athenahealth's CEO Discusses Q1 2014 Results - Earnings Call Transcript

Apr.18.14 | About: athenahealth, Inc. (ATHN)

athenahealth, Inc. (NASDAQ:ATHN)

Q1 2014 Earnings Conference Call

April 18, 2014 08:00 AM ET

Executives

Dana Quattrochi - IR

Tim Adams - CFO

Jonathan Bush - Chairman and CEO

Ed Park - COO

Analyst

Gavin Weiss - JPMorgan Chase & Co, Research Division

Steven Halper - FBR Capital Markets & Co.

Dave Windley - Jefferies & Co.

David Francis - RBC Capital Markets

Ryan Daniels - William Blair

Ricky Goldwasser - Morgan Stanley

George Hill - Deutsche Bank AG, Research Division

Adam Noble - Goldman Sachs Group Inc., Research Division

Donald Hooker - KeyBanc Capital Markets Inc., Research Division

Sandy Draper - SunTrust Robinson Humphrey

Sean Wieland - Piper Jaffray

Garen Sarafian - Citigroup

Bret Jones - Oppenheimer

Michael Cherny - ISI Group

Operator

Welcome to the athenahealth First Quarter 2014 Earnings Conference Call. My name is Karen, and I will be your operator for today’s call. (Operator Instructions). Please note that this conference is being recorded. I will now like to turn the call over to Ms. Dana Quattrochi. Dana, you may begin.

Dana Quattrochi

Good morning, and thank you for joining us. With me on the call today is Jonathan Bush, our Chairman and CEO; Tim Adams, our Chief Financial Officer; and Ed Park, our Chief Operating Officer. On today's call, Tim Adams and I will share brief highlights from the prepared remarks we published yesterday and then Tim Adams, Ed Park and Jonathan Bush will take questions from the audience. Jonathan Bush will then wrap up the call with some closing comments.

We would like to remind everyone that certain statements contained in this conference call may be considered forward-looking and are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, including statements reflecting our expectations for future financial and operational performance, including key growth rates, key metrics, operating expenditures, tax rates and profitability; our selling and marketing efforts and market opportunity; and service offering benefits such as cost reduction, improved health outcome and provider documentation time; research and development plans and timelines including those relating to athenaCoordinator Enterprise and athenaCommunicator, of bookings and traction, further integration of our services and the resulting benefits of our ICB ’10 preparedness; integration of Epocrates and expected benefits; developments in our Enterprise business; plans for our headquarters and other facilities and resulting benefits; and our business expansion and creation of a national network of service providers and the expected long-term benefits.

Forward-looking statements may often be identified with words, such as we expect, we anticipate, upcoming or similar indications of future expectations. These statements are not promises or guarantees and are subject to various risks and uncertainties that can cause our actual results to differ materially from those expressed in such forward-looking statements, including the risks and uncertainties under the heading Risk Factors in our most recent annual report on Form 10-K and other periodic reports filed with the SEC, which are available on our website at investors.athenahealth.com and on the SEC's website at sec.gov. These statements speak only as of the date hereof, and we undertake no obligation to update or revise the information contained in this call.

Finally, please note that on today's call we will refer to certain non-GAAP financial measures in which we exclude certain noncash or nonrecurring items, such as stock-based compensation, from our GAAP financial results. We believe that in order to properly understand our short-term and long-term financial trends, investors may wish to consider the impact of these items as a supplement to financial performance measures determined in accordance with GAAP. Please refer to yesterday's press release announcing our first quarter fiscal year 2014 results available on our website for a reconciliation of these non-GAAP performance measures to our GAAP financial results.

With that, I'll now turn the call over to Tim Adams.

Tim Adams

Thank you, Dana, and good morning everyone. First, let me apologize for any inconvenience we may have caused by holding our earnings call on Good Friday. We appreciate your attendance on what might be a day away from the office for many of you. Given the fact that Jonathan just returned from his sabbatical, I will provide the business update and Dana Quattrochi will provide the financial update. Ed Park is also here to answer questions regarding the progress we made during the quarter.

It is important to note that our plans for the year and the first quarter were in place and set it into motion well before Jonathan left for his sabbatical, and the entire athenahealth team executed well under our strong leadership team during his time away and we welcome Jonathan back. In the first quarter we continued to execute on more and more difficult goals from the ever expanding set of opportunities we're pursuing. Let’s start with bookings.

We exceeded our bookings goals in our small group and group segments. Although our Enterprise team is behind our internal plan for the quarter, their results closely mirror the performance from Q1 of last year. Again, let me reiterate what we have mentioned in prior calls, the Enterprise deals are complex sales and can often move to the right by a few weeks or even months. The Enterprise team has continued to build out its pipeline of deals and remains focused on delivering approximately 50% of our total bookings this year.

Moving to Epocrates. The team continued to struggle on new bookings attainment during the quarter. However, we are very committed and confident that Rob Cosinuke can keep driving new sales. Our enthusiasm for Epocrates remains very strong. In line with our objectives for the first half of 2014, we are excited to announce that we have closed two highly anticipated athenaCoordinator Enterprise deals.

Our co-development partners for this new service offering are Steward Medical Group, part of the Stewart Health Care System Network in New England, and Griffin Hospital, and Acute Care Community Hospital in Derby Connecticut. Steward and Griffin are both long-standing clients on our athenaOne suite of services.

Not only are we thrilled about this milestone in our relationship with Steward and Griffin, but before Jonathan left, he said he will give us the silent treatment if such news did not great him upon his return. So not only are we excited about this accomplishment, it is also we're relieved that we closed these two deals and we are thrilled that he will be talking to us.

Our best in class EHR athenaClinicals keep showing successful market penetration with athenaOne deals at Privia Medical Group with 154 providers in the Metro DC area. St. Peter’s Healthcare System in Metro New York City with 182 providers and Phoebe Physician Group with 260 multi-specialty providers in South West Georgia.

In addition to these athena one deals, Summit Medical Group the largest and most established physician owned multi-specialty practice in New Jersey is moving their EHR to the cloud. After being an athenaCollector clients since December 2011, we are honoured that such a dynamic and forward looking organization has decided to move on to our full suite of services, including athenaClinicals, athenaCommunicator and athenaCoordinator population health management.

Our expanded partnership with Summit Medical Group clearly demonstrates that athenaHealth Services delivered market results giving us the opportunity to build deeper relationships with our clients.

A similar story has also been played out, one of our largest enterprise clients, Ascension Health. We have realized some significant progress in cross selling athenaClinical at Ascension and maintain a positive outlook for deepening our relationship with the Ascension organization overtime. We continue to expand the network with a 31% increase in physicians on athenaCollector, outpacing our Q4, 2013 growth rate of 28%. The accelerating rate of physicians added to the network across all of our core services shows the strength of our model and the traction it’s building among both independent and employed physicians.

