þ
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
|
|
04-3387530
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(State or other jurisdiction of
incorporation or organization)
|
|
(I.R.S. Employer
Identification No.)
|
|
|
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311 Arsenal Street
Watertown, Massachusetts
|
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02472
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(Address of principal executive offices)
|
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(Zip Code)
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Large accelerated filer
þ
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Accelerated filer
¨
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Non-accelerated filer
¨
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Smaller reporting company
¨
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Emerging growth company
¨
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PART I – FINANCIAL INFORMATION
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Page
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Item 1.
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Item 2.
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Item 3.
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Item 4.
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PART II – OTHER INFORMATION
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Item 1.
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Item 1A.
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Item 2.
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Item 3.
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Item 4.
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Item 5.
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Item 6.
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Item 1.
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Condensed Consolidated Financial Statements (unaudited)
|
|
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Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
|
2018
|
|
2017
(1)
|
|
2018
|
|
2017
(1)
|
||||||||
Revenue
|
|
$
|
323.3
|
|
|
$
|
301.1
|
|
|
$
|
652.7
|
|
|
$
|
586.5
|
|
Cost of revenue
(2)
|
|
152.0
|
|
|
143.8
|
|
|
306.0
|
|
|
288.2
|
|
||||
Gross profit
|
|
171.3
|
|
|
157.3
|
|
|
346.7
|
|
|
298.3
|
|
||||
Other operating expenses:
|
|
|
|
|
|
|
|
|
||||||||
Selling and marketing
|
|
48.9
|
|
|
65.0
|
|
|
98.6
|
|
|
130.7
|
|
||||
Research and development
(2)
|
|
48.4
|
|
|
42.4
|
|
|
96.6
|
|
|
85.2
|
|
||||
General and administrative
|
|
30.9
|
|
|
37.7
|
|
|
66.3
|
|
|
69.1
|
|
||||
Total other operating expenses
|
|
128.2
|
|
|
145.1
|
|
|
261.5
|
|
|
285.0
|
|
||||
Operating income
|
|
43.1
|
|
|
12.2
|
|
|
85.2
|
|
|
13.3
|
|
||||
Other expense
|
|
(2.4
|
)
|
|
(1.7
|
)
|
|
(5.0
|
)
|
|
(2.9
|
)
|
||||
Income before income tax provision
|
|
40.7
|
|
|
10.5
|
|
|
80.2
|
|
|
10.4
|
|
||||
Income tax provision
|
|
4.3
|
|
|
0.6
|
|
|
12.7
|
|
|
1.9
|
|
||||
Net income
|
|
$
|
36.4
|
|
|
$
|
9.9
|
|
|
$
|
67.5
|
|
|
$
|
8.5
|
|
Foreign currency translation adjustment
|
|
(0.5
|
)
|
|
