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Athena Health Acquires Epocrates

Posted on Tuesday, Mar 12th 2013

A 2011 report by IDC estimates that the electronic health reform (EHR) market will grow from $1.9 billion in 2009 to $3.8 billion by 2015. Outpatient EHR is projected to account for $1.41 billion of the market, and the inpatient EHR services will contribute the remaining $2.4 billion by 2015. A more recent report by IDC continues to project growth, as it suggests EHR penetration to grow from 25% in 2009 to 80% by 2016. Hopefully, this will positively impact healthcare administration costs at large.

Athenahealth’s Financials

Athenahealth’s (NASDAQ:ATHN) Q4 revenues grew 26% over the year to $116.3 million. EPS grew from $0.26 a year ago to $0.29 for the quarter. They ended the year with revenues rising 30% over the year to $422.3 million, with an EPS of $1.00.

Athena saw significant growth in most of its key metrics. Collections posted to client accounts grew 25% to $2.5 billion for the quarter. At the end of the year, they reported 39,752 active medical providers, of whom 28,011 are physicians, compared to 32,740 providers and 23,210 physicians at the end of the previous year. They recorded 10,926 active medical providers using athenaClinicals, and 7,949 of these providers were physicians. A year ago, those numbers stood at 6,525 providers and 4,662 physicians. The use of athenaCommunicator also increased from 5,830 a year ago to 14,065 active medical providers during the year.

Athena’s Acquisitions

Athena continued on their acquisition spree and recently announced the acquisition of the mobile health apps developer, Epocrates, for $293 million. Epocrates was founded in 1998 by Stanford graduates. They went public in 2011 but have seen their stock price fall during the past two years. Epocrates is known for their mobile apps, which offer services such as drug reference with brand, generic and OTC medicines, interaction check, and pill ID. Their apps provide information on drug and disease monographs and diagnostics. As of August 2012, the Epocrates apps were being used by more than 338,000 physicians in the U.S. Their apps are available for Android, iOS, and BlackBerry, and they earned revenues through subscriptions for premium drug and clinical reference tools. Athena will leverage the strong recognition of the Epocrates brand even after the acquisition and integrate it with athenaClinicals, their electronic records system. They plan to expand Epocrates’ offerings to include medical procedures such as blood tests or radiology so that a doctor could use the app to order a procedure and see the availability and insurance coverage of local clinics. They will be able to integrate Epocrates’ mobile expertise with their cloud-based network to enhance mobile offerings and introduce new apps to attract more mobile traffic to their site.

Athena’s stock is trading at $96.65, with a market capitalization of $3.51 billion. It touched a 52-week high of $98.24 in September 2012.

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