We continue to make progress on delivering against our mission of being medical care givers most trusted service, not only by enhancing our service offerings but by helping them thrive in a rapidly changing healthcare environment. As we help you know athenaHealth offered and continues to offer the only guarantee in the marketplace, than insures our clients would make the October 1 transition to the ICD-10 codes sep without so much is a conclusion with a lamp post.

At the very end of March however, bundled into federal legislation on the so called dark fix, where a few sentences that delayed the transition by at least a year. While we believe this kicking the can further down the road waste time and money, we're ready anyway. We’ve extended the guarantee to practices that sign on to athenaOne services to June of 2015.

We’re confident in our preparedness. We’ve practice coded more than 10,000 claims in our ICD-10 readiness centre is stocked with tools and information, that put our clients ahead of the curve no matter what happens inside the beltway. We look at the delay though not needed by us as giving time for healthcare providers to make sure the right people, processes and technology are in place to handle the next curveball they gets thrown at physicians.

In addition, we continue to find a deeper integration with Epocrates, most lately the launch of EPOC inside athenaClinicals. Now caregivers don’t have to lead the moment of care to look up drug information, it’s right there in the same clinical workflow. Feedback from clients could not be more positive, but we feel that this step and others in the works are just beginning to demonstrate the exciting potential created by the combination of our Epocrates and athenaHealth.

We are transforming into a truly new kind of tech company, one pushing forward the smartest new designs, laser focused on supporting and positioning the healthcare provider to efficiently optimize information during moments of care. For example, if you read him, may be you got a glimpse of the new athenaNet experience which our alpha and beta testers are picking up with ease. They find it clean and intuitive. While, it’s premature to release performance metrics, one of our goals with the new streamline encounter, is to significantly reduce provider documentation time in order to uphold the sanctity of the moments of care.

Finally, athenaCommunicator also made some strides in Q1, most important we released our latest component of patient engagement services focused on population health. Using our enhanced group call service on an opt-in basis, athenaOne practices can now deploy five pre-package and targeted campaigns, including influence of vaccinations, Medicare Annual Wellness Visits, Diabetes, Hypertension and Colorectal Cancer Screenings.

Additional campaigns will be available shortly for breast cancer and diabetes screenings, as well as adult preventative visits. We will be monitoring the success of these campaigns at reducing costs and fostering improved health outcomes, while increasing schedule density and improving revenue. Tracking key performance metrics has always been at the core of athenaHealth's DNA. We use a balance scorecard to grade our performance as a company.

We believe these key performance indicators are required for long term success, as well as current year performance. To account for client satisfaction, all athenaHealth employees reach out to one or two designated clients per quarter, to check-in on our service. As a way to fine tune our information gathering, we recently adopted a net promoter score or MPS, based on a 10 point scale of whether or not the client would recommend us to a colleague. And our MPS for Q1 came in at 44.7 versus our goal of 47.3. The MPS results signal which of our clients can be leveraged to help us grow. So for some context, Adobe scores a 46, NetFlix 50, Google 53, Amazon 76 and Apple 77. So we’ve got some work to do because none of us are satisfied with 45 when our year-end goal is 52.5.

We want our clients to love us the way the public loves the company like Apple. If you’ve been to our Watertown headquarters recently, it’s unlike you escape without touring our floor of adjoining nerve centres. These lifecycle nervous centres allow us to completely instrument client performance from pre-go life forward, and narrow the basis of a nationalized client benchmarking process.

We introduced a new metric this year called net on-boarding success aimed to help us measure the impact of the nerve centers on our overall client on-boarding process. We categorize providers as either champions, neutrals or stragglers based on several key performance metrics against benchmarks of where they should be, such as same-day and counter close rate, provider documentation time, and percentage of encounters documented during the patient visit.

The purpose here is to measure, monitor and track the on-boarding process. And so to calculate net on-boarding success, we tally champions plus neutrals less stragglers. In Q1 we achieved an on-boarding success rate of 67%, just shy of our 70% goal. Through this unique visibility, the (athenistas disbanding) [ph] the nerve centers can proactively turn stragglers into neutrals and neutrals in the champions.

Finally, I want to bring you up to speed on our national campus strategy with four major build-outs in Watertown, Atlanta, Austin and San Francisco. The Watertown master plan continues apace. We're moving into more areas of the arsenal as tenants vacate and we grow. In Atlanta, we are facing growth options to expand in Palm city market. This is an ideal location for us as it's at the center of the key transportation hub to grow our client facing teams.

In Austin, Texas, we are releasing the entire iconic former Seaholm power plant, expanding our research and development team. We see this as a long-term investment in the intellectual capital of the region and expect to fill its 105,000 square feet in approximately eight years with about 300 athenistas.

Finally, we’re moving the Epocrates office in San Mateo to 50 Hawthorne Street in downtown San Francisco, releasing the entire building down in order to secure out this vital West Coast location, for attracting talent and servicing clients. We plan to fill the 56,000 square-foot space in five years. The past two months went by really fast, and thank goodness we have our first athenaCoordinator Enterprise data customers, since Jonathan has promises to you since the JPMorgan Healthcare Conference earlier this year. And we are excited that Jonathan is back. He’s well resting, in great shape for the Boston marathon.

I'll now like Dana take a minute to review our key financial details and then we look forward to taking your questions.

Dana Quattrochi

Thank you, Tim. Our Q1 2014 results reflected the expected seasonal trends we discussed during our last earnings call. In that call be reminded everyone that the first quarter of each fiscal year is characterized by higher expense levels related to the reset of FICA payroll taxes, vacation and bonus accruals, merit increases, and important sales and marketing events such as the HIMSS Annual Conference International Sales Meeting.

We also emphasize that discretionary use of physician services typically declined during the holiday season and that the collection cycle elongates to the reset of deductibles in the new year, also which can lead to a decline in collections by our physician clients in the first quarter. This year’s Q1 again reflected those seasonal trends. Additionally our Q1 collections in revenue this year were also impacted by a weaker flu season and inclement weather.

Yet, while revenue was slightly behind our internal stretched goals, we delivered 30% growth, and non-GAAP adjusted operating income came in ahead of plan as a result of some efficiencies and some shift of planned expenditures into Q2. As a result, we are reaffirming our guidance for full-year fiscal 2014 as communicated in December 2013.

As a reminder, we think it’s important for the investment community to focus on our full-year results as there are multiple factors that affect each quarter including seasonal trends, timing of new enterprise deals, and timing of on-boarding these new clients. So let’s discuss our quarterly results in more detail.

