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athenahealth, Inc. Reports Second Quarter Fiscal Year 2010 Results

July 22, 2010
athenahealth, Inc. Reports Second Quarter Fiscal Year 2010 Results

--28% Revenue Growth Over Second Quarter of 2009
--GAAP Net Income of $1.3 Million, or $0.04 Per Diluted Share
--Non-GAAP Adjusted Net Income of $4.1 Million, or $0.12 Per Diluted Share

WATERTOWN, Mass., Jul 22, 2010 (BUSINESS WIRE) -- athenahealth, Inc. (Nasdaq: ATHN), (the "Company"), a leading provider of web-based practice management, electronic health record (EHR), and patient communication services to medical groups, today announced financial and operational results for the second quarter of fiscal year 2010. The Company will conduct a conference call on Friday, July 23, 2010, at 8:00 a.m. Eastern Time to discuss these results and management's outlook for future financial and operational performance. In addition, the Company has furnished prepared remarks in conjunction with this press release via a Current Report on Form 8-K. These prepared remarks, including supplemental charts containing non-financial metrics commonly reported with quarterly results, are available within the Investors section of the Company's website at www.athenahealth.com.

Total revenue for the three months ended June 30, 2010, was $58.6 million, compared to $45.6 million in the same period last year, an increase of 28%.

"athenahealth has successfully evolved from a single-product company to a full service partner across billing, medical records and patient communications," said Jonathan Bush, the Company's Chairman, President and Chief Executive Officer. "As part of this evolution, the sale of multiple services to clients is becoming a more significant driver of growth."

For the three months ended June 30, 2010, Non-GAAP Adjusted Gross Margin was 60.7%, up from 58.6% in the same period last year. Non-GAAP Adjusted EBITDA was $9.9 million, or 16.9% of total revenue, compared to Non-GAAP Adjusted EBITDA of $7.7 million, or 16.8% of total revenue in the same period last year. GAAP Net Income for the second quarter of 2010 was $1.3 million, or $0.04 per diluted share compared to GAAP Net Income of $2.2 million or $0.06 per diluted share in the same period last year. Non-GAAP Adjusted Net Income was $4.1 million, or $0.12 per diluted share compared to $3.4 million or $0.10 per diluted share in the same period last year.

"The Company demonstrated strong revenue growth and increased adoption of our services during the first half of 2010," said Tim Adams, the Company's Chief Financial Officer and Treasurer. "Despite continued softness in physician office activity as well as the June Medicare claims hold that shifted about $1 million in business services revenue out of Q2 2010 and into Q3 2010, we grew revenue by 28% over Q2 2009 and continued to expand our Adjusted Gross Margin as well."

Adams continued, "Looking ahead to the second half of 2010, we continue to expect Q3 2010 annual revenue growth of at least 30%. However, due to the lighter than expected physician office activity our clients are experiencing, we do not expect Q4 2010 annual revenue growth to reach our prior 30% target. Thus, for the full year 2010 we currently expect to achieve 29-30% growth in total revenue. In terms of profitability, we continue to expect year-over-year expansion in Adjusted Gross Margins as well as year-over-year expansion in Adjusted EBITDA and Adjusted Operating Margins during Q3 2010 and Q4 2010."

Key metrics and milestones in the second quarter of 2010 included the following:

  • $1.4 billion in collections posted to client accounts, compared to $1.2 billion in the same quarter of 2009
  • 38.8 average client Days in Accounts Receivable (DAR), compared to 40.2 average client DAR in the same quarter of 2009
  • 17,136 active physicians using athenaCollector® at June 30, 2010, compared to 13,591 at June 30, 2009
  • 24,782 active medical providers using athenaCollector at June 30, 2010, compared to 20,323 at June 30, 2009
  • 2,256 active medical providers using athenaClinicalsSM at June 30, 2010, 1,548 of which were physicians, compared to 1,043 providers and 624 physicians at June 30, 2009
  • 689 active medical providers using athenaCommunicatorSM at June 30, 2010, 442 of which were physicians.

As of June 30, 2010, the Company had cash, cash equivalents, and short-term investments of $89.4 million and short- and long-term debt and capital lease obligations of $11.0 million.

