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8-K - FORM 8-K - ATHENAHEALTH INC | d382551d8k.htm |
EX-99.2 - EX-99.2 - ATHENAHEALTH INC | d382551dex992.htm |
Exhibit 99.1
athenahealth, Inc. Reports Second Quarter Fiscal Year 2012 Results
| 33% Revenue Growth Over Second Quarter of 2011 |
| GAAP Net Income of $4.2 Million, or $0.11 Per Diluted Share |
| Non-GAAP Adjusted Net Income of $9.0 Million, or $0.24 Per Diluted Share |
WATERTOWN, MA July 19, 2012 athenahealth, Inc. (NASDAQ: ATHN) (the Company), a leading provider of cloud-based practice management, electronic health record (EHR), and care coordination services to medical groups, today announced financial and operational results for the second quarter of fiscal year 2012. The Company will conduct a conference call tomorrow, Friday, July 20, 2012, 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, 2012, was $103.5 million, compared to $77.9 million in the same period last year, an increase of 33%.
I am very pleased with our execution so far this year and our continued focus on becoming medical care givers most trusted service, said Jonathan Bush, the Companys Chairman and Chief Executive Officer. Be it confirmation of the Affordable Care Act or the results of our third annual Physician Sentiment Index, all evidence suggests that cloud-based services are on the right side of history. The athenahealth team understands the growing cost of care coordination placed on medical care givers today and remains focused on improving that experience in a sustainable way. During the past quarter, we brought athenaNet mobile with the launch of our iPhone application, expanded our service offerings to include credentialing and eligibility denials, and expanded our client training and support through the athenaCareSM service. By listening to our clients and understanding their concerns, athenahealth will remain better equipped to help our clients manage change while improving their financial and operational performance regardless of how their services are paid for.
For the three months ended June 30, 2012, Non-GAAP Adjusted Gross Margin was 62.6%, down from 64.4% in the same period last year, as the Company continues to invest in its newest service offering, athenaCoordinator®. Non-GAAP Adjusted EBITDA increased 18%, to $20.6 million, or 19.9% of total revenue, from Non-GAAP Adjusted EBITDA of $17.5 million, or 22.5% of total revenue, in the same period last year. For the three months ended June 30, 2012, GAAP net income was $4.2 million, or $0.11 per diluted share, compared to $5.2 million, or $0.14 per diluted share, in the same period last year. Non-GAAP Adjusted Net Income was $9.0 million, or $0.24 per diluted share, up from $7.9 million, or $0.22 per diluted share, in the same period last year. See Use of Non-GAAP Financial Measures below.
We continued to enjoy strong revenue growth and increased adoption of our service offerings during Q2 2012, rounding out an impressive first half of 2012, said Tim Adams, the Companys Chief Financial Officer. Our quarterly revenue surpassed the $100 million mark for the first time in Company history, and we continued to exceed 30% top-line growth. Given this strong performance year to date, we are pleased to update our guidance for fiscal year 2012, increasing our expectations for both revenue growth and profitability. Thus, for full year 2012, we currently expect to achieve revenue growth of 31% to 33% and Non-GAAP Adjusted Net Income per Diluted Share of $0.90 to $1.00.
athenahealths revised fiscal 2012 guidance is presented below:
For the Fiscal Year Ending December 31, 2012 Forward-Looking Guidance | ||
GAAP Total Revenue |
$425-$430 million | |
Non-GAAP Adjusted Gross Margin |
62.0%-63.0% | |
Non-GAAP Adjusted Operating Income |
$59-$65 million | |
Non-GAAP Adjusted Net Income Per Diluted Share |
$0.90-$1.00 |
In addition, our anticipated fiscal year 2012 GAAP effective tax rate is approximately 45%-46%. Please see athenahealths Q2 2012 Prepared Remarks, published in conjunction with this press release for more information on the Companys revised fiscal year 2012 guidance.
