"We believe in a connected health care experience for all, where everyone across the continuum is connected to information and outcomes. In 2014, we connected a record 12,137 providers to our network and we connected 699 clients to innovative technologies and services offered on our MDP Marketplace. With a growing tally of more than 161,000 active interfaces, our clients' ability to share information is increasingly unencumbered," said Jonathan Bush, athenahealth's chairman and chief executive officer. "We are making marked progress towards building the health care internet. Our recent acquisition of RazorInsights and partnership with Beth Israel Deaconess Medical Center furthers our efforts and advances our ability to improve care coordination within and around the inpatient environment."
"In 2014, we grew our network to serve over 62,000 providers, increased our total automation rate to 51%, and made meaningful investments in both innovation and openness to further disrupt the status quo in health care," said Kristi Matus, athenahealth's chief financial & administrative officer. "athenahealth remains committed to delivering results-oriented solutions, not just for the clients we serve today, but for our growing addressable market and the care continuum at large."
We are updating our fiscal year 2015 guidance to incorporate the acquisition of RazorInsights and the purchase of webOMR, the web-based clinical applications and electronic health record platform from Beth Israel Deaconess Medical Center. Please note that if it were not for these transactions, we would have reaffirmed the original fiscal year 2015 guidance communicated on December 11, 2014 at our 7th Annual Investor Summit. athenahealth's updated fiscal year 2015 guidance to reflect these transactions is presented below:
In our earnings releases, prepared remarks, 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 after the consolidated financial statements. Our earnings press releases containing such non-GAAP reconciliations can be found in the Investors section of our web site at www.athenahealth.com.
To participate in athenahealth's live conference call and webcast, please dial 877-853-5645 (or 408-940-3868 for international calls) using conference code No. 65581423, or visit the Investors section of our web site at www.athenahealth.com. A replay will be available for one week following the conference call at 855-859-2056 (and 404-537-3406 for international calls) using conference code No. 65581423. A webcast replay will also be archived on our website.
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 62,000 health care providers in medical practices and health systems nationwide. For more information, please visit www.athenahealth.com.
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, including the updated fiscal year 2015 guidance; statements regarding the benefits of and demand for our service offerings; statements regarding the potential expansion of our network and progress towards building the health care internet; statements regarding our market opportunity; statements regarding changes in the health care industry, including an increased emphasis on coordinated care, and our positioning in regard to those changes; and statements found under our "Reconciliation of Non-GAAP Financial Measures to Comparable GAAP Measures" 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 our quarterly results; risks associated with the acquisition and integration of companies and new technologies to achieve expected synergies, including those related to our ability to successfully integrate the services, offerings, and technologies of Epocrates, RazorInsights, and webOMR and realize the expected benefits; risks associated with our ability to realize the expected benefits from the purchase of the Arsenal on the Charles campus in Watertown, Massachusetts; 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. Forward-looking statements may often be identified with words such as "we expect," "we anticipate," "upcoming," "aim," or similar indications of future expectations. 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. 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 our public filings with the Securities and Exchange Commission, available on the Investors section of our website at www.athenahealth.com and on the SEC's website at www.sec.gov.
athenahealth, Inc.
CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands, except per share amounts) |
|
|
|
|
|
|
|
|
December 31,
2014 |
December 31,
2013 |
Assets |
|
|
|
|
Current assets: |
|
|
|
|
Cash and cash equivalents |
|
|
$ 73,787 |
$ 65,002 |
Marketable securities |
|
|
40,950 |
— |
Accounts receivable, net |
|
|
121,710 |
87,343 |
Restricted cash |
|
|
— |
3,000 |
Deferred tax assets, net |
|
|
— |
6,118 |
Prepaid expenses and other current assets |
|
|
22,627 |
17,194 |
Total current assets |
|
|
259,074 |
178,657 |
Property and equipment, net |
|
|
271,552 |
213,018 |
Capitalized software costs, net |
|
|
56,574 |
29,987 |
Purchased intangible assets, net |
|
|
139,422 |
168,364 |
Goodwill |
|
|
198,049 |
198,049 |
Investments and other assets |
|
|
7,327 |
8,321 |
Total assets |
|
|
$ 931,998 |
$ 796,396 |
Liabilities & Stockholders' Equity |
|
|
|
|
Current liabilities: |
|
|
|
|
Accounts payable |
|
|
9,410 |
3,930 |
Accrued compensation |
|
|
71,768 |
44,444 |
Accrued expenses |
|
|
37,033 |
24,380 |
Line of credit |
|
|
$ 35,000 |
$ 35,000 |
Long-term debt |
|
|
15,000 |
15,000 |
Deferred revenue |
|
|
28,949 |
27,002 |
Deferred tax liability, net |
|
|
8,449 |
— |
Total current liabilities |
|
|
205,609 |
149,756 |
Deferred rent, net of current portion |
|
|
19,412 |
1,478 |
Long-term debt, net of current portion |
|
|
158,750 |
173,750 |
Deferred revenue, net of current portion |
|
|
54,473 |
53,172 |
Long-term deferred tax liability, net |
|
|
10,417 |
21,421 |
Other long-term liabilities |
|
|
8,214 |
5,511 |
Total liabilities |
|
|
456,875 |
405,088 |
Stockholders' equity: |
|
|
|
|
Preferred stock, $0.01 par value: 5,000 shares authorized; no shares issued and outstanding at December 31, 2014 and December 31, 2013, respectively |
|
|
— |
— |
Common stock, $0.01 par value: 125,000 shares authorized; 39,402 shares issued and 38,124 shares outstanding at December 31, 2014; 38,600 shares issued and 37,322 shares outstanding at December 31, 2013 |
|
|
395 |
387 |
Additional paid-in capital |
|
|
443,259 |
380,967 |
Treasury stock, at cost, 1,278 shares |
|
|
(1,200) |
(1,200) |
Accumulated other comprehensive income (loss) |
|
|
24,188 |
(446) |
Retained earnings |
|
|
8,481 |
11,600 |
Total stockholders' equity |
|
|
475,123 |
391,308 |
Total liabilities and stockholders' equity |
|
|
$ 931,998 |
$ 796,396 |
|
|
|
athenahealth, Inc.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited, in thousands, except per share amounts) |
|
|
|
|
|
|
Three Months Ended
December 31, |
Twelve Months Ended
December 31, |
|
2014 |
2013 |
2014 |
2013 |
Revenue: |
|
|
|
|
Business services |
$ 201,072 |
$ 162,529 |
$ 711,234 |
$ 563,237 |
Implementation and other |
12,142 |
9,050 |
41,365 |
31,766 |
Total revenue |
213,214 |
171,579 |
752,599 |
595,003 |
Expense: |
|
|
|
|
Direct operating |
76,274 |
62,852 |
302,539 |
238,672 |
Selling and marketing |
50,533 |
37,947 |
189,688 |
149,488 |
Research and development |
19,802 |
16,322 |
69,461 |
57,639 |
General and administrative |
33,592 |
22,339 |
125,192 |
99,776 |
Depreciation and amortization |
18,071 |
12,864 |
64,764 |
43,575 |
Total expense |
198,272 |
152,324 |
751,644 |
589,150 |
Operating income |
14,942 |
19,255 |
955 |
5,853 |
Other (expense) income: |
|
|
|
|
Interest expense |
(911) |
(1,319) |
(4,695) |
(3,905) |
Other income |
27 |
136 |
(124) |
283 |
Total other (expense) income |
(884) |
(1,183) |
(4,819) |
(3,622) |
Income (loss) before income tax (provision) benefit |
14,058 |
18,072 |
(3,864) |
2,231 |