—
|
|
|
(0.8
|
)
|
|
0.4
|
|
||||
Comprehensive income
|
|
$
|
35.9
|
|
|
$
|
9.9
|
|
|
$
|
66.7
|
|
|
$
|
8.9
|
|
|
|
|
|
|
|
|
|
|
||||||||
Net income per share – Basic
|
|
$
|
0.90
|
|
|
$
|
0.25
|
|
|
$
|
1.67
|
|
|
$
|
0.21
|
|
Net income per share – Diluted
|
|
$
|
0.89
|
|
|
$
|
0.24
|
|
|
$
|
1.64
|
|
|
$
|
0.21
|
|
Weighted average shares used in computing net income per share:
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
40.5
|
|
|
39.9
|
|
|
40.3
|
|
|
39.7
|
|
||||
Diluted
|
|
41.1
|
|
|
40.5
|
|
|
41.1
|
|
|
40.4
|
|
|
|
June 30,
2018 |
|
December 31,
2017 (1) |
||||
Assets
|
|
|
|
|
||||
Current assets:
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
222.1
|
|
|
$
|
165.1
|
|
Accounts receivable, net
|
|
183.7
|
|
|
169.5
|
|
||
Contract assets
|
|
80.2
|
|
|
—
|
|
||
Prepaid expenses and other current assets
|
|
62.3
|
|
|
46.8
|
|
||
Total current assets
|
|
548.3
|
|
|
381.4
|
|
||
Property and equipment, net
|
|
346.9
|
|
|
355.1
|
|
||
Capitalized software costs, net
|
|
150.5
|
|
|
139.7
|
|
||
Purchased intangible assets, net
|
|
101.4
|
|
|
108.6
|
|
||
Goodwill
|
|
281.3
|
|
|
274.4
|
|
||
Deferred tax assets, net
|
|
0.8
|
|
|
41.8
|
|
||
Other assets
(2)
|
|
97.2
|
|
|
31.3
|
|
||
Total assets
|
|
$
|
1,526.4
|
|
|
$
|
1,332.3
|
|
Liabilities & Stockholders’ Equity
|
|
|
|
|
||||
Current liabilities:
|
|
|
|
|
||||
Accounts payable
(3)
|
|
$
|
15.1
|
|
|
$
|
10.6
|
|
Accrued compensation
|
|
89.7
|
|
|
94.7
|
|
||
Accrued expenses
(3)
|
|
46.0
|
|
|
51.5
|
|
||
Current portion of long-term debt
|
|
24.0
|
|
|
20.2
|
|
||
Deferred revenue
|
|
34.2
|
|
|
30.7
|
|
||
Total current liabilities
|
|
209.0
|
|
|
207.7
|
|
||
Deferred rent, net of current portion
|
|
30.7
|
|
|
29.3
|
|
||
Long-term debt, net of current portion
|
|
239.7
|
|
|
252.6
|
|
||
Deferred tax liability, net
|
|
17.8
|
|
|
—
|
|
||
Deferred revenue, net of current portion
|
|
1.0
|
|
|
46.5
|
|
||
Other long-term liabilities
|
|
4.3
|
|
|
4.7
|
|
||
Total liabilities
|
|
502.5
|
|
|
540.8
|
|
||
Commitments and contingencies (Note 1)
|
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
|
||||
Preferred stock, $0.01 par value: 5.0 shares authorized; no shares issued and outstanding at June 30, 2018 and December 31, 2017
|
|
—
|
|
|
—
|
|
||
Common stock, $0.01 par value: 125.0 shares authorized; 40.5 shares issued and outstanding at June 30, 2018; 40.1 shares issued and outstanding at December 31, 2017
|
|
0.4
|
|
|
0.4
|
|
||
Additional paid-in capital
|
|
668.9
|
|
|
646.7
|
|
||
Accumulated other comprehensive loss
|
|
(1.2
|
)
|
|
(0.4
|
)
|
||
Retained earnings
|
|
355.8
|
|
|
144.8
|
|
||
Total stockholders’ equity
|
|
1,023.9
|
|
|
791.5
|
|
||
Total liabilities and stockholders’ equity
|
|
$
|
1,526.4
|
|
|
$
|
1,332.3
|
|
|
|
Six Months Ended June 30,
|
||||||
|
|
2018
|
|
2017
(1)
|
||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
||||
Net income
|
|
$
|
67.5
|
|
|
$
|
8.5
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
||||
Depreciation and amortization of property, equipment, capitalized software, and purchased intangible assets
|
|
73.5
|
|
|
72.8
|
|
||
Amortization of deferred commissions and contract fulfillment costs