Key metrics and milestones in the second quarter of fiscal year 2012 included the following:
| $2.3 billion in collections posted to client accounts in the second quarter of 2012, compared to $1.8 billion in the same quarter of 2011 |
| 38.2 average client Days in Accounts Receivable (DAR) in the second quarter of 2012, compared to 39.1 average client DAR in the same quarter of 2011 |
| 35,409 active medical providers using athenaCollector® at June 30, 2012, 25,001 of whom were physicians, compared to 29,482 providers and 20,824 physicians at June 30, 2011 |
| 8,558 active medical providers using athenaClinicals® at June 30, 2012, 6,151 of whom were physicians, compared to 4,848 providers and 3,444 physicians at June 30, 2011 |
| 8,642 active medical providers using athenaCommunicator® at June 30, 2012, 6,306 of whom were physicians, compared to 1,936 providers and 1,198 physicians at June 30, 2011 |
As of June 30, 2012, the Company had cash, cash equivalents, and available-for-sale investments of $156.9 million. The Company does not have any outstanding debt obligations.
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.
Conference Call Information
To participate in the Companys live conference call and webcast, please dial 800-446-2782 (or 847-413-3235 for international calls) using conference code No. 32573331, 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. 32573331. A webcast replay will also be archived on the Companys website.
2
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 care coordination services. For more information, please visit http://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 benefits of the Companys service offerings, statements regarding the expansion of the types of tasks the Company performs for its clients and the Companys continued investment in growth and development; and statements found under the Companys Reconciliation of Non-GAAP Financial Measures to Comparable GAAP 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; the Companys variable sales and implementation cycles, which may result in fluctuations in its quarterly results; risks associated with the acquisition and integration of companies and new technologies, including those related to the Companys ability to successfully integrate the athenaCoordinator service and successfully scale the Proxsys services and technologies to achieve expected synergies; 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, please see the disclosures contained in its public filings with the Securities and Exchange Commission, available on the Investors section of the Companys website at http://www.athenahealth.com and on the SECs website at http://www.sec.gov.
Contacts:
Dana Quattrochi (Investors)
Director, Investor Relations
athenahealth, Inc.
(617) 402-1329
investorrelations@athenahealth.com
Amanda Cheslock (Media)
athenahealth, Inc.
(212) 446-1884
acheslock@sloanepr.com
3
athenahealth, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands, except per share amounts)
June 30, 2012 |
December 31, 2011 |
|||||||
Assets |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 92,330 | $ | 57,781 | ||||
Short-term investments |
63,029 | 62,084 | ||||||
Current portion of restricted cash |
3,344 | | ||||||
Accounts receivable - net |
50,885 | 49,038 | ||||||
Deferred tax assets |
5,971 | 5,245 | ||||||
Prepaid expenses and other current assets |
13,975 | 8,988 | ||||||
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|
|
|
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Total current assets |
229,534 | 183,136 | ||||||
Property and equipment - net |
52,503 | 52,275 | ||||||
Restricted cash, net of current portion |
856 | 5,007 | ||||||
Software development costs - net |
9,372 | 6,974 | ||||||
Purchased intangibles - net |
18,546 | 20,052 | ||||||
Goodwill |
47,307 | 47,307 | ||||||
Deferred tax assets |
12,229 | 12,532 | ||||||
Investments and other assets |
4,323 | 21,503 | ||||||
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Total assets |
$ | 374,670 | $ | 348,786 | ||||
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Liabilities & Stockholders Equity |
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Current liabilities: |
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Accounts payable |
$ | 2,755 | $ | 6,318 | ||||
Accrued compensation |
27,493 | 28,176 | ||||||
