Athenahealth (ATHN) 10-Q 21 Jul 16 2016 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2016	Jul. 18, 2016
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2016
Document Fiscal Year Focus	2,016
Document Fiscal Period Focus	Q2
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		39,343,485

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Current assets:
Cash and cash equivalents	$ 134,297	$ 141,927
Accounts receivable, net	139,829	148,157
Prepaid expenses and other current assets	33,098	30,176
Total current assets	307,224	320,260
Property and equipment, net	327,912	321,524
Capitalized software costs, net	123,495	107,517
Purchased intangible assets, net	116,119	126,239
Goodwill	229,935	229,157
Investments and other assets	15,080	13,965
Total assets	1,119,765	1,118,662
Current liabilities:
Accounts payable	4,086	10,768
Accrued compensation	82,795	88,122
Accrued expenses	50,118	51,452
Long-term debt	14,523	10,762
Deferred revenue	31,859	32,593
Total current liabilities	183,381	193,697
Deferred rent, net of current portion	31,361	31,118
Long-term debt, net of current portion	280,088	287,353
Deferred revenue, net of current portion	52,542	55,946
Long-term deferred tax liability, net	1,659	1,254
Other long-term liabilities	5,166	5,988
Total liabilities	554,197	575,356
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.01 par value: 5,000 shares authorized; no shares issued and outstanding at June 30, 2016 and December 31, 2015	0	0
Common stock, $0.01 par value: 125,000 shares authorized; 40,590 shares issued and 39,312 shares outstanding at June 30, 2016; 40,209 shares issued and 38,931 shares outstanding at December 31, 2015	406	403
Additional paid-in capital	547,470	522,443
Treasury stock, at cost, 1,278 shares	(1,200)	(1,200)
Accumulated other comprehensive loss	(868)	(848)
Retained earnings	19,760	22,508
Total stockholders’ equity	565,568	543,306
Total liabilities and stockholders’ equity	$ 1,119,765	$ 1,118,662

Condensed Consolidated Balance3

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Jun. 30, 2016	Dec. 31, 2015
Statement of Financial Position [Abstract]
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized (shares)	5,000,000	5,000,000
Preferred stock, shares issued (shares)	0	0
Preferred stock, shares outstanding (shares)	0	0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (shares)	125,000,000	125,000,000
Common stock, shares issued (shares)	40,590,000	40,209,000
Common stock, shares outstanding (shares)	39,312,000	38,931,000
Treasury stock, shares (shares)	1,278,000	1,278,000

Condensed Consolidated Statemen

Condensed Consolidated Statements of Income - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Revenue:
Business services	$ 254,087	$ 215,403	$ 501,616	$ 413,166
Implementation and other	7,852	9,291	16,472	17,962
Total revenue	261,939	224,694	518,088	431,128
Expense:
Direct operating	103,891	89,899	209,280	174,456
Selling and marketing	65,906	54,413	123,496	107,778
Research and development	23,612	24,387	48,759	48,115
General and administrative	41,262	36,103	82,187	72,315
Depreciation and amortization	28,534	22,101	55,308	42,453
Total expense	263,205	226,903	519,030	445,117
Operating loss	(1,266)	(2,209)	(942)	(13,989)
Other (expense) income:
Interest expense	(1,538)	(1,513)	(3,468)	(2,572)
Other income	5	21,081	47	21,125
Total other (expense) income	(1,533)	19,568	(3,421)	18,553
(Loss) income before income tax benefit (provision)	(2,799)	17,359	(4,363)	4,564
Income tax benefit (provision)	884	(8,010)	1,615	(4,047)
Net (loss) income	$ (1,915)	$ 9,349	$ (2,748)	$ 517
Net (loss) income per share - Basic (in dollars per share)	$ (0.05)	$ 0.24	$ (0.07)	$ 0.01
Net (loss) income per share - Diluted (in dollars per share)	$ (0.05)	$ 0.24	$ (0.07)	$ 0.01
Weighted average shares used in computing net (loss) income per share:
Basic (shares)	39,271	38,574	39,153	38,427
Diluted (shares)	39,271	39,340	39,153	39,338