Income tax (provision) benefit |
(5,329) |
(4,927) |
745 |
363 |
Net income (loss) |
$ 8,729 |
$ 13,145 |
$ (3,119) |
$ 2,594 |
Net income (loss) per share – Basic |
$ 0.23 |
$ 0.35 |
$ (0.08) |
$ 0.07 |
Net income (loss) per share – Diluted |
$ 0.22 |
$ 0.34 |
$ (0.08) |
$ 0.07 |
Weighted average shares used in computing net (loss) income per share: |
|
|
|
|
Basic |
38,097 |
37,262 |
37,862 |
36,856 |
Diluted |
39,040 |
38,645 |
37,862 |
38,257 |
|
|
athenahealth, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands) |
|
|
|
|
|
|
|
Year Ended December 31, |
|
|
2014 |
2013 |
2012 |
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
Net (loss) income |
|
$ (3,119) |
$ 2,594 |
$ 18,732 |
Adjustments to reconcile net (loss) income to net cash provided by operating activities: |
|
|
|
|
Depreciation and amortization |
|
93,806 |
61,853 |
29,144 |
Excess tax benefit from stock-based awards |
|
(10,060) |
(6,910) |
(14,179) |
Deferred income tax |
|
(11,670) |
(7,044) |
(890) |
Change in fair value of contingent considerations |
|
— |
76 |
(5,118) |
Stock-based compensation expense |
|
55,558 |
42,648 |
27,236 |
Other reconciling adjustments |
|
(224) |
(67) |
1,092 |
Changes in operating assets and liabilities: |
|
|
|
|
Accounts receivable, net |
|
(34,367) |
(3,399) |
(12,611) |
Prepaid expenses and other current assets |
|
4,285 |
3,283 |
12,096 |
Other long-term assets |
|
596 |
(66) |
111 |
Accounts payable |
|
2,546 |
(233) |
13 |
Accrued expenses and other long-term liabilities |
|
10,083 |
(21) |
3,898 |
Accrued compensation |
|
26,339 |
5,775 |
7,959 |
Deferred revenue |
|
3,248 |
(3,090) |
2,969 |
Deferred rent |
|
12,084 |
(2,091) |
(239) |
Net cash provided by operating activities |
|
149,105 |
93,308 |
70,213 |
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
Capitalized software development costs |
|
(53,477) |
(29,123) |
(15,657) |
Purchases of property and equipment |
|
(76,092) |
(38,260) |
(23,904) |
Proceeds from sales and maturities of investments |
|
— |
56,245 |
160,340 |
Purchases of investments |
|
— |
(2,000) |
(118,919) |
Payments on acquisitions, net of cash acquired |
|
— |
(410,161) |
(5,798) |
Change in restricted cash |
|
3,000 |
(1,643) |
3,650 |
Other investing activities |
|
(750) |
— |
172 |
Net cash used in investing activities |
|
(127,319) |
(424,942) |
(116) |
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
Proceeds from issuance of common stock under stock plans and warrants |
|
21,041 |
31,133 |
18,699 |
Taxes paid related to net share settlement of stock awards |
|
(28,879) |
(12,075) |
(4,248) |
Excess tax benefit from stock-based awards |
|
10,060 |
6,910 |
14,179 |
Proceeds from long-term debt |
|
— |
200,000 |
— |
Proceeds from line of credit |
|
— |
155,000 |
— |
Payments for line of credit |
|
— |
(120,000) |
— |
Payments for long-term debt |
|
(15,000) |
(11,250) |
— |
Net settlement of acquired company's board of directors equity shares |
|
— |
(5,806) |
— |
Debt issuance costs |
|
— |
(1,699) |
— |
Payment of contingent consideration accrued at acquisition date |
|
— |
(525) |
(1,550) |
Net cash (used in) provided by financing activities |
|
(12,778) |
241,688 |
27,080 |
Effects of exchange rate changes on cash and cash equivalents |
|
(223) |
(40) |
30 |
Net (decrease) increase in cash and cash equivalents |
|
8,785 |
(89,986) |
97,207 |
Cash and cash equivalents at beginning of period |
|
65,002 |
154,988 |
57,781 |
Cash and cash equivalents at end of period |
|
$ 73,787 |
$ 65,002 |
$ 154,988 |
|
|
athenahealth, Inc.