Accrued expenses |
17,200 | 17,774 | ||||||
Current portion of deferred revenue |
6,301 | 6,345 | ||||||
Current portion of deferred rent |
996 | 960 | ||||||
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Total current liabilities |
54,745 | 59,573 | ||||||
Deferred rent, net of current portion |
2,458 | 2,932 | ||||||
Deferred revenue, net of current portion |
45,433 | 44,281 | ||||||
Other long-term liabilities |
3,109 | 5,529 | ||||||
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|
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Total liabilities |
105,745 | 112,315 | ||||||
Stockholders equity: |
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Preferred stock, $0.01 par value: 5,000 shares authorized; no shares issued and outstanding at June 30, 2012 and December 31, 2011, respectively |
| | ||||||
Common stock, $0.01 par value: 125,000 shares authorized; 37,240 shares issued, and 35,962 shares outstanding at June 30, 2012; 36,678 shares issued and 35,400 shares outstanding at December 31, 2011. |
372 | 367 | ||||||
Additional paid-in capital |
272,981 | 247,131 | ||||||
Treasury stock, at cost, 1,278 shares |
(1,200 | ) | (1,200 | ) | ||||
Accumulated other comprehensive loss |
(84 | ) | (101 | ) | ||||
Accumulated retained deficit |
(3,144 | ) | (9,726 | ) | ||||
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Total stockholders equity |
268,925 | 236,471 | ||||||
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Total liabilities and stockholders equity |
$ | 374,670 | $ | 348,786 | ||||
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4
athenahealth, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited, in thousands, except per share amounts)
Three Months Ended June 30, |
Six Months Ended June 30, |
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2012 | 2011 | 2012 | 2011 | |||||||||||||
Revenue |
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Business services |
$ | 100,110 | $ | 75,349 | $ | 193,659 | $ | 142,835 | ||||||||
Implementation and other |
3,405 | 2,536 | 6,422 | 4,980 | ||||||||||||
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Total revenue |
103,515 | 77,885 | 200,081 | 147,815 | ||||||||||||
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Expense: |
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Direct operating |
41,014 | 29,020 | 79,812 | 56,290 | ||||||||||||
Selling and marketing |
27,389 | 18,815 | 51,117 | 35,756 | ||||||||||||
Research and development |
8,615 | 5,166 | 15,783 | 10,245 | ||||||||||||
General and administrative |
13,961 | 11,718 | 30,160 | 23,437 | ||||||||||||
Depreciation and amortization |
5,795 | 3,737 | 11,281 | 7,135 | ||||||||||||
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Total expense |
96,774 | 68,456 | 188,153 | 132,863 | ||||||||||||
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Operating income |
6,741 | 9,429 | 11,928 | 14,952 | ||||||||||||
Other income (expense) |
12 | (77 | ) | 146 | (44 | ) | ||||||||||
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Income before income taxes |
6,753 | 9,352 | 12,074 | 14,908 | ||||||||||||
Income tax provision |
(2,599 | ) | (4,166 | ) | (5,492 | ) | (6,471 | ) | ||||||||
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Net income |
$ | 4,154 | $ | 5,186 | $ | 6,582 | $ | 8,437 | ||||||||
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Net income per share - Basic |
$ | 0.12 | $ | 0.15 | $ | 0.18 | $ | 0.24 | ||||||||
Net income per share - Diluted |
$ | 0.11 | $ | 0.14 | $ | 0.18 | $ | 0.24 | ||||||||
Weighted average shares used in computing net income per share: |
||||||||||||||||
Basic |
35,685 | 34,917 | 35,713 | 34,798 | ||||||||||||
Diluted |
36,906 | 35,773 | 36,951 | 35,715 |
5
athenahealth, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
Six Months Ended June 30, |
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2012 | 2011 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: |
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Net income |
$ | 6,582 | $ | 8,437 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: |
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Depreciation and amortization |
12,861 | 8,055 | ||||||
Amortization of premium on investments |
681 | 868 | ||||||
Provision for uncollectible accounts |
287 | 593 | ||||||