Condensed Consolidated Stateme5

Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Statement of Comprehensive Income [Abstract]
Net (loss) income	$ (1,915)	$ 9,349	$ (2,748)	$ 517
Other comprehensive income (loss)
Unrealized gain (loss) on securities, net of tax of ($2,210) and $2,984 for the three and six months ended June 30, 2015, respectively	0	1,633	0	(6,963)
Reclassification adjustments for gains on sales of marketable securities included in net income, net of tax of $8,471 for the three and six months ended June 30, 2015, respectively	0	(12,600)	0	(12,600)
Unrealized gain (loss) on change in fair value of interest rate swap, net of tax of ($40) and ($50) for the three and six months ended June 30, 2016, respectively, and ($23) and $117 for the three and six months ended June 30, 2015, respectively	66	36	83	(195)
Foreign currency translation adjustment	(115)	(265)	(103)	(136)
Total other comprehensive loss	(49)	(11,196)	(20)	(19,894)
Comprehensive loss	$ (1,964)	$ (1,847)	$ (2,768)	$ (19,377)

Condensed Consolidated Stateme6

Condensed Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Statement of Comprehensive Income [Abstract]
Unrealized gain (loss) on securities, tax expense (benefit)	$ 0	$ (2,210)	$ 0	$ 2,984
Reclassification adjustments for gain on securities, tax expense (benefit)	0	8,471	0	8,471
Unrealized (loss) gain on interest rate derivative, tax expense (benefit)	$ (40)	$ (23)	$ (50)	$ 117

Condensed Consolidated Stateme7

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income	$ (2,748)	$ 517
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization	66,451	54,726
Excess tax benefit from stock-based awards	0	(1,042)
Deferred income tax	(1,970)	3,553
Stock-based compensation expense	33,545	32,963
Gain on sale of marketable securities	0	(21,071)
Other reconciling adjustments	(28)	84
Changes in operating assets and liabilities:
Accounts receivable, net	8,328	(4,423)
Prepaid expenses and other current assets	(2,867)	(7,287)
Other long-term assets	(1,335)	(858)
Accounts payable	(5,967)	2,561
Accrued expenses and other long-term liabilities	1,238	7,152
Accrued compensation	(9,175)	(5,371)
Deferred revenue	(4,139)	7,094
Deferred rent	662	5,982
Net cash provided by operating activities	81,995	74,580
CASH FLOWS FROM INVESTING ACTIVITIES:
Capitalized software costs	(42,849)	(58,730)
Purchases of property and equipment	(33,969)	(41,993)
Payments on acquisitions, net of cash acquired	(1,700)	(39,890)
Proceeds from sales of marketable securities	0	18,584
Other investing activities	213	(2,550)
Net cash used in investing activities	(78,305)	(124,579)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock under stock plans and warrants	9,194	8,559
Taxes paid related to net share settlement of stock awards	(16,549)	(18,718)
Excess tax benefit from stock-based awards	0	1,042
Proceeds from line of credit	0	60,000
Payments on line of credit	0	(95,000)
Proceeds from long-term debt	0	300,000
Payments on long-term debt	(3,750)	(173,750)
Debt issuance costs	0	(987)
Other financing activities	(47)	0
Net cash (used in) provided by financing activities	(11,152)	81,146
Effect of exchange rate changes on cash and cash equivalents	(168)	(67)
Net decrease in cash and cash equivalents	(7,630)	31,080
Cash and cash equivalents at beginning of period	141,927	73,787
Cash and cash equivalents at end of period	134,297	104,867
Non-cash transactions
Property, equipment, and purchased software recorded in accounts payable and accrued expenses	12,096	15,444
Non-cash leasehold improvements	0	1,228
Receivable of proceeds from the sale of marketable securities in prepaid expenses and other current assets	0	2,832
Additional disclosures
Cash paid for interest, net	3,591	2,665
Cash paid for taxes	$ 458	$ 138

