Athenahealth (ATHN) 10-Q 22 Oct 15 2015 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2015	Oct. 20, 2015
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2015
Document Fiscal Year Focus	2,015
Document Fiscal Period Focus	Q3
Trading Symbol	ATHN
Entity Registrant Name	ATHENAHEALTH INC
Entity Central Index Key	1,131,096
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		38,829,970

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Current assets:
Cash and cash equivalents	$ 116,712	$ 73,787
Marketable securities	0	40,950
Accounts receivable, net	144,781	121,710
Deferred tax asset, net	12,504	0
Prepaid expenses and other current assets	32,892	22,627
Total current assets	306,889	259,074
Property and equipment, net	309,072	271,552
Capitalized software costs, net	102,127	56,574
Purchased intangible assets, net	131,995	139,422
Goodwill	229,157	198,049
Investments and other assets	12,162	7,327
Total assets	1,091,402	931,998
Current liabilities:
Accounts payable	14,219	9,410
Accrued compensation	75,732	71,768
Accrued expenses	45,652	37,033
Line of credit	0	35,000
Long-term debt	7,500	15,000
Deferred revenue	35,807	28,949
Deferred tax liability, net	0	8,449
Total current liabilities	178,910	205,609
Deferred rent, net of current portion	26,969	19,412
Long-term debt, net of current portion	292,500	158,750
Deferred revenue, net of current portion	55,566	54,473
Long-term deferred tax liability, net	17,631	10,417
Other long-term liabilities	7,676	8,214
Total liabilities	$ 579,252	$ 456,875
Commitments and contingencies (Note 7)
Stockholders’ equity:
Preferred stock, $0.01 par value: 5,000 shares authorized; no shares issued and outstanding at September 30, 2015 and December 31, 2014	$ 0	$ 0
Common stock, $0.01 par value: 125,000 shares authorized; 40,089 shares issued and 38,811 shares outstanding at September 30, 2015; 39,402 shares issued and 38,124 shares outstanding at December 31, 2014	401	395
Additional paid-in capital	499,321	443,259
Treasury stock, at cost, 1,278 shares	(1,200)	(1,200)
Accumulated other comprehensive (loss) income	(1,165)	24,188
Retained earnings	14,793	8,481
Total stockholders’ equity	512,150	475,123
Total liabilities and stockholders’ equity	$ 1,091,402	$ 931,998

Condensed Consolidated Balance3

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Sep. 30, 2015	Dec. 31, 2014
Statement of Financial Position [Abstract]
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	125,000,000	125,000,000
Common stock, shares issued	40,089,000	39,402,000
Common stock, shares outstanding	38,811,000	38,124,000
Treasury stock, shares	1,278,000	1,278,000

Condensed Consolidated Statemen

Condensed Consolidated Statements of Income - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Revenue:
Business services	$ 224,990	$ 179,711	$ 638,156	$ 510,162
Implementation and other	11,078	10,717	29,040	29,223
Total revenue	236,068	190,428	667,196	539,385
Expense:
Direct operating	94,850	79,343	269,306	226,265
Selling and marketing	55,927	45,206	163,705	139,155
Research and development	22,560	18,087	70,675	49,659
General and administrative	34,778	31,800	107,093	91,600
Depreciation and amortization	24,763	17,258	67,216	46,693
Total expense	232,878	191,694	677,995	553,372
Operating income (loss)	3,190	(1,266)	(10,799)	(13,987)
Other income (expense):
Interest expense	(1,620)	(1,244)	(4,192)	(3,784)
Other income (expense)	7,590	26	28,715	(151)
Total other income (expense)	5,970	(1,218)	24,523	(3,935)
Income (loss) before income tax (provision) benefit	9,160	(2,484)	13,724	(17,922)
Income tax (provision) benefit	(3,365)	853	(7,412)	6,074
Net income (loss)	$ 5,795	$ (1,631)	$ 6,312	$ (11,848)
Net income (loss) per share - Basic (in dollars per share)	$ 0.15	$ (0.04)	$ 0.16	$ (0.31)
Net income (loss) per share - Diluted (in dollars per share)	$ 0.15	$ (0.04)	$ 0.16	$ (0.31)
Weighted average shares used in computing net income (loss) per share:
Basic (shares)	38,714	37,999	38,523	37,783
Diluted (shares)	39,536	37,999	39,476	37,783

Condensed Consolidated Stateme5

Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Statement of Comprehensive Income [Abstract]
Net income (loss)	$ 5,795	$ (1,631)	$ 6,312	$ (11,848)
Other comprehensive income (loss)
Unrealized (loss) gain on securities, net of tax of $501 and $3,485 for the three and nine months ended September 30, 2015, respectively, and $2,976 and $16,629 for the three and nine months ended September 30, 2014, respectively	(746)	(4,934)	(7,709)	27,561
Reclassification adjustments for gains on sales of marketable securities included in net income, net of tax of $3,049 and $11,520 for the three and nine months ended September 30, 2015, respectively	(4,536)	0	(17,136)	0
Unrealized gain (loss) on change in fair value of interest rate swap, net of tax of ($13) and $104 for the three and nine months ended September 30, 2015, respectively, and $142 and $73 for the three and nine months ended September 30, 2014, respectively	23	237	(172)	122
Foreign currency translation adjustment	(200)	(227)	(336)	41
Total other comprehensive (loss) income	(5,459)	(4,924)	(25,353)	27,724
Comprehensive income (loss)	$ 336	$ (6,555)	$ (19,041)	$ 15,876