Excess tax benefit from stock-based awards |
(5,680 | ) | (6,432 | ) | ||||
Deferred income tax |
(426 | ) | (819 | ) | ||||
(Decrease) Increase in fair value of contingent consideration |
(1,110 | ) | 224 | |||||
Stock-based compensation expense |
12,984 | 7,916 | ||||||
Other reconciling adjustments |
(120 | ) | 73 | |||||
Changes in operating assets and liabilities: |
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Accounts receivable |
(2,134 | ) | (7,650 | ) | ||||
Prepaid expenses and other current assets |
605 | 5,985 | ||||||
Other long-term assets |
117 | 166 | ||||||
Accounts payable |
1,222 | 781 | ||||||
Accrued expenses |
1,742 | 388 | ||||||
Accrued compensation |
(683 | ) | | |||||
Deferred revenue |
1,108 | 4,887 | ||||||
Deferred rent |
(438 | ) | (3,303 | ) | ||||
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Net cash provided by operating activities |
27,598 | 20,169 | ||||||
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CASH FLOWS FROM INVESTING ACTIVITIES: |
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Capitalized software development costs |
(5,915 | ) | (3,068 | ) | ||||
Purchases of property and equipment |
(15,657 | ) | (6,841 | ) | ||||
Proceeds from sales and maturities of investments |
46,374 | 86,834 | ||||||
Purchases of short-term and long-term investments |
(30,883 | ) | (80,175 | ) | ||||
Payment of acquisition |
| (6,988 | ) | |||||
Decrease in restricted cash |
807 | 2,887 | ||||||
Other investing activities |
172 | | ||||||
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Net cash (used in) investing activities |
(5,102 | ) | (7,351 | ) | ||||
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CASH FLOWS FROM FINANCING ACTIVITIES: |
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Proceeds from issuance of common stock under stock plans and warrants |
10,905 | 4,558 | ||||||
Taxes paid related to net share settlement of restricted stock awards |
(3,686 | ) | | |||||
Excess tax benefit from stock-based awards |
5,680 | 6,432 | ||||||
Payment of contingent consideration accrued at acquisition date |
(807 | ) | (2,558 | ) | ||||
Payment to terminate interest rate derivative contract |
| (563 | ) | |||||
Payments on long-term debt and capital lease obligations |
| (9,216 | ) | |||||
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Net cash provided by (used in) financing activities |
12,092 | (1,347 | ) | |||||
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Effects of exchange rate changes on cash and cash equivalents |
(39 | ) | (45 | ) | ||||
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Net decrease in cash and cash equivalents |
34,549 | 11,426 | ||||||
Cash and cash equivalents at beginning of period |
57,781 | 35,944 | ||||||
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Cash and cash equivalents at end of period |
$ | 92,330 | $ | 47,370 | ||||
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Non-cash transactions |
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Property and equipment recorded in accounts payable and accrued expenses |
$ | 450 | $ | 222 | ||||
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Tax benefit recorded in prepaid expenses and other current assets |
$ | 5,651 | $ | 6,344 | ||||
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Additional disclosures |
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Cash paid for interest |
$ | 51 | $ | 225 | ||||
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Cash paid for taxes |
$ | 3,824 | $ | 804 | ||||
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6
athenahealth, Inc.
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, 2012 and 2011:
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
2012 | 2011 | 2012 | 2011 | |||||||||||||
Stock-based compensation expense charged to: |
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Direct operating |
$ | 1,545 | $ | 810 | $ | 2,453 | $ | 1,415 | ||||||||
Selling and marketing |
2,015 | 1,159 | 3,687 | 2,082 | ||||||||||||
Research and development |
1,083 | 486 | 1,848 | 1,016 | ||||||||||||
General and administrative |
2,708 | 1,456 | 4,996 | 3,403 | ||||||||||||
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Total |
$ | 7,351 | $ | 3,911 | $ | 12,984 | $ | 7,916 | ||||||||
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athenahealth, Inc.