BASIS OF PRESENTATION

BASIS OF PRESENTATION	6 Months Ended
	Jun. 30, 2016
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,” “us,” 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 disclosures 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 fairly present the financial position as of June 30, 2016 , the results of operations for the three and six months ended June 30, 2016 and 2015 , and cash flows for the six months ended June 30, 2016 and 2015 . The results of operations for the three and six month period ended June 30, 2016 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, liabilities, 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 Transaction – We have a long-term investment in a vendor. The total expense related to this vendor for the three and six months ended June 30, 2016 was $11.4 million and $19.5 million , respectively, and was $5.6 million and $9.9 million for the three and six months ended June 30, 2015, respectively. The total amount payable to this vendor at June 30, 2016 and December 31, 2015 was $3.8 million and $2.3 million , respectively. New Accounting Pronouncements – In March 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-09, Compensation – Stock Compensation (Topic 718) . ASU 2016-09 simplifies several aspects of the accounting for employee share-based payment transactions, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. Under this guidance, a company recognizes all excess tax benefits and tax deficiencies as income tax expense or benefit in the income statement. This change eliminates the notion of the additional paid-in capital pool and reduces the complexity in accounting for excess tax benefits and tax deficiencies. ASU 2016-09 is effective for public companies for annual reporting periods beginning after December 15, 2016, including interim periods within those annual reporting periods; however, early adoption is permitted. We are assessing the impact that adopting this new accounting standard will have on our consolidated financial statements and footnote disclosures. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) . ASU 2016-02 most significantly impacts lessee accounting and disclosures. First, this guidance requires lessees to identify arrangements that should be accounted for as leases. Under ASU 2016-02, for lease arrangements exceeding a 12-month term, a right-of-use asset and lease obligation is recorded by the lessee for all leases, whether operating or financing, while the income statement will reflect lease expense for operating leases and amortization/interest expense for financing leases. The balance sheet amount recorded for existing leases at the date of adoption of ASU 2016-02 must be calculated using the applicable incremental borrowing rate at the date of adoption. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases today. In addition, ASU 2016-02 requires the use of the modified retrospective method, which will require adjustment to all comparative periods presented in the consolidated financial statements. This guidance is effective for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted. We are assessing the impact that adopting this new accounting standard will have on our consolidated financial statements and footnote disclosures. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers, which defers the effective date of ASU 2014-09 for all entities by one year. ASU 2014-09 is now effective for public companies for annual reporting periods beginning after December 15, 2017, including interim periods within those reporting periods. Early adoption is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. ASU 2014-09 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). We continue to evaluate the expected impact of this new guidance and available adoption methods.

BUSINESS COMBINATIONS

BUSINESS COMBINATIONS	6 Months Ended
	Jun. 30, 2016
Business Combinations [Abstract]
BUSINESS COMBINATIONS	BUSINESS COMBINATIONS Arsenal Health On April 11, 2016, we acquired Arsenal Health, formerly known as Smart Scheduling, Inc., for $1.7 million . We purchased Arsenal Health in order to add its schedule optimization functionality to our athenaCoordinator offering. We expect this acquisition to accelerate our capabilities in machine learning and predictive analytics. The fair value of the purchased intangible assets related to technology acquired was $0.9 million . The $0.8 million excess of purchase consideration over the fair value of the purchased intangible assets acquired was allocated to goodwill, which is deductible for U.S. income tax purposes. In conjunction with this acquisition, Smart Scheduling, Inc. settled the convertible note receivable and related interest from our More Disruption Please (“MDP”) Accelerator Program, which represented a total fair value of $0.3 million . We incurred transaction costs in connection with the acquisition of $0.1 million , which are included in general and administrative expenses. Razor Insights On January 13, 2015 , we acquired Razor Insights, LLC (“RazorInsights”) for $39.9 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 was 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.

