13 in a Row for athenahealth, Inc (ATHN)

The number 13 stood out for athenahealth, Inc (NASDAQ:ATHN) CEO Jonathan Bush when discussing his company’s earnings announced on Thursday. That’s the number of consecutive years that athenahealth grew sales by 30% or more. There were other good numbers mentioned in the quarterly results also — enough to send shares rising more than 4% in early trading on Friday. Let’s take a look.

Up and up
Fourth-quarter revenue was up 26% year-over-year to $116.3 million. GAAP earnings came in at $5.9 million, or $0.16 per diluted share. That’s up from $5.3 million, or $0.15 per diluted share, in the fourth quarter of 2011. Adjusted earnings increased to $0.29 per diluted share from $0.26 per diluted share in the prior year. The average analyst estimate was $0.28 per share.

athenahealth, Inc (NASDAQ:ATHN)Not everything was up for the full year. Revenue jumped 30% from 2011′s total of $324.1 million to $422.3 million in 2012. However, GAAP earnings fell from $0.53 per diluted share in 2011 to $0.50 per share in 2012. On an adjusted basis, though, earnings were up — from $0.88 per diluted share in 2011 to $1.00 per share in 2012. Stock-based compensation expenses made the key difference between the GAAP and adjusted figures.

Several other key product metrics shared by athenahealth showed strong year-over-year growth. The company’s athenaCollector medical billing service had 39,752 active providers on board in 2012, compared to 32,740 in the previous year. Its electronic health record system, athenaClinicals, grew from 6,525 active users in 2011 to 10,926 in 2012. The number of medical providers using patient communications portal athenaCommunicator increased to 14,065 from 10,153 the prior year.

From Epocrates, Inc. (NASDAQ:EPOC) to “I love Judy”
Yet again, athenahealth’s numbers looked good. And yet again, the more interesting stuff came from what Bush and his management team said on the conference call after the earnings results were announced.

Bush particularly noted the contrast between brand awareness between athenahealth and Epocrates, Inc. (NASDAQ:EPOC), which it is in the process of buying. While seven out of 10 doctors don’t know who athenahealth is, 90% of physicians recognize the Epocrates name. Bush sees great opportunities in getting more doctors to look at the cloud-based services offered by athenahealth with Epocrates under its wings.

When asked about getting providers to convert from legacy electronic medical record systems, Bush stated that his team “have to get better at explaining to people why their Flock of Seagulls EMR is going to go to the same place that their Flock of Seagulls vinyl albums went.” He acknowledged the challenges of going up against scenarios where hospitals buy software from Allscripts Healthcare Solutions Inc (NASDAQ:MDRX) and give it to doctors as inexpensively as they legally can. Of course, he could have also noted (but didn’t) that Allscripts’ revenue and earnings declined last quarter.

It’s always fun to listen to Jonathan Bush. Even the analysts on the call were asking if he’d be on CNBC, because they didn’t want to miss him if he was. He’s funny — for example, professing his love for “girlfriend” Judy Faulkner, CEO of hospital software company Epic. But he’s also a visionary, outlining goals for athenahealth to make implementation nearly instantaneous and free and to move all customers to transaction-based pricing.

Lucky 13?
Shares for athenahealth are up 17% year-to-date and more than 34% over the last year. With another good quarter, the momentum could continue. I’m still hesitant, though, about the lofty valuation of the stock. It has a forward P/E of 56. It’s a great company, though, with a compelling business model. A string of 13 years in a row of 30% sales growth doesn’t just happen by luck.

The article 13 in a Row for athenahealth originally appeared on Fool.com and is written by Keith Speights.

Fool contributor Keith Speights has no position in any stocks mentioned. The Motley Fool recommends athenahealth.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The 10 Largest Pharmaceutical Companies In the World

The 10 Most Expensive Android Apps

The 9 Most Expensive Designer Bags in the World

The 7 Most Expensive Real Estate in the World

The 10 Most Expensive eBay Items Ever Sold

The 10 Most Expensive iPhone Apps

The 9 Most Expensive Designer Shoes in the World

The 10 Most Expensive Cigarette Brands

The 10 Most Expensive Law Schools in the US

The 10 Best Wall Street Movies

The 10 Most Expensive Golf Clubs Ever Sold

The 10 Most Expensive Golf Memberships

The 10 Best Disney Characters Ever Created

The 8 Best Foods for Gaining Weight

The 10 Most Expensive Colleges in the World

The 7 Most Memorable Ad Campaigns of All Time

The 7 Most Expensive High Schools in the World

The 10 Electric Vehicles with the Longest Range

The 10 Cities with the Worst Drivers in the World

The 10 Most Expensive Dresses Ever Created

10 Islands to Visit Before You Die

10 Famous Celebrities Who Needed Rehab

The 15 Countries with the Largest Oil Reserves

The 10 Most Overused Excuses in the World

The 5 Best iOS Apps You Can’t Get on Android

5 Companies Damaged By Social Media Blunders

The 10 Most Legendary Blues Songs

The 10 Most Lawless Places in the World

4 Reasons China is a Threat to the US

The 17 Most Sugary Drinks in the World

The 10 Most Ruthless Rulers in History

The 10 Greatest Generals in History

Top 8 Travel Destinations for 2015

The 10 Safest Dog Breeds for Children

The 10 Most Stolen Vehicles in the US

The 7 Most Expensive Celebrity Weddings

The 10 Best LoL Teams in the World

Top 10 Worst Marketing Campaigns Ever Produced

Top 5 Diets that Help You Lose Weight

The 10 Best Ways to Stay Awake

7 Artists That Switched Musical Genres

The 10 Most Expensive Cities to Live in New Jersey

The 10 Best High Schools in New York

The 10 Countries With the Least Gender Inequality

The 6 Biggest Musician-Manager Feuds

The 10 Countries with the Cheapest Gas Prices

The 7 Most Theatrical Bands of All Time

The 8 Worst Band Breakups of All Time

The 10 Most Important South American Leaders

The 7 Most Successful Casting Show Winners

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!