|
|
3.9
|
|
|
—
|
|
||
Deferred income tax
|
|
10.3
|
|
|
1.4
|
|
||
Stock-based compensation expense
|
|
24.4
|
|
|
30.0
|
|
||
Other reconciling adjustments
|
|
5.1
|
|
|
—
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
|
||||
Accounts receivable, net
|
|
(13.8
|
)
|
|
(8.7
|
)
|
||
Contract assets
|
|
(2.7
|
)
|
|
—
|
|
||
Prepaid expenses and other current assets
|
|
(15.4
|
)
|
|
(12.2
|
)
|
||
Deferred commissions and contract fulfillment costs and other long-term assets
|
|
(14.8
|
)
|
|
(8.8
|
)
|
||
Accounts payable
|
|
3.9
|
|
|
(1.1
|
)
|
||
Accrued expenses, deferred rent, and other long-term liabilities
|
|
—
|
|
|
6.3
|
|
||
Accrued compensation
|
|
(4.7
|
)
|
|
(20.7
|
)
|
||
Deferred revenue
|
|
10.8
|
|
|
6.3
|
|
||
Net cash provided by operating activities
|
|
148.0
|
|
|
73.8
|
|
||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
||||
Capitalized software costs
|
|
(45.9
|
)
|
|
(41.5
|
)
|
||
Purchases of property and equipment
|
|
(24.8
|
)
|
|
(51.0
|
)
|
||
Payments on acquisitions, net of cash acquired
|
|
(10.1
|
)
|
|
(40.8
|
)
|
||
Other investing activities
|
|
3.7
|
|
|
—
|
|
||
Net cash used in investing activities
|
|
(77.1
|
)
|
|
(133.3
|
)
|
||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
||||
Proceeds from issuance of common stock under stock plans
|
|
10.6
|
|
|
9.4
|
|
||
Taxes paid related to net share settlement of stock awards
|
|
(14.2
|
)
|
|
(15.2
|
)
|
||
Payments on long-term debt
|
|
(9.4
|
)
|
|
(11.2
|
)
|
||
Net cash used in financing activities
|
|
(13.0
|
)
|
|
(17.0
|
)
|
||
Effect of exchange rate changes on cash and cash equivalents
|
|
(0.9
|
)
|
|
0.3
|
|
||
Net increase (decrease) in cash and cash equivalents
|
|
57.0
|
|
|
(76.2
|
)
|
||
Cash and cash equivalents at beginning of period
|
|
165.1
|
|
|
147.4
|
|
||
Cash and cash equivalents at end of period
|
|
$
|
222.1
|
|
|
$
|
71.2
|
|
Non-cash transaction
|
|
|
|
|
||||
Property, equipment, and purchased and internally-developed software recorded in accounts payable, accrued expenses, and accrued compensation
|
|
$
|
12.8
|
|
|
$
|
12.0
|
|
Additional disclosures
|
|
|
|
|
||||
Cash paid for interest, net
|
|
$
|
3.3
|
|
|
$
|
3.0
|
|
Cash paid for taxes
|
|
$
|
7.3
|
|
|
$
|
0.6
|
|
|
|
Cumulative Effect of Adoption Impact of New Revenue Standard
January 1, 2018
|
||
Contract assets
|
|
$
|
77.4
|
|
Deferred tax assets, net
|
|
(40.9
|
)
|
|
Other assets
(1)
|
|
61.5
|
|
|
Total assets
|
|
$
|
98.0
|
|
Deferred revenue, current
|
|
(8.1
|
)
|
|
Deferred revenue, net of current portion
|
|
(44.8
|
)
|
|
Deferred tax liability, net
|
|
7.4
|
|
|
Retained earnings
|
|
143.5
|
|
|
Total liabilities and stockholders’ equity
|
|
$
|
98.0
|
|
|
|
Three Months Ended June 30, 2018
|
||||||||||
|
|
As Presented
|
|
Impact of New Revenue Standard
|
|
Previous Revenue Standard
|
||||||
Revenue
|
|
$
|
323.3
|
|
|
$
|
8.6
|
|
|
$
|
331.9
|
|
Cost of revenue
|
|
152.0
|
|
|
4.0
|
|
|
156.0
|
|
|||
Gross profit
|
|
171.3
|
|
|
4.6
|
|
|
175.9
|
|
|||
Other operating expenses:
|
|
|
|
|
|
|
||||||
Selling and marketing
|
|
48.9
|
|
|
5.0
|
|
|
53.9
|
|
|||
Research and development
