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8-K - FORM 8-K - ATHENAHEALTH INC | b87371e8vk.htm |
EX-2.1 - EX-2.1 - ATHENAHEALTH INC | b87371exv2w1.htm |
EX-99.3 - EX-99.3 - ATHENAHEALTH INC | b87371exv99w3.htm |
EX-99.2 - EX-99.2 - ATHENAHEALTH INC | b87371exv99w2.htm |
Exhibit 99.1
athenahealth, Inc. Reports Second Quarter Fiscal Year 2011 Results
| 33% Revenue Growth Over Second Quarter of 2010 | ||
| GAAP Net Income of $5.2 Million, or $0.14 Per Diluted Share | ||
| Non-GAAP Adjusted Net Income of $7.9 Million, or $0.22 Per Diluted Share |
WATERTOWN, MA July 21, 2011 - athenahealth, Inc. (Nasdaq: ATHN), (the Company), a leading
provider of Internet-based business services for physician practices, today announced financial and
operational results for the second quarter of fiscal year 2011. The Company will conduct a
conference call tomorrow, Friday, July 22, 2011, at 8:00 a.m. Eastern Time to discuss these results
and managements outlook for future financial and operational performance.
Total revenue for the three months ended June 30, 2011 was $77.9 million, compared to $58.6 million
in the same period last year, an increase of 33%.
Midway through the year, we are ecstatic to see athenahealths growth, operations and financial
house in such good order because it gives us more time, money and energy to focus on our clients,
said Jonathan Bush, the Companys Chairman, President, and Chief Executive Officer.
Furthermore, we are pleased to announce the signing of a definitive agreement to acquire Proxsys
LLC, a leading provider of services and technology focused on the front end of the revenue cycle
for hospital systems, continued Bush. We believe this acquisition will position us to attack an
additional area of inefficiency within the U.S. health care system, provide us with a new growth
channel and enable us to offer more value to hospital systems as well as ambulatory medical
groups.
For the three months ended June 30, 2011, Non-GAAP Adjusted Gross Margin was 64.4%, up from 60.7%
in the same period last year. Non-GAAP Adjusted EBITDA grew to $17.5 million, or 22.5% of total
revenue, from Non-GAAP Adjusted EBITDA of $9.9 million, or 16.9% of total revenue, in the same
period last year. For the three months ended June 30, 2011, GAAP net income was $5.2 million, or
$0.14 per diluted share, and Non-GAAP Adjusted Net Income was $7.9 million, or $0.22 per diluted
share. See Use of Non-GAAP Financial Measures below.
athenahealths strong performance during Q2 2011 rounds out an impressive first half of 2011,
said Tim Adams, the Companys Chief Financial Officer. Given this strong performance year to date,
we are pleased to update our guidance for fiscal year 2011, increasing our expectations for both
revenue growth and profitability. This revised guidance includes the impact of increased
investments in growth and innovation as well as our anticipated acquisition of Proxsys, LLC which
is expected to close during Q3 2011.
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athenahealths revised fiscal year 2011 guidance is presented below:
For the Fiscal Year Ending December 31, 2011
GAAP Total Revenue |
$ | 315-325 million | ||
Non-GAAP Adjusted Gross Margin |
62.5-63.5 | % | ||
Non-GAAP Adjusted EBITDA |
$ | 59-67 million | ||
Non-GAAP Adjusted Net Income per Diluted Share |
$ | 0.70-0.83 |
Please see athenahealths Q2 2011 Prepared Remarks, published in conjunction with this press
release, for more detail on the anticipated acquisition of Proxsys, LLC as well as the Companys
revised fiscal year 2011 guidance.
Key metrics and milestones in the second quarter of fiscal year 2011 included the following:
| $1.8 billion in collections posted to client accounts in the second quarter of 2011, compared to $1.4 billion in the same quarter of 2010 | ||
| 39.1 average client Days in Accounts Receivable (DAR) in the second quarter of 2011, compared to 38.8 average client DAR in the same quarter of 2010 | ||
| 29,482 active medical providers using athenaCollector® at June 30, 2011, 20,824 of whom were physicians, compared to 24,782 providers and 17,136 physicians at June 30, 2010 | ||
| 4,848 active medical providers using athenaClinicals® at June 30, 2011, 3,444 of whom were physicians, compared to 2,256 providers and 1,548 physicians at June 30, 2010 | ||
| 1,936 active medical providers using athenaCommunicator® at June 30, 2011, 1,198 of whom were physicians, compared to 689 providers and 442 physicians at June 30, 2010 |
As of June 30, 2011, the Company had cash, cash equivalents, short and long-term investments of
$124.7 million. During the quarter, the Company retired outstanding debt obligations, including the
interest rate derivative liability and a real estate loan recorded within deferred rent, of
approximately $12.0 million.
