Athenahealth, Led by Bush's Cousin, to File for IPO, People Say
By Tim Mullaney
June 1 (Bloomberg) -- Athenahealth Inc., the medical- software company headed by a cousin of President George W. Bush, plans to go public, taking advantage of a U.S. government push to automate health-care records, according to people with knowledge of the matter.
Jonathan Bush, 38, plans to file for Athenahealth's initial public offering this month, said the people, who declined to be identified because the decision hasn't been announced.
Athenahealth's software automates billing and patient tracking for more than 10,000 doctors, competing with Quality Systems Inc., Allscripts Healthcare Solutions Inc. and units of larger companies such as McKesson Corp., the biggest U.S. drug distributor.
Athenahealth may be valued at more than $500 million, said Paul Bard, who follows the IPO market for Renaissance Capital Corp. ``I'm sure it will get a lot of interest because of who is involved,'' said Bard, who is based in Greenwich, Connecticut.
Bush, chief executive officer of the Watertown, Massachusetts-based company, declined to comment. He said in an interview a year ago that he planned to take the company public this year.
Bush's father is the brother of the president's father, former President George H.W. Bush.
`Billion-Dollar Opportunity'
Goldman Sachs Group Inc. and Merrill Lynch & Co. are managing the offering, the people said. Merrill Lynch spokeswoman Terez Hanhan and Goldman Sachs spokesman Ed Canaday declined to comment.
Athenahealth's sales increased 41 percent last year to $76 million, according to its Web site. The company hasn't said if it is profitable.
Investors may value the company at as much as $700 million if it can convince them revenue can continue to grow by at least 40 percent a year, Bard said. Corey Tobin, an analyst at William Blair & Co. in Chicago, said Athenahealth may be valued at $500 million to $600 million.
``Jonathan firmly believes this is a billion-dollar opportunity,'' Ann W. Lamont, managing partner of Oak Investment Partners in Westport, Connecticut, which owns 20 percent of Athenahealth, said in a December interview.
She declined to be interviewed for this story. ``We're in the no-comment phase,'' she wrote in an e-mail.
Rule Changes
Athenahealth and other medical-software companies are benefiting from August 2006 changes in federal rules that let hospitals subsidize computer programs for doctors' offices. Such help had been prohibited to keep hospitals from trying to tie doctors to one facility.
The companies also are being aided by a broader push to automate medicine in a bid to curb U.S. health-care spending and improve the finances of Medicare, the government health-care program for the elderly.
President Bush appointed the first U.S. health-technology coordinator in May 2004 to set standards for a national network linking doctors and hospitals. He has promoted such medical technology in four State of the Union addresses.
Quality Systems, based in Irvine, California, had net income of $24.7 million on sales of $112 million in the nine months ended Dec. 31. Analysts estimate its revenue rose 30 percent in the fiscal year just ended. The shares have risen 10 percent this year after closing little changed in 2006 and gaining 23 percent in 2005.
Shares of Chicago-based Allscripts fell 12 percent on May 9 after it reported sales that fell short of analysts' estimates. The stock doubled last year.
Mixed Results
``The most important thing for Athenahealth, and for us, is that this is a very hot segment,'' Allscripts CEO Glen Tullman said in an interview. ``No one doubts that health care is going to become paperless.''
Athenahealth's software stores data from every medical insurer, enabling claims to be prepared properly and paid quickly. The company says clients are paid 35 percent faster after they adopt the system, and collect 7 percent more money by reducing errors that cause underpayments or rejections. The service costs doctors about 5 percent of their revenue.
Health-technology IPOs since 2005 have been mixed, Renaissance Capital's Bard said.
New York-based WebMD Health Corp., owner of a consumer health Internet site, has almost tripled since its debut in September 2005. Intensive-care software vendor Visicu Inc. in Baltimore is down 38 percent since first selling shares in April 2006.
Athenahealth probably will fare better, Bard said. ``It looks like Athenahealth is bigger and more established,'' he said.
