WATERTOWN, Mass., Dec. 09, 2015 (GLOBE NEWSWIRE) — athenahealth, Inc. (NASDAQ:ATHN) (“athenahealth” or “we”), a leading provider of cloud-based services and mobile applications for medical groups and health systems, today reaffirmed financial guidance for fiscal year 2015 and announced financial guidance for fiscal year 2016.
Our fiscal year 2015 and 2016 guidance is presented below:
| For the Fiscal Year Ending: |
||||
| December 31, 2015 |
December 31, 2016 |
|||
| GAAP Total Revenue | $905 – $925 million | $1,085 – $1,115 million | ||
| Non-GAAP Adjusted Gross Margin | 62.5% – 63.5% | 63.5% – 64.5% | ||
| Non-GAAP Adjusted Operating Income | $75 – $85 million | $120 – $135 million | ||
| Non-GAAP Adjusted Net Income per Diluted Share | $1.10 – $1.20 | $1.65 – $1.85 | ||
| Non-GAAP Tax Rate | 40 percent | 40 percent | ||
We are reaffirming fiscal year 2015 guidance as we released in conjunction with our fourth quarter and full year 2014 earnings call on February 6, 2015. And, as communicated during our third quarter 2015 earnings call on October 23, 2015, additional insights into our fiscal year 2015 guidance are as follows:
- We expect GAAP Total Revenue to be at or above the mid-point of the $905 million to $925 million guidance range.
- We expect Non-GAAP Adjusted Gross Margin to be close to the high end of the 62.5% to 63.5% guidance range.
- We expect Non-GAAP Adjusted Operating Income to be above the high end of the $75 million to $85 million guidance range.
- Finally, we expect Non-GAAP Adjusted Net Income per Diluted share to be above the high end of the $1.10 to $1.20 guidance range.
In order to help the investment community better understand our strategic investments and financial goals for our fiscal year 2016 performance expectations, we are providing the following additional insight:
- We plan to continue to scale our operations and improve Non-GAAP Adjusted Gross Margin.
- We plan to continue to invest in sales and marketing to support our bookings growth goal.
- We plan to continue to invest in research and development to support building our continuum of care services.
- We plan to scale general and administrative expenses.
“As we look towards 2016, we plan on leveraging our vast network to drive growth, broaden and deepen our services, and boost interoperability,” said Kristi Matus, chief financial and administrative officer of athenahealth. “We continue to see expansive market opportunities and look forward to presenting our financial plan for fiscal year 2016 at our Eighth Annual Investor Summit tomorrow. As always, we will measure our success in 2016 by our corporate balanced scorecard which includes stability, performance, client satisfaction, and financial metrics that best reflect how we are progressing against our long-term vision of building the health care internet.”
A webcast of our Eighth Annual Investor Summit tomorrow, Thursday, December 10, 2015, starts at 8:30 a.m. Eastern Time. We will provide an update on athenahealth’s business and share our outlook for future financial and operational performance. As previously announced, the live webcast of the event can be accessed via the Investors section of our website at www.athenahealth.com.
Use of Non-GAAP Financial Measures
In our earnings releases, conference calls, slide presentations, and webcasts, we may use or discuss non-GAAP financial measures, as defined by 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. Our earnings press releases containing such non-GAAP reconciliations can be found on the Investors section of our web site at http://www.athenahealth.com.
Eighth Annual Investor Summit Webcast Information
A live webcast of our Eighth Annual Investor Summit can be accessed via the Investors section of our website at http://www.athenahealth.com. A replay of this webcast will be available on the website within 24 hours following the event and will remain available through March 10, 2016.
About athenahealth, Inc.
athenahealth is a leading provider of cloud-based services for electronic health records (EHR), revenue cycle management and medical billing, patient engagement, care coordination, and population health management, as well as Epocrates and other point-of-care mobile apps. We connect care and drive meaningful, measurable results for more than 72,000 health care providers in medical practices and health systems nationwide. For more information, please visit www.athenahealth.com.