CASH, CASH EQUIVALENTS, AND AVAILABLE-FOR-SALE INVESTMENTS
(Unaudited, in thousands)
Set forth below is a breakout of total cash, cash equivalents, and available-for-sale investments as of June 30, 2012, and December 31, 2011:
June 30, 2012 | December 31, 2011 | |||||||
Cash, cash equivalents |
$ | 92,330 | $ | 57,781 | ||||
Short-term investments |
63,029 | 62,084 | ||||||
Long-term investments* |
1,555 | 18,619 | ||||||
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Total |
$ | 156,914 | $ | 138,484 | ||||
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* | The Company has purchased certain available-for-sale investments that had a maturity date longer than one-year, which it classifies in Investments and other assets on the condensed consolidated balance sheet. |
7
athenahealth, Inc.
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 accounting principles generally accepted in the United States of America (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.
Please note that these figures may not sum exactly due to rounding.
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 June 30, |
Six Months Ended June 30, |
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(unaudited, in thousands) | 2012 | 2011 | 2012 | 2011 | ||||||||||||
Total revenue |
$ | 103,515 | $ | 77,885 | $ | 200,081 | $ | 147,815 | ||||||||
Direct operating expense |
41,014 | 29,020 | 79,812 | 56,290 | ||||||||||||
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Total revenue less direct operating expense |
62,501 | 48,865 | 120,269 | 91,525 | ||||||||||||
Add: Stock-based compensation expense allocated to direct operating expense |
1,545 | 810 | 2,453 | 1,415 | ||||||||||||
Add: Amortization of purchased intangibles |
753 | 460 | 1,506 | 920 | ||||||||||||
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Non-GAAP Adjusted Gross Profit |
$ | 64,799 | $ | 50,135 | $ | 124,228 | $ | 93,860 | ||||||||
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Non-GAAP Adjusted Gross Margin |
62.6 | % | 64.4 | % | 62.1 | % | 63.5 | % |
8
Non-GAAP Adjusted EBITDA
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 June 30, |
Six Months Ended June 30, |
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(unaudited, in thousands) | 2012 | 2011 | 2012 | 2011 | ||||||||||||
Total revenue |
$ | 103,515 | $ | 77,885 | $ | 200,081 | $ | 147,815 | ||||||||
GAAP net income |
4,154 | 5,186 | 6,582 | 8,437 | ||||||||||||
Add: Provision for income taxes |
2,599 | 4,166 | 5,492 | 6,471 | ||||||||||||
Add: Total other (income) expense |
(12 | ) | 77 | (146 | ) | 44 | ||||||||||
Add: Stock-based compensation expense |
7,351 | 3,911 | 12,984 | 7,916 | ||||||||||||
Add: Depreciation and amortization |
5,795 | 3,737 | 11,281 | 7,135 | ||||||||||||
Add: Amortization of purchased intangibles |
753 | 460 | 1,506 | 920 | ||||||||||||
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Non-GAAP Adjusted EBITDA |
$ | 20,640 | $ | 17,537 | $ | 37,699 | $ | 30,923 | ||||||||
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Non-GAAP Adjusted EBITDA Margin |
19.9 | % | 22.5 | % | 18.8 | % | 20.9 | % |
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, which represents Non-GAAP Adjusted Operating Income as a percentage of total revenue.