Use of Non-GAAP Financial Measures

In the Company's earnings releases, conference calls, slide presentations, or webcasts, the Company may use or discuss non-GAAP financial measures as defined by SEC Regulation G. The GAAP financial measure most directly comparable to each non-GAAP financial measure used or discussed, and a reconciliation of the differences between each non-GAAP financial measure and the comparable GAAP financial measure, are included in this press release after the condensed consolidated financial statements. The Company's earnings press releases containing such non-GAAP reconciliations can be found on the Investors section of the Company's web site at www.athenahealth.com.

Conference Call Information

To participate in the Company's live conference call and webcast, please dial 877-303-6175 (678-809-1072 for international calls) using conference code No. 84476278 or visit the Investors section of the Company's web site:www.athenahealth.com. A replay will be available for one week following the conference call at 800-642-1687 (706-645-9291 for international calls) using conference code No. 84476278. A webcast replay will also be archived on the Company's website.

About athenahealth

athenahealth, Inc. is a leading provider of web-based business services for medical groups. athenahealth's service offerings are based on proprietary web-native practice management and electronic health record (EHR) software, a continuously updated payer knowledge-base, integrated back-office service operations, and automated and live patient communication services. For more information, please visit www.athenahealth.com.  or call (888) 652-8200.

Forward-Looking Statements

This press release contains forward-looking statements, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including statements reflecting management's expectations for future financial and operational performance and operating expenditures, expected growth, including anticipated annual growth rates, profitability and business outlook, the benefits of the Company's current service offerings, and statements found under the Company's Reconciliation of Non-GAAP Financial Measures section of this release. 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 the Company's 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: the Company's fluctuating operating results; the Company's variable sales and implementation cycles, which may result in fluctuations in its quarterly results; risks associated with its expectations regarding its ability to maintain profitability; the impact of increased sales and marketing expenditures, including whether increased expansion in revenues is attained and whether impact on margins and profitability is longer term than expected; changes in tax rates or exposure to additional tax liabilities; the highly competitive industry in which the Company operates and the relative immaturity of the market for its service offerings; and the evolving and complex governmental and regulatory compliance environment in which the Company and its 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. The Company 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 the Company, see the disclosures contained in its public filings with the Securities and Exchange Commission, available on the Investors section of the Company's website at www.athenahealth.com.  and on the SEC's website at www.sec.gov.

   

athenahealth, Inc.

 

CONDENSED CONSOLIDATED BALANCE SHEETS

 

(Unaudited, in thousands, except per share amounts)

 
         
    June   December
      30, 2010       31, 2009  
         
Assets        
Current assets:        
Cash and cash equivalents   $ 27,945     $ 30,526  
Short-term investments     61,457       52,323  
Accounts receivable - net     35,247       33,323  
Deferred tax assets     3,932       5,544  
Prepaid expenses and other current assets     6,529       4,663  
Total current assets     135,110       126,379  
         
Property and equipment - net     31,053       24,871  
Restricted cash     8,885       9,216  
Software development costs - net     2,768       2,324  
Purchased intangibles - net     13,570       14,490  
Goodwill     22,120       22,120  
Deferred tax assets     12,295       10,284  
Other assets     1,116       1,393  
Total assets   $ 226,917  

 

$ 211,077  
         
Liabilities & Stockholders' Equity        
Current liabilities:        
Current portion of long-term debt and capital lease obligations   $ 3,322     $ 3,437  
Accounts payable     2,246       1,880  
Accrued compensation     14,647       15,774  
Accrued expenses     11,316       10,781  
Current portion of deferred revenue     5,419       4,038  
Interest rate derivative liability     655       291  
Current portion of deferred rent     1,372  

 

  1,288  
Total current liabilities     38,977       37,489  
Deferred revenue, net of current portion     32,169       28,684  
Other long-term liabilities     1,191       1,191  
Deferred rent, net of current portion     6,746       7,444  
Debt and capital lease obligations, net of current portion     7,643       8,951  
Total liabilities     86,726       83,759  
         
Stockholders' equity:        

Preferred stock, $0.01 par value: 5,000 shares authorized; no shares issued and outstanding at June 30, 2010 and December 31, 2009, respectively

    -       -  

Common stock, $0.01 par value: 125,000 shares authorized; 35,417 shares issued, and 34,139 shares outstanding at June 30, 2010; 35,166 shares issued and 33,888 shares outstanding at December 31, 2009.

