Athenahealth, Inc has a market cap of $2.93 billion; its shares were traded at around $92.97 with a P/E ratio of 154.4 and P/S ratio of 9.1. Athenahealth, Inc had an annual average earning growth of 43.9% over the past 5 years.
Highlight of Business Operations:For the six months ended June 30, 2012, we generated revenue of $200.1 million from the sale of our services compared to $147.8 million for the six months ended June 30, 2011. Given the scope of our market opportunity, we have increased our spending each year on growth, innovation, and infrastructure. Our revenue is predominately derived from business services that we provide on an ongoing basis. This revenue is generally determined as a percentage of payments collected by us on behalf of our clients, so the key drivers of our revenue include growth in the number of physicians and other medical providers working within our client accounts, the collections of these physicians, and the number of services purchased. To provide these services, we incur expenses in several categories, including direct operating, selling and marketing, research and development, general and administrative, and depreciation and amortization expense. In general, our direct operating expense increases as our volume of work increases, whereas our selling and
Revenue. We derive our revenue from two sources: from business services associated with our revenue cycle management, electronic health record management, patient communication management, care coordination and analytics offerings and from implementation and other services. Implementation and other revenue consist primarily of professional services fees related to assisting clients with the initial implementation of our services and for ongoing training and related support services. Business services accounted for approximately 97% of our total revenues for the six months ended June 30, 2012 and 2011. Business services revenue are typically 2% to 8% of a practices total collections depending upon the services purchased, the size, complexity, and other characteristics of the practice, plus a per-statement charge for billing statements that are generated for patients. Accordingly, business services revenue is largely driven by: the number of physician practices and other service providers we serve, the number of physicians and other medical providers working in those physician practices, the volume of activity and related collections of those physicians, the mix of our services used by those physician practices and other medical providers, and our contracted rates. There is moderate seasonality in the activity level of physician practices. Typically, discretionary use of physician services declines in the late summer and during the holiday season, which leads to a decline in collections by our physician clients about 30 to 50 days later. Additionally, the volume of activity and related collections vary from year to year based in large part on the severity, length and timing of the onset of the flu season. While we believe that the severity, length and timing of the onset of the cold and flu season will continue to impact collections by our physician clients, there can be no assurance that our future sales of these services will necessarily follow historical patterns. Implementation and other revenue are largely driven by the increase in the volume of our new business. As a result, we expect implementation and other revenue to increase in absolute terms for the foreseeable future but to remain relatively consistent as a percentage of total revenue. None of our clients accounted for more than 10% of our total revenues for the three and six months ended June 30, 2012 and 2011.
Selling and Marketing Expense. Selling and marketing expense primarily increased due to employee-related costs, including stock-based compensation expense, internal sales commissions and external partner channel commission of $4.8 million and $8.5 million for the three and six months periods, respectively, due to an increase in headcount, an increase in the fair value of our recently issued stock-based compensation awards and an increase in amount paid to external channel partners. Our sales and marketing headcount increased by 34% since June 30, 2011, as we hired additional sales personnel to focus on adding new customers and increasing penetration within our existing markets. The increase was also due to a $3.6 million and $6.5 million increase in travel-related expenses, consulting, online marketing, offline marketing and other marketing events for the three and six months period, respectively.
General and Administrative Expense. General and administrative expense was primarily impacted by higher employee-related costs, an increase in infrastructure expenditures and changes in the fair value of the certain contingent consideration. An increase in higher employee-related costs, including stock-based compensation expense, of $2.3 million and $3.9 million is due to an increased headcount and increase in the fair value of our recently issued stock-based compensation awards for the three and six months period respectively. Our general and administrative headcount increased by 30% since June 30, 2011, as we added personnel to support our growth. The increase in headcount drove an increase in our expenditures related to infrastructure by $0.7 million and $1.5 million, respectively. During the three and six months ended June 30, 2012, we recognized a decrease and an increase in general and administrative expense of $0.9 million and $1.3 million, respectively, related to the Anodyne contingent consideration based on the final cross-sell results as of June 30, 2012. Unrelated, during the three and six months ended June 30, 2012, we recognized a decrease in general and administrative expense of $0.3 million and $2.4 million, respectively, related to the first Proxsys contingent consideration based on an increase in probability that we will miss a minimum athenaCoordinator service revenue threshold required for any payment to be made by 5-10%.
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