On Wednesday, Athenahealth said that it is considering the strategic alternatives because its CEO Jonathan Bush is stepping down. The reason of this step is the allegations which he is facing including the issue that he attacked his then wife 13 years ago.
Athenahealth, which sells a software platform to medical providers, is dealing with a tough situation of 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 per the strategic reviews, Athenahealth said that 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.
The company said in a statement that, “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.”
Marc Levine, the Chief Financial Officer, is assuming day-to-day operations of the company whereas Amy Abernethy will be advising the executive leadership on strategy. Former CEO of General Electric, Jeff Immelt, has been appointed executive chairman to manage the transition.
Last year, Immelt was forced out of General Electric 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, had founded the health-care technology company in 1997. Two weeks ago, the reports surfaced that he attacked his ex-wife during a custody battle more than a decade ago. In recent days, examples of potentially inappropriate behaviour at the office. These reasons has made him an issue of proper scrutiny.
Bush said in a statement that “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.”
In an email sent to Athenahealth employees obtained by the source, 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.”