    354       352  
Additional paid-in capital     181,113       169,715  
Treasury stock, at cost, 1,278 shares     (1,200 )     (1,200 )
Accumulated other comprehensive income     (175 )     (73 )
Accumulated deficit     (39,901 )

 

  (41,476 )
Total stockholders' equity     140,191       127,318  
Total liabilities and stockholders' equity   $ 226,917     $ 211,077  
 

athenahealth, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited, in thousands, except per share amounts)

                 
    Three Months Ended   Six Months Ended
    June 30,   June 30,
      2010       2009       2010       2009  
        (as restated)       (as restated)
Revenue:                
Business services   $ 56,399     $ 44,429     $ 108,964     $ 84,324  
Implementation and other     2,153       1,219       4,065       2,352  
Total revenue     58,552       45,648       113,029       86,676  
                 
Expense:                
Direct operating     24,101       19,397       47,620       37,958  
Selling and marketing     12,693       8,888       24,753       15,887  
Research and development     4,824       3,439       8,898       6,620  
General and administrative     11,403       8,394       23,080       16,595  
Depreciation and amortization     2,657       1,798       5,077       3,437  
Total expense     55,678       41,916       109,428       80,497  
                 
Operating income     2,874       3,732       3,601       6,179  
                 
Other income (expense):                
Interest income     66       320       144       722  
Interest expense     (118 )     (283 )     (335 )     (457 )
(Loss) gain on interest rate derivative contract     (304 )     308       (364 )     500  
Other income     33       79       63       115  
Total other income     (323 )     424       (492 )     880  
                 
Income before income taxes     2,551       4,156       3,109       7,059  
Income tax provision     (1,253 )     (1,912 )     (1,534 )     (3,277 )
                 
Net income   $ 1,298     $ 2,244     $ 1,575     $ 3,782  
                 
Net income per share - Basic   $ 0.04     $ 0.07     $ 0.05     $ 0.11  
                 
Net income per share - Diluted   $ 0.04     $ 0.06     $ 0.04     $ 0.11  
                 
Weighted average shares used in computing net income per share:                
Basic     34,106       33,527       34,061       33,472  
Diluted     35,178       34,822       35,190       34,818  
 

athenahealth, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in thousands)

         
    Six Months Ended
    June 30,
      2010       2009  
CASH FLOWS FROM OPERATING ACTIVITIES:      

(as restated)

Net income   $ 1,575     $ 3,782  
Adjustments to reconcile net income to net cash provided by operating activities:        
Depreciation and amortization     5,997       3,596  
Amortization of premium (discounts) on investments     733       (442 )
Provision for uncollectible accounts     423       168  
Deferred income taxes     (399 )     2,880  
Tax benefit from stock-based awards     (1,281 )     (1,231 )
Increase in fair value of contingent consideration     304       -  
Loss (gain) on interest rate derivative contract     364       (500 )
Stock compensation expense     6,694       3,992  
Changes in operating assets and liabilities:        
Accounts receivable     (2,347 )     (612 )
Prepaid expenses and other current assets     (584 )     (1,289 )
Other long-term assets     277       32  
Accounts payable     128       800  
Accrued expenses     (896 )     (1,431 )
Deferred revenue     4,866       2,801  
Deferred rent     (614 )     (543 )
Net cash provided by operating activities     15,240       12,003  
         
CASH FLOWS FROM INVESTING ACTIVITIES:        
Capitalized software development costs     (1,579 )     (1,060 )
Purchases of property and equipment     (9,870 )     (5,061 )
Proceeds from sales and maturities of investments     50,450       37,000  
Proceeds from sale or disposal of equipment     363       3,366  
Purchases of short-term investments     (60,372 )     (51,770 )
Decrease in restricted cash     331       332  
Net cash used in investing activities     (20,677 )     (17,193 )
         
CASH FLOWS FROM FINANCING ACTIVITIES:        
Proceeds from issuance of common stock under stock plans     3,425       697  
Payments on long-term debt and capital lease obligations     (1,786 )     (2,319 )
Tax benefit from stock-based awards     1,281       1,231  
Net cash provided by (used in) financing activities     2,920       (391 )
Effects of exchange rate changes on cash and cash equivalents     (64 )     (32 )
Net decrease in cash and cash equivalents     (2,581 )     (5,613 )
Cash and cash equivalents at beginning of period     30,526       28,933  
Cash and cash equivalents at end of period   $ 27,945     $ 23,320  
         

Supplemental disclosures of non-cash items - Property and equipment recorded in accounts payable and accrued expenses

  $ 273     $ 37  
         
Supplemental disclosures of cash flow information -        
Cash paid for interest   $ 284     $ 317  
         
Cash paid for taxes   $ 1,389     $ 514  
         
Change in fair value of contingent consideration   $ 304     $ -  
         
Property and equipment acquired under capital leases   $ 363     $ 3,366  
 

athenahealth, Inc.