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 management’s expectations for future financial and operational performance and operating expenditures, expected growth, and business outlook; statements regarding the benefits of and potential market for our service offerings; statements about our investments in growth, interoperability, and the development of our services, including expansion to support the full continuum of care; statements regarding building a health care internet; and statements found under our “Reconciliation of Non-GAAP Financial Measures to Comparable GAAP Measures For Fiscal Year 2015 Guidance” and “Reconciliation of Non-GAAP Financial Measures to Comparable GAAP Measures For Fiscal Year 2016 Guidance” sections 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 our 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: our fluctuating operating results; our 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; risks associated with our expectations regarding our ability to maintain profitability; the impact of increased sales and marketing and research and development 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 we operate and the relative immaturity of the market for our service offerings; and the evolving and complex governmental and regulatory compliance environment in which we and our 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. We undertake 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 us, please see the disclosures contained in its public filings with the Securities and Exchange Commission, available on the Investors section of our website at http://www.athenahealth.com and on the SEC’s website at http://www.sec.gov.
athenahealth, Inc.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
TO COMPARABLE GAAP MEASURES FOR FISCAL YEAR 2015 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 our “Non-GAAP Adjusted Gross Profit” and “Non-GAAP Adjusted Gross Margin” guidance for fiscal year 2015, which represents Non-GAAP Adjusted Gross Profit as a percentage of total revenue.
| LOW | HIGH | |||||
| Fiscal Year Ending December 31, 2015 | ||||||
| Total revenue | $ | 905.0 | $ | 925.0 | ||
| Direct operating expense | 364.1 | 362.4 | ||||
| Total revenue less direct operating expense | $ | 540.9 | $ | 562.6 | ||
| Add: Stock-based compensation expense | ||||||
| allocated to direct operating expense | 13.8 | 13.8 | ||||
| Add: Amortization of purchased intangible assets | ||||||
| allocated to direct operating expense (1) | 11.0 | 11.0 | ||||
| Non-GAAP Adjusted Gross Profit | $ | 565.6 | $ | 587.4 | ||
| Non-GAAP Adjusted Gross Margin | 62.5 | % | 63.5 | % | ||
| (1) Based on preliminary estimates related to purchase accounting | ||||||
Non-GAAP Adjusted Operating Income Guidance
Set forth below is a reconciliation of our “Non-GAAP Adjusted Operating Income” and “Non-GAAP Adjusted Operating Income Margin” guidance for fiscal year 2015, which represents Non-GAAP Adjusted Operating Income as a percentage of total revenue.
| LOW | HIGH | |||||
| Fiscal Year Ending December 31, 2015 | ||||||
| Total revenue | $ | 905.0 | $ | 925.0 | ||
| GAAP net loss | (8.0 | ) | (3.8 | ) | ||
| Add: (Benefit from) provision for income taxes | (4.3 | ) | (1.8 | ) | ||
| Add: Total other expense | 1.4 | 4.6 | ||||
| Add: Stock-based compensation expense | 61.4 | 61.4 | ||||
| Add: Amortization of capitalized stock-based compensation related to software development | 4.2 | 4.2 | ||||
| Add: Amortization of purchased intangible assets | 20.3 | 20.3 | ||||
| Non-GAAP Adjusted Operating Income | $ | 75.0 | $ | 85.0 | ||
| Non-GAAP Adjusted Operating Income Margin | 8.3 | % | 9.2 | % | ||
Non-GAAP Adjusted Net Income Guidance
Set forth below is a reconciliation of our “Non-GAAP Adjusted Net Income” and “Non-GAAP Adjusted Net Income per Diluted Share” guidance for fiscal year 2015.
| LOW | HIGH | |||||
| Fiscal Year Ending December 31, 2015 | ||||||
| GAAP net loss | $ | (8.0 | ) | $ | (3.8 | ) |
| Add: Stock-based compensation expense | 61.4 | 61.4 | ||||
| Add: Amortization of capitalized stock-based compensation related to software development | 4.2 | 4.2 | ||||
| Add: Amortization of purchased intangible assets | 20.3 | 20.3 | ||||
| Sub-total of tax deductible items | $ | 85.9 | $ | 85.9 | ||
| (Less): Tax impact of tax deductible items (1) | (34.4 | ) | (34.4 | ) | ||
| Add: Tax impact resulting from applying a normalized non-GAAP tax rate (2) | 0.6 | 0.5 | ||||
| Non-GAAP Adjusted Net Income | $ | 44.2 | $ | 48.2 | ||
| Weighted average shares – diluted | 40.1 | 40.1 | ||||
| Non-GAAP Adjusted Net Income per Diluted Share | $ | 1.10 | $ | 1.20 | ||
(1) Tax impact calculated using a statutory tax rate of 40%.
