Athenahealth Chief Rejects Einhorn Claims

May 8 2014 | 11:52am ET

Electronic medical records company Athenahealth is defending itself against Greenlight Capital founder David Einhorn’s attack.

Einhorn on Monday called Athenahealth a bubble stock and suggested that it is worth only about one-tenth of its price. The company “isn’t in a position to succeed the way bulls hope. It is caught up in a bubble and could easily fall 80% or more.”

But Athenahealth CEO Jonathan Bush countered that it could rise 80% or more.

“I’m absolutely sure this is a $1,000 a share stock,” Bush told CNBC. The claim, however, lost some of its force after Bush admitted that he has “no idea when it gets there” and that he doesn’t “know anything about valuations, so far all I know [Einhorn] is right.”

Bush did defend the company’s business model, saying that Athenahealth is not a business process outsourcing firm, “it’s not an enterprise software company, it’s not even a [software as service] company. It is a software-enabled service.”

“It is a company that takes software and gives it to customers in exchange for solving complicated and expensive problems that they hate and stink at.”

Also rallying to Athenahealth’s defense is ARK Investment Management’s Cathie Wood who told CNNMoney that she “can understand why people think it’s at an outrageous multiple.” But, she said, that’s because “they decided to dial down earnings by increasing costs to invest in the business more aggressively.”

“Companies with strategic vision as they move into the cloud tend to take the lion’s share of the market. They more very rapidly so no one can catch them. We think Athena is in that category in the healthcare space.”


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