Condensed Consolidated Stateme6

Condensed Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Statement of Comprehensive Income [Abstract]
Unrealized gain (loss) on securities, tax	$ 501	$ 2,976	$ 3,485	$ 16,629
Reclassification adjustments for gain on securities, tax	3,049	0	11,520	0
Unrealized (loss) gain on interest rate derivative, tax	$ (13)	$ 142	$ 104	$ 73

Condensed Consolidated Stateme7

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$ 6,312	$ (11,848)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	85,869	69,416
Excess tax benefit from stock-based awards	(8,367)	0
Deferred income tax	(1,652)	(6,494)
Stock-based compensation expense	47,943	38,986
Gain on sale of marketable securities	(28,656)	0
Other reconciling adjustments	6	121
Changes in operating assets and liabilities:
Accounts receivable, net	(21,941)	(14,164)
Prepaid expenses and other current assets	(1,296)	(6,352)
Other long-term assets	(2,090)	18
Accounts payable	5,611	5,070
Accrued expenses and other long-term liabilities	4,232	8,387
Accrued compensation	4,085	10,379
Deferred revenue	6,015	1,830
Deferred rent	6,848	8,792
Net cash provided by operating activities	102,919	104,141
CASH FLOWS FROM INVESTING ACTIVITIES:
Capitalized software development costs	(77,714)	(41,232)
Purchases of property and equipment	(65,090)	(51,131)
Payments on acquisitions, net of cash acquired	(39,890)	0
Proceeds from sales of marketable securities	29,756	0
Change in restricted cash	0	2,955
Other investing activities	(2,610)	(250)
Net cash used in investing activities	(155,548)	(89,658)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock under stock plans and warrants	18,046	19,723
Taxes paid related to net share settlement of stock awards	(20,664)	(28,302)
Excess tax benefit from stock-based awards	8,367	0
Proceeds from line of credit	60,000	0
Payments on line of credit	(95,000)	0
Proceeds from long-term debt	300,000	0
Payments on long-term debt	(173,750)	(11,250)
Debt issuance costs	(987)	0
Net cash provided by (used in) financing activities	96,012	(19,829)
Effect of exchange rate changes on cash and cash equivalents	(458)	(126)
Net increase (decrease) in cash and cash equivalents	42,925	(5,472)
Cash and cash equivalents at beginning of period	73,787	65,002
Cash and cash equivalents at end of period	116,712	59,530
Non-cash transactions
Property, equipment, and purchased software recorded in accounts payable and accrued expenses	13,240	18,571
Non-cash leasehold improvements	1,469	3,047
Tax benefit recorded in prepaid expenses and other current assets	8,367	0
Additional disclosures
Cash paid for interest, net	3,870	3,514
Cash paid (refunded) for taxes	$ 139	$ (812)

BASIS OF PRESENTATION

BASIS OF PRESENTATION	9 Months Ended
	Sep. 30, 2015
Organization, Consolidation and Presentation of Financial Statements [Abstract]
BASIS OF PRESENTATION	BASIS OF PRESENTATION General – The accompanying unaudited condensed consolidated financial statements have been prepared by athenahealth, Inc. (the “Company,” “we,” or “our”) in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial reporting and as required by Regulation S-X, Rule 10-01. The year-end condensed consolidated balance sheet data was derived from audited financial statements but does not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of the Company’s management, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting of items of a normal and recurring nature) necessary to present fairly the financial position as of September 30, 2015 , the results of operations for the three and nine months ended September 30, 2015 , and 2014 , and cash flows for the nine months ended September 30, 2015 , and 2014 . The results of operations for the three and nine month period ended September 30, 2015 are not necessarily indicative of the results to be expected for the full year. When preparing financial statements in conformity with GAAP, we must make estimates and assumptions that affect the reported amounts of assets and liabilities and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates, and such differences could be material. We consider events or transactions that occur after the balance sheet date but before the financial statements are issued to provide additional evidence relative to certain estimates or to identify matters that require additional disclosure. Subsequent events have been evaluated through the date of issuance of these financial statements. Related Party Transactions – We have a long-term investment in a vendor. The total expense related to this vendor for the three and nine months ended September 30, 2015 was $6.6 million and $16.5 million , respectively, and was $3.5 million and $7.6 million , for the three and nine months ended September 30, 2014 , respectively. The total amount payable to this vendor at September 30, 2015 and December 31, 2014 was $2.2 million and $1.3 million , respectively. New Accounting Pronouncements – In April 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2015-03, Simplifying the Presentation of Debt Issuance , which changes the presentation of debt issuance costs in financial statements. Under this guidance, an entity will present such costs in the balance sheet as a reduction of the related debt liability rather than as an asset. We have evaluated ASU 2015-03 and determined that its adoption will not have a material effect on our financial position or earnings. This guidance is effective for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted for all entities for financial statements that have not been previously issued. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers . This standard outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most of the current revenue recognition guidance, including industry-specific guidance. In addition, ASU 2014-09 provides guidance on accounting for certain revenue-related costs including, but not limited to, when to capitalize costs associated with obtaining and fulfilling a contract. ASU 2014-09 provides companies with two implementation methods. Companies can choose to apply the standard retrospectively to each prior reporting period presented (full retrospective application) or retrospectively with the cumulative effect of initially applying the standard as an adjustment to the opening balance of retained earnings of the annual reporting period that includes the date of initial application (modified retrospective application). This guidance is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Early adoption is permitted; however, companies are not permitted to adopt the standard earlier than January 1, 2017. Additionally, the FASB has issued exposure drafts to change certain aspects of ASU 2014-09. We continue to evaluate the expected impact of this new guidance and available adoption methods.

