UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) March 9, 2010
athenahealth, Inc.
(Exact name of registrant as specified in its charter)
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| Delaware
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001-33689
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04-3387530 |
| (State or other jurisdiction
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(Commission
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(IRS Employer |
| of incorporation)
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File Number)
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Identification No.) |
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| 311 Arsenal Street, Watertown, MA
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02472 |
| (Address of principal executive offices)
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(Zip Code) |
Registrant’s telephone number, including area code: 617-402-1000
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the
registrant under any of the following provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02 Results of Operations and Financial Condition.
On
March 15, 2010, athenahealth, Inc. (the “Company”) issued a press release regarding its financial and operational
results for the fourth quarter of 2009 and the year ended December 31, 2009, and matters described in Item 4.02
below. A copy of the press release is furnished herewith as Exhibit 99.1 and is incorporated herein
by reference.
The information included in this Current Report on Form 8-K pursuant to this Item 2.02,
including Exhibit 99.1 attached hereto, is intended to be furnished and shall not be deemed “filed”
for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the
liabilities of that section, nor shall it be deemed incorporated by reference in any filing under
the Securities Act of 1933 or the Securities Exchange Act of 1934, except as expressly set forth by
specific reference in such filing.
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| Item 4.02 |
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Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or
Completed Interim Review. |
(a) As previously announced, the Company initiated an internal review of its
accounting policy for the amortization period for deferred implementation revenue, and postponed
the release of its financial results for the fourth quarter of 2009 and the year ended December 31,
2009, to complete this internal accounting review. As a result of this review, which has now been
completed, the Company has concluded that a correction to the amortization period for deferred
implementation revenue for the expected performance period is appropriate. Accordingly, on March 9,
2010, the Audit Committee of the Board of Directors (the “Audit Committee”) determined that the
Company will restate its financial statements for the fiscal years ended December 31, 2005, 2006,
2007 and 2008; each quarterly period in its fiscal year ended December 31, 2008; and the first
three quarterly periods in its fiscal year ended December 31, 2009, to restate “implementation and
other” revenue to reflect a longer amortization period for deferred implementation revenue. The
Audit Committee further determined that the following should no longer be relied upon: (i) the
Company’s audited consolidated financial statements for the fiscal years ended December 31, 2005,
2006, 2007, and 2008, and the related audit reports thereon issued by Deloitte & Touche LLP, the
Company’s independent registered public accounting firm; and (ii) the Company’s unaudited
consolidated financial statements for each quarterly period in its fiscal year ended December 31,
2008, and the first three quarterly periods in its fiscal year ended December 31, 2009. The Audit
Committee made this determination following consultation with and upon the recommendation of
management and following consultation with Deloitte & Touche LLP. The Company will include (i) the
restated results for the fiscal years ended December 31, 2007 and 2008, and (ii) the restated
financial information for the quarterly periods in its fiscal year ended December 31, 2008, and the
first three quarterly periods in its fiscal year ended December 31, 2009, in its Annual Report on
Form 10-K for the year ended December 31, 2009 (the “2009 Form 10-K”). Adjustments for periods
prior to 2007 will be reflected in the opening balance for retained earnings in 2007, as well as in
the Company’s selected financial data tables for the fiscal years ended December 31, 2005 and 2006,
in Part II, Item 6 of the 2009 Form 10-K.
Description of Financial Restatement
Implementation revenue consists primarily of professional services fees related to assisting
customers with the implementation of the Company’s services. These non-refundable fees are
generally billed up front and recorded as deferred revenue until the implementation is complete and
then recognized ratably over the expected performance period. Previously, the expected performance
period was estimated based upon the initial customer contract term, which, for the vast majority of
contracts, was one year in duration. Implementation and other revenue has ranged from four to seven
percent of total revenue on an annual basis since 2007.
As a result of the Company’s review, the Company concluded that in prior and future periods,
the Company will amortize deferred implementation revenue over a longer expected performance period
of twelve years in order to reflect the estimated expected customer life. Accordingly, and as
described above, the Company will restate the “implementation and other” revenue within its
previously filed consolidated financial statements to reflect a longer amortization period for
deferred implementation revenue. The Company will continue to record implementation expenses in the
period as incurred. The length of the amortization period for deferred implementation revenue
recognition does not impact cumulative total implementation revenue under contract nor does it
impact cash flow.
In addition, in connection with the restatement, certain prior year amounts have been
reclassified to correct their presentation in the financial statements. These reclassifications had
no effect on net income or shareholders’ equity for any period and pertain to: (1) reimbursements
of out-of-pocket expenses that were previously netted against corresponding expense and have now
been grossed up and included in “implementation and other” revenue, (2) certain deferred tax
liabilities that have been reclassified from non-current to current, (3) draw downs of capital
lease lines that were previously presented as sources of cash within the financing activities
section of the cash flow statements and have now been reclassified as investing activities, and (4)
the excess tax benefit from stock-based awards that were previously presented as sources of cash
within the “operating activities” section of the consolidated statements of cash flows in the
accrued expense line and have been reclassified as “operating activities” in the excess tax benefit
from stock-based awards line item.