Use of Non-GAAP Financial Measures
In the Companys earnings releases, conference calls, slide presentations, and 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 Companys earnings press releases containing such non-GAAP
reconciliations can be found on the Investors section of the Companys web site at
http://www.athenahealth.com.
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Conference Call Information
To participate in the Companys live conference call and webcast, please dial 800-447-0521 (or
847-413-3238 for international calls) using conference code No. 30150497, or visit the Investors
section of the Companys web site at www.athenahealth.com. A replay will be available for one week
following the conference call at 888-843-7419 (and 630-652-3042 for international calls) using
conference code No. 30150497. A webcast replay will also be archived on the Companys website.
About athenahealth
athenahealth, Inc. is a leading provider of cloud-based business services for physician practices.
athenahealths 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
managements expectations for future financial and operational performance and operating
expenditures, expected growth and business outlook, statements regarding the expected benefits
resulting from the planned Proxsys, LLC acquisition and the expected closing that acquisition, the
benefits of the Companys current service offerings, and statements found under the Companys
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 Companys 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 Companys fluctuating operating results; risks associated with the
acquisition and integration of companies and new technologies; the Companys 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
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Companys website at http://www.athenahealth.com and on the SECs website at http://www.sec.gov.
Contacts:
Jennifer Heizer (Investors)
Director, Investor Relations
athenahealth, Inc.
(617) 402-1322
investorrelations@athenahealth.com
Jennifer Heizer (Investors)
Director, Investor Relations
athenahealth, Inc.
(617) 402-1322
investorrelations@athenahealth.com
John Hallock (Media)
Director, Corporate Communications
athenahealth, Inc.
(617) 402-1428
media@athenahealth.com
Director, Corporate Communications
athenahealth, Inc.
(617) 402-1428
media@athenahealth.com
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athenahealth, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands, except per share amounts)
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands, except per share amounts)
June | December | |||||||
30, 2011 | 31, 2010 | |||||||
Assets |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 47,370 | $ | 35,944 | ||||
Short-term investments |
57,038 | 80,231 | ||||||
Accounts receivable net |
43,927 | 36,870 | ||||||
Deferred tax assets |
4,818 | 3,856 | ||||||
Prepaid expenses and other current assets |
7,189 | 6,749 | ||||||
Total current assets |
160,342 | 163,650 | ||||||
Property and equipment net |
41,289 | 31,899 | ||||||
Restricted cash |
5,804 | 8,691 | ||||||
Software development costs net |
4,812 | 3,642 | ||||||
Purchased intangibles net |
11,731 | 12,651 | ||||||
Goodwill |
22,450 | 22,450 | ||||||
Deferred tax assets |
10,816 | 10,959 | ||||||
Investments and other assets |
22,728 | 7,228 | ||||||
Total assets |
$ | 279,972 | $ | 261,170 | ||||
Liabilities & Stockholders Equity |
||||||||
Current liabilities: |
||||||||
Current portion of long-term debt and capital lease obligations |
$ | | $ | 2,909 | ||||
Accounts payable |
1,348 | 559 | ||||||
Accrued compensation |
18,196 | 19,178 | ||||||
Accrued expenses |
11,316 | 10,981 | ||||||
Current portion of deferred revenue |
5,528 | 4,978 | ||||||
Interest rate derivative liability |
| 490 | ||||||
Current portion of deferred rent |
896 | 1,497 | ||||||