NET (LOSS) INCOME PER SHARE

NET (LOSS) INCOME PER SHARE	6 Months Ended
	Jun. 30, 2016
Earnings Per Share [Abstract]
NET (LOSS) INCOME PER SHARE	NET (LOSS) INCOME PER SHARE The following table reconciles the weighted average shares outstanding for basic and diluted net (loss) income per share for the periods indicated: Three Months Ended June 30, Six Months Ended June 30, 2016 2015 2016 2015 Net (loss) income $ (1,915 ) $ 9,349 $ (2,748 ) $ 517 Weighted average shares used in computing basic net (loss) income per share 39,271 38,574 39,153 38,427 Net (loss) income per share – Basic $ (0.05 ) $ 0.24 $ (0.07 ) $ 0.01 Net (loss) income $ (1,915 ) $ 9,349 $ (2,748 ) $ 517 Weighted average shares used in computing basic net (loss) income per share 39,271 38,574 39,153 38,427 Effect of dilutive securities — 766 — 911 Weighted average shares used in computing diluted net (loss) income per share 39,271 39,340 39,153 39,338 Net (loss) income per share – Diluted $ (0.05 ) $ 0.24 $ (0.07 ) $ 0.01 The computation of diluted net (loss) income per share does not include 0.7 million and 0.7 million for both the three and six months ended June 30, 2015, respectively, because their inclusion would have an anti-dilutive effect on net (loss) income per share.

DEBT

DEBT	6 Months Ended
	Jun. 30, 2016
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”). As of June 30, 2016 and December 31, 2015 , we had $296.3 million and $300.0 million , respectively, outstanding on the unsecured term loan 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 June 30, 2016 was 1.96% . 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 June 30, 2016 are as follows: Amount 2016 $ 7,500 2017 15,000 2018 20,625 2019 28,125 2020 225,000 Total $ 296,250 Less current portion 15,000 Long-term portion $ 281,250

FAIR VALUE OF FINANCIAL INSTRUM

FAIR VALUE OF FINANCIAL INSTRUMENTS	6 Months Ended
	Jun. 30, 2016
Fair Value Disclosures [Abstract]
FAIR VALUE OF FINANCIAL INSTRUMENTS	FAIR VALUE OF FINANCIAL INSTRUMENTS As of June 30, 2016 and December 31, 2015 , 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. Derivatives are carried at fair value, as determined using standard valuation models, and adjusted when necessary for credit risk. As of June 30, 2016 and December 31, 2015 , we had not drawn on our revolving credit facility under the 2015 Credit Agreement. The credit facility carries a variable interest rate set at current market rates, and as such, the carrying value approximates fair value. Money market funds 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 More Disruption Please (“MDP”) Accelerator portfolio is a program designed to cultivate healthcare information technology start-ups and expand services offered to our physician network. Portfolio investments as of June 30, 2016 and December 31, 2015 are in the form of convertible notes receivable and equity, and are included in investments and other assets on our Condensed Consolidated Balance Sheets. At June 30, 2016 , as there is no indication of performance risk related to the convertible notes receivable, we currently estimate that the fair value of the notes receivable approximates cost, based on inputs including the original transaction prices, 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). Derivative financial instruments are used to manage certain of our interest rate exposures. We do not enter into derivatives for trading or speculative purposes. 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. Changes in the fair value of the interest rate swap are recognized, net of taxes, in other comprehensive income (loss) (“OCI”) until the hedged items are recognized in earnings. Hedge ineffectiveness associated with the interest rate swap, if any, is reported in interest expense. For the three and six months ended June 30, 2016 and June 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 six months ended June 30, 2016 and June 30, 2015, nor was any amount excluded from ineffectiveness testing. We do not expect that any of the $0.1 million of pre-tax unrealized losses included in accumulated other comprehensive loss at June 30, 2016 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 at June 30, 2016 and December 31, 2015 was a liability of $0.1 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 June 30, 2016 and December 31, 2015 , 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 in active markets for identical assets or liabilities, and fair values determined by Level 2 inputs utilize quoted prices 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 June 30, 2016, Using Level 1 Level 2 Level 3 Total Cash and cash equivalents: Money market $ 15,021 $ — $ — $ 15,021 Debt securities: MDP Accelerator portfolio — — 750 750 Total assets $ 15,021 $ — $ 750 $ 15,771 Interest rate swap liability (a) $ — $ (78 ) $ — $ (78 ) Total liabilities $ — $ (78 ) $ — $ (78 ) Fair Value Measurements as of December 31, 2015, Using Level 1 Level 2 Level 3 Total Cash and cash equivalents: Money market $ 10,006 $ — $ — $ 10,006 Debt securities: MDP Accelerator portfolio — — 1,250 1,250 Total assets $ 10,006 $ — $ 1,250 $ 11,256 Interest rate swap liability (a) $ — $ (210 ) $ — $ (210 ) Total liabilities $ — $ (210 ) $ — $ (210 ) (a) Recorded in other short-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 the three and six months ended June 30, 2016 : Fair Value Measurements Using Unobservable Inputs (Level 3) Three Months Ended June 30, 2016 Six Months Ended June 30, 2016 Balance, beginning of period $ 1,250 $ 1,250 Conversion (250 ) (250 ) Settlement (250 ) (250 ) Balance, end of period $ 750 $ 750

