Athenahealth Inc. took a big hit to its bottom line during the third quarter, as a result of a tax provision that saw the company giving back about half of its profits to the feds.
The Watertown, Mass.-based web-based electronic medical records provider paid more than $2.3 million in taxes during the three months ended Sept. 30, a charge that pushed its net income down to $2.3 million, compared to $3.7 million for the same period last year.
Without the income tax provision, Athenahealth would have turned a 32 percent increase in profits over the same period last year. Company officials said the provision was the result of a “reversal of a valuation allowance against U.S. deferred tax assets in the fourth quarter of 2008.”
For the first nine months of 2009, earnings were down 12 percent, to $7.4 million, compared to $8.3 million for the same period last year. Athenahealth attributed the decline to the tax payments.
Overall, the company reported $45.6 million in sales during the quarter, a 38 percent increase from the $33 million it posted during the same period last year. For the nine-month period, Athenahealth increased sales to $137.5 million, compared to $92 million during the same period last year, a nearly 50 percent jump.
The company said nearly 15,000 physicians and 22,000 medical providers using its AthenaCollector billing software, an increase from 12,000 physicians and 17,000 providers using the product last year.
Athenahealth continues to bank heavily on expected windfalls from ±a provision in the American Recovery and Reinvestment Act designed to push the digitization of medical records. Doctors’ offices that demonstrate as-yet-undefined “meaningful use” of EMR technology starting in 2011 will be eligible for the payments.
During the quarter, Athenahealth guaranteed stimulus cash for physicians who signed up for its EMR service.