Athenahealth eyes $100M in cost-savings while CEO Bush loses president title
- Athenahealth announced on Tuesday it is augmenting its senior management structure. The company will establish the role of president, which will report to CEO Jonathan Bush. Bush previously held the title of president.
- The board of directors plans to separate the roles of chairman and CEO and is working to recruit an independent chairman. Athenahealth is still looking to fill a permanent CFO after Karl Stubelis left for Arcadia Healthcare Solutions in July.
- The company also announced it has identified about $100 million in "cost-savings opportunities that will drive efficiency and targeted investment in the company's fast-growing hospital and network services businesses."
The executive shakeup comes after activist investor Elliott Management disclosed a 9.2% economic interest in the health IT vendor in May. He said at the time "shares of athenahealth were substantially undervalued."
Soon afterward, athena's stock soared. While it's common stock is down from the recent high of $155.93 per share on July 21, the company's stock — which closed at $146.01 on Tuesday — is better off than it was about three months ago when it closed at $98.01 on April 28.
The recent announcement suggests Elliott's influence is seeping into the company, although Bush — a founder of the company — is retaining his role as CEO. Though it did not mention him by name, athena's announcement tipped its hat to Elliott, noting the company is conducting a strategic review of its operations, finances, strategy, leadership and governance that "takes into account the input of athenahealth shareholders representing a significant majority of outstanding shares."
The company stated it will provide more information around the $100 million in cost-savings opportunities, including plans to significantly increase operating margins next year and beyond by its third quarter 2017 earnings release.
Brandon Hull, lead director of the athenahealth board, said in a prepared statement, “The board is unified in its belief that this review is a positive step to fortify the company’s foundation. Given the growth of the company and our increased scale and scope, we believe there is an opportunity to target current spending to drive enhanced, sustainable value for all athenahealth shareholders.”
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