athenahealth second-quarter total revenue increases 28% to $58.6M

athenahealth, Inc. (Nasdaq: ATHN), (the "Company"), a leading provider of web-based practice management, electronic health record (EHR), and patient communication services to medical groups, today announced financial and operational results for the second quarter of fiscal year 2010. The Company will conduct a conference call on Friday, July 23, 2010, at 8:00 a.m. Eastern Time to discuss these results and management's outlook for future financial and operational performance. In addition, the Company has furnished prepared remarks in conjunction with this press release via a Current Report on Form 8-K. These prepared remarks, including supplemental charts containing non-financial metrics commonly reported with quarterly results, are available within the Investors section of the Company's website at www.athenahealth.com.

“Non-GAAP Adjusted Net Income per Diluted Share”

Total revenue for the three months ended June 30, 2010, was $58.6 million, compared to $45.6 million in the same period last year, an increase of 28%.

"athenahealth has successfully evolved from a single-product company to a full service partner across billing, medical records and patient communications," said Jonathan Bush, the Company's Chairman, President and Chief Executive Officer. "As part of this evolution, the sale of multiple services to clients is becoming a more significant driver of growth."

For the three months ended June 30, 2010, Non-GAAP Adjusted Gross Margin was 60.7%, up from 58.6% in the same period last year. Non-GAAP Adjusted EBITDA was $9.9 million, or 16.9% of total revenue, compared to Non-GAAP Adjusted EBITDA of $7.7 million, or 16.8% of total revenue in the same period last year. GAAP Net Income for the second quarter of 2010 was $1.3 million, or $0.04 per diluted share compared to GAAP Net Income of $2.2 million or $0.06 per diluted share in the same period last year. Non-GAAP Adjusted Net Income was $4.1 million, or $0.12 per diluted share compared to $3.4 million or $0.10 per diluted share in the same period last year.

"The Company demonstrated strong revenue growth and increased adoption of our services during the first half of 2010," said Tim Adams, the Company's Chief Financial Officer and Treasurer. "Despite continued softness in physician office activity as well as the June Medicare claims hold that shifted about $1 million in business services revenue out of Q2 2010 and into Q3 2010, we grew revenue by 28% over Q2 2009 and continued to expand our Adjusted Gross Margin as well."

Adams continued, "Looking ahead to the second half of 2010, we continue to expect Q3 2010 annual revenue growth of at least 30%. However, due to the lighter than expected physician office activity our clients are experiencing, we do not expect Q4 2010 annual revenue growth to reach our prior 30% target. Thus, for the full year 2010 we currently expect to achieve 29-30% growth in total revenue. In terms of profitability, we continue to expect year-over-year expansion in Adjusted Gross Margins as well as year-over-year expansion in Adjusted EBITDA and Adjusted Operating Margins during Q3 2010 and Q4 2010."

Key metrics and milestones in the second quarter of 2010 included the following:

• $1.4 billion in collections posted to client accounts, compared to $1.2 billion in the same quarter of 2009
• 38.8 average client Days in Accounts Receivable (DAR), compared to 40.2 average client DAR in the same quarter of 2009
• 17,136 active physicians using athenaCollector® at June 30, 2010, compared to 13,591 at June 30, 2009
• 24,782 active medical providers using athenaCollector at June 30, 2010, compared to 20,323 at June 30, 2009
• 2,256 active medical providers using athenaClinicals^SM at June 30, 2010, 1,548 of which were physicians, compared to 1,043 providers and 624 physicians at June 30, 2009
• 689 active medical providers using athenaCommunicator^SM at June 30, 2010, 442 of which were physicians.

As of June 30, 2010, the Company had cash, cash equivalents, and short-term investments of $89.4 million and short- and long-term debt and capital lease obligations of $11.0 million.