ACQUISITIONS

ACQUISITIONS	9 Months Ended
	Sep. 30, 2015
Business Combinations [Abstract]
ACQUISITIONS	ACQUISITIONS webOMR On January 23, 2015 , we signed an agreement to purchase a suite of internally-developed clinical applications and an electronic health record (“EHR”) system from Beth Israel Deaconess Medical Center, Inc. (“BIDMC”) referred to as webOMR for $22.0 million in cash. This asset is recorded in the capitalized software costs, net line on our Condensed Consolidated Balance Sheet. The agreement also provides for up to an additional $18.0 million in contingent payments upon achievement of certain milestones in the future. In connection with the purchase of the webOMR technology, the parties also entered into a two -year collaboration agreement under which BIDMC will provide ongoing consultation services with respect to the webOMR technology and provide one of its facilities as a testing site for a new inpatient service offering. We purchased webOMR to accelerate our entry into the inpatient market. Razor Insights On January 13, 2015 , we acquired Razor Insights, LLC (“RazorInsights”), a provider of cloud-based billing and EHR software services to rural and community hospitals, for $40.0 million in cash after net working capital adjustments. We acquired RazorInsights for the assembled workforce, technology, customer base, and to accelerate our entry into the inpatient market. The fair value of net assets acquired, after measurement period adjustments totaling $1.0 million , was $8.9 million , including purchased intangible assets of $7.0 million related to technology acquired and $4.0 million related to customer relationships. The $31.1 million excess of purchase consideration over the fair value of net assets acquired is allocated to goodwill, which is deductible for U.S. income tax purposes. We incurred transaction costs in connection with the acquisition of $0.3 million , which are included in general and administrative expenses. The fair values assigned to assets acquired and liabilities assumed were based on information that was available as of the date of the acquisition. Certain items, such as the working capital adjustments to the purchase price and the value of the purchased intangible assets, are subject to change as additional information is received about facts and circumstances that existed at the date of acquisition.

NET INCOME (LOSS) PER SHARE

NET INCOME (LOSS) PER SHARE	9 Months Ended
	Sep. 30, 2015
Earnings Per Share [Abstract]
NET INCOME (LOSS) PER SHARE	NET INCOME (LOSS) PER SHARE Basic net income (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the period. Diluted net income (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding and potentially dilutive securities outstanding during the period under the treasury stock method. Potentially dilutive securities include stock options, restricted stock units, and shares to be purchased under the employee stock purchase plan. Under the treasury stock method, dilutive securities are assumed to be exercised at the beginning of the period and as if funds obtained thereby were used to purchase common stock at the average market price during the period. Securities are excluded from the computations of diluted net income (loss) per share if their effect would be anti-dilutive to earnings per share; therefore, in periods of net loss, shares used to calculate basic and dilutive net loss per share are equivalent. The following table reconciles the weighted average shares outstanding for basic and diluted net income (loss) per share for the periods indicated: Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Net income (loss) $ 5,795 $ (1,631 ) $ 6,312 $ (11,848 ) Weighted average shares used in computing basic net income (loss) per share 38,714 37,999 38,523 37,783 Net income (loss) per share – Basic $ 0.15 $ (0.04 ) $ 0.16 $ (0.31 ) Net income (loss) $ 5,795 $ (1,631 ) $ 6,312 $ (11,848 ) Weighted average shares used in computing basic net income (loss) per share 38,714 37,999 38,523 37,783 Effect of dilutive securities 822 — 953 — Weighted average shares used in computing diluted net income (loss) per share 39,536 37,999 39,476 37,783 Net income (loss) per share – Diluted $ 0.15 $ (0.04 ) $ 0.16 $ (0.31 ) The computation of diluted net income per share does not include 0.5 million and 0.8 million shares of stock options and restricted stock units for the three and nine months ended September 30, 2015 , respectively, because their inclusion would have an anti-dilutive effect on net income per share.

