3 Keys for AthenaHealth, Inc. to Regain Its Go-Go Growth

Source: athenahealth.

Once upon a time, cloud-based healthcare software provider athenahealth boasted of consistent annual revenue growth of 30% or more. In 2014, though, the company missed that mark -- albeit with a still-respectable 24% year-over-year growth rate.

CEO Jonathan Bush thinks athenahealth could regain its go-go growth from prior years. When the company announces its first-quarter financial results later this week, we'll find out how much progress has been made. Here are three keys to achieving the goal.

1. Partner prioritiesBush didn't totally throw sales partner McKesson under the bus in his comments about athenahealth's 2014 results, but he didn't mince words, either. He attributed part of the sales growth slowdown to McKesson needing "time to review its priorities."

It's obvious that athenahealth has had some concerns about McKesson's focus on its sales relationship in light of the large distributor's acquisition of PSS World Medical. Athenahealth depends on McKesson heavily for generating prospects. However, the absorption of PSS World Medical operations has been a primary focus for McKesson.

Athenahealth's first-quarter results should provide a clue as to whether the McKesson relationship is working more effectively. The aftermath of the PSS World Medical acquisition should be only temporary, but investors will want to look to see if the transition troubles from athenahealth's perspective are over.

2. Epocrates emergingIn 2013, athenahealth bought point-of-care software provider Epocrates for $293 million. That price tag represented more than 50 times forward earnings for Epocrates. At the time, there were concerns that athenahealth had paid too much for what it was getting.

Thus far, those concerns appear to be well-founded. The Epocrates business has continued to lose revenue, with a 27% year-over-year drop in the third quarter of 2014 and a 32% year-over-year decline in the fourth quarter. However, there were hints of a light at the end of the tunnel. In his fourth-quarter earnings call remarks, Jonathan Bush stated that bookings for Epocrates were the strongest they had been since the acquisition.

Investors probably shouldn't expect Epocrates to have a dramatic turnaround in the first quarter. However, any signals that the unit is emerging from its prior downward spiral would be quite encouraging.

3. Inpatient inroadsCustomers want software solutions that address all of their business. That's been a challenge for athenahealth in the past, because it has only offered an ambulatory solution. Management knew it needed to address the "inpatient question" in particular.

There have been a couple of pieces of good news on that front recently. Athenahealth acquired RazorInsights in January. RazorInsights is a provider of cloud-based electronic health record (EHR) and financial solutions torural, critical-access, and community hospitals.In February, athenahealth also boughtwebOMR, the web-based clinical applications and EHR platform developed by Boston'sBeth Israel Deaconess Medical Center.

Athenahealth's moves to expand its inpatient solution offerings will take a while to fully develop. It's unlikely the first-quarter results will reflect any significant impact from either of the company's moves. However, sometimes just changing perceptions can help win customers. There could be some clues from bookings that athenahealth's strategy holds promise.

World peace?Analysts are expecting athenahealth to announce first-quarter earnings of $0.14 per share and revenue of $205.24 million. If you're keeping score, that would be year-over-year revenue growth of almost 26% -- very good, but still not at athenahealth's goal of 30%.

That goal might be more manageable than another one, though. In his concluding remarks on the last earnings call, Jonathan Bush talked about a meeting the night before with 1,200 sales and market staff. He was so pumped up from the meeting that he said, "with a couple of cocktails in them... we could bring world peace."

While athenahealth hasn't pulled off achieving world peace yet, a return to 30% sales growth could be attainable. Shareholders will find out soon if that return is on the way.

The article 3 Keys for AthenaHealth, Inc. to Regain Its Go-Go Growth originally appeared on Fool.com.

Keith Speights has no position in any stocks mentioned. The Motley Fool recommends Athenahealth and McKesson. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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