Total current liabilities |
37,284 | 40,592 | ||||||
Deferred rent, net of current portion |
3,258 | 5,960 | ||||||
Deferred revenue, net of current portion |
39,998 | 35,661 | ||||||
Other long-term liabilities |
1,394 | 1,897 | ||||||
Debt and capital lease obligations, net of current portion |
| 6,307 | ||||||
Total liabilities |
81,934 | 90,417 | ||||||
Stockholders equity: |
||||||||
Preferred stock, $0.01 par value: 5,000 shares authorized; no shares issued
and outstanding at June 30, 2011 and December 31, 2010, respectively |
| | ||||||
Common stock, $0.01 par value: 125,000 shares authorized; 36,245 shares
issued, and 34,967 shares outstanding at June 30, 2011; 35,808 shares
issued and 34,530 shares outstanding at December 31, 2010. |
362 | 358 | ||||||
Additional paid-in capital |
219,153 | 200,339 | ||||||
Treasury stock, at cost, 1,278 shares |
(1,200 | ) | (1,200 | ) | ||||
Accumulated other comprehensive income |
58 | 28 | ||||||
Accumulated deficit |
(20,335 | ) | (28,772 | ) | ||||
Total stockholders equity |
198,038 | 170,753 | ||||||
Total liabilities and stockholders equity |
$ | 279,972 | $ | 261,170 | ||||
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athenahealth, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands, except per share amounts)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands, except per share amounts)
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Revenue: |
||||||||||||||||
Business services |
$ | 75,349 | $ | 56,399 | $ | 142,835 | $ | 108,964 | ||||||||
Implementation and other |
2,536 | 2,153 | 4,980 | 4,065 | ||||||||||||
Total revenue |
77,885 | 58,552 | 147,815 | 113,029 | ||||||||||||
Expense: |
||||||||||||||||
Direct operating |
29,020 | 24,101 | 56,290 | 47,620 | ||||||||||||
Selling and marketing |
18,815 | 12,693 | 35,756 | 24,753 | ||||||||||||
Research and development |
5,166 | 4,824 | 10,245 | 8,898 | ||||||||||||
General and administrative |
11,718 | 11,403 | 23,437 | 23,080 | ||||||||||||
Depreciation and amortization |
3,737 | 2,657 | 7,135 | 5,077 | ||||||||||||
Total expense |
68,456 | 55,678 | 132,863 | 109,428 | ||||||||||||
Operating income |
9,429 | 2,874 | 14,952 | 3,601 | ||||||||||||
Other income (expense): |
||||||||||||||||
Interest income |
109 | 66 | 216 | 144 | ||||||||||||
Interest expense |
(54 | ) | (118 | ) | (231 | ) | (335 | ) | ||||||||
Loss on interest rate derivative contract |
(138 | ) | (304 | ) | (73 | ) | (364 | ) | ||||||||
Other income |
6 | 33 | 44 | 63 | ||||||||||||
Total other expense |
(77 | ) | (323 | ) | (44 | ) | (492 | ) | ||||||||
Income before income taxes |
9,352 | 2,551 | 14,908 | 3,109 | ||||||||||||
Income tax provision |
(4,166 | ) | (1,253 | ) | (6,471 | ) | (1,534 | ) | ||||||||
Net income |
$ | 5,186 | $ | 1,298 | $ | 8,437 | $ | 1,575 | ||||||||
Net income per share Basic |
$ | 0.15 | $ | 0.04 | $ | 0.24 | $ | 0.05 | ||||||||
Net income per share Diluted |
$ | 0.14 | $ | 0.04 | $ | 0.24 | $ | 0.04 | ||||||||
Weighted average shares used in computing net
income per share: |
||||||||||||||||
Basic |
34,917 | 34,106 | 34,798 | 34,061 | ||||||||||||
Diluted |
35,773 | 35,178 | 35,715 | 35,190 |
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athenahealth, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
Six Months Ended | ||||||||
June 30, | ||||||||
2011 | 2010 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: |
||||||||
Net income |
$ | 8,437 | $ | 1,575 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
Depreciation and amortization |
8,055 | 5,997 | ||||||
Amortization of premium on investments |
868 | 733 | ||||||
Provision for uncollectible accounts |
593 | 423 | ||||||
Excess tax benefit from stock-based awards |
(6,432 | ) | (1,281 | ) | ||||
Deferred income tax |
(819 | ) | (399 | ) | ||||
Increase in fair value of contingent consideration |