DEBT

DEBT	9 Months Ended
	Sep. 30, 2015
Debt Disclosure [Abstract]
DEBT	DEBT On May 5, 2015 , we entered into an amended and restated credit agreement (the “2015 Credit Agreement”). The 2015 Credit Agreement amended and restated our previous credit agreement, dated as of May 10, 2013 (the “2013 Credit Agreement”), and provides for a $500.0 million senior credit facility consisting of a $300.0 million unsecured term loan facility and a $200.0 million unsecured revolving credit facility (the “2015 Senior Credit Facility”). A portion of the proceeds received from the 2015 Senior Credit Facility were used to repay the outstanding revolving loans under the 2013 Credit Agreement such that there were no revolving loans outstanding on the closing of the 2015 Credit Agreement. The 2015 Credit Agreement contains terms and conditions that are customary to credit facilities of this nature; it may be used to refinance existing indebtedness, and for working capital and other general corporate purposes. We may increase the revolving credit facility up to an additional $100.0 million and may increase the term loan facility to the extent that such amount will not cause us to be in breach of our financial covenants, subject to certain conditions, including obtaining lender commitments. The 2015 Senior Credit Facility matures on May 5, 2020 , although we may prepay the 2015 Senior Credit Facility in whole or in part at any time without premium or penalty, and the unutilized portion of the commitments may be irrevocably reduced or terminated by us in whole or in part without penalty or premium. At our option, any loans under the 2015 Senior Credit Facility (other than swing line loans) will bear interest at a rate equal to (i) the British Bankers Association London Interbank Offered Rate (“LIBOR”) plus an interest margin based on our consolidated leverage ratio, or (ii) the base rate (which is the highest of (a) the Bank of America prime rate, (b) the Federal Funds rate plus 0.50% , and (c) one month LIBOR plus 1.00% ) plus an interest margin based on our consolidated leverage ratio. The interest rate for the 2015 Senior Credit Facility as of September 30, 2015 was 1.70% . We will pay a commitment fee during the term of the 2015 Senior Credit Facility, which varies between 0.20% and 0.40% based on our consolidated leverage ratio. We incurred financing fees of $1.0 million for the 2015 Senior Credit Facility, which are being amortized as interest expense in the Condensed Consolidated Statements of Income over the five -year term of the agreement. Future principal payments of the unsecured term loan facility at September 30, 2015 are as follows: Amount 2015 $ — 2016 11,250 2017 15,000 2018 20,625 2019 28,125 Thereafter 225,000 Total $ 300,000 Less current portion 7,500 Long-term portion $ 292,500