STOCK-BASED COMPENSATION EXPENSE

(Unaudited, in thousands)

                 

Set forth below is a breakout of stock-based compensation expense for the three and six months ended June 30, 2010 and 2009:

                 
(unaudited, in thousands)   Three Months Ended   Six Months Ended
    June 30,   June 30,
      2010     2009     2010     2009

Stock-based compensation charged to:

               
Direct operating   $ 652   $ 400   $ 1,120   $ 775
Selling and marketing     888     529     1,578     1,043
Research and development     679     251     1,003     494
General and administrative     1,691     896     2,993     1,680
Total   $ 3,910   $ 2,076   $ 6,694   $ 3,992

athenahealth, Inc.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
TO COMPARABLE GAAP MEASURES
(Unaudited, in thousands, except per share amounts)

The following is a reconciliation of the non-GAAP financial measures used by the Company to describe the Company's financial results determined in accordance with United States generally accepted accounting principles (GAAP). An explanation of these measures is also included below under the heading "Explanation of Non-GAAP Financial Measures" set forth below.

While management believes that these non-GAAP financial measures provide useful supplemental information to investors regarding the underlying performance of the Company's business operations, investors are reminded to consider these non-GAAP measures in addition to, and not as a substitute for, financial performance measures prepared in accordance with GAAP. In addition, it should be noted that these non-GAAP financial measures may be different from non-GAAP measures used by other companies, and management may utilize other measures to illustrate performance in the future. Non-GAAP measures have limitations in that they do not reflect all of the amounts associated with the Company's results of operations as determined in accordance with GAAP.

 

Non-GAAP Adjusted Gross Margin

Set forth below is a presentation of the Company's "Non-GAAP Adjusted Gross Profit" and "Non-GAAP Adjusted Gross Margin," which represents Non-GAAP Adjusted Gross Profit as a percentage of total revenue.

                 
(unaudited, in thousands)   Three Months Ended   Six Months Ended
    June 30,   June 30,
      2010       2009       2010       2009  
        (As Restated)       (As Restated)
Total revenue   $ 58,552     $ 45,648     $ 113,029     $ 86,676  
Direct operating expense     24,101       19,397       47,620       37,958  

Total revenue less direct operating expense

    34,451       26,251       65,409       48,718  

Add: Stock-based compensation expense allocated to direct operating expense

    652       400       1,120       775  
Add: Amortization of purchased intangibles     460       80       920       160  
                 
Non-GAAP Adjusted Gross Profit   $ 35,563     $ 26,731     $ 67,449     $ 49,653  
                 
Non-GAAP Adjusted Gross Margin     60.7 %     58.6 %     59.7 %     57.3 %
 

Non-GAAP Adjusted EBITDA

Set forth below is a reconciliation of the Company's "Non-GAAP Adjusted EBITDA" and "Non-GAAP Adjusted EBITDA Margin," which represents Non-GAAP Adjusted EBITDA as a percentage of total revenue.

                 
(unaudited, in thousands)   Three Months Ended   Six Months Ended
    June 30,   June 30,
      2010       2009       2010       2009  
        (As Restated)       (As Restated)
Total Revenue   $ 58,552     $ 45,648     $ 113,029     $ 86,676  
                 
GAAP net income     1,298       2,244       1,575       3,782  
Add: Provision for income taxes     1,253       1,912       1,534       3,277  
Add (less) : Total other (income) expense     323       (424 )     492       (880 )
Add: Stock-based compensation expense     3,910       2,076       6,694       3,992  
Add: Depreciation and amortization     2,657       1,798       5,077       3,437  
Add: Amortization of purchased intangibles     460       80       920       160  
                 
Non-GAAP Adjusted EBITDA   $ 9,901     $ 7,686     $ 16,292     $ 13,768  
                 
Non-GAAP Adjusted EBITDA Margin     16.9 %     16.8 %     14.4 %     15.9 %
 

Non-GAAP Adjusted Operating Income

Set forth below is a reconciliation of the Company's "Non-GAAP Adjusted Operating Income" and "Non-GAAP Adjusted Operating Income Margin." Non-GAAP Adjusted Operating Income Margin represents Non-GAAP Adjusted Operating Income as a percentage of total revenue.

