BOSTON (AP) -- Shares of athenahealth fell on Friday after the medical clinic billing and records software maker reported its first-quarter earnings fell 25 percent, and revenue growth was offset by slightly higher growth in expenses.
THE SPARK: The Watertown, Mass., company said Thursday after markets closed that it earned $2.4 million, or 7 cents per share, in the three months that ended March 31. That was down from net income of nearly $3.3 million, or 9 cents per share, in the same quarter last year. Adjusted earnings, which exclude one-time items, were 17 cents per share, matching the consensus estimate of analysts surveyed by FactSet.
Revenue jumped 38 percent to $96.6 million, above analysts' expectations for $93.7 million. But expenses rose at a slightly higher rate of nearly 42 percent to about $91.4 million. The largest expense category, direct operating expenses, rose 42 percent.
THE BIG PICTURE: The first quarter was the 49th in a row in which athenahealth has posted revenue growth. However, the company continues to invest heavily in future growth, which can boost expenses. "Despite our success to date, we are still early in our quest to become a health information backbone and will continue our investments in growth and innovation to achieve this goal," Chief Financial Officer Tim Adams said.
THE ANALYSIS: Citi Investment Research analyst George Hill, who rates the stock "Neutral," was disappointed that athenahealth did not announce new client wins.
"While the company had a solid quarter, the lack of substantial new enterprise deals given its valuation keeps us from being more positive," he wrote in a note.
Meanwhile, Leo Carpio of Caris & Co. noted that athenahealth didn't raise its earnings guidance.
Carpio, who rates the stock "Average" or "Neutral," noted that athenahealth shares had risen 16 percent since the company's fourth-quarter earnings report. Given that increase, he said investors "may not be pleased" by the fact that athenahealth's first-quarter results were in line with analyst expectations, and that the company reaffirmed its second-quarter expectations rather than lifting them.
SHARE ACTION: Shares of athenahealth fell $2.38, or 3.2 percent, to $71.65 in midday trading. The stock traded at a 52-week high of $78.24 on March 26, and is up from a 52-week low of $38.97 last June.