Athenahealth shares fall on news of reporting delay

By Mike Miliard
11:16 AM

After announcing that it would be postponing the release of its fourth quarter financial results, Watertown, Mass.-based athenahealth, Inc. (ATHN), which provides Web-based billing services to providers, saw its shares fall 13 percent in pre-market trading on Friday.

The firm, whose previous CFO, Carl Byers, stepped down at the end of 2009 and was replaced by Tim Adams this past month, was due to publish its earnings on Thursday, but held back, citing an internal accounting review.

At issue is an evaluation of the company's policy related to the timing of amortization for deferred implementation revenue. Money generated from the implementation of new services for customers accounts for six percent or so of athenahealth's revenue.

The company will file a Notification of Late Filing with the Securities and Exchange Commission on Tuesday, notifying the commission that its annual report for the 2009 fiscal year could not be filed "without unreasonable expense or effort within the prescribed time period." <a href="/directory/athenahealth" target="_blank" class="directory-item-link">Athenahealth will announce the new date for Q4 and FY 2009 earnings reporting in a subsequent release.

In the longer term, analysts don't expect the news to have too much of an adverse effect.

"Assuming no more surprises, our call would be to buy the stock on the weakness, as very little has changed," write Piper Jaffray & Co.'s Sean Wieland and Mohan Naidu. "But we believe it's the lack of confidence that will punish the shares, and that will likely remain an overhang on the stock for some time."

Although "the company's business is dry," writes David Whelan at, "it has recently been recasting itself as an electronic health records company – a hot area ever since the stimulus bill in February included $20 billion in Medicare subsidies for doctors who go digital. The story had been working. Before tonight's drop, the stock traded at a lofty 53 times earnings."