|
|
48.4
|
|
|
—
|
|
|
48.4
|
|
|||
General and administrative
|
|
30.9
|
|
|
—
|
|
|
30.9
|
|
|||
Total other operating expenses
|
|
128.2
|
|
|
5.0
|
|
|
133.2
|
|
|||
Operating income
|
|
43.1
|
|
|
0.4
|
|
|
42.7
|
|
|||
Other expense
|
|
(2.4
|
)
|
|
—
|
|
|
(2.4
|
)
|
|||
Income before income tax provision
|
|
40.7
|
|
|
0.4
|
|
|
40.3
|
|
|||
Income tax provision
|
|
4.3
|
|
|
0.1
|
|
|
4.2
|
|
|||
Net income
|
|
$
|
36.4
|
|
|
$
|
0.3
|
|
|
$
|
36.1
|
|
Foreign currency translation adjustment
|
|
(0.5
|
)
|
|
—
|
|
|
(0.5
|
)
|
|||
Comprehensive income
|
|
$
|
35.9
|
|
|
$
|
0.3
|
|
|
$
|
35.6
|
|
|
|
|
|
|
|
|
||||||
Net income per share – Basic
|
|
$
|
0.90
|
|
|
$
|
0.01
|
|
|
$
|
0.89
|
|
Net income per share – Diluted
|
|
$
|
0.89
|
|
|
$
|
0.01
|
|
|
$
|
0.88
|
|
|
|
Six Months Ended June 30, 2018
|
||||||||||
|
|
As Presented
|
|
Impact of New Revenue Standard
|
|
Previous Revenue Standard
|
||||||
Revenue
|
|
$
|
652.7
|
|
|
$
|
0.5
|
|
|
$
|
652.2
|
|
Cost of revenue
|
|
306.0
|
|
|
8.1
|
|
|
314.1
|
|
|||
Gross profit
|
|
346.7
|
|
|
8.6
|
|
|
338.1
|
|
|||
Other operating expenses:
|
|
|
|
|
|
|
||||||
Selling and marketing
|
|
98.6
|
|
|
7.8
|
|
|
106.4
|
|
|||
Research and development
|
|
96.6
|
|
|
—
|
|
|
96.6
|
|
|||
General and administrative
|
|
66.3
|
|
|
—
|
|
|
66.3
|
|
|||
Total other operating expenses
|
|
261.5
|
|
|
7.8
|
|
|
269.3
|
|
|||
Operating income
|
|
85.2
|
|
|
16.4
|
|
|
68.8
|
|
|||
Other expense
|
|
(5.0
|
)
|
|
—
|
|
|
(5.0
|
)
|
|||
Income before income tax provision
|
|
80.2
|
|
|
16.4
|
|
|
63.8
|
|
|||
Income tax provision
|
|
12.7
|
|
|
4.1
|
|
|
8.6
|
|
|||
Net income
|
|
$
|
67.5
|
|
|
$
|
12.3
|
|
|
$
|
55.2
|
|
Foreign currency translation adjustment
|
|
(0.8
|
)
|
|
—
|
|
|
(0.8
|
)
|
|||
Comprehensive income
|
|
$
|
66.7
|
|
|
$
|
12.3
|
|
|
$
|
54.4
|
|
|
|
|
|
|
|
|
||||||
Net income per share – Basic
|
|
$
|
1.67
|
|
|
$
|
0.30
|
|
|
$
|
1.37
|
|
Net income per share – Diluted
|
|
$
|
1.64
|
|
|
$
|
0.30
|
|
|
$
|
1.34
|
|
|
|
Previous Revenue Standard
|
||||||||||||||
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Business services
|
|
$
|
323.6
|
|
|
$
|
293.0
|
|
|
$
|
636.9
|
|
|
$
|
571.3
|
|
Implementation and other
|
|
8.3
|
|
|
8.1
|
|
|
15.3
|
|
|
15.2
|
|
||||
Total revenue
|
|
$
|
331.9
|
|
|
$
|
301.1
|
|
|
$
|
652.2
|
|
|
$
|
586.5
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Cost of revenue
|
|
$
|
19.3
|
|
|
$
|
15.5
|
|
|
$
|
36.9
|
|
|
$
|
29.8
|
|
Research and development
|
|
0.2
|
|
|
0.1
|
|
|
0.4
|
|
|
0.1
|
|
|
|
June 30,
2018 |
|
December 31,
2017 |
||||
Accounts payable
|
|
$
|
6.7
|
|
|
$
|
5.6
|
|
Accrued expenses
|
|
6.9
|
|
|
5.7
|
|
|
|
Workforce Reductions
|
||
Accrual at December 31, 2017
|
|
$
|
3.4
|
|
Additions
|
|
0.9
|
|
|
Cash payments
|
|
(4.1
|
)
|
|
Accrual at June 30, 2018
|
|
$
|
0.2
|
|
|
|
Three Months Ended June 30, 2018
|
|
Six Months Ended June 30, 2018
|
||||
Service offerings:
|
|
|
|
|
||||
athenaOne
|
|
$
|
300.6
|
|
|
$
|
606.5
|
|
Other athenahealth-branded services
|
|
7.3
|
|
17.0
|
||||
Epocrates
|
|
10.1
|
|
19.7
|
||||
Other
|
|
5.3
|
|
9.5
|
||||
Total revenue
|
|
$
|
323.3
|
|
|
$
|
652.7
