What: athenahealth's was up more than 25% today after reporting third quarter earnings after the bell yesterday.
So what: Investors are ecstatic with the numbers -- as they should be. Revenue was up 24% year over year. And, on the bottom line, athenahealth posted $5.8 million in income compared to a loss of $1.6 million in the year-ago quarter.
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The key measurement for growth at athenahealth is the number of new physicians using its cloud-based electronic health records, billing, mobile applications, and the like. In the third quarter, the company added 4,784 providers with athenaCollector, athenaClinicals, and athenaCommunicator all having net additions. The number of additions was a record for the company, suggesting that there's more growth ahead.
athenahealth's smaller rival Quality Systems was also up substantially today after releasing earnings on Thursday after the bell. Revenue growth at Quality Systems wasn't nearly as impressive, up just 4% year over year. While the growth isn't all that impressive, Quality Systems has struggled of late, so any growth is good news.
We'll have to wait for nearly two weeks to see if the growth at athenaheath and Quality Systems came at the expense of their larger rival, Cerner , which isn't scheduled to release earnings until November 3. Cerner was up slightly today, so investors don't seem too worried. It's, of course, possible for athenahealth, Quality Systems, and Cerner to all add physicians because these healthcare IT companies are not only competing with each other but also against the pen and paper.
Now what: Management didn't make any changes to its guidance but noted that revenue would be "at or above the mid-point of the $905 million to $925 million guidance range." At the mid-point, athenahealth is guiding for fourth quarter revenue of $248 million, which would only be a 16% increase over the year-ago quarter.
It seems likely that management is sandbagging a little bit, but we'll have to wait until the quarter ends to know for sure.
The article Why athenahealth Skyrocketed Today originally appeared on Fool.com.
Brian Orelli has no position in any stocks mentioned. The Motley Fool recommends Athenahealth and Cerner. 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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