ended December 31, 2007 and 2006 (no amounts were capitalized):
(unaudited, in thousands) Three months ended Year ended
December 31, December 31,
------------------ ------------------
2007 2006 2007 2006
-------- -------- -------- --------
(1) Stock-based compensation
charged to:
Direct operating $ 45 $ 21 $ 181 $ 64
Selling and marketing 13 12 97 43
Research and development 82 16 260 53
General and administrative 234 136 773 196
-------- -------- -------- --------
Total $ 374 $ 185 $ 1,311 $ 356
======== ======== ======== ========
Set forth below is a reconciliation of our "adjusted EBITDA" to our net income (loss), the most directly comparable financial measure calculated and presented in accordance with GAAP.
(unaudited, in thousands) Three months ended Year ended
December 31, December 31,
------------------ ------------------
2007 2006 2007 2006
-------- -------- -------- --------
Revenue $ 28,165 $ 20,846 $100,773 $ 75,813
Net income (loss) 2,069 (2,714) (3,503) (9,224)
Provision for income taxes (183) -- 34 --
Interest expense, net 224 667 2,267 2,299
Other expense -- 257 5,689 702
Depreciation and amortization 1,216 1,650 5,541 6,238
Stock-based compensation
expense 374 185 1,311 356
Cumulative effect of change in
accounting principle -- -- -- 373
-------- -------- -------- --------
Adjusted EBITDA $ 3,700 $ 45 $ 11,339 $ 744
======== ======== ======== ========
Adjusted EBITDA margin 13.1% 0.2% 11.3% 1.0%
======== ======== ======== ========
Set forth below is a reconciliation of our "adjusted net income (loss)" to our net income, the most directly comparable financial measure calculated and presented in accordance with GAAP.
(unaudited, in thousands except per share amounts)
Three months
ended Year ended
December 31, December 31,
----------------- -----------------
2007 2006 2007 2006
------- ------- ------- -------
Net income (loss) $ 2,069 $(2,714) $(3,503) $(9,224)
Other expense -- 257 5,689 702
Stock-based compensation
expense 374 185 1,311 356
Cumulative effect of
change in accounting
principle -- -- -- 373
------- ------- ------- -------
Adjusted net income
(loss) $ 2,443 $(2,272) $ 3,497 $(7,793)
======= ======= ======= =======
Weighted average shares
- diluted 34,891 4,708 12,568 4,708
Adjusted net income
(loss) per share
- diluted $ 0.07 $ (0.48) $ 0.28 $ (1.66)
Set forth below is a presentation of our "adjusted gross margin":
(unaudited, in thousands) Three months
ended Year ended
December 31, December 31,
------------------ ------------------
2007 2006 2007 2006
-------- -------- -------- --------
Total revenue $ 28,165 $ 20,846 $100,773 $ 75,813
Direct operating
expense 12,235 9,906 46,135 36,530
-------- -------- -------- --------
Total revenue less
direct operating
expense 15,930 10,940 54,638 39,283
Stock-based compensation
expense allocated to
direct operating expense 45 21 181 64
-------- -------- -------- --------
Adjusted gross profit $ 15,975 $ 10,961 $ 54,819 $ 39,347
======== ======== ======== ========
Adjusted gross margin 56.7% 52.6% 54.4% 51.9%
======== ======== ======== ========