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Athenahealth said Wednesday it is considering strategic alternatives as its CEO Jonathan Bush steps down, effective immediately, as he faces allegations including that he attacked his then wife 13 years ago.
Athenahealth, which sells a software platform to medical providers, is fighting a takeover offer for $160 a share from Paul Singer’s activist firm Elliott Management. Before Wednesday’s announcement, the stock was at $151 a share, about 6 percent below the offer price. The company has a market capitalization of $6.1 billion.
Ahead of the announcement, Athenahealth shares were halted. They initially rose nearly 6 percent once trading resumed, hitting a 52-week high of $163.94.
As part of its strategic review, Athenahealth said it would consider a sale, merger or remaining an independent company. Elliot said it welcomes the board’s decision and believes it is the right one.
“We have long believed that athenahealth is a great company, and we look forward to participating as a bidder in the company’s strategic exploration process,” the firm said in a statement.
Athenahealth’s annual shareholder meeting is scheduled for Wednesday.
Chief Financial Officer Marc Levine is assuming day-to-day operations of the company, and Amy Abernethy will be advising the executive leadership on strategy. Former General Electric CEO Jeff Immelt has been appointed executive chairman to manage the transition.
Immelt was forced out of GE last year with the company’s stock in free fall. Company insiders said his unwillingness to hear bad news led to unrealistic financial goals, poorly timed questions and even mismanagement of the company’s cash. He was appointed chairman of Athenahealth’s board in February to the dismay of some shareholders.
Cowen said it wasn’t surprised by Wednesday’s announcement, and that it continues to believe selling the company poses the best potential exist for shareholders.
“The points made by Elliott were specific to (Athenahealth), but we also recognize a number of challenging broader macro drivers, as well, including slowing growth in the (electronic health records) industry,” Cowen analyst Charles Rhyee said in a note to clients.
Athenahealth on Wednesday backed its full-year revenue forecast of between $1.31 billion and $1.38 billion.
Bush, nephew of former president George H.W. Bush, founded the health-care technology company in 1997. He came under scrutiny after reports surfaced nearly two weeks ago that he attacked his ex-wife during a custody battle more than a decade ago. In recent days, examples of potentially inappropriate office behavior emerged.
“It’s easy for me to see that the very things that made me useful to the Company and cause in these past twenty-one years, are now exactly the things that are in the way,” Bush said in a statement.
In an email sent to Athenahealth employees obtained by CNBC, Bush said it’s “sad” for him to see that, but it’s also a “joyful realization.”
“Joyful, because it signifies that after all, our dear Goddess really was larger than me all this time,” he wrote, adding: “athenahealth really will launch beyond me, healing itself whatever wounds my own weaknesses have inflicted. Such a beautiful notion. So gratifying.”
Bush is the brother of Billy Bush, who was fired from NBC’s “Today” show after the airing in October 2016 of a salacious 2005 recording of then-presidential candidate Donald Trump.
Source – cnbc.com