A change in the way it accounts for revenues forced Athenahealth Inc. (NSDQ:ATHN) to restate its financial results dating back to 2005, as it posted full-year and fourth-quarter declines in net income.
The Watertown, Mass.-based physician practice software provider posted net income of $4.3 million, or 12 cents per diluted share, during the three months ended Dec. 31, 2009, down 83.9 percent compared with $26.8 million (77 cents per share) during Q4 2008. Revenues for the quarter rose 33.4 percent to $54.4 million, compared with $40.8 million during the last three months of 2008.
For the full year, Athenahealth reported net income of $9.3 million, or 27 cents per share, on sales of $188.5 million, compared with net income of $31.6 million (91 cents per share) on revenues of $136.3 million during 2008.
The company’s decision to amortize a portion of its revenues, derived from implementations of its web-based practice management software, over 12 years rather than one prompted Athenahealth to re-state its financials going back five years and delayed the release of its latest-quarter results. The delay pushed its stock price down nearly 18 percent, to a March 1 low of $35.87, in the days following the Feb. 25 announcement of the postponement. Shares were up 9.5 percent to $40.94 in early-morning trading today.
It’s not the first accounting change for Athenahealth, which earlier in February said it would change the way it accounts for non-GAAP adjusted net income and brought a new CFO on board in January. Timothy Adams replaced Carl Byers, who had been with the firm since its 1997 inception, as the top financial dog Jan. 11.
In a conference call with analysts, Adams and CEO Jonathan Bush reiterated the company’s targets of 30 percent top-line growth and 40 percent bottom-line growth over the next five years.
Athenahealth’s revised revenues, expenses and income for 2007 and 2008 are as follows, according to filings with the federal Securities & Exchange Commission (amounts in thousands except per-share amounts):
| 2008 (restated) | 2008 (prior) | % change | 2007 (restated) | 2007 (prior) | % change | |
| Total revenue | $136,282 | $131,879 | 3.3% | $97,618 | $94,182 | 3.6% |
| Total expenses | $128,697 | $127,549 | 0.9% | $97,129 | $96,286 | 0.9% |
| Net income (loss) | $31,602 | $28,871 | 9.5% | ($7,501) | ($3,503) | 114.1% |
| Net income (loss) per share — diluted | $0.91 | $0.83 | 9.6% | ($0.60) | ($0.28) | 114.3% |
