The Economic Data calendar for the week of the 23rd of May through the 27th of May is full of critical releases and events. Here is a snapshot of some of the headline numbers that we will be focused on.
After Quantitative Easing and NIRP (negative interest-rate policy) have failed to deliver economic growth, central planners are now talking about helicopter money. Delusional? Yes.
Takeaway: We are removing athenahealth (ATHN) from our Best Idea List, but staying long in the Position Monitor.
We are removing athenahealth (ATHN) from our Best Idea List, but staying long in the Position Monitor. The recent CFO and other high-level employee departures, combined with negative anecdotes related to the Streamlined rollout and what looks like an early slowdown in our tracker reduces our conviction over the intermediate term. Over the long-term, we continue to believe athenahealth is well positioned to take share in ambulatory and the recently entered inpatient market. What will get us out of the position completely, and possibly pivot short, is if the athena-Tracker continues to slow over an extended period.
The other high-level employee departures include Senior Financial Officer, Parth Mehrotra, who left in March 2016 for a COO position at Brighton Health Group and Director of Enterprise Sales, Ian Ha, who left in December 2015 for a similar role at Flatiron Health. We suspect that the Florida Cancer chargeback was related to Ian Ha's departure, as Florida Cancer currently uses Flatiron for their Oncology EMR solution.
We are becoming increasingly concerned about the disruption that the Streamlined rollout is having on users. We have observed a growing outcry of dissatisfaction both from our outreach using the tracker data, and through various social media and software review websites. We also witnessed several users discussing their dissatisfaction with Streamlined at the New England HIMSS conference earlier this month. The reviews are fairly consistent, complaining about "too-many clicks", poor workflow design and lack of responsiveness from account managers, with some even comparing the new EMR to Allscripts. While we understand that docs don't like change, we would be remiss to ignore the negative and potentially lasting impact this type of disruption can have in such a highly referential industry. As a result, we expect the Net Promoter Score (NPS) to get worse before it gets better and continue to be a headwind to small and group bookings as the Streamlined rollout continues through year-end.
While it is never a good sign to see a CFO leave, in this situation, we believe it is for the right reasons and a net positive for the company. As we had expected, the departure was the result of Jonathan Bush needing to step back in as the direct report to oversee and manage the culture, which had been changing for the worse under Kristi Matus's leadership and the dual CFAO role. The management change is in response to employee comments, such as those on glassdoor.com, as well as a struggle to balance rapid growth and maintain the important employee culture. This is an issue they have been dealing with for some time and a decision that was not made in haste, but came to in a mutual realization recently (Jonathan Bush/Board and Kristi Matus) that they needed to separate roles and Jonathan Bush, CEO, needed to step back in. As there was not another suitable EVP level position available, Kristi Matus decided it was best to leave for other opportunities.
Karl Stubelis, CFO and previously Controller for 3-years, reiterated 2016 guidance, and both he and Jonathan Bush emphasized that Kristi Matus's departure was not due to financial or accounting misconduct.
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In this brief excerpt from The Macro Show earlier today, Hedgeye CEO Keith McCullough responds to a subscriber’s question about whether he thinks there will be a “20% or more” drawdown in the S&P 500 from here. Spoiler Alert: He does.
Takeaway: The best of the best : our favorite reading material from the week of May 16 and a tribute to the King of the Texas Troubadours.
Happy Friday! In case your attention was turned toward, say The Fed for example, and you missed some of the more interesting health care articles/videos/podcasts, we have listed our favorites here:
Health Care Services
Fighting for Assisted Living Centers, The Hill, May 17, 2016 (Includes discussion of Nursing Homes) - <KND> <GEN> <DVCR>
You Mean I Don't Have to Show Up? The Promise of Telemedicine. NYT, May 16, 2016 <TDOC>
Mental Disorders Top The List Of The Most Costly Conditions In The United States: $201 Billion, Health Affairs, May 2016 <AAC> <ACHC>
Theranos Plans Bold expansion Even as it Reels From New Setbacks, Stat News, May 19, 2016
Health Insurance Coverage
Health Insurance Coverage: Early Release of Estimates From the National Health Interview Survey, 2015, Centers for Disease Control, May 17, 2016 <All Health Insurers>
Durable Medical Equipment
Providing Quality, Affordable Durable Medical Equipment for Beneficiaries, The CMS Blog, May 17, 2016 (with links to recent accessibility data) <IVC> <MDT> and others
Health care data as a public utility: how do we get there? Brookings, May 18, 2016 <CERN> <ATHN>
When Drugs Don't Work, The Economist, May 21, 2016 <All Pharma>
Growth in Specialty Drug Spending from 2013 to 2014, Blue Cross and Blue Shield Association, May 2016 See esp Hep C treatments <GILD>
Columbia's Battle with a Cancer Drug Company Could Set A Global Precedent for Generic Meds, Vice News, May, 19, 2016 <NVS>
Actions by Congress on Opioids Haven't Included Limiting Them, New York Times, May 18, 2016
How Big Pharma Uses Charity Programs to Cover for Drug Price Hikes, Bloomberg, May 19, 2016 <All Pharma>
Shameless Self-promotion -Hedgeye Health Care Notes/Calls/Musings:
Lastly and having nothing to do with health care policy, regulation or legislation, the King of the Texas Troubadours, Guy Clark died this week. It is Friday, So Let Him Roll...
Follow me on Twitter for more throughout the week
In this seventh edition of About Everything, Howe discusses why the Millennial Generation is coming into adulthood, but delaying traditionally big steps like homeownership and family life. Howe explains why and explores the broader investing implications.
Click here to read the associated About Everything writeup.
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