STOCK-BASED COMPENSATION
(Unaudited, in thousands) |
|
|
|
|
|
Set forth below is a breakout of stock-based compensation impacting the Consolidated Statements of Income for the three and twelve months ended December 31, 2014, and 2013: |
|
|
|
|
|
|
Three Months Ended
December 31, |
Twelve Months Ended
December 31, |
|
2014 |
2013 |
2014 |
2013 |
Stock-based compensation charged to Consolidated Statements of Income: |
|
|
|
|
Direct operating |
$ 3,203 |
$ 2,160 |
$ 12,009 |
$ 7,778 |
Selling and marketing |
3,703 |
2,848 |
14,581 |
12,057 |
Research and development |
1,923 |
991 |
7,221 |
4,238 |
General and administrative |
7,743 |
2,925 |
21,747 |
18,575 |
Total stock-based compensation expense |
16,572 |
8,924 |
55,558 |
42,648 |
Amortization of capitalized stock-based compensation related to software development (1) |
743 |
347 |
2,258 |
1,027 |
Total |
$ 17,315 |
$ 9,271 |
$ 57,816 |
$ 43,675 |
|
|
|
|
|
(1) In addition, for the three months ended December 31, 2014, and 2013, $1.2 million and $0.5 million, respectively, of stock-based compensation was capitalized in the line item Capitalized Software Costs, net in the Consolidated Balance Sheets for which $0.7 million and $0.3 million, respectively, of amortization was included in the line item Depreciation and Amortization in the Consolidated Statements of Income. For the twelve months ended December 31, 2014, and 2013, $4.7 million and $2.2 million, respectively, of stock-based compensation was capitalized in the line item Capitalized Software Costs, net in the Consolidated Balance Sheets for which $2.3 million and $1.0 million, respectively, of amortization was included in the line item Depreciation and Amortization in the Consolidated Statements of Income. |
|
|
athenahealth, Inc.
AMORTIZATION OF PURCHASED INTANGIBLE ASSETS
(Unaudited, in thousands) |
|
|
|
|
|
Set forth below is a breakout of amortization of purchased intangible assets impacting the Consolidated Statements of Income for the three and twelve months ended December 31, 2014, and 2013: |
|
|
|
|
|
|
Three Months Ended
December 31, |
Twelve Months Ended
December 31, |
Amortization of purchased intangible assets allocated to: |
2014 |
2013 |
2014 |
2013 |
Direct operating |
$ 2,991 |
$ 2,777 |
$ 12,181 |
$ 10,617 |
Selling and marketing |
3,211 |
2,419 |
16,388 |
7,261 |
Total amortization of purchased intangible assets |
$ 6,202 |
$ 5,196 |
$ 28,569 |
$ 17,878 |
|
|
|
|
|
|
|
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 us to describe our 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 our 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 our 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 our "Non-GAAP Adjusted Gross Profit" and "Non-GAAP Adjusted Gross Margin," which represents Non-GAAP Adjusted Gross Profit as a percentage of total revenue. |
|
|
|
|
|
(unaudited, in thousands) |
Three Months Ended |
Twelve Months Ended |
|
December 31, |
December 31, |
|
2014 |
2013 |
2014 |
2013 |
|
|
|
|
|
Total revenue |
$ 213,214 |
$ 171,579 |
$ 752,599 |
$ 595,003 |
Direct operating expense |
76,274 |
62,852 |
302,539 |
238,672 |
Total revenue less direct operating expense |
136,940 |
108,727 |
450,060 |
356,331 |
Add: Stock-based compensation allocated to direct operating expense |
3,203 |
2,160 |
12,009 |
7,778 |
Add: Amortization of purchased intangible assets allocated to direct operating expense |
2,991 |
2,777 |
12,181 |
10,617 |
Non-GAAP Adjusted Gross Profit |
$ 143,134 |
$ 113,664 |
$ 474,250 |
$ 374,726 |
Non-GAAP Adjusted Gross Margin |
67.1% |
66.2% |
63.0% |
63.0% |
|
Non-GAAP Adjusted EBITDA
Set forth below is a reconciliation of our "Non-GAAP Adjusted EBITDA" and "Non-GAAP Adjusted EBITDA Margin," which represents Non-GAAP Adjusted EBITDA as a percentage of total revenue. |