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Net income
|
|
$
|
36.4
|
|
|
$
|
9.9
|
|
|
$
|
67.5
|
|
|
$
|
8.5
|
|
Weighted average shares used in computing basic net income per share
|
|
40.5
|
|
|
39.9
|
|
|
40.3
|
|
|
39.7
|
|
||||
Net income per share – Basic
|
|
$
|
0.90
|
|
|
$
|
0.25
|
|
|
$
|
1.67
|
|
|
$
|
0.21
|
|
|
|
|
|
|
|
|
|
|
||||||||
Net income
|
|
$
|
36.4
|
|
|
$
|
9.9
|
|
|
$
|
67.5
|
|
|
$
|
8.5
|
|
Weighted average shares used in computing basic net income per share
|
|
40.5
|
|
|
39.9
|
|
|
40.3
|
|
|
39.7
|
|
||||
Effect of dilutive securities
|
|
0.6
|
|
|
0.6
|
|
|
0.8
|
|
|
0.7
|
|
||||
Weighted average shares used in computing diluted net income per share
|
|
41.1
|
|
|
40.5
|
|
|
41.1
|
|
|
40.4
|
|
||||
Net income per share – Diluted
|
|
$
|
0.89
|
|
|
$
|
0.24
|
|
|
$
|
1.64
|
|
|
$
|
0.21
|
|
|
|
Fair Value Measurements as of June 30, 2018, Using
|
|
|
||||||||||||
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Cash and cash equivalents:
|
|
|
|
|
|
|
|
|
||||||||
Money market
|
|
$
|
0.1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
0.1
|
|
Debt securities:
|
|
|
|
|
|
|
|
|
||||||||
MDP Accelerator portfolio
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total assets
|
|
$
|
0.1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
0.1
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
Fair Value Measurements as of December 31, 2017, Using
|
|
|
||||||||||||
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Cash and cash equivalents:
|
|
|
|
|
|
|
|
|
||||||||
Money market
|
|
$
|
0.1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
0.1
|
|
Debt securities:
|
|
|
|
|
|
|
|
|
||||||||
MDP Accelerator portfolio
|
|
—
|
|
|
—
|
|
|
0.5
|
|
|
0.5
|
|
||||
Total assets
|
|
$
|
0.1
|
|
|
$
|
—
|
|
|
$
|
0.5
|
|
|
$
|
0.6
|
|
|
|
Fair Value Measurements Using Unobservable Inputs (Level 3)
|
||||||||||||||
|
|
Three Months Ended June 30, 2018
|
|
Three Months Ended June 30, 2017
|
|
Six Months Ended June 30, 2018
|
|
Six Months Ended June 30, 2017
|
||||||||
Balance, beginning of period
|
|
$
|
0.5
|
|
|
$
|
0.5
|
|
|
$
|
0.5
|
|
|
$
|
0.5
|
|
Conversion
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Settlement
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Impairment
|
|
(0.5
|
)
|
|
—
|
|
|
(0.5
|
)
|
|
—
|
|
||||
Balance, end of period
|
|
$
|
—
|
|
|
$
|
0.5
|
|
|
$
|
—
|
|
|
$
|
0.5
|
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
•
|
Total revenue as presented of
$323.3 million
for the
three
months ended
June 30, 2018
. Total revenue under the previous revenue recognition standard of
$331.9 million
compared to
$301.1 million
in the same period last year, an increase of
10%
. Total revenue as presented of
$652.7 million
for the
six
months ended
June 30, 2018
. Total revenue under the previous revenue recognition standard of
$652.2 million
compared to
$586.5 million
in the same period last year, an increase of
11%
. Increased revenue in both the
three
and
six
months ended
June 30, 2018
compared to the
three
and
six
months ended
June 30, 2017
were the result of strong growth in collections processed driven by continued growth in providers.
