athenahealth, Inc. Reaffirms Fiscal Year 2014 Guidance and Initiates Guidance for Fiscal Year 2015

WATERTOWN, Mass., Dec. 10, 2014 (GLOBE NEWSWIRE) -- athenahealth, Inc. (Nasdaq:ATHN) ("athenahealth" or "we"), a leading provider of cloud-based services and mobile tools for medical groups and health systems, today reaffirmed financial guidance for fiscal year 2014 and announced financial guidance for fiscal year 2015. We will host our Seventh Annual Investor Summit tomorrow, Thursday, December 11, 2014, starting at 8:30 a.m. Eastern Time to provide an update on athenahealth's business and share management's outlook for future financial and operational performance.

Our fiscal year 2014 and 2015 guidance is presented below:

We are not making any changes to the fiscal year 2014 guidance we presented at our 6th Annual Investor Summit on December 12, 2013. However, as communicated during our Q3 2014 earnings call, additional insights into our fiscal year 2014 guidance remain as follows:

• We expect GAAP Total Revenue to be at or above the mid-point of the $725 million to $755 million guidance range.
• We expect Non-GAAP Adjusted Gross Margin to be close to the mid-point of the 62.5% to 63.5% guidance range.
• We expect Non-GAAP Adjusted Operating Income to be at or above the mid-point of the $70 million to $80 million guidance range.
• Finally, we expect Non-GAAP Adjusted Net Income per Diluted share to be close to the high end of the $0.98 to $1.10 guidance range.

Today, we are announcing our fiscal year 2015 guidance. In order to help the investment community better understand our strategic investments and financial goals for the upcoming fiscal year, we are providing additional insight our fiscal year 2015 guidance as follows:

• 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 of 30%.
• We plan to increase our investment in research and development to support building our continuum of care services.
• We plan to scale general and administrative expenses overall, while strategically investing in select areas.

"We are very excited about the significant market opportunities ahead of us and are pleased to present an ambitious financial plan for fiscal year 2015. We expect that our investments will be prioritized around building the necessary teams, processes, and services to continue our growth trajectory as we expand to support the full continuum of care," said Kristi Matus, chief financial and administrative officer of athenahealth. "As always, we will measure our success in 2015 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."

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 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. 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.

Webcast Information

A live webcast of our Seventh 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 11, 2015.

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 59,000 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 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 2014 Guidance" and "Reconciliation of Non-GAAP Financial Measures to Comparable GAAP Measures For Fiscal Year 2015 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 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.

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: Dana Quattrochi
         athenahealth, Inc. (Investors)
         investorrelations@athenahealth.com
         (617) 402-1329
         
         Holly Spring
         athenahealth, Inc. (Media)
         media@athenahealth.com
         (617) 402-1631