|
|
|
|
|
(unaudited, in thousands) |
Three Months Ended |
Twelve Months Ended |
|
December 31, |
December 31, |
|
2014 |
2013 |
2014 |
2013 |
|
|
|
|
|
Total Revenue |
$ 213,214 |
$ 171,579 |
$ 752,599 |
$ 595,003 |
GAAP net income (loss) |
8,729 |
13,145 |
(3,119) |
2,594 |
Add: Provision for (benefit from) income taxes |
5,329 |
4,927 |
(745) |
(363) |
Add: Total other expense |
884 |
1,183 |
4,819 |
3,622 |
Add: Stock-based compensation expense |
16,572 |
8,924 |
55,558 |
42,648 |
Add: Depreciation and amortization |
18,071 |
12,864 |
64,764 |
43,575 |
Add: Amortization of purchased intangible assets |
6,202 |
5,196 |
28,569 |
17,878 |
Add: Integration and transaction costs |
— |
397 |
— |
6,865 |
Add: Non-tax deductible transaction costs |
— |
— |
— |
2,159 |
Less: Gain on early termination of lease |
— |
— |
— |
(2,468) |
Non-GAAP Adjusted EBITDA |
$ 55,787 |
$ 46,636 |
$ 149,846 |
$ 116,510 |
Non-GAAP Adjusted EBITDA Margin |
26.2% |
27.2% |
19.9% |
19.6% |
|
Non-GAAP Adjusted Operating Income
Set forth below is a reconciliation of our "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. |
|
|
|
|
|
(unaudited, in thousands) |
Three Months Ended |
Twelve Months Ended |
|
December 31, |
December 31, |
|
2014 |
2013 |
2014 |
2013 |
|
|
|
|
|
Total revenue |
$ 213,214 |
$ 171,579 |
$ 752,599 |
$ 595,003 |
GAAP net income (loss) |
8,729 |
13,145 |
(3,119) |
2,594 |
Add: Provision for (benefit from) income taxes |
5,329 |
4,927 |
(745) |
(363) |
Add: Total other expense |
884 |
1,183 |
4,819 |
3,622 |
Add: Stock-based compensation expense |
16,572 |
8,924 |
55,558 |
42,648 |
Add: Amortization of capitalized stock-based compensation related to software development |
743 |
347 |
2,258 |
1,027 |
Add: Amortization of purchased intangible assets |
6,202 |
5,196 |
28,569 |
17,878 |
Add: Integration and transaction costs |
— |
397 |
— |
6,865 |
Add: Non-tax deductible transaction costs |
— |
— |
— |
2,159 |
Less: Gain on early termination of lease |
— |
— |
— |
(2,468) |
Non-GAAP Adjusted Operating Income |
$ 38,459 |
$ 34,119 |
$ 87,340 |
$ 73,962 |
Non-GAAP Adjusted Operating Income Margin |
18.0% |
19.9% |
11.6% |
12.4% |
|
Non-GAAP Adjusted Net Income
Set forth below is a reconciliation of our "Non-GAAP Adjusted Net Income" and "Non-GAAP Adjusted Net Income per Diluted Share." |
|
|
|
|
|
(unaudited, in thousands) |
Three Months Ended |
Twelve Months Ended |
|
December 31, |
December 31, |
|
2014 |
2013 |
2014 |
2013 |
|
|
|
|
|
GAAP net income (loss) |
$ 8,729 |
$ 13,145 |
$ (3,119) |
$ 2,594 |
Add: Stock-based compensation expense |
16,572 |
8,924 |
55,558 |
42,648 |
Add: Amortization of capitalized stock-based compensation related to software development |
743 |
347 |
2,258 |
1,027 |
Add: Amortization of purchased intangible assets |
6,202 |
5,196 |
28,569 |
17,878 |
Add: Integration and transaction costs |
— |
397 |
— |
6,865 |
Less: Gain on early termination of lease |
— |
— |
— |
(2,468) |
Sub-total of tax deductible items |
23,517 |
14,864 |
86,385 |
65,950 |
Less: Tax impact of tax deductible items (1) |
(9,407) |
(5,946) |
(34,554) |
(26,380) |
Add: Non-tax deductible transaction costs |
— |
— |
— |
2,159 |
Add: Tax impact resulting from applying non-GAAP tax rate (2) |
(294) |
— |
801 |
— |
Non-GAAP Adjusted Net Income |
$ 22,545 |
$ 22,063 |
$ 49,513 |
$ 44,323 |
Weighted average shares - diluted |
39,040 |
38,645 |
37,862 |
38,257 |
Non-GAAP Adjusted Net Income per Diluted Share |
$ 0.58 |
$ 0.57 |
$ 1.31 |
$ 1.16 |