|
•
|
Gross margin as presented of
53.0%
for the
three
months ended
June 30, 2018
. Gross margin under the previous revenue recognition standard of
53.0%
, compared to
52.2%
in the same period last year. Gross margin as presented of
53.1%
for the
six
months ended
June 30, 2018
. Gross margin under the previous revenue recognition standard of
51.8%
, compared to
50.9%
in the same period last year.
|
•
|
Operating income as presented of
$43.1 million
for the
three
months ended
June 30, 2018
. Operating income under the previous revenue recognition standard of
$42.7 million
, or
12.9%
of total revenue, compared to
$12.2 million
, or
4.1%
of total revenue, in the same period last year. Operating income as presented of
$85.2 million
for the
six
months ended
June 30, 2018
. Operating income under the previous revenue recognition standard of
$68.8 million
, or
10.5%
of total revenue, compared to
$13.3 million
, or
2.3%
of total revenue, in the same period last year.
|
•
|
Net income as presented of
$36.4 million
, or
$0.89
per diluted share for the
three
months ended
June 30, 2018
. Net income under the previous revenue recognition standard of
$36.1 million
, or
$0.88
per diluted share, compared to net income of
$9.9 million
, or
$0.24
per diluted share, in the same period last year. Net income as presented of
$67.5 million
, or
$1.64
per diluted share for the
six
months ended
June 30, 2018
. Net income under the previous revenue recognition standard of
$55.2 million
, or
$1.34
per diluted share, compared to net income of
$8.5 million
, or
$0.21
per diluted share, in the same period last year. Our financial results reflect strong revenue growth and continued execution on our plans to reduce expenses and operate more efficiently.
|
•
|
Our balance sheet at
June 30, 2018
includes cash and cash equivalents of approximately
$222.1 million
. Additionally, we have a
$500.0 million
senior credit facility comprised of a
$300.0 million
unsecured term loan facility and a
$200.0 million
unsecured revolving credit facility. As of
June 30, 2018
, we had
$264.4 million
outstanding on the unsecured term loan facility and
$200.0 million
available on the unsecured revolving credit facility. We will continue our disciplined approach to capital allocation decisions, including assessing reinvestments into the business and potential acquisitions, among other potential uses of our assets and available credit.
|
•
|
Net cash provided by operating activities increased
$74.2 million
in the
six
months ended
June 30, 2018
compared to the
six
months ended
June 30, 2017
.
|
•
|
In June 2018, we announced that our Board initiated a process to explore strategic alternatives and had begun working with financial advisors. As part of this process, the Board will consider a sale, merger or other transaction involving the Company as well as continuing as an independent company.
