Athenahealth blows past Q1 expectations, looks to carve out appeal amid vertical mergers

Athenahealth building
Athenahealth CEO Jonathan Bush said the success of vertical mergers like CVS-Aetna will rely on a "national patient-centric medical record." (Athenahealth)

Fresh off a strong quarter in which it saw a double-digit increase in revenue compared to last year, Athenahealth (NYSE: ATHN) has its eyes fixed on changes across the healthcare industry and the role it might play in vertical consolidation.

Asked about how the company plans to navigate new, potentially influential mergers like CVS-Aetna and the Amazon, JPMorgan, Berkshire Hathaway partnership, CEO Jonathan Bush noted that the success of those new partnerships will hinge on the ability to coordinate care for a larger swath of patients.

“The ability to have a national patient-centric medical record that tracks patients wherever they go enables these businesses,” Bush said on an earnings call Friday morning.

He added that the company is positioning itself to “be extremely attractive to anyone who is interested in a true longitudinal picture of patients.”

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In the short term, Athena has pulled back on operating expenses, which totaled $133 million in the first quarter, down from $140 million during the same period last year, according to an earnings filing. Meanwhile, the company added $329 million in revenue, up 12% from the first quarter of 2017.

That revenue boost came despite a slower bookings quarter than expected. Net income was up significantly at $31.1 million compared to a $1.4 million loss last year, driving up earnings per share to $0.76.

However, shares were down 13% Friday morning thanks to the 32% decline in bookings. 

Athenahealth trimmed 9% of its workforce last fall and laid out a leaner business model moving forward. On Friday’s call, Chief Financial Officer Marc Levine said the company saw slower research and development investment in the first quarter, but expects to ramp up spending over the course of the year, noting a “tight labor market for technical skill sets” accounted for a portion of the delay.