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES	6 Months Ended
	Jun. 30, 2016
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 disputes 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)	6 Months Ended
	Jun. 30, 2016
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,” “us,” 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 disclosures 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 fairly present the financial position as of June 30, 2016 , the results of operations for the three and six months ended June 30, 2016 and 2015 , and cash flows for the six months ended June 30, 2016 and 2015 . The results of operations for the three and six month period ended June 30, 2016 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, liabilities, 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 March 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-09, Compensation – Stock Compensation (Topic 718) . ASU 2016-09 simplifies several aspects of the accounting for employee share-based payment transactions, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. Under this guidance, a company recognizes all excess tax benefits and tax deficiencies as income tax expense or benefit in the income statement. This change eliminates the notion of the additional paid-in capital pool and reduces the complexity in accounting for excess tax benefits and tax deficiencies. ASU 2016-09 is effective for public companies for annual reporting periods beginning after December 15, 2016, including interim periods within those annual reporting periods; however, early adoption is permitted. We are assessing the impact that adopting this new accounting standard will have on our consolidated financial statements and footnote disclosures. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) . ASU 2016-02 most significantly impacts lessee accounting and disclosures. First, this guidance requires lessees to identify arrangements that should be accounted for as leases. Under ASU 2016-02, for lease arrangements exceeding a 12-month term, a right-of-use asset and lease obligation is recorded by the lessee for all leases, whether operating or financing, while the income statement will reflect lease expense for operating leases and amortization/interest expense for financing leases. The balance sheet amount recorded for existing leases at the date of adoption of ASU 2016-02 must be calculated using the applicable incremental borrowing rate at the date of adoption. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases today. In addition, ASU 2016-02 requires the use of the modified retrospective method, which will require adjustment to all comparative periods presented in the consolidated financial statements. This guidance is effective for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted. We are assessing the impact that adopting this new accounting standard will have on our consolidated financial statements and footnote disclosures. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers, which defers the effective date of ASU 2014-09 for all entities by one year. ASU 2014-09 is now effective for public companies for annual reporting periods beginning after December 15, 2017, including interim periods within those reporting periods. Early adoption is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. ASU 2014-09 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). We continue to evaluate the expected impact of this new guidance and available adoption methods.

