Athenahealth’s stock has had an incredible year, and as a result, the company has become a popular short position on Wall Street, most notably with David Einhorn. Through the middle of this month, the stock has skyrocketed, returning 266% since the company’s initial public offering in 2007.

Athenahealth enjoys success

Thanks to the soaring stock price, Athenahealth enjoys about a $5 billion market value. By comparison, the NASDAQ has returned 87%, and the Russell 1000 Health Care Index has returned 130% in the same time frame, reports Fortune.

Athenahealth’s average revenue growth has been 32% per year as it sells various cloud-based services to health care facilities and doctors’ offices. The company has successfully tapped into the $40.2 billion global healthcare IT market, which is expected to climb 64% in the next five years, hitting $66 billion in 2020, as Global Industry Analysts predicts.

athenahealth David Einhorn

Einhorn reveals short thesis on Athenahealth

Earlier this year, David Einhorn of Greenlight Capital explained why he’s shorting Athenahealth, saying he sees it as chief among what he calls “bubble stocks,” all of which he’s shorting. The day after his presentation, shares of the healthcare IT company slumped, falling by almost 14%. Through the middle of this month, shares remain down by approximately 3% year to date, and over 25% of the company’s shares are sold short.

Einhorn said Athenahealth’s valuation was simply too high, as the recent $130 per share price meant the stock was trading at a multiple of 3,547 times the company’s earnings in the last 12 months. The hedge fund manager said even if the company was growing “considerably faster,” its valuation is so high that it would still be too high.

Additionally, he points out that Athenahealth has a “tiny market share” and said he doesn’t think how the company can “become a backbone of anything.”

Wall Street doesn’t understand

Earlier this month, Athenahealth revealed that revenue would hit at least $740 million this year, a 24.3% growth rate, which is significantly slower than last year’s 40%. This year the healthcare IT company expects to lose $7 billion. However, Athena CEO Jonathan Bush said their short-term results don’t really matter. He said he wants to “create and curate the health care internet,” reports Fortune.

The CEO said Einhorn just doesn’t understand what they do. According to Fortune, even any of the company’s investors don’t really understand it.

The company’s main business involves handling insurance claims for small doctors’ offices, with that segment making up over 60% of its revenue. The company’s electronic medical record software is newer, but it gets high ratings in the healthcare industry, just as its first medical claims product has.

Shares of Athenahealth edged upward as much as 1% during regular trading hours today.