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Athenahealth, Inc. (ATHN) Message Board

  • georgespelvin Jan 14, 2013 11:00 AM Flag

    forecasting mid state prices

    I am wrong to say a price will never hit this or that again. The market is now rational in the short run. Einstein said he had no idea what the weapons of the next world war would be but he did know what the weapons of the war after that would be---sticks and stones. Forecasting markets is like that. Even Buffet says he cannot do that. So I should not have forecast it.

    But unless something very unusual happens to ATHN I cannot see how it justifes these prices. You notice that the press releases release no information about length or terms of contract or dollar value. That is not true of all PR's in this field.

    I am out of ATHN for now. I will wait until I see more ambiguous numbers in the next conf call or i see a major transfer of shares from institutions to individual investors.

    I know that ATHN in particular and the market place in general is having loads of problems. Margins are going down as are the quantity of sales. The fact is there are very few winners and lots of losers. Further, the recent data confirms what every doctor who has installed an EHR knows: EHR's do not improve your lot financially; they may enable better patient care but they slow a doctor down by up to 25%. Doctors are people who spend 103% of their income. The early adopters adopted. The doctors forced to because they are employees of hospitals, which are run by IT "theoreticians" have bought, some more than once. Subsidies for first year usage deadline this year is still October use which is nine months away. And the subsidy is less for first year this year than last.

    I saw this happen with the PMS market from 1980 to 2000. TIme and windows of opportunity moved much slower then. The microcomputer was brand new. The world wide web did not exist at the beginning, The Internet existed but the graphical interface did not. Broadband was point to point and expensive. Today the cycles are much narrower with respect to time.

    I see in the reporting of ATHN narrowing margins. I see in the field first hand ATHN dropping their drawers to get business. I see very significant distress in the field, generally. I do not believe doctors understand what ATHN does NOT do. You do not reduce your staff when you use ATHN. They are NOT a billing service. That is why they are cheaper than a billing service.

    I do not believe ATHN users are well served. It is just a hosted and average system with plenty of hoopla. They come and go. This one has a Bush as a hood ornament. If you listen to him you will understand that and then even if you do not understand the other issues you could ask yourself why a company that had the real goods would engage in that.

    None of the upper echelon of the company has bought a single share. Each has sold thousands of shares per month going back THREE years. The institutions lightened their holdings by 5 million shares Q3 as compared to the Q2, smack in the middle of the rise. I do not know how to get the Q4 numbers at this time; they come out with delays.

    I made good money on the short although I gave away 10 points as I rode it for ten points of its gain off the lowest. I have no complaints. I sold short on a fundamental basis. I covered on a technical basis. I did not short this stock for a year, watching the price movement and realizing there was bullish sentiment despite the worrisome fundamentals, early on apparent from the marketplace and later on apparent in its reporting.

    Government subsidies distort markets and thus distort stock prices. When you have these episodic subsidies in which you have a deadline each year by which time you must have purchased and be using you further distort the market. October of last year was the deadline. October of this year is the next deadline. These systems take a long time to implement but meaningful use is not all that hard. Further, many of the implementations do not go well. Ask Allscripts. A good EHR implementation requires a lot of hand holding. ATHN does not do that. It is virtual. Further it does not have dealers so it cannot leverage them.

    Only the clients who are massive and have their own application deployment teams can weather that storm. From what I have heard the ATHN EHR is not all that deep. But that is secon\d hand. I have not seen it.

    It is not worth it to talk to doctors about it because they are not reliable reporters on matters like this. Most doctors know one financial thing: the approximate balance of their checking account.

    My plan today is to wait until the conf call. Unless some news leaks out before. If the numbers are less than convincing it should not take as long to get to 58 as it did before but it will not get there in one day. If the number is good it may pop some but it is already at lofty multiples. Not even Microsoft survived a P/E like this. 15 years ago MSFT sold for 60 times earnings. At $100+. It is now $25, 15 years later. And the P/E is just under 16. That means it has done nothing in 15 years. Half the companies that developed and sold :PMS software are no longer in business. They were bought up by the juggernauts that decided to be the last people to drown.

    You know where I stand. The conf call should shed some light.

    Sentiment: Strong Sell

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    • georgespelvin Jan 14, 2013 11:40 AM Flag

      Correction on MSFT. It revers split as I recall. The $100 stock would now be $50 stock. The price came down adjusted for the split by 50% while the P/E adjusted by the same amount (reverse split 1 for 2 gets you from 60 times earnings to 30 and then stock goes to 25 which would take the p/e to 15 where it is.
      So essentially MSFT has been dead for a decade.

      Why screw around with a Microsoft when you can interact with an Apple or a ton of other sectors and companies that have a tail wind, not a head wind (it is easier to make money as a long then as a short given that the general direction of the market is up). It is easier to make money in a mild upward gradient by buying than it is to make money by shorting in a mild downturn. I just feel that the price of ATHN is absurd when you look at just the numbers and then even more so when you add in the market color.

      These things all have their day. Even legitimate, big companies not being put together as a get rich quick scheme. If you had bought General Motors 40 years ago you might be no better off today. My bet is that 10 years from now the young kids will not have heard of ATHN anymore than most of you have heard of Contel, Verssys or Healtheon (three decades of ;just three exotic-story high profile nickel rockets).

      Sentiment: Strong Sell

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