Some very positive momentum in the first quarter for Athenahealth and Eclipsys.


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Some very positive momentum in the first quarter for Athenahealth and Eclipsys. 
 
Shares of Athenahealth Inc. surged more than 10 percent after the company reported better-than-expected profit in the first quarter.
 
Athenahealth also announced that in April it signed a contract to provide services to Minneapolis-based MinuteClinic LLC, a chain of retail clinics that is a subsidiary of pharmacy vendor CVS Corp., Woonsocket, R.I. The deal could add 500 clinics to Athenahealth's client list.
 
Athenahealth in the first quarter had net income of $1.8 million, compared with a $2.7 million loss during the same period last year. Quarterly revenue rose 36% to $29.8 million. The company posted $797 million in collections to client accounts in the first quarter, a 31.5% increase compared with the first quarter of 2007. Active physician clients rose 28% to 9,810.
 
The vendor, which went public in late 2007, ended the quarter with cash and equivalents of $66.5 million and debt of $1.7 million. More information is available at Athenahealth.com
 
Net income totaled $1.8 million, or 5 cents per share, compared with a year-ago loss of $2.7 million, or 55 cents per share, a year ago. Excluding stock-based compensation costs, the company earned $3.1 million, or 9 cents per share, in the latest period.
 
Analysts surveyed by Thomson Financial expected earnings excluding stock option charges of 6 cents per share on revenue of $28.9 million.
 
"In our history, the first quarter often involves margin compression due to costs at the start of the year and lower seasonal physician collections, so we were quite pleased to see strength both in revenue growth and in margin expansion this quarter," said Carl Byers, chief financial officer.
 
AthenaHealth said $797 million in cash collections were posted to client accounts in the first quarter, compared with $606 million a year earlier, and 9,810 active physicians were live, up from 7,639 in the same quarter of last year.  Goldman Sachs analyst Randall Stanicky said Athenahealth's physician additions were notably strong despite the seasonally softer quarter.  He thinks the company's signing of MinuteClinic in April, which adds over 500 clinics to become Athenahealth's largest client, is positive and represents the company's ability to win larger business deals.
 
Jefferies & Co. analyst Richard Close also noted that physician backlog has surged in the last six months, but thinks more is yet to come.  "Combine this with Minute Clinic (new clients) fourth-quarter 2008 activation, and a dynamic outlook is materializing for investors," he wrote in a note to clients. Close reiterated a "Buy" rating and $46 price target on the stock.