athenahealth (ATHN) Down 7% Since Earnings Report: Can It Rebound?

A month has gone by since the last earnings report for athenahealth, Inc. ATHN. Shares have lost about 7% in that time frame, underperforming the market.

Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

athenahealth (ATHN) Beats on Q4 Earnings, Misses Revenues

athenahealth (ATHN) reported adjusted earnings of $0.42 per share, which beat the Zacks Consensus Estimate of $0.27. However, the figure came below $0.45 posted in the year-ago quarter.

The Watertown, MA based maker of billing and medical practice management software posted revenues of $288.2 million, which missed the Zacks Consensus Estimate of $304.0 million but increased 12% from $257.5 million on a year-over-year basis.

Quarter Highlights

athenahealth reported Business and Services revenues of $278.9 million, up 12.5% from the year-ago quarter. However, implementation and other segment posted revenues of $9.3 million, down 3.1% from the same quarter last year.

A strong client base has been a major growth driver for the company. Applications like athenaClinicals, athenaClinicals-Streamlined, athenaInsight, athenaCommunicator, athenaOne, athenaCollector for Hospital and Health Systems and the brand promise of ‘Unbreak Healthcare’ are fortifying its market position in terms of exclusiveness of services provided in the respective markets.

Physician Details

athenahealth’s huge client base and solid network expansion are its major positives. In the reported quarter, the company registered 1,366 new active physicians in athenaCollector compared with 2,148 in the year-ago quarter, 1,573 physicians in athenaClinicals compared with 1,126 and 2,009 physicians in athenaCommunicator compared with 1,965.

In the reported quarter, net new active providers added to the network comprised 2,226 athenaCollector providers, 2,288 athenaClinicals providers, and 3,074 athenaCommunicator providers compared with 3,102, 1,613 and 2,835 respectively in the same period last year.

Financial Condition

Cash and cash equivalents were $147.4 million at the end of 2016 compared with $141.9 million at 2015 end. Long-term debt was $18.3 million compared with the 2015-end level of $10.8 million.

Guidance

For 2017, athenahealth maintained the total revenue projection at $1.290–$1.330 billion. Adjusted operating income is expected between $170 million and $190 million. Annual bookings are expected at $400 million to $450 million.

How Have Estimates Been Moving Since Then?

Following the release, investors have witnessed a downward trend in fresh estimates. There have been two revisions lower for the current quarter. In the past month, the consensus estimate has shifted 28.06% downward due to these changes.

athenahealth, Inc. Price and Consensus

 

athenahealth, Inc. Price and Consensus | athenahealth, Inc. Quote

VGM Scores

At this time, athenahealth's stock has a strong Growth Score of 'A', though it is lagging a lot on the momentum front with an 'F'. Charting a somewhat similar path, the stock was allocated a grade of 'D' on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of 'C'. If you aren't focused on one strategy, this score is the one you should be interested in.

The company's stock is suitable solely for growth based on our styles scores.

Outlook

Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Notably, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
athenahealth, Inc. (ATHN): Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research