Three Months Ended June 30, |
Six Months Ended June 30, |
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(unaudited, in thousands) | 2012 | 2011 | 2012 | 2011 | ||||||||||||
Total revenue |
$ | 103,515 | $ | 77,885 | $ | 200,081 | $ | 147,815 | ||||||||
GAAP net income |
4,154 | 5,186 | 6,582 | 8,437 | ||||||||||||
Add: Provision for income taxes |
2,599 | 4,166 | 5,492 | 6,471 | ||||||||||||
Add: Total other (income) expense |
(12 | ) | 77 | (146 | ) | 44 | ||||||||||
Add: Stock-based compensation expense |
7,351 | 3,911 | 12,984 | 7,916 | ||||||||||||
Add: Amortization of purchased intangibles |
753 | 460 | 1,506 | 920 | ||||||||||||
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Non-GAAP Adjusted Operating Income |
$ | 14,845 | $ | 13,800 | $ | 26,418 | $ | 23,788 | ||||||||
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Non-GAAP Adjusted Operating Income Margin |
14.3 | % | 17.7 | % | 13.2 | % | 16.1 | % |
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 June 30, |
Six Months Ended June 30, |
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(unaudited, in thousands except per share amounts) | 2012 | 2011 | 2012 | 2011 | ||||||||||||
GAAP net income |
$ | 4,154 | $ | 5,186 | $ | 6,582 | $ | 8,437 | ||||||||
Add: Loss on interest rate derivative contract |
| 138 | | 73 | ||||||||||||
Add: Stock-based compensation expense |
7,351 | 3,911 | 12,984 | 7,916 | ||||||||||||
Add: Amortization of purchased intangibles |
753 | 460 | 1,506 | 920 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Sub-total of tax deductible items |
8,104 | 4,509 | 14,490 | 8,909 | ||||||||||||
(Less): Tax impact of tax deductible items (1) |
(3,242 | ) | (1,804 | ) | (5,796 | ) | (3,564 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Non-GAAP Adjusted Net Income |
$ | 9,016 | $ | 7,891 | $ | 15,276 | $ | 13,782 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Weighted average shares - diluted |
36,906 | 35,773 | 36,951 | 35,715 | ||||||||||||
Non-GAAP Adjusted Net Income per Diluted Share |
$ | 0.24 | $ | 0.22 | $ | 0.41 | $ | 0.39 |
(1) - Tax impact calculated using a statutory tax rate of 40%
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
(unaudited, in thousands except per share amounts) | 2012 | 2011 | 2012 | 2011 | ||||||||||||
GAAP net income per share - diluted |
$ | 0.11 | $ | 0.14 | $ | 0.18 | $ | 0.24 | ||||||||
Add: (Gain) loss on interest rate derivative contract |
| 0.01 | | | ||||||||||||
Add: Stock-based compensation expense |
0.20 | 0.11 | 0.35 | 0.22 | ||||||||||||
Add: Amortization of purchased intangibles |
0.02 | 0.01 | 0.04 | 0.03 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Sub-total of tax deductible items |
0.22 | 0.13 | 0.39 | 0.25 | ||||||||||||
(Less): Tax impact of tax deductible items (1) |
(0.09 | ) | (0.05 | ) | (0.16 | ) | (0.10 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Non-GAAP Adjusted Net Income per Diluted Share |
$ | 0.24 | $ | 0.22 | $ | 0.41 | $ | 0.39 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Weighted average shares - diluted |
36,906 | 35,773 | 36,951 | 35,715 |
(1) - Tax impact calculated using a statutory tax rate of 40%
10
athenahealth, Inc.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
TO COMPARABLE GAAP MEASURES FOR FISCAL YEAR 2012 GUIDANCE
(Unaudited, in millions, 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 2012, which represents Non-GAAP Adjusted Gross Profit as a percentage of total revenue.
LOW | HIGH | |||||||
Fiscal Year Ending December 31, 2012 | ||||||||
Total revenue |
$ | 425.0 | $ | 430.0 | ||||
Direct operating expense |
169.1 | 166.7 | ||||||
|
|
|
|
|||||
Total revenue less direct operating expense |
$ | 255.9 | $ | 263.3 | ||||
|
|
|
|
|||||
Add: Stock-based compensation expense allocated to direct operating expense |
4.7 | 4.7 | ||||||
Add: Amortization of purchased intangibles |
2.9 | 2.9 | ||||||
|
|
|
|
|||||
Non-GAAP Adjusted Gross Profit |
$ | 263.5 | $ | 271.0 | ||||
|
|
|
|
|||||
Non-GAAP Adjusted Gross Margin |
62.0 | % | 63.0 | % |
Non-GAAP Adjusted Operating Income Guidance
Set forth below is a reconciliation of the Companys Non-GAAP Adjusted Operating Income and Non-GAAP Adjusted Operating Income Margin guidance for fiscal year 2012, which represents Non-GAAP Adjusted Operating Income as a percentage of total revenue.