224 | 304 | ||||||
Stock-based compensation expense |
7,916 | 6,694 | ||||||
Loss on interest rate derivative contract |
73 | 364 | ||||||
Changes in operating assets and liabilities: |
||||||||
Accounts receivable |
(7,650 | ) | (2,347 | ) | ||||
Prepaid expenses and other current assets |
5,985 | (584 | ) | |||||
Other long-term assets |
166 | 277 | ||||||
Accounts payable |
781 | 128 | ||||||
Accrued expenses |
388 | (896 | ) | |||||
Deferred revenue |
4,887 | 4,866 | ||||||
Deferred rent |
(3,303 | ) | (614 | ) | ||||
Net cash provided by operating activities |
20,169 | 15,240 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES: |
||||||||
Capitalized software development costs |
(3,068 | ) | (1,579 | ) | ||||
Purchases of property and equipment |
(6,841 | ) | (9,870 | ) | ||||
Proceeds from sale or disposal of equipment |
| 363 | ||||||
Proceeds from sales and maturities of investments |
86,834 | 50,450 | ||||||
Purchases of short-term and long-term investments |
(80,175 | ) | (60,372 | ) | ||||
Payments for acquisition |
(6,988 | ) | | |||||
Decrease in restricted cash |
2,887 | 331 | ||||||
Net cash used in investing activities |
(7,351 | ) | (20,677 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES: |
||||||||
Proceeds from issuance of common stock under stock plans |
4,558 | 3,425 | ||||||
Excess tax benefit from stock-based awards |
6,432 | 1,281 | ||||||
Payment of contingent consideration accrued at acquisition date |
(2,558 | ) | | |||||
Payment to terminate interest rate derivative contract |
(563 | ) | | |||||
Payments on long-term debt and capital lease obligations |
(9,216 | ) | (1,786 | ) | ||||
Net cash (used in) provided by financing activities |
(1,347 | ) | 2,920 | |||||
Effects of exchange rate changes on cash and cash equivalents |
(45 | ) | (64 | ) | ||||
Net increase (decrease) in cash and cash equivalents |
11,426 | (2,581 | ) | |||||
Cash and cash equivalents at beginning of period |
35,944 | 30,526 | ||||||
Cash and cash equivalents at end of period |
$ | 47,370 | $ | 27,945 | ||||
Supplemental disclosures of non-cash items Property and equipment
recorded in accounts payables and accrued expenses |
$ | 222 | $ | 273 | ||||
Supplemental disclosures Cash paid for interest |
$ | 225 | $ | 284 | ||||
Supplemental disclosures Cash paid for taxes |
$ | 804 | $ | 1,389 | ||||
Property and equipment acquired under capital leases |
$ | | $ | 363 | ||||
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athenahealth, Inc.
STOCK-BASED COMPENSATION EXPENSE
(Unaudited, in thousands)
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, 2011 and 2010:
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Stock-based compensation expense charged to: |
||||||||||||||||
Direct operating |
$ | 810 | $ | 652 | $ | 1,415 | $ | 1,120 | ||||||||
Selling and marketing |
1,159 | 888 | 2,082 | 1,578 | ||||||||||||
Research and development |
486 | 679 | 1,016 | 1,003 | ||||||||||||
General and administrative |
1,456 | 1,691 | 3,403 | 2,993 | ||||||||||||
Total |
$ | 3,911 | $ | 3,910 | $ | 7,916 | $ | 6,694 | ||||||||
athenahealth, Inc.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
TO COMPARABLE GAAP MEASURES
(Unaudited, in thousands, except per share amounts)
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 Companys 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.
While management believes that these non-GAAP financial measures provide useful supplemental
information to investors regarding the underlying performance of the Companys 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 Companys results of operations as determined in accordance with GAAP.
8
Non-GAAP Adjusted Gross Margin
Set forth below is a presentation of the Companys Non-GAAP Adjusted Gross Profit and
Non-GAAP Adjusted Gross Margin, which represents Non-GAAP Adjusted Gross Profit as a percentage
of total revenue.