(2) Represents adjusting the GAAP net loss at a non-GAAP tax rate of 40%. For 2015, we are using a non-GAAP tax rate of 40% to normalize the tax impact to our Non-GAAP Adjusted Net Income per Diluted Share based on the fact that a relatively small change in pre-tax GAAP income (loss) in any one period could result in a volatile GAAP effective tax rate.
| LOW | HIGH | |||||
| Fiscal Year Ending December 31, 2015 | ||||||
| GAAP net loss per share – diluted | $ | (0.20 | ) | $ | (0.09 | ) |
| Add: Stock-based compensation expense | 1.53 | 1.53 | ||||
| Add: Amortization of capitalized stock-based compensation related to software development | 0.11 | 0.11 | ||||
| Add: Amortization of purchased intangible assets | 0.51 | 0.51 | ||||
| Sub-total of tax deductible items | $ | 2.14 | $ | 2.14 | ||
| (Less): Tax impact of tax deductible items (1) | (0.86 | ) | (0.86 | ) | ||
| Add: Tax impact resulting from applying a normalized non-GAAP tax rate (2) | 0.02 | 0.01 | ||||
| Non-GAAP Adjusted Net Income per Diluted Share | $ | 1.10 | $ | 1.20 | ||
| Weighted average shares – diluted | 40.1 | 40.1 | ||||
(1) Tax impact calculated using a statutory tax rate of 40%.
(2) Represents adjusting the GAAP net loss at a non-GAAP tax rate of 40%. For 2015, we are using a non-GAAP tax rate of 40% to normalize the tax impact to our Non-GAAP Adjusted Net Income per Diluted Share based on the fact that a relatively small change in pre-tax GAAP income (loss) in any one period could result in a volatile GAAP effective tax rate.
athenahealth, Inc.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
TO COMPARABLE GAAP MEASURES FOR FISCAL YEAR 2016 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 our “Non-GAAP Adjusted Gross Profit” and “Non-GAAP Adjusted Gross Margin” guidance for fiscal year 2016, which represents Non-GAAP Adjusted Gross Profit as a percentage of total revenue.
| LOW | HIGH | |||||
| Fiscal Year Ending December 31, 2016 | ||||||
| Total revenue | $ | 1,085.0 | $ | 1,115.0 | ||
| Direct operating expense | 423.4 | 423.2 | ||||
| Total revenue less direct operating expense | $ | 661.6 | $ | 691.7 | ||
| Add: Stock-based compensation expense | ||||||
| allocated to direct operating expense | 19 | 19 | ||||
| Add: Amortization of purchased intangible assets | ||||||
| allocated to direct operating expense | 8.4 | 8.4 | ||||
| Non-GAAP Adjusted Gross Profit | $ | 689.0 | $ | 719.2 | ||
| Non-GAAP Adjusted Gross Margin | 63.5 | % | 64.5 | % | ||
Non-GAAP Adjusted Operating Income Guidance
Set forth below is a reconciliation of our “Non-GAAP Adjusted Operating Income” and “Non-GAAP Adjusted Operating Income Margin” guidance for fiscal year 2016, which represents Non-GAAP Adjusted Operating Income as a percentage of total revenue.
| LOW | HIGH | |||||
| Fiscal Year Ending December 31, 2016 | ||||||
| Total revenue | $ | 1,085.0 | $ | 1,115.0 | ||
| GAAP net income | 10.8 | 19.5 | ||||
| Add: Provision for income taxes | 7.6 | 12.9 | ||||
| Add: Total other expense | 5.3 | 6.4 | ||||
| Add: Stock-based compensation expense | 69.4 | 69.4 | ||||
| Add: Amortization of capitalized stock-based compensation related to software development | 6.8 | 6.8 | ||||
| Add: Amortization of purchased intangible assets | 20.0 | 20.0 | ||||
| Non-GAAP Adjusted Operating Income | $ | 120.0 | $ | 135.0 | ||
| Non-GAAP Adjusted Operating Income Margin | 11.1 | % | 12.1 | % | ||
Non-GAAP Adjusted Net Income Guidance
Set forth below is a reconciliation of our “Non-GAAP Adjusted Net Income” and “Non-GAAP Adjusted Net Income per Diluted Share” guidance for fiscal year 2016.
| LOW | HIGH | |||||
| Fiscal Year Ending December 31, 2016 | ||||||
| GAAP net income | $ | 10.8 | $ | 19.5 | ||
| Add: Stock-based compensation expense | 69.4 | 69.4 | ||||
| Add: Amortization of capitalized stock-based compensation related to software development | 6.8 | 6.8 | ||||
| Add: Amortization of purchased intangible assets | 20.0 | 20.0 | ||||
| Sub-total of tax deductible items | $ | 96.2 | $ | 96.2 | ||
| (Less): Tax impact of tax deductible items (1) | (38.5 | ) | (38.5 | ) | ||
| Add: Tax impact resulting from applying a non-GAAP normalized tax rate (2) | 0.2 | (0.1 | ) | |||
| Non-GAAP Adjusted Net Income | $ | 68.8 | $ | 77.2 | ||
| Weighted average shares – diluted | 41.7 | 41.7 | ||||
| Non-GAAP Adjusted Net Income per Diluted Share | $ | 1.65 | $ | 1.85 | ||
(1) Tax impact calculated using a statutory tax rate of 40%.