Starting with the top line, our Q1 2014 revenue of $163 million grew 30% over last year. Q1 2014 revenue includes $10.6 million of revenue from Epocrates branded services and $4.2 million of other revenues. Revenue from our athenahealth branded services was $148.2 million, representing growth of 23% over Q1 2013. athenahealth branded revenue in Q1 was negatively impacted by an increase in our days in accounts receivable which rose from 38 days in Q4 2013 to 41 days.

Our non-GAAP adjusted gross margin rate was 59.8% in Q1 2014 compared to 60.4% in Q1 2013. Given the fact that revenue was slightly lower than planned, our non-GAAP adjusted gross margin rate came in a bit behind our internal goals. As planned we continue to invest in both growth and innovation increasing our GAAP selling and marketing expense by 31% and our GAAP research and development expense by 27%, compared to Q1 2013.

Our GAAP selling and marketing expense was 27% of revenue for Q1 2014, compared to 26% for Q1 2013, as we continue to invest in awareness building and regeneration activity. Our GAAP research and development expense was 9% of revenue for Q1 2014 in line with Q1 2013, as we continue to invest in redesigning the caregivers experience and further automating and broadening our services.

Our non-GAAP adjusted operating income was $8.7 million representing a slight decline from $9.4 million in Q1 2013, which reflects the higher investment levels in growth and innovation as expected in our internal plan. Non-GAAP adjusted net income per diluted share was $0.12 compared to $0.38 in Q1 2013. This is a tough comparison as Q1 2013 included a GAAP tax benefit of $12.7 million primarily attributed to the additional GAAP expenses associated with the Epocrates in our small transactions. For 2014 we are using a non-GAAP tax rate of 40% to normalize the tax impact to our non-GAAP adjusted net income per diluted share. If this approach had been used in 2013 our Q1 2013 non-GAAP adjusted net income per diluted share would have been $0.15 instead of $0.38.

In closing as you all know, we believe our market opportunity is huge and we set very ambitious goals for ourselves as we serve our client's current and expected needs, pursue new business and profitable growth. The athenahealth team has carried forward the momentum from last year and continues to execute against our ever expanding goals. While first quarter revenue came in slightly below our internal plan, we exceeded our profitability goals while making significant progress in developing our prospects pipeline for our core businesses, further developing our technologies and services and more importantly, on-boarding new clients with the highest level of focus on the best service possible. We are excited about our future and believe we are well positioned to deliver against our 2014 plan and look forward to updating you on our progress as we move forward.

With that we’d be happy to take your questions.

Question-and-Answer Session

Operator

Thank you. We will now begin the question and answer session. (Operator Instructions). Our first question comes from the line of Gavin Weiss from JP Morgan.

Gavin Weiss - JPMorgan Chase & Co, Research Division

Good morning. In the prepared comments last night I read that the coordinator enterprise feeder outcome base and paid out of savings are increased revenue. I think that’s a little bit different than the revenue model you have talked about previously which was 1% of revenue. Can you talk about how that revenue model is changing and maybe what it is for your first two clients?

Jonathan Bush

Desperate times call for desperate measures Gavin, not going to lie to you. We wanted some early customers and in that we had no references to show them. If they had asked us to wear a [indiscernible] to the first meeting, we would have done that too.

Tim Adams

So Gavin I think it’s important to note. So we have a theory of 1% of health system revenue but the important thing here was that we get the alpha, we get the beta greatness we got the alpha and the beta. And I think we have to be open minded, we have to be flexible, when we think about how the deals get structured. The key process to prove that the ROI is there, we want to reduce leakage, better care coordination, these are important elements of the service that will take some time to prove out. I think that will give us the confidence to be in the market with percentage of revenue. But to Jon’s point [Multiple Speakers]

Jonathan Bush

One of them just massively discounted a percent of revenue and Stuart is [Multiple Speakers].

Tim Adams

Yes, it’s a little more [indiscernible].

Gavin Weiss - JPMorgan Chase & Co, Research Division

Okay, I get it. And then those two deals, are these clients that you’ve had originally had in mind when you were thinking original or early adopters and are there any others that you sort of have in the queue as [Multiple Speakers].

Jonathan Bush

So we have many in the queue, we have captain Kirk himself, Kirk, Paul Kirkman leading a squad of kind of current early adoption sales discussion implementation analysis both picking the folks with the resiliency to be early at this and we wanted -- we seek two things, one we seek someone close to headquarters that we can bump into and match with a lot, we seek someone with some scale where the numbers can really make a difference and then we seek a place where we can really, where there is not too much scale where we can actually do everything really well really quickly. So Griffin is close by, it’s not overwhelmingly large and but no one is going to show visit a show site out to that part of Connecticut that easily. And then Stuart of course is a very close strategic sort of ally to the company, there they operate in a very entrepreneurial way and they are right here in town.

Tim Adams

In both longstanding Athena customers which helps because we know each other well, we trust each other.

Operator

Thank you. And our next question comes from the line of Steven Halper from FBR.

Steven Halper - FBR Capital Markets & Co.

Yes. So relative to the coordinator enterprise transactions, what’s the general timing of the core development work that needs to be done and when will you start to see those data points to suggest that the product or if you want to call it the services is being effective? What are the realistic expectations around that?

Jonathan Bush

We’re going to get started on it right away and we already have a high level [indiscernible] that we intent to go to market with, with both of the clients. I think that realistically we expect that the understanding of the moving of the needle is going to happen over the course of the next several quarters but we should see some early results relatively quickly. But we don’t want to waste any time. We are going to start now. We are not going to wait till the summer or the fall to get started.

Tim Adams

The way it’s been described to me is there is phases, so the majority of athenaCoordinator is already built and so its sits in other products, that portion which is already built will go up and go live very quickly and the part that needs to be cobbled on in the end will take, will occur in subsequent phases. But as Eddie says, phase one, is, it’s no co-development, its installation and we hope will go pretty quick.

Steven Halper - FBR Capital Markets & Co.

And then what was the increase, just a housekeeping item, the increase in the days in AR, what’s responsible for the increase there?

Jonathan Bush

Yes Steve. It’s up three days from year-end and primarily just when you hit beginning of the year and you have this reset of health plans and deductibles for patients, so it just elongates the collection cycle a bit. The patients are notorious for being the slower pairs.

Tim Adams

We also -- Jill Henderson, our data science guru pointed out particularly a heavy vacation, concentration of vacation days this year compared to other ones. And bad weather in the Deep South and also some weaker flu sort of collating to create a dip in charges and if you think about the way the formula DAR formula works, if your AR is running along just fine and circling at its usual pace and you create a quick downward dip, quick and temporary downward dip in outbound charges, it creates a little spike in day AR.