Three Months Ended | Six Months Ended | |||||||||||||||
June 30 | June 30 | |||||||||||||||
(unaudited, in thousands) | 2011 | 2010 | 2011 | 2010 | ||||||||||||
Total revenue |
$ | 77,885 | $ | 58,552 | $ | 147,815 | $ | 113,029 | ||||||||
Direct operating expense |
29,020 | 24,101 | 56,290 | 47,620 | ||||||||||||
Total revenue less direct operating expense |
48,865 | 34,451 | 91,525 | 65,409 | ||||||||||||
Add: Stock-based compensation expense
allocated to direct operating expense |
810 | 652 | 1,415 | 1,120 | ||||||||||||
Add: Amortization of purchased intangibles |
460 | 460 | 920 | 920 | ||||||||||||
Non-GAAP Adjusted Gross Profit |
$ | 50,135 | $ | 35,563 | $ | 93,860 | $ | 67,449 | ||||||||
Non-GAAP Adjusted Gross Margin |
64.4 | % | 60.7 | % | 63.5 | % | 59.7 | % |
Non-GAAP Adjusted EBITDA Margin
Set forth below is a reconciliation of the Companys Non-GAAP Adjusted EBITDA and Non-GAAP
Adjusted EBITDA Margin, which represents Non-GAAP Adjusted EBITDA as a percentage of total
revenue.
Three Months Ended | Six Months Ended | |||||||||||||||
June 30 | June 30 | |||||||||||||||
(unaudited, in thousands) | 2011 | 2010 | 2011 | 2010 | ||||||||||||
Total revenue |
$ | 77,885 | $ | 58,552 | $ | 147,815 | $ | 113,029 | ||||||||
GAAP net income |
5,186 | 1,298 | 8,437 | 1,575 | ||||||||||||
Add: Provision for income taxes |
4,166 | 1,253 | 6,471 | 1,534 | ||||||||||||
Add: Total other expense |
77 | 323 | 44 | 492 | ||||||||||||
Add: Stock-based compensation expense |
3,911 | 3,910 | 7,916 | 6,694 | ||||||||||||
Add: Depreciation and amortization |
3,737 | 2,657 | 7,135 | 5,077 | ||||||||||||
Add: Amortization of purchased intangibles |
460 | 460 | 920 | 920 | ||||||||||||
Non-GAAP Adjusted EBITDA |
$ | 17,537 | $ | 9,901 | $ | 30,923 | $ | 16,292 | ||||||||
Non-GAAP Adjusted EBITDA Margin |
22.5 | % | 16.9 | % | 20.9 | % | 14.4 | % |
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Non-GAAP Adjusted Operating Income
Set forth below is a reconciliation of the Companys 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.
Three Months Ended | Six Months Ended | |||||||||||||||
June 30 | June 30 | |||||||||||||||
(unaudited, in thousands) | 2011 | 2010 | 2011 | 2010 | ||||||||||||
Total revenue |
$ | 77,885 | $ | 58,552 | $ | 147,815 | $ | 113,029 | ||||||||
GAAP net income |
5,186 | 1,298 | 8,437 | 1,575 | ||||||||||||
Add: Provision for income taxes |
4,166 | 1,253 | 6,471 | 1,534 | ||||||||||||
Add : Total other expense |
77 | 323 | 44 | 492 | ||||||||||||
Add: Stock-based compensation expense |
3,911 | 3,910 | 7,916 | 6,694 | ||||||||||||
Add: Amortization of purchased intangibles |
460 | 460 | 920 | 920 | ||||||||||||
Non-GAAP Adjusted Operating Income |
$ | 13,800 | $ | 7,244 | $ | 23,788 | $ | 11,215 | ||||||||
Non-GAAP Adjusted Operating Income Margin |
17.7 | % | 12.4 | % | 16.1 | % | 9.9 | % |
Non-GAAP Adjusted Net Income
Set forth below is a reconciliation of the Companys Non-GAAP Adjusted Net Income and
Non-GAAP Adjusted Net Income per Diluted Share.