                 
(unaudited, in thousands)   Three Months Ended   Six Months Ended
    June 30,   June 30,
      2010       2009       2010       2009  
        (As Restated)       (As Restated)
Total revenue   $ 58,552     $ 45,648     $ 113,029     $ 86,676  
                 
GAAP net income   $ 1,298     $ 2,244     $ 1,575     $ 3,782  
Add: Provision for income taxes     1,253       1,912       1,534       3,277  
Add (less) : Total other (income) expense     323       (424 )     492       (880 )
Add: Stock-based compensation expense     3,910       2,076       6,694       3,992  
Add: Amortization of purchased intangibles     460       80       920       160  
                 
Non-GAAP Adjusted Operating Income   $ 7,244     $ 5,888     $ 11,215     $ 10,331  
                 
Non-GAAP Adjusted Operating Income Margin     12.4 %     12.9 %     9.9 %     11.9 %
 

Non-GAAP Adjusted Net Income

Set forth below is a reconciliation of the Company's "Non-GAAP Adjusted Net Income" and "Non-GAAP Adjusted Net Income per Diluted Share."

                 
(unaudited, in thousands except per share amounts)   Three Months Ended   Six Months Ended
    June 30,   June 30,
      2010       2009       2010       2009  
        (As Restated)       (As Restated)
GAAP net income   $ 1,298     $ 2,244     $ 1,575     $ 3,782  
(Less) Add: (Gain) loss on interest rate derivative     304       (308 )     364       (500 )
Add: Stock-based compensation expense     3,910       2,076       6,694       3,992  
Add: Amortization of purchased intangibles     460       80       920       160  
                 
Sub-total of tax deductible items     4,674       1,848       7,978       3,652  
                 
(Less): Tax impact of tax deductible items (1)     (1,870 )     (739 )     (3,191 )     (1,461 )
                 
Non-GAAP Adjusted Net Income   $ 4,102     $ 3,353     $ 6,362     $ 5,973  
                 
Weighted average shares - diluted     35,178       34,822       35,190       34,818  
                 
Non-GAAP Adjusted Net Income per Diluted Share   $ 0.12     $ 0.10     $ 0.18     $ 0.17  
                 
(1) - Tax impact calculated using federal statutory tax rate of 34% and a blended state tax rate of 6%
*Note that Other (income) expense is no longer excluded per revised non-GAAP methodology as discussed in our Current Report on Form 8-K filed with the SEC on February 4, 2010
 
(unaudited, in thousands except per share amounts)   Three Months Ended   Six Months Ended
    June 30,   June 30,
      2010       2009       2010       2009  
        (As Restated)       (As Restated)
GAAP net income per share - diluted   $ 0.04     $ 0.06     $ 0.04     $ 0.11  
(Less) Add: (Gain) loss on interest rate derivative     0.01       (0.01 )     0.01       (0.01 )
Add: Stock-based compensation expense     0.11       0.06       0.19       0.11  
Add: Amortization of purchased intangibles     0.01       -       0.03       -  
                 
Sub-total of tax deductible items     0.13       0.05       0.23       0.10  
                 
(Less): Tax impact of tax deductible items (1)     (0.05 )     (0.01 )     (0.09 )     (0.04 )
                 
Non-GAAP Adjusted Net Income per Diluted Share   $ 0.12     $ 0.10     $ 0.18     $ 0.17  
                 
Weighted average shares - diluted     35,178       34,822       35,190       34,818  
                 
(1) - Tax impact calculated using federal statutory tax rate of 34% and a blended state tax rate of 6%
*Note that Other (income) expense is no longer excluded per revised non-GAAP methodology as discussed in our Current Report on Form 8-K filed with the SEC on February 4, 2010