By Tim Mullaney
June 1 (Bloomberg) -- Athenahealth Inc., the medical- software company headed by a cousin of President George W. Bush, plans to go public, taking advantage of a U.S. government push to automate health-care records, according to people with knowledge of the matter.
Jonathan Bush, 38, plans to file for Athenahealth's initial public offering this month, said the people, who declined to be identified because the decision hasn't been announced.
Athenahealth's software automates billing and patient tracking for more than 10,000 doctors, competing with Quality Systems Inc., Allscripts Healthcare Solutions Inc. and units of larger companies such as McKesson Corp., the biggest U.S. drug distributor.
Athenahealth may be valued at more than $500 million, said Paul Bard, who follows the IPO market for Renaissance Capital Corp. ``I'm sure it will get a lot of interest because of who is involved,'' said Bard, who is based in Greenwich, Connecticut.
Bush, chief executive officer of the Watertown, Massachusetts-based company, declined to comment. He said in an interview a year ago that he planned to take the company public this year.
Bush's father is the brother of the president's father, former President George H.W. Bush.
`Billion-Dollar Opportunity'
Goldman Sachs Group Inc. and Merrill Lynch & Co. are managing the offering, the people said. Merrill Lynch spokeswoman Terez Hanhan and Goldman Sachs spokesman Ed Canaday declined to comment.
Athenahealth's sales increased 41 percent last year to $76 million, according to its Web site. The company hasn't said if it is profitable.
Investors may value the company at as much as $700 million if it can convince them revenue can continue to grow by at least 40 percent a year, Bard said. Corey Tobin, an analyst at William Blair & Co. in Chicago, said Athenahealth may be valued at $500 million to $600 million.
``Jonathan firmly believes this is a billion-dollar opportunity,'' Ann W. Lamont, managing partner of Oak Investment Partners in Westport, Connecticut, which owns 20 percent of Athenahealth, said in a December interview.
She declined to be interviewed for this story. ``We're in the no-comment phase,'' she wrote in an e-mail.
Rule Changes
Athenahealth and other medical-software companies are benefiting from August 2006 changes in federal rules that let hospitals subsidize computer programs for doctors' offices. Such help had been prohibited to keep hospitals from trying to tie doctors to one facility.
The companies also are being aided by a broader push to automate medicine in a bid to curb U.S. health-care spending and improve the finances of Medicare, the government health-care program for the elderly.
President Bush appointed the first U.S. health-technology coordinator in May 2004 to set standards for a national network linking doctors and hospitals. He has promoted such medical technology in four State of the Union addresses.
Quality Systems, based in Irvine, California, had net income of $24.7 million on sales of $112 million in the nine months ended Dec. 31. Analysts estimate its revenue rose 30 percent in the fiscal year just ended. The shares have risen 10 percent this year after closing little changed in 2006 and gaining 23 percent in 2005.
Shares of Chicago-based Allscripts fell 12 percent on May 9 after it reported sales that fell short of analysts' estimates. The stock doubled last year.
Mixed Results
``The most important thing for Athenahealth, and for us, is that this is a very hot segment,'' Allscripts CEO Glen Tullman said in an interview. ``No one doubts that health care is going to become paperless.''
Athenahealth's software stores data from every medical insurer, enabling claims to be prepared properly and paid quickly. The company says clients are paid 35 percent faster after they adopt the system, and collect 7 percent more money by reducing errors that cause underpayments or rejections. The service costs doctors about 5 percent of their revenue.
Health-technology IPOs since 2005 have been mixed, Renaissance Capital's Bard said.
New York-based WebMD Health Corp., owner of a consumer health Internet site, has almost tripled since its debut in September 2005. Intensive-care software vendor Visicu Inc. in Baltimore is down 38 percent since first selling shares in April 2006.
Athenahealth probably will fare better, Bard said. ``It looks like Athenahealth is bigger and more established,'' he said.
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