Three Months Ended | Six Months Ended | |||||||||||||||
June 30 | June 30 | |||||||||||||||
(unaudited, in thousands except per share amounts) | 2011 | 2010 | 2011 | 2010 | ||||||||||||
GAAP net income |
$ | 5,186 | $ | 1,298 | $ | 8,437 | $ | 1,575 | ||||||||
Add: Loss on interest rate derivative contract |
138 | 304 | 73 | 364 | ||||||||||||
Add: Stock-based compensation expense |
3,911 | 3,910 | 7,916 | 6,694 | ||||||||||||
Add: Amortization of purchased intangibles |
460 | 460 | 920 | 920 | ||||||||||||
Sub-total of tax deductible items |
4,509 | 4,674 | 8,909 | 7,978 | ||||||||||||
(Less): Tax impact of tax deductible items (1) |
(1,804 | ) | (1,870 | ) | (3,564 | ) | (3,191 | ) | ||||||||
Non-GAAP Adjusted Net Income |
$ | 7,891 | $ | 4,102 | $ | 13,782 | $ | 6,362 | ||||||||
Weighted average shares diluted |
35,773 | 35,019 | 35,715 | 35,110 | ||||||||||||
Non-GAAP Adjusted Net Income per Diluted Share |
$ | 0.22 | $ | 0.12 | $ | 0.39 | $ | 0.18 |
(1) | - Tax impact calculated using federal statutory tax rate of 34% and a blended state tax rate of 6% |
10
Three Months Ended | Six Months Ended | |||||||||||||||
June 30 | June 30 | |||||||||||||||
(unaudited, in thousands except per share amounts) | 2011 | 2010 | 2011 | 2010 | ||||||||||||
GAAP net income per share diluted |
$ | 0.14 | $ | 0.04 | $ | 0.24 | $ | 0.04 | ||||||||
Add: Loss on interest rate derivative contract |
0.01 | 0.01 | | 0.01 | ||||||||||||
Add: Stock-based compensation expense |
0.11 | 0.11 | 0.22 | 0.19 | ||||||||||||
Add: Amortization of purchased intangibles |
0.01 | 0.01 | 0.03 | 0.03 | ||||||||||||
Sub-total of tax deductible items |
0.13 | 0.13 | 0.25 | 0.23 | ||||||||||||
(Less): Tax impact of tax deductible items (1) |
(0.05 | ) | (0.05 | ) | (0.10 | ) | (0.09 | ) | ||||||||
Non-GAAP Adjusted Net Income per Diluted Share |
$ | 0.22 | $ | 0.12 | $ | 0.39 | $ | 0.18 | ||||||||
Weighted average shares diluted |
35,773 | 35,019 | 35,715 | 35,110 |
(1) | - Tax impact calculated using federal statutory tax rate of 34% and a blended state tax rate of 6% |
athenahealth, Inc.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
TO COMPARABLE GAAP MEASURES FOR FISCAL YEAR 2011 GUIDANCE
(Unaudited, in thousands, except per share amounts)
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
TO COMPARABLE GAAP MEASURES FOR FISCAL YEAR 2011 GUIDANCE
(Unaudited, in thousands, except per share amounts)
Please note that the figures presented below may not sum exactly due to rounding.
Non-GAAP Adjusted Gross Margin Guidance
Set forth below is a presentation of the Companys Non-GAAP Adjusted Gross Profit and Non-GAAP
Adjusted Gross Margin guidance for fiscal year 2011, which represents Non-GAAP Adjusted Gross
Profit as a percentage of total revenue.
LOW | HIGH | |||||||
Fiscal Year Ending December 31, 2011 | ||||||||
Total revenue |
$ | 315.0 | $ | 325.0 | ||||
Direct operating expense |
122.9 | 123.7 | ||||||
Total
revenue less direct operating expense |
$ | 192.1 | $ | 201.3 | ||||
Add:
Stock-based compensation expense allocated to direct operating expense |
3.1 | 3.1 | ||||||
Add: Amortization of purchased intangibles |
1.8 | 1.8 | ||||||
Non-GAAP Adjusted Gross Profit |
$ | 197.0 | $ | 206.2 | ||||
Non-GAAP Adjusted Gross Margin |
62.5 | % | 63.5 | % |
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Non-GAAP Adjusted EBITDA Guidance
Set forth below is a reconciliation of the Companys Non-GAAP Adjusted EBITDA and Non-GAAP
Adjusted EBITDA Margin guidance for fiscal year 2011, which represents Non-GAAP Adjusted EBITDA as
a percentage of total revenue.