NET (LOSS) INCOME PER SHARE (Ta

NET (LOSS) INCOME PER SHARE (Tables)	6 Months Ended
	Jun. 30, 2016
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 (loss) income per share for the periods indicated: Three Months Ended June 30, Six Months Ended June 30, 2016 2015 2016 2015 Net (loss) income $ (1,915 ) $ 9,349 $ (2,748 ) $ 517 Weighted average shares used in computing basic net (loss) income per share 39,271 38,574 39,153 38,427 Net (loss) income per share – Basic $ (0.05 ) $ 0.24 $ (0.07 ) $ 0.01 Net (loss) income $ (1,915 ) $ 9,349 $ (2,748 ) $ 517 Weighted average shares used in computing basic net (loss) income per share 39,271 38,574 39,153 38,427 Effect of dilutive securities — 766 — 911 Weighted average shares used in computing diluted net (loss) income per share 39,271 39,340 39,153 39,338 Net (loss) income per share – Diluted $ (0.05 ) $ 0.24 $ (0.07 ) $ 0.01

DEBT (Tables)

DEBT (Tables)	6 Months Ended
	Jun. 30, 2016
Debt Disclosure [Abstract]
Schedule of Maturities of Long-term Debt	Future principal payments of the unsecured term loan facility at June 30, 2016 are as follows: Amount 2016 $ 7,500 2017 15,000 2018 20,625 2019 28,125 2020 225,000 Total $ 296,250 Less current portion 15,000 Long-term portion $ 281,250

FAIR VALUE OF FINANCIAL INSTR17

FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables)	6 Months Ended
	Jun. 30, 2016
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 June 30, 2016 and December 31, 2015 , 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 in active markets for identical assets or liabilities, and fair values determined by Level 2 inputs utilize quoted prices 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 June 30, 2016, Using Level 1 Level 2 Level 3 Total Cash and cash equivalents: Money market $ 15,021 $ — $ — $ 15,021 Debt securities: MDP Accelerator portfolio — — 750 750 Total assets $ 15,021 $ — $ 750 $ 15,771 Interest rate swap liability (a) $ — $ (78 ) $ — $ (78 ) Total liabilities $ — $ (78 ) $ — $ (78 ) Fair Value Measurements as of December 31, 2015, Using Level 1 Level 2 Level 3 Total Cash and cash equivalents: Money market $ 10,006 $ — $ — $ 10,006 Debt securities: MDP Accelerator portfolio — — 1,250 1,250 Total assets $ 10,006 $ — $ 1,250 $ 11,256 Interest rate swap liability (a) $ — $ (210 ) $ — $ (210 ) Total liabilities $ — $ (210 ) $ — $ (210 ) (a) Recorded in other short-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 the three and six months ended June 30, 2016 : Fair Value Measurements Using Unobservable Inputs (Level 3) Three Months Ended June 30, 2016 Six Months Ended June 30, 2016 Balance, beginning of period $ 1,250 $ 1,250 Conversion (250 ) (250 ) Settlement (250 ) (250 ) Balance, end of period $ 750 $ 750

BASIS OF PRESENTATION - Narrati

BASIS OF PRESENTATION - Narrative (Details) - Long-Term Investment in Vendor - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Related Party Transaction [Line Items]
Total related party expense	$ 11.4	$ 5.6	$ 19.5	$ 9.9
Total amount payable to related parties	$ 3.8		$ 3.8		$ 2.3

BUSINESS COMBINATIONS - Narrati

BUSINESS COMBINATIONS - Narrative (Details) - USD ($) $ in Thousands	Apr. 11, 2016	Jan. 13, 2015	Jun. 30, 2016	Dec. 31, 2015
Business Acquisition [Line Items]
Goodwill			$ 229,935	$ 229,157
Arsenal Health
Business Acquisition [Line Items]
Payments to acquire businesses, gross	$ 1,700
Goodwill	800
Liability settled, fair value	300
Arsenal Health | General and Administrative Expense
Business Acquisition [Line Items]
Transaction costs associated with the acquisition	100
Arsenal Health | Technology-Based Intangible Assets
Business Acquisition [Line Items]
Intangible assets acquired	$ 900
RazorInsights
Business Acquisition [Line Items]
Payments to acquire businesses, gross		$ 39,900
Goodwill		31,100
Measurement period adjustments		(1,000)
Fair value of assets acquired		8,900
RazorInsights | General and Administrative Expense
Business Acquisition [Line Items]
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 (LOSS) INCOME PER SHARE - S