Operator

And our next question comes from the line of Dave Windley from Jefferies.

Dave Windley - Jefferies & Co.

Hi, thanks for taking the questions. You mentioned in the prepared remarks last night that athenaClinicals had made some fairly substantial inroads and Tim today you talked about Ascension in particular. So, on Ascension could you quantify that progress with Clinicals and while you are at it, if you wouldn’t mind quantifying the waves of collector in Ascension that were added in the quarter that were mentioned in the prepared remarks?

Tim Adams

Yes, so Dave, with respect to all of our clients, we share only what they want us to share and we certainly are at liberty to tell you that Ascension is rolling out athenaClinicals in certain locations which is great news and that was always our hope on day one that once we got our foot in the door with Collector and Communicator and we could prove that even success and standardization for these physicians across the board, we were always very hopeful that athenaClinicals had a place with Ascension. So, we're off to a good start with some of the ministries that have gone live on Collector not all of them and hopefully more good news to come on that. In terms of Collector adds this quarter for Ascension, it was in the neighbourhood of 230 physicians that went live in the quarter, it's about 300 providers. And again, Ascension will continue to roll out on a phased in basis over time.

Dave Windley - Jefferies & Co.

Okay. Thank you. And then my follow-up, Tim you mentioned these messaging campaigns around screenings and preventive visits and the like. You also mentioned that you would be measuring the cost saving impact of stimulating those preventive visits. How will athena do that? How will you measure that cost saving metric?

Tim Adams

As you know we have a ton of data inside of athenaNet in terms of at the patient level, at the claim level, at the business level. What you want to do is watch these campaigns as you have an outreach to a patient population and overtime you want to look at the effectiveness of care over a longer period of time. So, it will take some time to follow-up on the treatment pathway of these patients but the beauty of athenaNet is we have visibility into the claim level, at the patient level that no other provider, competitor in the marketplace really have.

Dave Windley - Jefferies & Co.

I guess what I am wondering is the claim activity that would be away from practice for your client for that patient, how will you track that?

Tim Adams

Are you saying in terms of when it’s leaking out of the system?

Dave Windley - Jefferies & Co.

Right, out of your clients claim activity away from them.

Tim Adams

Well, the full installation of Coordinator enterprise included the pulling of pay claims data from the payer, so we receive paid claims from the [indiscernible] and we would know who went where why for what, because these guys will in an ACO that’s particularly at a global risk type setting, essentially the hospitals pay for it twice because they assume one amount in the carrying cost of their own facility and then they actually pay a claim to another facility. So, it’s extremely important in risk environment that we see that. I did hear that the Federal Government is slowly coming around on letting us utilize Medicare claim date as well which will allow even without a risk contract analysis of that sort, that’s not all the way possible today but that’s the way we find out about all leakage and then of course when the doctors on athena we see the leakage, because they send the orders, athena sends the order to the competitor. And so you can see it in the report.

Operator

Thank you. And our next question comes from the line of David Francis from RBC Capital Markets.

David Francis - RBC Capital Markets

I wanted to continue down the thread of kind of basic blocking and tackling metrics here. I know Steve brought up the days in AR but there were a lot of performance metrics that seemed to move in the wrong direction this quarter, I mean days of client work were up significantly, total collections were down sequentially. Total claims volume was up, but collections were down. I guess I was wondering if you guys could talk a little bit about kind of is there something going on from an operating perspective that you’re not picking up in the nerve centres or to kind of what might be the driver of those sequential changes in operating metrics?

Tim Adams

This is Tim, let me start and I’ll let Eddie way in with some additional insights. We know we had a weaker flu season this year, so you do point out that collections were down sequentially about 100 million in Q1 this year versus Q4. This time a year ago I think they were up about 20 million. So we did see a down tick. Part of that is the flu season. The weather really was an impact, so between weather and flu season roughly about $1 million of revenue hit to athena. We saw ice storms in the Southeast and everybody was locked up in wherever they were. So those are a couple of factors that pinched us a little bit in terms of revenue in Q1.

So in terms of the underlying core operating metrics I think that would sort of split the question to, how is the core operations of the company running versus what are the external factors that might be influencing the numbers. The core operating metrics of the company are running extraordinarily well. We instrument everything end to end in terms of the turnaround times of hosting and the management, all of those numbers first half was resolution rate are tracking according to expectations. And so the core operating machinery of the company is working well. I do think that at some point out there some external effects including the white flu season, the weather in the south and there is a little bit of mix shift going on in the client base from, as we brought on some ED providers I think that those naturally have worse performance metrics. And so that’s impacting some of the metrics as well. But there are a couple of external events that we think will end up working themselves out, but we don’t think it’s a cause for concern.

David Francis - RBC Capital Markets

As a quick follow up turning to Epocrates, the revenue performance there was obviously below our expectations anyway. If you compare it to the stub period that you had last year and were to take that out for an entire quarter it looks down substantially year-over-year as well. So can you give us a little bit more colour and feedback in terms of what’s going on in Epocrates and what you are doing to try and fix the revenue trends there? Thanks guys.

Tim Adams

Yes, this is Tim, as we mentioned at the Investor Day back in December, we said that EPOC revenue on the superior apples-to-apples basis ignore all the purchase accounting, would be down year-over-year on a full year basis roughly 7% to 8%. Q1 came in a little behind our own expectations. So it’s going to put pressure on that 8%. When we locked our budget in back in October, we had a perspective on where bookings would be in Q4 of last year and Q1 of this year. And we came in luck on both, the Q4 bookings impact hurt us a little bit more in the P&L for revenue this quarter.

Rob is on this thing, we are in the markets looking to hire a Vice President of Sales, we do not have that person on Board right now. Our sales executive headcount is below where we had anticipated it would be and Rob is on that as well. So I would characterize it more as a sales execution topic that we are very focused on. I believe it is short-term for our strategic excitement and enthusiasm about properties being the on-ramp, the touch point to have the dots in U.S. remains stronger than it did a year ago when we acquired the business. So, we have a short-term [indiscernible] back we're working on and you see that in the Q1 bookings performance. That is a miss for us and you see it in the top line revenue sequentially year-over-year.

Operator

Thank you. And our next question comes from the line of Ryan Daniels from William Blair.

Ryan Daniels - William Blair

I had another follow up on Coordinator Enterprise. Just thinking about the co-development timeline, is it really full speed ahead to go ahead and sign new contracts? Are you hoping to get the capabilities up and running, get reference accounts and then move forward with some sales at better pricing and less risk? Any colour there to think about?