FAIR VALUE OF FINANCIAL INSTRUM

FAIR VALUE OF FINANCIAL INSTRUMENTS	9 Months Ended
	Sep. 30, 2015
Fair Value Disclosures [Abstract]
FAIR VALUE OF FINANCIAL INSTRUMENTS	FAIR VALUE OF FINANCIAL INSTRUMENTS As of September 30, 2015 and December 31, 2014 , the carrying amounts of cash and cash equivalents, receivables, accounts payable, and accrued expenses approximated their estimated fair values because of the short-term nature of these financial instruments. As of September 30, 2015 , we had $300.0 million outstanding on our term loan facility and we had nothing drawn on our revolving credit facility under the 2015 Credit Agreement. As of December 31, 2014 , we had $173.8 million outstanding on our term loan facility and $35.0 million outstanding on our revolving credit facility under the 2013 Credit Agreement. The credit facilities under both credit agreements carry a variable interest rate set at current market rates, and as such, the carrying values approximate fair value. Our More Disruption Please (“MDP”) Accelerator portfolio is a program designed to cultivate health care information technology start-ups and expand services offered to our physician network. Certain of these investments as of September 30, 2015 and December 31, 2014 are in the form of short-term convertible notes receivable, and are included in prepaid expenses and other current assets; investments that are not classified as short-term are included in investments and other assets on our Condensed Consolidated Balance Sheets. At September 30, 2015 , as there is no indication of performance risk and no conversion is currently contemplated, we estimate that the fair value of the notes receivable approximates cost, based on inputs including the original transaction price, our own recent transactions in the same or similar instruments, completed or pending third-party transactions in the underlying investments, subsequent rounds of financing, and changes in financial ratios or cash flows (Level 3). Marketable equity securities are valued using a market approach based upon the quoted market prices of identical instruments when available or other observable inputs such as trading prices of identical instruments in inactive markets or similar securities. Our interest rate swap agreement was designed to manage exposure to interest rates on our variable rate indebtedness. We have designated the interest rate swap agreement as a cash flow hedge. For the three and nine months ended September 30, 2015 , no amount was recognized in earnings for our interest rate swap. There was no ineffectiveness associated with the interest rate swap during the three and nine months ended September 30, 2015 , nor was any amount excluded from ineffectiveness testing. We do not expect that any of the $0.5 million of pre-tax unrealized losses included in accumulated other comprehensive loss at September 30, 2015 , will be reclassified into earnings within the next 12 months. This amount will vary due to fluctuations in interest rates. We are exposed to credit loss in the event of non-performance by the swap counterparty. The estimated fair value of our interest rate swap agreement with a certain financial institution at September 30, 2015 and December 31, 2014 was a liability of $0.5 million and $0.2 million , respectively, based on inputs other than quoted prices that are observable for the interest rate swap (Level 2). Inputs include present value of fixed and projected floating rate cash flows over the term of the swap contract. The following table presents information about our financial assets and liabilities that are measured at fair value on a recurring basis as of September 30, 2015 and December 31, 2014 , and indicates the fair value hierarchy of the valuation techniques we utilized to determine such fair value. In general, fair values determined by Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities, and fair values determined by Level 2 inputs utilize quoted prices (unadjusted) in inactive markets for identical assets or liabilities obtained from readily available pricing sources for similar instruments. The fair values determined by Level 3 inputs are unobservable values which are supported by little or no market activity. It is our policy to recognize transfers between levels of the fair value hierarchy, if any, at the end of the reporting period; however, there have been no such transfers during any of the periods presented. Fair Value Measurements as of September 30, 2015, Using Level 1 Level 2 Level 3 Total Cash and cash equivalents: Money market $ 10,000 $ — $ — $ 10,000 Debt securities: MDP Accelerator portfolio $ — $ — $ 1,250 $ 1,250 Total assets $ 10,000 $ — $ 1,250 $ 11,250 Interest rate swap liability (a) $ — $ (521 ) $ — $ (521 ) Total liabilities $ — $ (521 ) $ — $ (521 ) Fair Value Measurements as of December 31, 2014, Using Level 1 Level 2 Level 3 Total Available-for-sale investments: Marketable equity securities $ 40,950 $ — $ — $ 40,950 Debt securities: MDP Accelerator portfolio $ — $ — $ 750 $ 750 Total assets $ 40,950 $ — $ 750 $ 41,700 Interest rate swap liability (b) $ — $ (244 ) $ — $ (244 ) Total liabilities $ — $ (244 ) $ — $ (244 ) (a) Recorded in other short-term liabilities on the Condensed Consolidated Balance Sheets. (b) Recorded in other long-term liabilities on the Condensed Consolidated Balance Sheets. The following table presents our financial instruments measured at fair value using unobservable inputs (Level 3) as of September 30, 2015 : Fair Value Measurements Using Unobservable Inputs (Level 3) Three Months Ended September 30, 2015 Nine Months Ended September 30, 2015 Balance, beginning of period $ 1,250 $ 750 Reductions — (250 ) Additions — 750 Balance, end of period $ 1,250 $ 1,250

INVESTMENTS

INVESTMENTS	9 Months Ended
	Sep. 30, 2015
Investments [Abstract]
INVESTMENTS	INVESTMENTS We had no available-for-sale securities as of September 30, 2015 due to the sale of our holdings in Castlight Health, Inc. stock. We had the following available-for-sale securities as of December 31, 2014 : Cost Gross Unrealized Gain Fair Value Marketable equity securities $ 1,100 $ 39,850 $ 40,950

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES	9 Months Ended
	Sep. 30, 2015
Commitments and Contingencies Disclosure [Abstract]
COMMITMENTS AND CONTINGENCIES	COMMITMENTS AND CONTINGENCIES We are engaged from time to time in certain legal disputes arising in the ordinary course of business, including employment discrimination claims and challenges to our intellectual property. We believe that we have adequate legal defenses and that the likelihood of a loss contingency relating to the ultimate disposition of any of these claims is remote. When the likelihood of a loss contingency becomes at least reasonably possible with respect to any of these disputes, or, as applicable in the future, if there is at least a reasonable possibility that a loss exceeding amounts already recognized may have been incurred, we will revise our disclosures in accordance with the relevant authoritative guidance. Additionally, we will accrue a liability for loss contingencies when we believe that it is both probable that a liability has been incurred and that we can reasonably estimate the amount of the loss. We will review these accruals and adjust them to reflect ongoing negotiations, settlements, rulings, advice of legal counsel, and other relevant information. To the extent new information is obtained, and our views on the probable outcomes of claims, suits, assessments, investigations, or legal proceedings change, changes in our accrued liabilities would be recorded in the period in which such determination is made.

