Earnings delay hurts Belfast firm

Posted March 04, 2010, at 9:30 p.m.

BELFAST, Maine — After athenahealth Inc., one of Belfast’s major employers, delayed releasing its fourth-quarter earnings report last week, the company’s stocks slipped and its rating was downgraded by at least one securities analyst.

However, company spokesman John Hallock said Thursday that the delay occurred simply because athenahealth needed more time to complete a self-initiated internal audit of its accounting policy for one “very small” portion of its revenue.

“We’re trying to be as proactive as possible, and above-board, in the way that we account for things,” Hallock said in a telephone interview Thursday. “You want to make sure that every single element you’re reporting is correct and in line with regulations.”

Athenahealth Maine employs more than 200 people in Belfast who help process electronic, Web-based services between health care providers and insurance companies. The company was founded a dozen years ago in Watertown, Mass., by Jonathan Bush, a first cousin of former President George W. Bush.

The company had been scheduled to report its fourth-quarter and full year 2009 reports on Feb. 25, and hold a conference call the next morning. After the report was delayed, stocks slid more than 15 percent to close at $36.84 per share last Friday.

They since have rebounded to $38.67 at the end of the trading day Thursday.

The accounting question stems from the fact that when athenahealth gains a new customer, it gets money for implementing its services. That revenue is recorded over the length of its contract with the customer, which is usually one year. Because many of its contracts are automatically renewed after the first year, the company said, it may start recording that revenue over a longer period of time.

The company would have to restate its past results if it makes the change.

JMP Securities analyst Constantine Davides said the company may scare off potential customers at a critical time for its business, and downgraded the stock to “Market Perform” from “Market Outperform.”

At least one law firm has announced an investigation into the business practices of athenahealth. Efforts Thursday to speak with a representative from the Kendall Law Group in Dallas were unsuccessful.

Hallock said the concerns are overstated and the earnings report, when it occurs, should show that. Athenahealth was just named to Fast Company Magazine’s “Fast 50” list of the world’s most innovative companies, one of only three health care companies to be so lauded.

“We’re doing some pretty fantastic things when it comes to medical advisers and our folks in Belfast play a pretty critical role in that,” he said. “We are growing at a terrific rate and we don’t have any plans to stop the terrific growth we see in that area.”

The company has been advertising for new employees in Belfast.

City Manager Joe Slocum said he is not concerned about the health of the company, which he described as very important to Belfast.

“We have great faith in their financial future,” he said. “I have great faith in the people who run it, in the products they deliver and the people who work there. … I don’t react to the market. There are fearmongers in the marketplace who are speculating all over the place. I don’t pay any attention to those people.”

On Tuesday, athenahealth announced that it has entered into a strategic relationship with U.S. Bancorp and its subsidiary, Elavon, to launch a new integrated payment processing service that will include a new Credit Card Plus solution for athenahealth physician clients nationwide. The comprehensive payment processing service has been designed to streamline patient paper check and credit card transactions to enable an improved and secure checkout process for physicians and their patients, athenahealth said.

The Associated Press contributed to this report.

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