Ed Park

So we’re going to move full speed ahead. I think that as Jonathon mentioned, the first couple of customers that we have are going to be full in co-development partners, I think that. And we’re going to be facing them in. The first several days is here I think that we’ve already done, we already know how to do them. I think that we’ve been open about the fact that ordinarily enterprise is really a -- taking several capabilities that we already have mature, such as the acquisition of the HDS Population Health Service that we had a couple of years ago, [indiscernible] services that we acquired a few years ago.

And we’ve been stitching those together into a patient centric service that really allows us to be a strategic partner to an enterprise. So we are putting together a set of mature capabilities here. And I think that we are going to be further developing the way we go to market with these. We’ve already learned a lot about what makes sense as a phasing in of these procedures and the first thing we’ll start off with is the Population Health Service, which again is the mature service that we have today.

So our perspective is that we’re going to go continue to go in and sell it as phased service, where the first several phases are going to be priced at market and the later phases are going to be opted in, as we continue to move forward. And I think that going to market that way makes a ton of sense for us and we see that there is a ton of folks who are interested and we will continue to press on the pipeline and [indiscernible] we can.

Ryan Daniels - William Blair

Okay. Perfect colour. Thank you. And then may be a different topic just the ICD-10 delay, I know it’s only a few weeks out from that being snuck in the legislation. But are you hearing anything from your sales teams about that causing any noise in the channel specifically on the collector side?

Tim Adams

Honestly, I think the ICD-10 is going to end at being a mixed bag for us. On the one hand I think that it helped us a little bit in Q1 because there was an urgency to move. On the other hand what we expected going into Q3 -- Q2 and Q3 was a little bit of a freeze in the market, because there are a number clients who said, we’re really interested in Athena, we believe in the mission, we believe in what you can do for us. But we don’t want to do anything this year, because we’re going to pay for the upgrade, meeting this upgrade to my existing system to just [indiscernible] soon as we get past that we’ll reengage with you in Q4, Q1 of next year. What we're seeing now is a number of those clients coming back to us and saying, well look now that ICD-10 is being put on hold, we’re happy to engage with you now. Overall, I think it’s going to end at the (net plus) [ph] but it is a little bit of a mixed bag for us. I think that we're not choosing a bookings loss for the year and we remain extremely positive and confident.

Operator

Thank you. And our next question comes from the line of Ricky Goldwasser from Morgan Stanley.

Ricky Goldwasser - Morgan Stanley

So a couple of quick questions here as follow-up. So first of all, can you share with us what’s the timeline to show clients, your first two clients the scorecard with the ROI metric in leakage? And then secondly can you help us think about the addressable market opportunity? Is it kind of like constrained to athena's existing clients or are you also kind of like looking at enterprises, hospitals that don’t necessarily use athena today, but can use the Coordinator, is kind of like add on to what we already have?

Tim Adams

Well, the addressable market is definitely all [Technical Difficulty] and at this stage it’s just that 1% of the system revenues whatever that is $5 billion or 500 million that are out there right now and hospitals revs. You do not need to be an athenaClient to be a coordinator enterprise client. So in fact this is often a way for hospitals to connect to the large number of athenaClient doctor who may don’t employ, but whom they work with in their community. So this is the way being easier to coordinate [indiscernible] easier to do business with, if you’re locked on some, 70s big iron thing, which normal entrepreneurial doctors won’t join, but you want to connect to them. Coordinator is a way of kind of bridging to the [indiscernible] so it’s very much that the adjustable market is everyone. People who are just starting their Epic or Cerner or whatever implementations are still breathing the fumes of believing that everyone will just obey them and get onto their iron, but those who are on for a while and realize that the world will not go in their one piece of iron, are perfect prospects. Whether or not their employed doctors are, you know, athena one client. So what was the other one, the scorecard?

Ricky Goldwasser – Morgan Stanley

Yes. Timing to show true metrics enterprise Coordinator.

Tim Adams

So I think that’s the way to think about the metrics on Enterprise Coordinators, that our intent is to prove the point that we can get to a percent of health system collections. And as Jonathan said, there’s about $1.7 trillions in health system [indiscernible] day which means that the total addressable market is probably roughly $17 billion. I think that the -- that within that, it’s very hard when you’re in a relationship as deep as the one that we want to be in with our clients, as we begin to move these metrics to peace out, what part in ROI or gain share is going to be -- irrespective of how you structure the gain share is due to stuff that they did internally versus stuff that we’re helping them with. We want to be so deeply embedded as it's difficult to tell which is why -- in these early days we just have series of the interim metrics that we put in place with Steward, but the intent over the medium to long run is to do away with that and just go through a much simplified pricing model, where it’s just 8% [indiscernible] and they couldn’t imagine going without us.

Ricky Goldwasser – Morgan Stanley

So when you think about kind of like historic relationship, just because it's kind of like the pilot that you are going to take in and market with, what is the timeline that you kind of like promised and that you will be able to show them some data? Is it six months, 12 months, two years?

Tim Adams

This year.

Ricky Goldwasser – Morgan Stanley

And then one follow-up on utilization trends. I know you mentioned in the prepared remarks last night that sequentially there was some slowdown. Any data points that you track that show any indication of early utilization trends off from the exchange population?

Tim Adams

We haven’t tracked an exchange population, but it's still a miniscule piece of the base. I think that bodes just on rolling there, just beginning to roll through the system. We recently put out an ACA view log that you can take a look at, that shows some early indications of what we're seeing out there on the market, but I think the story of the ATM exchange is really going to be told in the back half of the year.

Operator

Our next question comes from the line of George Hill from Deutsche Bank.

George Hill - Deutsche Bank AG, Research Division

Good morning guys and thanks for taking the questions. Tim, I just kind of want to delve into a couple of your comments which seem -- I’m trying to reconcile what you had said, it looks like booking for the Enterprise group came in a little late. But it seems like you guys announced a handful of deals over the quarter and the first two EnterpriseCoordinator deals, so help me reconcile, kind of the bookings coming in late versus what on a reported basis from the announced deals in the Coordinator deals, seemed like pretty good quarter.

Tim Adam

Well, if Steve Kahane were here, he would tell you that, we’ve set very high targets for him, which I think is true. George, as you know we -- you know the goal is to grow bookings 30% year-over-year. At the investor day we did say that the Enterprise segment would be roughly half of the bookings totals. So we expect that segment to grow at a pretty high pace. And considering we signed a very large customer last year, we’ve got a big number in front of Steve and we've got a healthy pipeline and he's focused on it. He is a bit behind. We are a bit behind in the Enterprise segment in Q1. We don’t get overly concerned about that because this is a long term game that we're playing. St. Peter’s, Phoebe, Privia were all in the group segment, large accounts, but technically in the group segment. Steve has a good place with his team. He has got a great team and we’re excited about the opportunities in front of us. And this is what it looked like this time a year ago. And the Enterprise segment had a terrific year in 2013.

