On Sept 20th, athenahealth (ATHN) went public on the NASDAQ becoming the most successful IPO to date in 2007. Coming out at $18/share, the share price soared to over $38/share, a 115% gain. Since then, the price has settled down (probably some profit taking by early purchasers) and is now trading at ~$33/share. Still a hefty increase over that entry IPO price.

While some claim that founder and CEO Jonathan Bush, being a cousin of Pres. Bush has a lot to do with the success of the IPO, I find this a rather simplistic view.

So why is the market excited about athenahealth? Here is my quick take:

• Delivering a service that the market truly needs. Most physician practices are struggling to keep up with the myriad of rules to effectively and efficiently collect from payer. athenahealth provides a Web-based service that addresses this need.
• Model is in some respects similar to Salesforce.com, a darling on the street, thus athenahealth gets some added value there.
• Breaking from the tradition of most vendors in this market – it is a disruptor and better yet, a disruptor that users are readily adopting. With renewal rates close to 100% it’s hard to argue that this model will not work.
• As a subscription service, it has an excellent and dependable annuity revenue model that provides assurances for the future.
• Pricing model is also attractive to physicians as it is typically based on a small percentage cut of the revenue that their service is able to capture from payers on behalf of physicians.
• Very healthy high double digit growth rate that appears to be accelerating.

While it remains to be seen just how scalable their model is, there is a lot to like about this company. My hope is that such success will spawn others to likewise go counter to traditional wisdom in this market as it may be the only way that we’ll see real change and subsequently better health, better outcomes and greater adoption of HIT in the broader market.