|
|
|
Three Months Ended
June 30, |
||||||||||||||
|
|
2018
|
|
2017
|
||||||||||||
|
|
As Presented
|
|
Impact of New Revenue Standard
|
|
Previous Revenue Standard
|
|
Previous Revenue Standard
|
||||||||
|
|
(in millions)
|
||||||||||||||
Revenue
|
|
$
|
323.3
|
|
|
$
|
8.6
|
|
|
$
|
331.9
|
|
|
$
|
301.1
|
|
Cost of revenue
|
|
152.0
|
|
|
4.0
|
|
|
156.0
|
|
|
143.8
|
|
||||
Selling and marketing
|
|
48.9
|
|
|
5.0
|
|
|
53.9
|
|
|
65.0
|
|
||||
Income tax provision
|
|
4.3
|
|
|
0.1
|
|
|
4.2
|
|
|
0.6
|
|
|
|
Six Months Ended
June 30, |
||||||||||||||
|
|
2018
|
|
2017
|
||||||||||||
|
|
As Presented
|
|
Impact of New Revenue Standard
|
|
Previous Revenue Standard
|
|
Previous Revenue Standard
|
||||||||
|
|
(in millions)
|
||||||||||||||
Revenue
|
|
$
|
652.7
|
|
|
$
|
0.5
|
|
|
$
|
652.2
|
|
|
$
|
586.5
|
|
Cost of revenue
|
|
306.0
|
|
|
8.1
|
|
|
314.1
|
|
|
288.2
|
|
||||
Selling and marketing
|
|
98.6
|
|
|
7.8
|
|
|
106.4
|
|
|
130.7
|
|
||||
Income tax provision
|
|
12.7
|
|
|
4.1
|
|
|
8.6
|
|
|
1.9
|
|
|
|
Previous Revenue Standard
|
||||||||||||||||||||||||||
|
|
Three Months Ended
June 30, |
|
Change
|
|
Six Months Ended
June 30, |
|
Change
|
||||||||||||||||||||
|
|
2018
|
|
2017
|
|
Amount
|
|
Percent
|
|
2018
|
|
2017
|
|
Amount
|
|
Percent
|
||||||||||||
|
|
(in millions)
|
|
|
|
|
|
(in millions)
|
|
|
|
|
||||||||||||||||
Business services
|
|
$
|
323.6
|
|
|
$
|
293.0
|
|
|
30.6
|
|
|
10
|
%
|
|
$
|
636.9
|
|
|
$
|
571.3
|
|
|
65.6
|
|
|
11
|
%
|
Implementation and other
|
|
8.3
|
|
|
8.1
|
|
|
0.2
|
|
|
2
|
%
|
|
15.3
|
|
|
15.2
|
|
|
0.1
|
|
|
1
|
%
|
||||
Total revenue
|
|
$
|
331.9
|
|
|
$
|
301.1
|
|
|
30.8
|
|
|
10
|
%
|
|
$
|
652.2
|
|
|
$
|
586.5
|
|
|
65.7
|
|
|
11
|
%
|
|
|
Previous Revenue Standard
|
||||||||||||||||||||||||||||
|
|
Three Months Ended
June 30, |
|
Change
|
|
Six Months Ended
June 30, |
|
Change
|
||||||||||||||||||||||
|
|
2018
|
|
2017
|
|
Amount
|
|
Percent
|
|
2018
|
|
2017
|
|
Amount
|
|
Percent
|
||||||||||||||
|
|
(in millions)
|
|
|
|
|
|
(in millions)
|
|
|
|
|
||||||||||||||||||
Selling and marketing
|
|
$
|
53.9
|
|
|
$
|
65.0
|
|
|
$
|
(11.1
|
)
|
|
(17
|
)%
|
|
$
|
106.4
|
|
|
$
|
130.7
|
|
|
$
|
(24.3
|
)
|
|
(19
|
)%
|
Research and development
|
|
48.4
|
|
|
42.4
|
|
|
6.0
|
|
|
14
|
%
|
|
96.6
|
|
|
85.2
|
|
|
11.4
|
|
|
13
|
%
|
||||||
General and administrative
|
|
30.9
|
|
|
37.7
|
|
|
(6.8
|
)
|
|
(18
|
)%
|
|
66.3
|
|
|
69.1
|
|
|
(2.8
|
)
|
|
(4
|
)%
|
||||||
Total
|
|
$
|
133.2
|
|
|
$
|
145.1
|
|
|
$
|
(11.9
|
)
|
|
(8
|
)%
|
|
$
|
269.3
|
|
|
$
|
285.0
|
|
|
$
|
(15.7
|
)
|
|
(6
|
)%
|
|
|
Previous Revenue Standard
|
||||||||||||||||||||||||||
|
|
Three Months Ended
June 30, |
|
Change
|
|
Six Months Ended
June 30, |
|
Change
|
||||||||||||||||||||
|
|
2018
|
|
2017
|
|