NET (LOSS) INCOME PER SHARE - Schedule of Earnings Per Share, Basic and Diluted (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Earnings Per Share [Abstract]
Net (loss) income	$ (1,915)	$ 9,349	$ (2,748)	$ 517
Weighted average shares used in computing basic net income (loss) per share (shares)	39,271	38,574	39,153	38,427
Net (loss) income per share - Basic (in dollars per share)	$ (0.05)	$ 0.24	$ (0.07)	$ 0.01
Effect of dilutive securities (shares)	0	766	0	911
Weighted average shares used in computing diluted net (loss) income per share (shares)	39,271	39,340	39,153	39,338
Net (loss) income per share - Diluted (in dollars per share)	$ (0.05)	$ 0.24	$ (0.07)	$ 0.01

NET (LOSS) INCOME PER SHARE - N

NET (LOSS) INCOME PER SHARE - Narrative (Details) - shares shares in Millions	3 Months Ended	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2015
Earnings Per Share [Abstract]
Options and restricted stock units which have an antidilutive effect (shares)	0.7	0.7

DEBT - Narrative (Details)

DEBT - Narrative (Details) - USD ($)	May 05, 2015	Jun. 30, 2016	Dec. 31, 2015
Senior Credit Facility, 2015
Line of Credit Facility [Line Items]
Current borrowing capacity	$ 500,000,000
Interest rate, effective percentage		1.96%
Debt issuance costs	$ 1,000,000
Line of credit term (years)	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
Long-term line of credit		$ 296,300,000	$ 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 (up to)	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	Jun. 30, 2016	Dec. 31, 2015
Debt Instrument [Line Items]
Less current portion	$ 14,523	$ 10,762
Long-term portion	280,088	$ 287,353
Unsecured Debt | Senior Credit Facility, 2015
Debt Instrument [Line Items]
2,016	7,500
2,017	15,000
2,018	20,625
2,019	28,125
2,020	225,000
Total	296,250
Less current portion	15,000
Long-term portion	$ 281,250

FAIR VALUE OF FINANCIAL INSTR24

FAIR VALUE OF FINANCIAL INSTRUMENTS - Narrative (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash flow hedge gain (loss) amount reclassified to earnings	$ 0	$ 0	$ 0	$ 0
Cash flow hedge gain (loss) on hedge ineffectiveness	0	$ 0	0	$ 0
Fair Value, Measurements, Recurring
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Interest rate swap liability	78,000		78,000		$ 210,000
Level 2 | Fair Value, Measurements, Recurring
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Interest rate swap liability	78,000		78,000		210,000
Revolving Credit Facility | Senior Credit Facility
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term line of credit	$ 0		$ 0		$ 0

FAIR VALUE OF FINANCIAL INSTR25

FAIR VALUE OF FINANCIAL INSTRUMENTS - Financial Assets and Liabilities that Are Measured at Fair Value on Recurring Basis (Detail) - Fair Value, Measurements, Recurring - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	$ 15,771	$ 11,256
Interest rate swap liability	(78)	(210)
Total liabilities	(78)	(210)
Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	15,021	10,006
Interest rate swap liability	0	0
Total liabilities	0	0
Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	0	0
Interest rate swap liability	(78)	(210)
Total liabilities	(78)	(210)
Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	750	1,250
Interest rate swap liability	0	0
Total liabilities	0	0
Money Market Funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents:	15,021	10,006
Money Market Funds | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents:	15,021	10,006
Money Market Funds | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents:	0	0
Money Market Funds | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents:	0	0
MDP Accelerator portfolio
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt securities:	750	1,250
MDP Accelerator portfolio | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt securities:	0	0
MDP Accelerator portfolio | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt securities:	0	0
MDP Accelerator portfolio | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt securities:	$ 750	$ 1,250

FAIR VALUE OF FINANCIAL INSTR26

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	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2016
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Balance, beginning of period	$ 1,250	$ 1,250
Conversion	(250)	(250)
Settlement	(250)	(250)
Balance, end of period	$ 750	$ 750