BASIS OF PRESENTATION (Policies

BASIS OF PRESENTATION (Policies)	9 Months Ended
	Sep. 30, 2015
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Basis of Presentation	General – The accompanying unaudited condensed consolidated financial statements have been prepared by athenahealth, Inc. (the “Company,” “we,” or “our”) in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial reporting and as required by Regulation S-X, Rule 10-01. The year-end condensed consolidated balance sheet data was derived from audited financial statements but does not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of the Company’s management, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting of items of a normal and recurring nature) necessary to present fairly the financial position as of September 30, 2015 , the results of operations for the three and nine months ended September 30, 2015 , and 2014 , and cash flows for the nine months ended September 30, 2015 , and 2014 . The results of operations for the three and nine month period ended September 30, 2015 are not necessarily indicative of the results to be expected for the full year. When preparing financial statements in conformity with GAAP, we must make estimates and assumptions that affect the reported amounts of assets and liabilities and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates, and such differences could be material. We consider events or transactions that occur after the balance sheet date but before the financial statements are issued to provide additional evidence relative to certain estimates or to identify matters that require additional disclosure. Subsequent events have been evaluated through the date of issuance of these financial statements.
New Accounting Pronouncements	New Accounting Pronouncements – In April 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2015-03, Simplifying the Presentation of Debt Issuance , which changes the presentation of debt issuance costs in financial statements. Under this guidance, an entity will present such costs in the balance sheet as a reduction of the related debt liability rather than as an asset. We have evaluated ASU 2015-03 and determined that its adoption will not have a material effect on our financial position or earnings. This guidance is effective for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted for all entities for financial statements that have not been previously issued. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers . This standard outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most of the current revenue recognition guidance, including industry-specific guidance. In addition, ASU 2014-09 provides guidance on accounting for certain revenue-related costs including, but not limited to, when to capitalize costs associated with obtaining and fulfilling a contract. ASU 2014-09 provides companies with two implementation methods. Companies can choose to apply the standard retrospectively to each prior reporting period presented (full retrospective application) or retrospectively with the cumulative effect of initially applying the standard as an adjustment to the opening balance of retained earnings of the annual reporting period that includes the date of initial application (modified retrospective application). This guidance is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Early adoption is permitted; however, companies are not permitted to adopt the standard earlier than January 1, 2017. Additionally, the FASB has issued exposure drafts to change certain aspects of ASU 2014-09. We continue to evaluate the expected impact of this new guidance and available adoption methods.

NET INCOME (LOSS) PER SHARE (Ta

NET INCOME (LOSS) PER SHARE (Tables)	9 Months Ended
	Sep. 30, 2015
Earnings Per Share [Abstract]
Schedule of Earnings Per Share, Basic and Diluted	The following table reconciles the weighted average shares outstanding for basic and diluted net income (loss) per share for the periods indicated: Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Net income (loss) $ 5,795 $ (1,631 ) $ 6,312 $ (11,848 ) Weighted average shares used in computing basic net income (loss) per share 38,714 37,999 38,523 37,783 Net income (loss) per share – Basic $ 0.15 $ (0.04 ) $ 0.16 $ (0.31 ) Net income (loss) $ 5,795 $ (1,631 ) $ 6,312 $ (11,848 ) Weighted average shares used in computing basic net income (loss) per share 38,714 37,999 38,523 37,783 Effect of dilutive securities 822 — 953 — Weighted average shares used in computing diluted net income (loss) per share 39,536 37,999 39,476 37,783 Net income (loss) per share – Diluted $ 0.15 $ (0.04 ) $ 0.16 $ (0.31 )

DEBT (Tables)

DEBT (Tables)	9 Months Ended
	Sep. 30, 2015
Debt Disclosure [Abstract]
Schedule of Maturities of Long-term Debt	Future principal payments of the unsecured term loan facility at September 30, 2015 are as follows: Amount 2015 $ — 2016 11,250 2017 15,000 2018 20,625 2019 28,125 Thereafter 225,000 Total $ 300,000 Less current portion 7,500 Long-term portion $ 292,500

FAIR VALUE OF FINANCIAL INSTR18

FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables)	9 Months Ended
	Sep. 30, 2015
Fair Value Disclosures [Abstract]
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis	The following table presents information about our financial assets and liabilities that are measured at fair value on a recurring basis as of September 30, 2015 and December 31, 2014 , and indicates the fair value hierarchy of the valuation techniques we utilized to determine such fair value. In general, fair values determined by Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities, and fair values determined by Level 2 inputs utilize quoted prices (unadjusted) in inactive markets for identical assets or liabilities obtained from readily available pricing sources for similar instruments. The fair values determined by Level 3 inputs are unobservable values which are supported by little or no market activity. It is our policy to recognize transfers between levels of the fair value hierarchy, if any, at the end of the reporting period; however, there have been no such transfers during any of the periods presented. Fair Value Measurements as of September 30, 2015, Using Level 1 Level 2 Level 3 Total Cash and cash equivalents: Money market $ 10,000 $ — $ — $ 10,000 Debt securities: MDP Accelerator portfolio $ — $ — $ 1,250 $ 1,250 Total assets $ 10,000 $ — $ 1,250 $ 11,250 Interest rate swap liability (a) $ — $ (521 ) $ — $ (521 ) Total liabilities $ — $ (521 ) $ — $ (521 ) Fair Value Measurements as of December 31, 2014, Using Level 1 Level 2 Level 3 Total Available-for-sale investments: Marketable equity securities $ 40,950 $ — $ — $ 40,950 Debt securities: MDP Accelerator portfolio $ — $ — $ 750 $ 750 Total assets $ 40,950 $ — $ 750 $ 41,700 Interest rate swap liability (b) $ — $ (244 ) $ — $ (244 ) Total liabilities $ — $ (244 ) $ — $ (244 ) (a) Recorded in other short-term liabilities on the Condensed Consolidated Balance Sheets. (b) Recorded in other long-term liabilities on the Condensed Consolidated Balance Sheets.
Schedule of Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation	The following table presents our financial instruments measured at fair value using unobservable inputs (Level 3) as of September 30, 2015 : Fair Value Measurements Using Unobservable Inputs (Level 3) Three Months Ended September 30, 2015 Nine Months Ended September 30, 2015 Balance, beginning of period $ 1,250 $ 750 Reductions — (250 ) Additions — 750 Balance, end of period $ 1,250 $ 1,250