George Hill - Deutsche Bank AG, Research Division

Okay and then just a quick follow-up. One metric that did improve sharply in our model was the company’s take rate, and or the amount of revenue that you guys recognized off collections, recognized limited collections due to some seasonality and weather and other issues, I guess -- and can you talk about what drove the expansion at company’s take rate.

Tim Adam

It’s really the continuation of accounts that are buying more than one service, more than just collectives. So, I think it came in roughly around 4.5. So that was up nice from Q4, you're correct. Trying to think of the key goal lines, those I mentioned earlier with essentially we are getting some clinical ads, then we’ve some with medical as well. So that’s a nice penetration on that front.

George Hill - Deutsche Bank AG, Research Division

Have you guys had the ability to hatchback some of the promotional activity which should be weighing on the take rate, going forward as kind of recognition expense?

Tim Adam

The answer is yes, compared to some of the things we were talking about last year, correct.

Operator

And our next question comes from the line of Robert Jones from Goldman Sachs.

Adam Noble - Goldman Sachs Group Inc., Research Division

Hi, this is Adam Noble in for Bob. I just wanted you back to the bookings itself. When you kind of look at the two segments together, would you say that you were still able to see roughly about 30% bookings for the quarter and then specifically with the Enterprise bookings, was this simply just some RFPs taking longer than expected or are there any RFPs that you lost, that you had been expecting in the pipeline?

Tim Adam

In the Enterprise segment, things always take longer than we hope and expect, and that’s just the nature of the beast. And again you are in it for the long-term here, its floats from one quarter to the next, we're thrilled to get the business; I know some of you can’t. And we target this 30% goal on a year-over-year basis but for the core athena, the old athena products if you pull Epocal out, it was approximately 30% over Q1 of last year.

Adam Noble - Goldman Sachs Group Inc., Research Division

Okay great. And just to go back to utilization, I am just wondering if you could share utilization for your physicians at the end of the quarter versus January-February and I know it’s kind of early but are you seeing acceleration so far into April?

Tim Adams

We saw better performance in March than we did in January, very early to call but we’re seeing a positive uptick in April thus far.

Operator

Thank you. And our next question comes from the line of Donald Hooker from KeyBanc.

Donald Hooker - KeyBanc Capital Markets Inc., Research Division

So when you guys talk -- I just wanted to talk about your bookings trends and your objectives, so when you have a deal with [indiscernible], are you booking at all at once last year? Are you booking it as it comes in [indiscernible]?

Tim Adams

Yes, so in I believe it was June 30th last year, we had a very large collector and communicator booking amount that we recorded in our numbers. We did not record Clinicals, because it was not signed up at that time. So Clinicals will be added to bookings once those contracts come in.

Donald Hooker - KeyBanc Capital Markets Inc., Research Division

Okay, so you’re growing off of that, okay. I just wanted to make sure I understood that. And then may be wanted to go off and [indiscernible] a little bit but I know you’ve had this more disruption fees sort of program for a couple of years now and it seems like you are excited about a few of the technology partners at least that you’re working with. I was curious [indiscernible] or how you are thinking about that those technology partners actually impacting your core services in terms of maybe helping you do better what you do?

Tim Adams

So I think our perspective with MDP Partners is we have a very keen understanding of services that positions want that can help them with scheduling, help patient referrals that can help with productivity and if we don’t have that core functionality, we have a choice we can build or we can go find the best in class partner that is out there. There are a lot of great ideas from a lot of entrepreneurs that are cloud based. So Kyle and his team is out there looking to find these great technologies. They have to pass our screen of are you adding true value to the position and then if they are, we're willing to interface and work the revenue share model with these new partners, but it's a highly selective screening process.

Operator

Thank you. And our next question comes from the line of Sandy Draper from SunTrust.

Sandy Draper - SunTrust Robinson Humphrey

Thanks very much most of the questions that I had have been asked, may be just on the expense side Tim. I hear about the build outs around Boston, Atlanta, Austin, San Francisco, exciting that also may be a little bit donning on the expense side. I am just trying to understand how much of that expense is already starting to hit the model [indiscernible] had longer term where once these start to ramp up you have to step up in expense as you actually start to take down lease trying to think long term how we’re trending on those new build outs hitting the P&L?

Tim Adams

Yes Sandy, so couple of things to keep in mind, there’d be a lot of CapEx dollars put to work this year if we already started Q1, we'll see that accelerating throughout the year and that’s going to come in the P&L in the form of depreciation. So, you’re going to see depreciation growing this year and in future years primarily driven by those investments. If we take Atlanta, San Francisco, Austin once we have the keys and can move in and start our TI work, then we will begin expensing the rent that goes in the G&A line item.

So you will see G&A, you’ll see the rent component that is in G&A grow over time as we’re taking on more of these new facilities. But again, the focus is, we know we want to diversify the location of the work force, there is great talent in Austin, San Francisco and Atlanta in addition to [indiscernible] and Watertown so we do need to spread out so we can continue to grow the company.

Sandy Draper - SunTrust Robinson Humphrey

Great, thanks. And then may be just one quick follow up on the strength in bookings into group side and small side. Is there any one thing you can point to? Was there specifically really a competitor or may be a last one going back to Ed's comments earlier, may be a last minute push in front of ICD-10, anything that you saw that directly impacted the strength or do you think it’s just solid and then across all fronts on the small acreage side?

Tim Adams

I think there are number of factors in play, but I think that we just had solid execution by the team. I think that the ICD-10 environment certainly helps with the net tailwinds, but I think that the team has been under the strong leadership of Bill Conway and it is increasingly tenure, they know how to operate in this space. And we see ourselves thriving in what we see as a replacement market. I think that it’s pretty clear now that the first wave power point EHR is the one's that just sort of have its screens up there and just get to need, we use are not good, people who bond to those are finding that they don’t like them and want to go to something that actually works and I think that we are thriving an environment of replacement. Our original collector product was a replacement product; everyone has billing system before collector and we find the same thing with EHR that by playing the long ball that we will continue to thrive there.

Operator

Thank you. And our next question comes from the line of Sean Wieland from Piper Jaffray.

Sean Wieland - Piper Jaffray

Good morning and thanks. So, on the enterprise clinical deals, can you identify any comment thread that’s woven in on these, is it the new athena experience that people are getting a glimpse or what are the some of things that are common elements that are driving those sales?

