David Einhorn, President of hedge fund Greenlight Capital, Inc. poked fun at Athenahealth during this year’s Ira Sohn conference claiming the company is “overpriced and caught up in a bubble.” Einhorn noted that the stock could drop as much as 80 percent or more from its recent high in March of this year. The criticism comes after the company recently missed earning targets despite shares spiking earlier this year to the $200 mark in March. Since then shares have fallen considerably closing at $126.78 on Monday, Bloomberg reports (Summers, Bloomberg Businessweek, 5/5).
In his presentation on Monday to Wall Street’s elite investors, Einborn used various video interviews of Athenahealth’s CEO, Jonathan Bush as comedy stating the videos were full of “buzz words” to highlight that the company was not worth its valuation. Einhorn believes the company’s practice management/EHR and billing products are overvalued by investors who put cloud computing-like valuations on the company. “There will always be high-risk, low-margin things to do that will make healthcare better. Shareholders might want to consider the ramifications of the misallocation of capital.” Athena “isn’t positioned to succeed the way bulls hope,” Einhorn said.
“We believe there are serious risks to the business model mostly ignored by bullish investors and sell-side analysts,” he said. “The thing about bubble stocks is the best reason to own them is because they are going up. When they stop going up, these stocks become falling knives,” Einhorn added. Despite the harsh criticism and satire, Einhorn insists he’s not rooting for the company to fail (Britt , Marketwatch, 5/5).
Einhorn proclaimed Epic as the “undisputed winner” highlighting its recent partnership with CVS CareMark to use their EpicCare EHR system for their MinuteClinics. He referred to Epic as the “2,000 pound gorilla from Wisconsin”
Officials at Athenahealth could not be reached for comment.