INVESTMENTS (Tables)

INVESTMENTS (Tables)	9 Months Ended
	Sep. 30, 2015
Investments [Abstract]
Schedule of Available-for-sale Securities Reconciliation	We had no available-for-sale securities as of September 30, 2015 due to the sale of our holdings in Castlight Health, Inc. stock. We had the following available-for-sale securities as of December 31, 2014 : Cost Gross Unrealized Gain Fair Value Marketable equity securities $ 1,100 $ 39,850 $ 40,950

BASIS OF PRESENTATION - Narrati

BASIS OF PRESENTATION - Narrative (Details) - Long-Term Investment in Vendor - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014
Related Party Transaction [Line Items]
Total related party expense	$ 6.6	$ 3.5	$ 16.5	$ 7.6
Total amount payable to related parties	$ 2.2		$ 2.2		$ 1.3

ACQUISITIONS - Narrative (Detai

ACQUISITIONS - Narrative (Details) $ in Thousands	Jan. 23, 2015USD ($)facility	Jan. 13, 2015USD ($)	Sep. 30, 2015USD ($)	Dec. 31, 2014USD ($)
Business Acquisition [Line Items]
Goodwill			$ 229,157	$ 198,049
webOMR
Business Acquisition [Line Items]
Payments to acquire software	$ 22,000
Contingent consideration, value	$ 18,000
Collaboration agreement, term	2 years
Collaboration agreement, number of facilities provided as a testing site | facility	1
RazorInsights
Business Acquisition [Line Items]
Payments to acquire businesses, gross		$ 40,000
Measurement period adjustments		(1,000)
Fair value of assets acquired		8,900
Goodwill		31,100
Transaction costs associated with the acquisition		300
RazorInsights | Technology-Based Intangible Assets
Business Acquisition [Line Items]
Intangible assets acquired		7,000
RazorInsights | Customer Relationships
Business Acquisition [Line Items]
Intangible assets acquired		$ 4,000

NET INCOME (LOSS) PER SHARE - S

NET INCOME (LOSS) PER SHARE - Schedule of Earnings Per Share, Basic and Diluted (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Earnings Per Share [Abstract]
Net income (loss)	$ 5,795	$ (1,631)	$ 6,312	$ (11,848)
Weighted average shares used in computing basic net income (loss) per share (shares)	38,714	37,999	38,523	37,783
Net (loss) income per share - Basic (in dollars per share)	$ 0.15	$ (0.04)	$ 0.16	$ (0.31)
Net income (loss)	$ 5,795	$ (1,631)	$ 6,312	$ (11,848)
Effect of dilutive securities (in shares)	822	0	953	0
Weighted average shares used in computing diluted net income (loss) per share (in shares)	39,536	37,999	39,476	37,783
Net (loss) income per share - Diluted (in dollars per share)	$ 0.15	$ (0.04)	$ 0.16	$ (0.31)
Options and restricted stock units which have antidilutive effect (in shares)	500		800

DEBT - Narrative (Details)

DEBT - Narrative (Details) - USD ($)	May. 05, 2015	Sep. 30, 2015
Senior Credit Facility, 2015
Line of Credit Facility [Line Items]
Current borrowing capacity	$ 500,000,000
Interest rate, effective percentage		1.70%
Debt issuance costs		$ 1,000,000
Line of credit term	5 years
Senior Credit Facility, 2015 | Minimum
Line of Credit Facility [Line Items]
Commitment fee percentage		0.20%
Senior Credit Facility, 2015 | Maximum
Line of Credit Facility [Line Items]
Commitment fee percentage		0.40%
Senior Credit Facility, 2015 | Federal Funds rate
Line of Credit Facility [Line Items]
Basis spread on variable rate	0.50%
Senior Credit Facility, 2015 | Monthly Libor Interbank Offered Rate (LIBOR)
Line of Credit Facility [Line Items]
Basis spread on variable rate	1.00%
Senior Credit Facility, 2015 | Unsecured Debt
Line of Credit Facility [Line Items]
Current borrowing capacity	$ 300,000,000
Senior Credit Facility, 2015 | Revolving Credit Facility
Line of Credit Facility [Line Items]
Current borrowing capacity	200,000,000
Additional borrowing capacity	100,000,000
Senior Credit Facility, 2013 | Revolving Credit Facility
Line of Credit Facility [Line Items]
Long-term line of credit	$ 0