LOW | HIGH | |||||||
Fiscal Year Ending | December 31, 2011 | |||||||
Total Revenue |
$ | 315.0 | $ | 325.0 | ||||
GAAP net income |
12.7 | 17.3 | ||||||
Add: Provision for income taxes |
10.2 | 13.8 | ||||||
Add (less): Total other (income) expense |
(0.0 | ) | (0.0 | ) | ||||
Add: Stock-based compensation expense |
18.6 | 18.6 | ||||||
Add: Depreciation and amortization |
15.9 | 15.9 | ||||||
Add: Amortization of purchased intangibles |
1.8 | 1.8 | ||||||
Non-GAAP Adjusted EBITDA |
$ | 59.2 | $ | 67.4 | ||||
Non-GAAP Adjusted EBITDA Margin |
18.8 | % | 20.7 | % |
Non-GAAP Adjusted Net Income Guidance
Set forth below is a reconciliation of the Companys Non-GAAP Adjusted Net Income and Non-GAAP
Adjusted Net Income per Diluted Share guidance for fiscal year 2011.
LOW | HIGH | |||||||
Fiscal Year Ending | December 31, 2011 | |||||||
GAAP net income |
$ | 12.7 | $ | 17.3 | ||||
Add: Loss on interest rate derivative contract |
0.1 | 0.1 | ||||||
Add: Stock-based compensation expense |
18.6 | 18.6 | ||||||
Add: Amortization of purchased intangibles |
1.8 | 1.8 | ||||||
Sub-total of tax deductible items |
$ | 20.5 | $ | 20.5 | ||||
(Less): Tax impact of tax deductible items (1) |
(8.2 | ) | (8.2 | ) | ||||
Add: Acquisition-related expenses |
| | ||||||
Non-GAAP Adjusted Net Income |
$ | 25.0 | $ | 29.6 | ||||
Non-GAAP Adjusted Net Income per Diluted Share |
$ | 0.70 | $ | 0.83 | ||||
Weighted average shares diluted |
35.8 | 35.8 |
(1) | - Tax impact calculated using federal statutory tax rate of 34% and a blended state tax rate of 6% |
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LOW | HIGH | |||||||
Fiscal Year Ending | December 31, 2011 | |||||||
GAAP net income per share diluted |
0.35 | 0.48 | ||||||
Add: Loss on interest rate derivative contract |
0.00 | 0.00 | ||||||
Add: Stock-based compensation expense |
0.52 | 0.52 | ||||||
Add: Amortization of purchased intangibles |
0.05 | 0.05 | ||||||
Sub-total of tax deductible items |
$ | 0.57 | $ | 0.57 | ||||
(Less): Tax impact of tax deductible items (1) |
(0.23 | ) | (0.23 | ) | ||||
Non-GAAP Adjusted Net Income per Diluted Share |
$ | 0.70 | $ | 0.83 | ||||
Weighted average shares diluted |
35.8 | 35.8 |
(1) | - Tax impact calculated using federal statutory tax rate of 34% and a blended state tax rate of 6% |
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 Companys 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 Companys ongoing business by eliminating
certain non-cash expenses and other items that management believes might otherwise make comparisons
of the Companys ongoing business with prior periods more difficult, obscure trends in ongoing
operations, or reduce managements 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 Companys 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 Companys 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 Companys ability to generate income from ongoing business operations.
Management defines Non-GAAP Adjusted EBITDA as the sum of GAAP net income before provision for
income taxes, total other (income) expense, stock-based compensation expense, depreciation and
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amortization, 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 income taxes,
amortization of purchased intangibles, total other (income) expense, stock-based compensation
expense, 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 (gain) loss on interest rate derivative contract, stock-based compensation
expense, 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 Companys 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 Companys 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 Companys business, and also because the total amount of expense is partially outside of the Companys 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. | ||
| Amortization of purchased intangibles purchased intangibles are amortized over a period of several years after an acquisition and generally cannot be changed or influenced by management after the acquisition. Accordingly, this item is not considered by management in making operating decisions. Thus, including such charge does not accurately reflect the performance of the Companys ongoing operations for the period in which such charge is incurred. | ||
| Gains and losses on interest rate derivative contract 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. |
* Please note that management is no longer excluding acquisition-related expenses from its non-GAAP
financial results.
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