Tim Adams

On enterprise clinicals, I think that, one thing that’s been important is that visit to the nerve centres and just watching the control and speed to market which we can bring folks to life. I mean, a lot of these guys have gone through this is not their first time around the rodeo. They have tried to implement other EHRs and have stuttered and stopped in various forms and ways and when they did get them out it ends up being a little bit of [indiscernible] victory because everyone and all the doctors ends up twisting themselves in the configurations that will not support them over the long term.

And then they go in to these nerve centres, they see that we’re able to bring a ton of doctors, hundreds of doctors live quickly within four months on a single standard platform and all the doctors are happy afterwards and they realize everything they did wrong. So I think that what they see with our clinicals product is something that brings control to a situation that was previously a custom configured mess and they see time to market in a period where they don’t have any time to lose any more.

Sean Wieland - Piper Jaffray

And so new in your experience being used as a sales tool right now? Are they seeing this?

Tim Adams

Not yet. We have begun talking about it, but HIMSS was our coming out party. I think that we’re going to really begin to bring it out in Q2, Q3, and I think that’s going to -- one nice thing about the lifting of the ICD-10 and pushing of that is going to allow us to put a lot of licenses and efforts to your basket and you haven’t seen the look from that yet.

Sean Wieland - Piper Jaffray

Okay, thank you. And a follow-up question, again sliding in on a holiday looking forward to being entertained by an anecdote from your holiday, Jonathan. Do you care to share anything?

Jonathan Bush

We’re going to need to stay on the end of the call, Sean.

Tim Adams

Guys nearly for this, so you do not disappoint him at end of the call.

Jonathan Bush

Listen, my production work is gone into this call, so you can just please take it in new order it comes.

Sean Wieland - Piper Jaffray

We all now have to hang on in there. Thank you very much.

Jonathan Bush

Yes, before you go to the garden with the kids and your little California life out there with your skis and your boats.

Operator

Thank you. Our next question comes from the line of Richard Close from Avondale Partners.

Richard Close - Avondale Partners

Good morning. I was wondering if you could talk a little bit about the shifting expenses from first quarter to second quarter, Dana that you talked about in your prepared comments.

Jonathan Bush

Yes. Richard, it was just a little bit of timing. So, I think across the board every line item on the P&L, we were a little bit behind the headcount hiring plan. I would say the plan is a bit aggressive in Q1 which it tends to be our nature. And there was a little bit of timing on some of the marketing events that shifted into Q2. Those are the two primary drivers.

Richard Close - Avondale Partners

Anything to comment on the G&A expenses that came in pretty low compared to what we were looking for?

Tim Adams

We continue to invest there. I know rents slipped out in Q2 in a couple of locations. The keys were quite ready to be turned over to us. I think we lost two months in two different locations, not overly material. As you know, we will be investing in athena university in our internal systems this year. So you will see more of that in G&A.

Operator

Thank you. And our next question comes from the line of Garen Sarafian from Citigroup.

Garen Sarafian - Citigroup

Good morning. Thanks for taking the questions and welcome back Jonathan. Couple of loose ends I wanted to just touch on at this point. First is OIG, OIG changing their mind wasn’t contemplated in initial guidance you gave, but you stated before that it’s immaterial to the financial, so I’m just wondering have you implemented any of the fee changes yet and how are clients responding so far?

Jonathan Bush

So clients are responding well. We implemented -- we’re in the middle of going back through and doing what we think is right for our clients, so we’re still going to go with data by the bucket orders up to a cap but now clients have to pay the whole thing. And we believe that that’s the right thing to do because of the rising incentives of us with our clients. We want them to want us to close the order and they only play a bucket in order for closing quarter. So we’re going to remain with the base by the bucketing orders to a cap pricing, but because the receives are no longer going to be allowed to pay directly for the bucket order and we’re going to be lowering the base and the capital and clients are responding extraordinarily well to that message we’re doing right by them. It's revenue neutral to us because we’re still receiving the revenue from the receivers, there is nothing that doesn’t allow us to continue to part the receiver separately, they just didn’t like it directly between the either the sender or receiver but we’re still getting new charging of the receivers because honestly we’re delivering them the service that they want and need. So all in I think it’s a material work.

Jonathan Bush

It may actually we don’t know, it may actually fill in given that we’re ready to go through to get this network working, it’s still in early days and I was pleasantly surprised in the reviews that we’ve just done reviews of every divisions since I have gotten back. And the degree, first of all the degree of work and scrambling that the Athena (Ph) did is shocking, the re-tapering and re-explaining. You know for a company that lives and dies by its reputation in its mission, its desire to be trusted. We basically participated in a large scale baking switch at the end of gun and the degree through which we pulled off, we’re pulling off the explanation and the resetting of expectations while preserving as much trust as possible, I mean it looks great to me, maybe because I am sleeping too much these days, but its extraordinary.

But what they mean is that we just get paid by senders and receivers and it will be at our discretion over time to just lower our core base rate as we get revenue from the back end. So newspapers that get a lot of advertisers don’t have to pay -- don't have to charge as much for subscriptions and therefore they can increase their circulation and therefore they can do better with advertising. We’re in a similar, we can’t make it one for one like we wanted to anymore but we’re in a similar kind of two sided market in the early stages.

So I think, I actually think it will be fine.

Garen Sarafian - Citigroup

But it reduces the incentive for new introductions, so they are sending out. So I am wondering -- did you not really receive too many introductions to begin with or are you compensating for that in some other way.

Jonathan Bush

I think compensating for years and we continue to.

Garen Sarafian - Citigroup

Got it. And then just switching gears just a little bit on your score card and the satisfaction section. It’s still above 90% which is very respectable but if you compare it to the prior quarters it’s not probably the trend that you were hoping for. But that metric as you guys have already stated on the call has changed. So I am wondering is there a way to standardize it? So what it that score on the metric you guys were using last year or vice versa? Have you guys converted last year’s satisfaction scores to this year where we can get some sort of standardized number on that.

Jonathan Bush

So 92% is the score card, meaning we missed our desired goal by 8% and so you’re right you see it go down and therefore you’ve seen it miss our desired goal. If we don’t make up for that by the end of the year that 8% will contribute to the total results being lower than a 100 and the bonus of the company will be shrunken accordingly. So we want to get that up, net promoter score allows us to compare to other companies. So we’re switching regard and retro score, we were silently scoring last year in order to get parallel scores in order to make the score card accurate and credible. And we’re little light, we’ve been going through a lot of transitions, we hit at once bumpy release I believe while I was gone, related to athenaCommunicator where we ended up as a service to our clients doing some new proactive outbound service for the clients that went a little choppily and some of our clients didn’t know we were doing it for them, and so found out from their patients. So that may have moved our score back a nick or two, solved and resolved people have gone rectify them, change their processes, so that when we’re changing Communicator we do a different type of piloting, because you know when you pilot the rest of athena the user is our customer and file a Communicator the user is someone who isn’t our customer and we may not get the level of fidelity here how it goes.