LOW | HIGH | |||||||
Fiscal Year Ending December 31, 2012 | ||||||||
Total revenue |
$ | 425.0 | $ | 430.0 | ||||
GAAP net income |
15.0 | 18.5 | ||||||
Add: Provision for income taxes |
13.5 | 16.2 | ||||||
Add: Acquisition-related expenses |
| | ||||||
Add (less): Total other (income) expense |
(0.4 | ) | (0.6 | ) | ||||
Add: Stock-based compensation expense |
28.0 | 28.0 | ||||||
Add: Amortization of purchased intangibles |
2.9 | 2.9 | ||||||
|
|
|
|
|||||
Non-GAAP Adjusted Operating Income |
$ | 59.0 | $ | 65.0 | ||||
|
|
|
|
|||||
Non-GAAP Adjusted Operating Income Margin |
13.9 | % | 15.1 | % |
11
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 2012.
LOW | HIGH | |||||||
Fiscal Year Ending December 31, 2012 | ||||||||
GAAP net income |
$ | 15.0 | $ | 18.5 | ||||
Add: Stock-based compensation expense |
28.0 | 28.0 | ||||||
Add: Amortization of purchased intangibles |
2.9 | 2.9 | ||||||
|
|
|
|
|||||
Sub-total of tax deductible items |
$ | 30.9 | $ | 30.9 | ||||
|
|
|
|
|||||
(Less): Tax impact of tax deductible items (1) |
(12.4 | ) | (12.4 | ) | ||||
|
|
|
|
|||||
Non-GAAP Adjusted Net Income |
$ | 33.5 | $ | 37.0 | ||||
|
|
|
|
|||||
Weighted average shares - diluted |
37.2 | 37.2 | ||||||
|
|
|
|
|||||
Non-GAAP Adjusted Net Income per Diluted Share |
$ | 0.90 | $ | 1.00 | ||||
|
|
|
|
(1) | Tax impact calculated using a statutory tax rate of 40% |
LOW | HIGH | |||||||
Fiscal Year Ending December 31, 2012 | ||||||||
GAAP net income per share - diluted |
$ | 0.40 | $ | 0.50 | ||||
Add: Stock-based compensation expense |
0.75 | 0.75 | ||||||
Add: Amortization of purchased intangibles |
0.08 | 0.08 | ||||||
|
|
|
|
|||||
Sub-total of tax deductible items |
$ | 0.83 | $ | 0.83 | ||||
|
|
|
|
|||||
(Less): Tax impact of tax deductible items (1) |
(0.33 | ) | (0.33 | ) | ||||
|
|
|
|
|||||
Non-GAAP Adjusted Net Income per Diluted Share |
$ | 0.90 | $ | 1.00 | ||||
|
|
|
|
|||||
Weighted average shares - diluted |
37.2 | 37.2 |
(1) | Tax impact calculated using a statutory tax rate of 40% |
12
Explanation of Non-GAAP Financial Measures
The Company reports its financial results in accordance with accounting principles generally accepted in the United States of America, 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 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 (1) stock-based compensation expense allocated to direct operating expense and (2) 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 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, total other (income) expense, stock-based compensation expense, and amortization of purchased intangibles, 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 all of 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 the Companys performance during the period in which the expense is incurred. |
13
| Amortization of purchased intangibles purchased intangibles are amortized over their estimated useful life 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. |
14