DEBT - Schedule of Debt Maturit

DEBT - Schedule of Debt Maturities (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Debt Instrument [Line Items]
Less current portion	$ 7,500	$ 15,000
Long-term portion	292,500	$ 158,750
Unsecured Debt | Senior Credit Facility, 2015
Debt Instrument [Line Items]
2,015	0
2,016	11,250
2,017	15,000
2,018	20,625
2,019	28,125
Thereafter	225,000
Total	300,000
Less current portion	7,500
Long-term portion	$ 292,500

FAIR VALUE OF FINANCIAL INSTR25

FAIR VALUE OF FINANCIAL INSTRUMENTS - Narrative (Details) - USD ($)	3 Months Ended	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2015	Dec. 31, 2014
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Line of credit	$ 0	$ 0	$ 35,000,000
Cash flow hedge gain (loss) amount reclassified to earnings	0	0
Cash flow hedge gain (loss) on hedge ineffectiveness	0	0
Fair Value, Measurements, Recurring
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Interest rate swap liability	521,000	521,000	244,000
Level 2 | Fair Value, Measurements, Recurring
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Interest rate swap liability	521,000	521,000	244,000
Unsecured Debt | Senior Credit Facility, 2015
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Term loan outstanding	300,000,000	300,000,000
Unsecured Debt | Senior Credit Facility, 2013
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Term loan outstanding			173,800,000
Revolving Credit Facility | Senior Credit Facility, 2015
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Line of credit	$ 0	$ 0
Revolving Credit Facility | Senior Credit Facility, 2013
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Line of credit			$ 35,000,000

FAIR VALUE OF FINANCIAL INSTR26

FAIR VALUE OF FINANCIAL INSTRUMENTS - Financial Assets and Liabilities that Are Measured at Fair Value on Recurring Basis (Detail) - USD ($)	Sep. 30, 2015	Dec. 31, 2014
Marketable equity securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale investments	$ 0	$ 40,950,000
Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	11,250,000	41,700,000
Interest rate swap liability	(521,000)	(244,000)
Total liabilities	(521,000)	(244,000)
Fair Value, Measurements, Recurring | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	10,000,000	40,950,000
Interest rate swap liability	0	0
Total liabilities	0	0
Fair Value, Measurements, Recurring | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	0	0
Interest rate swap liability	(521,000)	(244,000)
Total liabilities	(521,000)	(244,000)
Fair Value, Measurements, Recurring | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	1,250,000	750,000
Interest rate swap liability	0	0
Total liabilities	0	0
Fair Value, Measurements, Recurring | Money Market Funds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and Cash Equivalents, Fair Value Disclosure	10,000,000
Fair Value, Measurements, Recurring | Money Market Funds [Member] | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and Cash Equivalents, Fair Value Disclosure	10,000,000
Fair Value, Measurements, Recurring | Money Market Funds [Member] | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and Cash Equivalents, Fair Value Disclosure	0
Fair Value, Measurements, Recurring | Money Market Funds [Member] | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and Cash Equivalents, Fair Value Disclosure	0
Fair Value, Measurements, Recurring | Marketable equity securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale investments		40,950,000
Fair Value, Measurements, Recurring | Marketable equity securities | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale investments		40,950,000
Fair Value, Measurements, Recurring | Marketable equity securities | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale investments		0
Fair Value, Measurements, Recurring | Marketable equity securities | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale investments		0
Fair Value, Measurements, Recurring | MDP Accelerator portfolio
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt securities	1,250,000	750,000
Fair Value, Measurements, Recurring | MDP Accelerator portfolio | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt securities	0	0
Fair Value, Measurements, Recurring | MDP Accelerator portfolio | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt securities	0	0
Fair Value, Measurements, Recurring | MDP Accelerator portfolio | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt securities	$ 1,250,000	$ 750,000

FAIR VALUE OF FINANCIAL INSTR27

FAIR VALUE OF FINANCIAL INSTRUMENTS - Schedule of Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation (Details) - Fair Value, Measurements, Recurring - Level 3 - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2015
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Balance, beginning of period	$ 1,250	$ 750
Reductions	0	(250)
Additions	0	750
Balance, end of period	$ 1,250	$ 1,250

INVESTMENTS - Summary of Avail

INVESTMENTS - Summary of Available-For-Sale Securities (Details) - Marketable equity securities - USD ($)	Sep. 30, 2015	Dec. 31, 2014
Schedule of Available-for-sale Securities [Line Items]
Cost		$ 1,100,000
Gross Unrealized Gain		39,850,000
Fair Value	$ 0	$ 40,950,000