Explanation of Non-GAAP Financial Measures

The Company reports its financial results in accordance with United States generally accepted accounting principles, or GAAP. However, management believes that in order to properly understand the Company's short-term and long-term financial and operational 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. Management also uses results of operations before such items to evaluate the operating performance of the Company and compare it against past periods, make operating decisions, and serve as a basis for strategic planning. These non-GAAP financial measures provide management with additional means to understand and evaluate the operating results and trends in the Company's ongoing business by eliminating certain non-cash expenses and other items that management believes might otherwise make comparisons of the Company's ongoing business with prior periods more difficult, obscure trends in ongoing operations, or reduce management's ability to make useful forecasts. Management believes that these non-GAAP financial measures provide additional means of evaluating period-over-period operating performance. In addition, management understands that some investors and financial analysts find this information helpful in analyzing the Company's financial and operational performance and comparing this performance to its peers and competitors.

Management defines "Non-GAAP Adjusted Gross Profit" as total revenue, less direct operating expense, plus stock-based compensation expense allocated to direct operating expense and amortization of purchased intangibles, and "Non-GAAP Adjusted Gross Margin" as non-GAAP Adjusted Gross Profit as a percentage of total revenue. Management considers these non-GAAP financial measures to be important indicators of the Company's operational strength and performance of its business and a good measure of its historical operating trends. Moreover, management believes that these measures enable investors and financial analysts to closely monitor and understand changes in the Company's ability to generate income from ongoing business operations.

Management defines "Non-GAAP Adjusted EBITDA" as the sum of GAAP net income before provision for (benefit from) income taxes, total other (income) expense, stock-based compensation expense, depreciation and amortization, acquisition-related expenses and amortization of purchased intangibles and "Non-GAAP Adjusted EBITDA Margin" as Non-GAAP Adjusted EBITDA as a percentage of total revenue. Management defines "Non-GAAP Adjusted Operating Income" as the sum of GAAP net income before provision for (benefit from) income taxes, total other (income) expense, stock-based compensation expense, acquisition-related expenses and amortization of purchased intangibles and "Non-GAAP Adjusted Operating Income Margin" as Non-GAAP Adjusted Operating Income as a percentage of total revenue. Management defines "Non-GAAP Adjusted Net Income" as the sum of GAAP net income before unrealized (gain) loss on an interest rate derivative, stock-based compensation expense, acquisition-related expenses, amortization of purchased intangibles, and any tax impact related to these items, and "Non-GAAP Adjusted Net Income per Diluted Share" as Non-GAAP Adjusted Net Income divided by weighted average diluted shares outstanding. Management considers these non-GAAP financial measures to be important indicators of the Company's operational strength and performance of its business and a good measure of its historical operating trends, in particular the extent to which ongoing operations impact the Company's overall financial performance.

Management excludes each of the items identified below from the applicable non-GAAP financial measure referenced above for the reasons set forth with respect to that excluded item:

 

  • Stock-based compensation expense -- excluded because these are non-cash expenses that management does not consider part of ongoing operating results when assessing the performance of the Company's business, and also because the total amount of expense is partially outside of the Company's control because it is based on factors such as stock price volatility and interest rates, which may be unrelated to our performance during the period in which the expense is incurred.
  • Acquisition-related expenses and amortization of purchased intangibles -- acquisition-related expenses are reported at the time acquisition costs are incurred, and purchased intangibles are amortized over a period of several years after the acquisition and generally cannot be changed or influenced by management after the acquisition. Accordingly, these items are not considered by management in making operating decisions, and management believes that such expenses do not have a direct correlation to future business operations. Thus, including such charges does not accurately reflect the performance of the Company's ongoing operations for the period in which such charges are incurred.
  • Unrealized gains and losses on interest rate derivative -- excluded because until they are realized, to the extent these gains or losses impact a period presented, management does not believe that they reflect the underlying performance of ongoing business operations for such period.

Click here to view Q2 2010 Prepared Remarks and Supplemental Metrics Sheet.

SOURCE: athenahealth, Inc.

athenahealth, Inc.
Jennifer Heizer (Investors), 617-402-1322
Director, Investor Relations
investorrelations@athenahealth.com
or
John Hallock (Media), 617-402-1428
Director, Corporate Communications
media@athenahealth.com

Copyright Business Wire 2010

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