athenahealth (ATHN), which provides billing services to medical practices, is retreating after drug and physician services distributor PSS Worldwide (PSSI) agreed to be acquired by McKesson Worldwide (MCK). PSS Worldwide currently sells athenahealth's services to physicians. In a note to investors earlier today, Citigroup analyst George Hill estimated that PSS generates less than 5% of new physician customers for athenahealth annually. Moreover, Hill quoted McKesson as saying that it has no plans immediately "distort or dismantle" any of PSS' relationships "without careful evaluation." While the relationship between PSS and athenahealth is likely to be derailed over the long-term, athenahealth should be able to increase its sales capacity in order to compensate for this change, wrote Hill, who maintained a $100 price target and Buy rating on the stock. In late morning trading, athenahealth dropped $1.38, or 2.06%, to $65.43. The shares are well off their low for the day of $58.91.
- Investment & Company Information
- George Hill