So that’s one thing that I noticed and the reviews that may have moved it back a little bit that we’ll recover from.

Jonathan Bush

And the answer, your original question in terms of where compared to historical norms, if you back test it against the previous scoring we’re within normal limits. We think that there is nothing that’s systemic here we’re going to keep an eye on it. We set an aggressive for ourselves this year and we still think we’re in track for it.

Garen Sarafian - Citigroup

I appreciate color and looking forward to closing remarks Jonathon. Thanks.

Operator

Thank you. And we have time for two more questions. Our next question comes from the line of Bret Jones from Oppenheimer.

Bret Jones - Oppenheimer

I wanted to ask on gross margin a little bit. If I add back $1 million for flu weather, don’t assign any cost to that just add back the revenue. It looks like gross margin still down about 40 bps, I am just trying to figure out if you can quantify or parse out, how much investment you made in the service line additions?

Tim Adams

This is Tim, you are doing a sequential look at gross margin?

Bret Jones - Oppenheimer

I was looking year-over-year.

Tim Adams

Okay. The real estate is now up in revenue and direct cost since we own it this quarter, we didn’t own it in Q1 of last year that has a much lower margin 30% give or take. So, that puts -- that was almost 50 bps right there, a pressure on gross margin because of the geography of where the Arsenal, now that we have tenants here. So, on a year-over-year that’s really it. Sequentially we have to step up in expenses in Q1 as we do every year, so that brings it down from a very healthy gross margin in Q4 that benefit reset et cetera. I touched on properties earlier, a little pressure on revenue of relatively fixed cost base in the short term in the properties that puts pressure on margin in Q1 that we didn’t see in Q4. So, those really the factors.

Bret Jones - Oppenheimer

Yes, I was also just thinking properties would have been extra 50 million year-over-year, probably about 70ish percent margin, so I would think that would have offset Arsenal. I was just wondering if there is anything else or is it just the investments in the service line addition?

Tim Adams

There are investments every year as we kind of re-up with new plans and programs.

Bret Jones - Oppenheimer

All right.

Tim Adams

EPOC gives a little bit of pressure on the margin.

Operator

Thank you. And our final question for today comes from the line of Michael Cherny from the ISI Group.

Michael Cherny - ISI Group

Good morning. As I guess I am in between Jonathan and story, so I think the play would have been little more interesting if you guys hadn’t signed the Coordinator on a press contract and he wasn’t talking to you. So, cheers, he already has for us. One last question I guess, obviously we talked about the bookings being strong from the small segments you are now coming up a couple of quarters of having the expend in the PSS relationship, can you talk about further update on some of the success there as you think about your channel partners, what are the type of partners would you potentially want to pursue in the market?

Jonathan Bush

Those are cultures, we only focus on people with the pulse. I think the area of focus as we have described in the past, is it still I think consulting firms getting into the mix with us, is the area that’s I think newest we have many consulting firms that work with us. We are cording kind of a deeper relationship with some of the bigger once but I think in terms of new alliances, for example, we are working with a very large consulting firm on the installation of enterprise coordinator. One of the great obstacles to athena’s growth is that there is virtually no implementation fee as compared with the big iron implementation, so the consulting firms have this terrible problem where they want to serve their client but they decide athena there will be no fees for them. And we are working on repositioning ourselves around the larger process improvement for the health system around coordination and care that actually will generate very productive, useful as oppose to wasteful consulting fee in the interest of the consulting firms. So, I think that’s the one that’s got my attention the most.

Michael Cherny - ISI Group

Yes.

Jonathan Bush

Obviously we have got lots of other like folks that we want to expand to distribution and all the little financial partners that we work with, they do so great and oh excuse me and the other one is our hospitals. We really started to hit our stride with a hospital as a channel partner and we have got several very productive for the first time in after years of trying, hospitals some of which are not placed in any other way that are out there offering a discount in special integration to clients in there, to doctors and their community they get on athena. So, those are two I will put there that I think are, they are not new in that. We do prototypes and we do have several of both but I think in terms of open addressable market to expand those are two areas where I think we are all curious.

Michael Cherny - ISI Group

Great, thanks and welcome back.

Jonathan Bush

Thank you. All right, well, I just want to say that I am happier than take back shit to be in the office with the athenist but it was a great experience from after 16 years of non-stop at least half of attention is now fully active attention on athena to stop paying attention. And I want you to know, I think it’s a relevant financial point that I literally completely stop paying attention. I did not look at my athena e-mail account once. I was not on one phone call, I did not help with one prospect. I did have a lunch with one doctor that I really like who is a prospect on my way to El Paso, I stopped over and had lunch but I am calling that just plain fun. And in eight weeks the only relationship I had with the company, I had four weeks of personal bucket list and four weeks of introducing myself to these people I have been told by my children and wife. And they are all very nice, so I’m thrilled. The reason I think this is a relevant point to – the investor committee is that I worry about the resiliency of founder run Company and worry about the resiliency of almost everything in our society. The level of regulation and protection that we give it allows it to be very weak inside.

And I was thrilled to see how well this Company handles a massive arbitrary blow, two really massive arbitrary blows from our extraordinarily powerful for a free country, central government. And how well they continue to prosecute new lines of business, they changed as Gavin pointed, thank you very little Gavin. They changed the pricing and packaging to get those Alphas going, acted in a very entrepreneurial way that usually only my quarter to act like. And we are hard at work building new product without presence. So my aspiration for this extraordinary sabbatical for me is that I will come back doing less what I used to do and able to focus more on whatever comes next. Now, that’s the good news.

The bad news is I cannot help but notice well I didn’t check my email, I did check the stock market and I noticed that upon my announcement of departure, Athenahealth shares went up by three quarter of a $1 billion and upon my announcement return shares of Athenahealth went down by a $1 billion. And I’m trying not to take this personally but it does bring out the country singer in me and so I would like to close the call with a little ditty produced by one of my favorite country and Wall Street star, Sandy Draper. So Karen, if you can play us out with my new favorite song, I will thank you all for you time today and look forward to seeing in person at on the next call. Hang in there.

[Song]

Thank you everyone. Bravo, Sandy.

Operator

Thank you. Ladies and gentlemen that does conclude our conference for today. We thank you for your participation and you may now disconnect.

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athenahealth (ATHN): Q1 EPS of $0.12 misses by $0.05. Revenue of $163.03M (+29.8% Y/Y) misses by $6.96M.