(2) Represents adjusting the GAAP net loss at a non-GAAP tax rate of 40%. For 2016, we will use a non-GAAP tax rate of 40% to normalize the tax impact to our Non-GAAP Adjusted Net Income per Diluted Share based on the fact that a relatively small change in pre-tax GAAP income (loss) in any one period could result in a volatile GAAP effective tax rate.
| LOW | HIGH | |||||
| Fiscal Year Ending December 31, 2016 | ||||||
| GAAP net income per share – diluted | $ | 0.26 | $ | 0.47 | ||
| Add: Stock-based compensation expense | 1.66 | 1.66 | ||||
| Add: Amortization of capitalized stock-based compensation related to software development | 0.16 | 0.16 | ||||
| Add: Amortization of purchased intangible assets | 0.48 | 0.48 | ||||
| Sub-total of tax deductible items | $ | 2.31 | $ | 2.31 | ||
| (Less): Tax impact of tax deductible items (1) | (0.92 | ) | (0.92 | ) | ||
| Add: Tax impact resulting from applying a non-GAAP normalized tax rate (2) | 0.01 | — | ||||
| Non-GAAP Adjusted Net Income per Diluted Share | $ | 1.65 | $ | 1.85 | ||
| Weighted average shares – diluted | 41.7 | 41.7 | ||||
(1) Tax impact calculated using a statutory tax rate of 40%.
(2) Represents adjusting the GAAP net loss at a non-GAAP tax rate of 40%. For 2016, we will use a non-GAAP tax rate of 40% to normalize the tax impact to our Non-GAAP Adjusted Net Income per Diluted Share based on the fact that a relatively small change in pre-tax GAAP income (loss) in any one period could result in a volatile GAAP effective tax rate.
Explanation of Non-GAAP Financial Measures
We report our 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 our 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 athenahealth 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 our ongoing business by eliminating certain non-cash expenses and other items that management believes might otherwise make comparisons of our ongoing business with prior periods more difficult, obscure trends in ongoing operations, or reduce management’s 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 our financial and operational performance and comparing this performance to our 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 intangible assets allocated to direct operating expense, 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 our operational strength and performance of our business and a good measure of our historical operating trends. Moreover, management believes that these measures enable investors and financial analysts to closely monitor and understand changes in our ability to generate income from ongoing business operations.
Management defines “Non-GAAP Adjusted Operating Income” as the sum of GAAP net income (loss) before provision for (benefit) from income taxes, total other (income) expense, stock-based compensation expense, amortization of capitalized stock-based compensation related to software development, and amortization of purchased intangible assets 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 (Loss)” as the sum of GAAP net income (loss) before stock-based compensation expense, amortization of capitalized stock-based compensation related to software development, amortization of purchased intangible assets and any tax impact related to these preceding items, and an adjustment to the tax provision for the non-GAAP tax rate and “Non-GAAP Adjusted Net Income (Loss) per Diluted Share” as Non-GAAP Adjusted Net Income (Loss) divided by weighted average diluted shares outstanding. Management considers all of these non-GAAP financial measures to be important indicators of our operational strength and performance of our business and a good measure of our historical operating trends, in particular the extent to which ongoing operations impact our overall financial performance.
Management excludes or adjusts 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 and amortization of capitalized stock-based compensation related to software development — excluded because these are non-cash expenditures that management does not consider part of ongoing operating results when assessing the performance of our business, and also because the total amount of the expenditure is partially outside of our 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 expenses are incurred.
- Amortization of purchased intangible assets — purchased intangible assets are amortized over their estimated useful lives and generally cannot be changed or influenced by management after the acquisition. Accordingly, this item is not considered by management in making operating decisions. Management does not believe such charges accurately reflect the performance of our ongoing operations for the period in which such charges are incurred.
- Non-GAAP tax rate — we are using a non-GAAP tax rate of 40% to normalize the tax impact to our Non-GAAP Adjusted Net Income (Loss) per Diluted Share based on the fact that a relatively small change in pre-tax GAAP income (loss) could result in a volatile GAAP effective tax rate.
CONTACT: Contacts: Dana Quattrochi athenahealth, Inc. (Investors) [email protected] (617) 402-1329 Holly Spring athenahealth, Inc. (Media) [email protected] (617) 402-1631