(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 2014, 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. If this approach had been used for the three months ended December 31, 2013, the tax impact from applying a non-GAAP tax rate would have been $(2,301) and our Non-GAAP Adjusted Net Income per Diluted Share would have been $0.51, or a decrease of $0.06. For the twelve months ended December 31, 2013, the tax impact from applying a non-GAAP tax rate would have been $(2,119) and our Non-GAAP Adjusted Net Income per Diluted Share would have been $1.10, or a decrease of $0.06. |
|
|
|
(unaudited, in thousands) |
Three Months Ended |
Twelve Months Ended |
|
December 31, |
December 31, |
|
2014 |
2013 |
2014 |
2013 |
|
|
|
|
|
GAAP net income (loss) per share - diluted |
$ 0.22 |
$ 0.34 |
$ (0.08) |
$ 0.07 |
Add: Stock-based compensation expense |
0.42 |
0.23 |
1.47 |
1.11 |
Add: Amortization of capitalized stock-based compensation related to software development |
0.02 |
0.01 |
0.06 |
0.03 |
Add: Amortization of purchased intangible assets |
0.16 |
0.13 |
0.75 |
0.47 |
Add: Integration and transaction costs |
— |
0.01 |
— |
0.18 |
Less: Gain on early termination of lease |
— |
— |
— |
(0.06) |
Sub-total of tax deductible items |
0.60 |
0.38 |
2.28 |
1.72 |
Less: Tax impact of tax deductible items (1) |
(0.24) |
(0.15) |
(0.91) |
(0.69) |
Add: Non-tax deductible transaction costs |
— |
— |
— |
0.06 |
Add: Tax impact resulting from applying non-GAAP tax rate (2) |
(0.01) |
— |
0.02 |
— |
Non-GAAP Adjusted Net Income per Diluted Share |
$ 0.58 |
$ 0.57 |
$ 1.31 |
$ 1.16 |
Weighted average shares - diluted |
39,040 |
38,645 |
37,862 |
38,257 |
(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 2014, 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. If this approach had been used for the three months ended December 31, 2013, the tax impact from applying a non-GAAP tax rate would have been $(2,301) and our Non-GAAP Adjusted Net Income per Diluted Share would have been $0.51, or a decrease of $0.06. For the twelve months ended December 31, 2013, the tax impact from applying a non-GAAP tax rate would have been $(2,119) and our Non-GAAP Adjusted Net Income per Diluted Share would have been $1.10, or a decrease of $0.06. |
|
|
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 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 (1) |
|
|
20.3 |
20.3 |
Non-GAAP Adjusted Operating Income |
|
|
$ 75.0 |
$ 85.0 |
Non-GAAP Adjusted Operating Income Margin |
|
|
8.3% |
9.2% |
(1) Based on preliminary estimates related to purchase accounting. |
|
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 (1) |
|
|
20.3 |
20.3 |
Sub-total of tax deductible items |
|
|
$ 85.9 |
$ 85.9 |
(Less): Tax impact of tax deductible items (2) |
|
|
(34.4) |
(34.4) |
Add: Tax impact resulting from applying a normalized non-GAAP tax rate (3) |
|
|
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) Based on preliminary estimates related to purchase accounting. |
(2) Tax impact calculated using a statutory tax rate of 40%. |
(3) 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 because a relatively small change in pre-tax GAAP income (loss) 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 (1) |
|
|
0.51 |
0.51 |
Sub-total of tax deductible items |
|
|
$ 2.14 |
$ 2.14 |
(Less): Tax impact of tax deductible items (2) |
|
|
(0.86) |
(0.86) |
Add: Tax impact resulting from applying a normalized non-GAAP tax rate (3) |
|
|
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) Based on preliminary estimates related to purchase accounting. |
(2) Tax impact calculated using a statutory tax rate of 40%. |
(3) 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 because a relatively small change in pre-tax GAAP income (loss) could result in a volatile GAAP effective tax rate. |
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 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: