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Athenahealth, Inc. (ATHN) Message Board

  • mghmd mghmd Jan 8, 2013 9:31 AM Flag

    ZACKS adds ATHN to strong sell group

    Not a good sign.The EPOC merger says to me that the management is losing focus/confidence in their basic strategy. Moreover, it also looks like there will be a lot of opposition to the proposed merger with a long list of law firms starting class action law suits

    Sentiment: Sell

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    • georgespelvin Jan 8, 2013 10:17 PM Flag

      Some clarifications and more thoughts.

      Epocrates is a fine enough service. They offer drug knowledge on smartphones. They charge about $10 per month and they have about half the doctors in America as clients. They are a very narrow niche player. And very simple technically with very few support issues.

      It is a fine enough company but at the end of its ability to grow. They are already on the second half of the total universe of potential clients.
      The idea that Athena whose clients spend 3%-5% of their revenue per year (for a doctor bringing in $400,000 per year that would be $1,000 per month to $1,400 per month and for specialists that bring in up to and more than $1 million per year and pay Athena $3,000 per month) is going to be able to sell Epocrates to those clients for $10 per month and make a difference to the Athena financial prospects is insane. Further, because Epocrates is already used by half the doctors in America there would be nothing for Athena to do but raise the prices because half of their doctors probably already have the service.
      Now, the idea that Athena can cross sell Athena into the Epocrates client base is also insane. There is no primed market there in the Epocrates client base any more than there is a prime eager market out there for all doctors who drink Coca Cola or put Mobil gasoline in their cars. To subscribe to Epocrates you need $10 and a smartphone. To subscribe to Athena you need between $1,000 and $3,000 per month and you need to throw out all your existing billing software, EHR software, retrain your staff, and close your eyes, pinch your nose, and jump, letting go of your billing. Again, there are no doctors using Epocrates that do not know of Athena or who would be motivated to use Athena simply because Athena now sold Epocrates services.

      The whole thing is laughable. Except it is not funny. You have a company, Athena, that is reaching the point where the story is getting old in the face of financial realities that are finally gaining some credence. Do not think that the institutions know anything you do not. They are not smart money. They are dumb money. That they continue to exist is that they have customers who are dumber than they. And if they are smart they are smart not in their investments but because they get paid whether you win or lose. And if they really lose your money the government bails them out with more of your money. It is a racket. They know not a bit from a byte from a bite. They have never ever worked up a patient on any EHR or tried to bill a payer or worked in a CBO. They have zero qualifications. But they get in first, sell to you, you buy, they get out, you hold the bag.
      There is nothing wrong with the Athena company. There is nothing right with the Athena stock. It is insane to buy the stock at anything over $40 and it is stupid to buy it over $20.
      There is one idiot on this board who says this is 100% of his portfolio. Hello?
      Athena is not doing this because they have lost their focus. They have done this because as I said they need a new story to take over as the old story gets long of tooth in the face of gathering financial realities, that may make themselves more easy to see at the end of the year when all the revenue recognition juggling comes to an audited end (as it does end of each year). So for those investors who know not a bit from a byte, who have never worked in a CBO, never worked up a patient on an EHR, never billed a payer, they have a new story.
      Next thing you know they will buy a janitorial supply company and then Humphries Exterminators. Two months ago the CEO was yacking about starting a startup incubator and buying a building that he will need in ten years. Ten years. Is he kidding? In ten years the river in Boston may be ten feet higher than it is now. There is no technology company in the world that is making decisions for ten years from now. Only the Catholic Church thinks in those time frames. Even Russia had only five year plans.
      Now here is another issue. An acquirer who has a stock price it thinks is overvalued (worth less than the money it takes to buy it) tries to acquire with stock. An acquirer who has a stock price that it thinks is undervalued (worth more than the price it sells for) tries to acquire with cash. For that matter any company that thinks it has a grossly undervalued stock buys its own stock. By doing that it not only buys what it thinks is inherently a bargain but it also reduces the number of shares owned thus automatically tending to increase the price simply be increasing the earnings PER SHARE. The average idiot if he cares about anything real (other than a “story”) thinks about earnings PER SHARE and you can increase that even as you reduce your earnings simply by reducing the number of shares. You can make a fraction bigger by increasing the numerator or by decreasing the denominator.
      Well, the management of Epocrates refused to accept Athena health. They took NOT ONE SHARE. To be fair they know that the stock of Athena is worthless. So does the CEO who has not bought a single share even in the IPO. He has sold shares every single month. As have all the other execs. Yes, you see purchases but they are stock option purchases where they grant themselves options to buy at what they make sure is a very low price and then they run the company to maximize price as the options mature. So all their purchases are round trips where they get in for $3 and out for $80 in the same second. And they pay income tax rates, not capital gain rates. Were they to believe the stock was going to go up they would have bought at $3 and held instead of granted options at $3 for two years down the road. It is such a crooked immoral system it is depressing.
      So Epocrates said pay me cash. And Athena had to pay cash and did. So Epocrates is telling you not to buy Athena stock.
      But what do they know. The idiot on this board who calls me G-orgy is your man. He knows all. Listen to him. The two kids who started Epocrates twelve or thirteen years ago and took it public know nothing compared to the genius who calls me G-orgy. Who does not know that?
      This is the problem with Yahoo. Anyone is allowed to post. We are not all equal. We are all allowed to speak. Not all of us deserve to be listened to. The Internet is the greatest democratic experiment since civilization began. It is a soapbox a million miles high that costs almost nothing to mount and speak.
      If anyone has anything substantive to say, I welcome it.
      There is another Yahoo service that is called Groups and you can keep idiots out. Perhaps this board needs a Yahoo Group. But I have not heard much substantive information on this board. I have a feeling that the people who know just read and keep quiet. Both inside the company and out.

      Sentiment: Strong Sell

    • georgespelvin Jan 8, 2013 7:52 PM Flag

      Yes. You are right. But the article also explain another problem and that is that you cannot prop up your stock by filling your larder with services that garner a P/E ratio that is a fraction of yours. Unless you think that you can cross sell it for drastically less cost and/or charge much more.

      In fact, and Zacks does not know the field well enough to think of this, you cannot charge as much for the peripheral services if they are offered under the imprimatur of a single company as you can if offered by a third party. Reason is that the client forgets the scope of the value proposition and simply compares sticker prices of different companies. Doctors are not rocket scientists. Or imaginative. They memorize. Or should I say memorized. They are not people who figure things out. They were taught everything they know. The ones with vivid imaginations flunked out.

      Cheap is good. Expensive is bad. Except for ego gratification. And having multiple vendors plays into their propensity to see a narrow scope and to find fault with the penultimate vendor.

      Epocrates is just another business. It has been around for years. I would bet but do not know for sure that they have ten times or more the number if clients as Athena. And they pay pennies for the service compared to Athena. And the idea that you are going to cross sell Athena to Epocrates clients is laughable.

      Acquisitions of this type are raging indications of desperation.

      This close to reporting of audited numbers I think it makes sense to wait to short again. I got 30 points at max on the first short and gave away about ten. So I will wait until I see some broad awareness. Also I want to see whether the institutions have unloaded during the last quarter. The SEC allows them to report by paper and take 45 days so that the retail investor is handicapped. It is a system for the rich, by the rich and of the rich.

      It matters not which party is in power.

      Sentiment: Strong Sell

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