Amount
|
|
Percent
|
|
2018
|
|
2017
|
|
Amount
|
|
Percent
|
||||||||||||
|
|
(in millions)
|
|
|
|
|
|
(in millions)
|
|
|
|
|
||||||||||||||||
Income tax provision
|
|
$
|
4.2
|
|
|
$
|
0.6
|
|
|
$
|
3.6
|
|
|
*
|
|
$
|
8.6
|
|
|
$
|
1.9
|
|
|
$
|
6.7
|
|
|
*
|
Effective tax rate
|
|
10.4
|
%
|
|
5.7
|
%
|
|
|
|
|
|
13.5
|
%
|
|
18.3
|
%
|
|
|
|
|
|
|
Six Months Ended
June 30, |
|
|
||||||||
|
|
2018
|
|
2017
|
|
Change
|
||||||
|
|
(in millions)
|
|
|
||||||||
Net income
|
|
$
|
67.5
|
|
|
$
|
8.5
|
|
|
$
|
59.0
|
|
Non-cash adjustments
|
|
117.2
|
|
|
104.2
|
|
|
13.0
|
|
|||
Net income after non-cash adjustments are added back
|
|
184.7
|
|
|
112.7
|
|
|
72.0
|
|
|||
Cash used in changes in operating assets and liabilities
|
|
(36.7
|
)
|
|
(38.9
|
)
|
|
2.2
|
|
|||
Net cash provided by operating activities
|
|
$
|
148.0
|
|
|
$
|
73.8
|
|
|
$
|
74.2
|
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk
|
Item 4.
|
Controls and Procedures
|
Item 1.
|
Legal Proceedings
|
Item 1A.
|
Risk Factors
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
Item 3.
|
Defaults Upon Senior Securities
|
Item 4.
|
Mine Safety Disclosures
|
Item 5.
|
Other Information
|
Item 6.
|
Exhibits
|
Exhibit
No.
|
|
Exhibit Description
|
|
|
|
10.1
*
|
|
2007 Employee Stock Purchase Plan, as amended and restated
|
|
|
|
10.2
*
|
|
Form of Retention Bonus Award Agreement
|
|
|
|
|
Rule 13a-14(a) or 15d-14 Certification of Principal Executive Officer and Chief Financial Officer
|
|
|
|
|
|
Certifications of Principal Executive Officer and Chief Financial Officer pursuant to Exchange Act rules 13a-14(b) or 15d-14(b) and 18 U.S.C. Section 1350
|
|
|
|
|
101*
|
|
XBRL (eXtensible Business Reporting Language). The following materials from athenahealth, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2018, formatted in XBRL:
|
|
|
(i) the Condensed Consolidated Statements of Income and Comprehensive Income
|
|
|
(ii) the Condensed Consolidated Balance Sheets
|
|
|
(iii) the Condensed Consolidated Statements of Cash Flows
|
|
|
(iv) the Notes to Condensed Consolidated Financial Statements
|
*
|
Filed or furnished herewith.
|
^
|
This certification will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent specifically incorporated by reference into such filing.
|
|
|
|
ATHENAHEALTH, INC.
|
||
|
|
|
By:
|
|
/s/ Marc A. Levine
|
|
|
Marc A. Levine
|
|
|
Principal Executive Officer & Chief Financial Officer
|
NAME
Date:
|
athenahealth, Inc.
By:
Name:
Title:
|
|
|
|
|
|
Date:
|
July 30, 2018
|
|
|
/s/ Marc A. Levine
|
|
|
|
|
Principal Executive Officer & Chief Financial Officer
|
|
/s/ Marc A. Levine
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Marc A. Levine
Principal Executive Officer & Chief Financial Officer
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