Athenahealth Initiated at Outperform - Analyst Blog
28 Septembre 2011 - 4:45PM
Zacks
We initiate our coverage on
Athenahealth (ATHN), a leading provider of
electronic health record (“EHR”) for medical establishments, with
an Outperform rating. Second-quarter fiscal 2011 earnings per share
of 14 cents beat the Zacks Consensus Estimate of 11 cents. Revenues
of $78 million came in ahead of the Zacks Consensus Estimate of $75
million.
The company’s web-based deployment
provides a low-cost scalable service while its flexible rules
engine leads to higher efficiency in claims settlement. The
Software-as-a-Service (SaaS)-based approach allows for a more
flexible delivery mechanism that is expected to help Athenahealth
win deals. The company has traditionally enjoyed high customer
satisfaction rates, which facilitate a larger number of
referrals.
Athenahealth’s unique business
model makes it a strong provider of revenue cycle management
(“RCM”) services (athenaCollector) to small physician practices.
Its EHR product (athenaClinical) is a key player in ambulatory
settings. We believe that sales of athenaClinical are likely
to remain robust, given the opportunity for physicians to earn
incentive payments under the federal stimulus (HITECH
provisions).
The company should benefit from its
extensive athenaCollector client base, as only a minority of its
subscriber base also utilizes athenaClinical. Cross selling
represents a solid growth opportunity in the near term. In this
regard, Athenahealth has made rapid strides in capturing the EHR
business of physician practices. However, this segment is shrinking
as hospitals increasingly absorb physician practices.
Athenahealth has geared itself for
the enterprise segment through its strategic alliance with
Microsoft (MSFT) and acquisition of Proxsys, both
earlier in 2011. The company has recently signed on, and executed,
several enterprise-sized deals, which provide it with a credible
and reference-able client base.
Expansion of operating margin, a
rising proportion of recurring revenues and better-than-expected
quarterly results are pillars of strength. We believe that the
company’s guidance for 2011 may leave further potential for upside
thereby providing room for earnings revision or surprise.
However, the federal stimulus will
gradually wind down but the replacement market is growing.
Competition is fierce and larger competitors may benefit from the
incumbency factor. Industry stalwarts, such as
Cerner (CERN), offer long-standing seamless
products integrating inpatient and ambulatory-care systems.
Quality Systems (QSII) and
Allscripts Healthcare Solutions
(MDRX) are two other well-known competitors in a crowded field,
which also includes low-end players such as Emdeon
(EM).
ATHENAHEALTH IN (ATHN): Free Stock Analysis Report
CERNER CORP (CERN): Free Stock Analysis Report
EMDEON INC-A (EM): Free Stock Analysis Report
ALLSCRIPTS HLTH (MDRX): Free Stock Analysis Report
MICROSOFT CORP (MSFT): Free Stock Analysis Report
QUALITY SYS (QSII): Free Stock Analysis Report
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