If the financial statements are to be believed, however, you have a company that has more than doubled revenues in just three years, maintaining margins over 40%, that currently sells at a multiple to earnings of just 10.3. Should the company be cleared of the charges against it, it would run up quickly, meaning now may be a good time for someone to strike.
That someone, I suspect, may well be salesforce.com, inc. (NYSE:CRM), which could use Ebix’s software to create self-service marketplaces in a number of other areas beyond insurance and, perhaps, spin-off the health assets and make most of its investment back.
athenahealth, Inc (NASDAQ:ATHN)
Of all the companies I looked at for this piece, athenahealth, Inc is by far the hottest and, ironically, the one least subject to takeover. Shares are up 51% in just the last three months.
Athena was originally built to do billing for doctors and clinics, but it switched gears a few years ago to deliver complete Electronic Health Records, or EHRs. This put it in direct competition for stimulus cash with companies like Cerner Corporation (NASDAQ:CERN) and Allscripts Healthcare Solutions Inc (NASDAQ:MDRX), and it’s partly the problems at the latter company that may be behind its current rise.
A lot of early interest in the company comes from its supposed political connections. Co-founder Jonathan Bush is a distant relative of the Presidents Bush, while the other co-founder, Todd Park, left the company in 2009 to join the Obama Administration, where he is now the Chief Technology Officer.
Athena has always been a Software as a Service company, the final step in an evolution to cloud, but the health business has stagnated unexpectedly. The administration offered billions in stimulus cash to hospitals and clinics a few years ago, but many have yet to take on the challenge, even though they face harsh penalties if they don’t move by fiscal 2015, which is now just 18 months away.
Still, Athena’s concentration on getting people paid has helped it deliver solid sales growth, and brought an average 10% of sales to the bottom line. It’s now debt-free, it seems to have great growth prospects, and it might find a really good home at an existing SaaS firm, like Salesforce or, perhaps, at IBM, especially if the stock is hit by a bad quarter.
My Foolish Take
Of all these companies, WDAY seems the most obvious choice as a take-out target. Other companies in the space have gone to the altar, it could be gotten by either friendly or unfriendly means. But if I had to put some money to put to work today, I might prefer EBIX, which could be highly vulnerable if the SEC does take action, and would thus deliver a solid bargain to a buyer.
The article Which Cloud Companies Might Be Bought Next? originally appeared on Fool.com and is written by Dana Blankenhorn.
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