Critical Review: Cotiviti (COTV) and athenahealth (ATHN)

Cotiviti (NYSE: COTV) and athenahealth (NASDAQ:ATHN) are both mid-cap healthcare companies, but which is the better stock? We will compare the two companies based on the strength of their profitability, institutional ownership, valuation, earnings, dividends, analyst recommendations and risk.

Earnings & Valuation

This table compares Cotiviti and athenahealth’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Cotiviti $625.16 million 5.16 $48.85 million $0.98 35.60
athenahealth $1.08 billion 4.76 $21.00 million $0.77 167.19

Cotiviti has higher earnings, but lower revenue than athenahealth. Cotiviti is trading at a lower price-to-earnings ratio than athenahealth, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of current recommendations and price targets for Cotiviti and athenahealth, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Cotiviti 0 2 7 0 2.78
athenahealth 1 16 7 0 2.25

Cotiviti presently has a consensus price target of $41.14, suggesting a potential upside of 17.92%. athenahealth has a consensus price target of $141.50, suggesting a potential upside of 9.91%. Given Cotiviti’s stronger consensus rating and higher probable upside, research analysts clearly believe Cotiviti is more favorable than athenahealth.

Insider & Institutional Ownership

86.0% of Cotiviti shares are held by institutional investors. 15.8% of Cotiviti shares are held by company insiders. Comparatively, 3.2% of athenahealth shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Profitability

This table compares Cotiviti and athenahealth’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Cotiviti 13.86% 13.61% 6.62%
athenahealth 2.65% 6.78% 3.83%

Summary

Cotiviti beats athenahealth on 10 of the 12 factors compared between the two stocks.

About Cotiviti

Cotiviti Holdings, Inc. is a provider of analytics-driven payment accuracy solutions. The Company focuses primarily on the healthcare sector. The Company operates through two segments: Healthcare, and Global Retail and Other. Through its Healthcare segment, the Company offers prospective and retrospective claims accuracy solutions to healthcare payers in the United States. The Company also provides analytics-based solutions unrelated to its healthcare payment accuracy solutions in the United States. Through its Global Retail and Other segment, the Company provides retrospective claims accuracy solutions to retailers primarily in the United States, Canada and the United Kingdom, as well as solutions that manage payment networks for a range of clients. The Company leverages its technology platform, configurable analytics, information assets and expertise in healthcare reimbursement to help its clients develop their claims payment accuracy.

About athenahealth

athenahealth, Inc. provides network-based medical record, revenue cycle, patient engagement, care coordination and population health services. The Company also offers Epocrates and other point-of-care mobile applications. The Company delivers majority of its service offerings through a single instance of cloud-based software, athenaNet. The Company has a range of network-enabled services to support healthcare providers across the continuum of care. The Company offers various combinations of its services to its clients, including athenaOne and athenaOne for Hospitals and Health Systems, depending on whether they are medical groups and practices or hospitals and larger health systems. As of December 31, 2016, the Company connected care across a national network of approximately 88,000 providers and approximately 86 million patients. Its suite of network-enabled services includes athenaCollector, athenaClinicals, athenaCommunicator, athenaCoordinator, Population Health and Epocrates.

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