Billionaire Paul Singer, who runs the hedge fund Elliott Management, bought 9.2% economic interest in digital health company athenahealth, which caused the Watertown, MA-based company’s stock to soar on Thursday.
Elliott Associates said in a regulatory filing on Thursday “that shares of athenahealth were substantially undervalued.” The hedge fund will “propose changes to the company’s operations, board and dividend policy, as well as a potential sale,” reported Bloomberg.
"We are aware of Elliott’s filing and look forward to talking with them to hear their views about the company and discuss the actions we are taking to drive enhanced growth and value creation for all athenahealth shareholders," athenahealth's Holly Spring told Healthcare Dive in an email. "We have great confidence in the company and where we are headed."
Elliott Associates’ purchase of athenahealth stock comes two weeks after athenahealth reported a net loss of $1.4 million for Q1. CEO and President Jonathan Bush pointed to declining visits per physician and declining payments per visit as the reasons for the revenue loss.
Elliott Associates is generally known as an "activist investor," meaning an investor that seeks to influence and make changes to a company to increase the value of its stock. While no plans have been made public, cost-cutting, change of direction or a sale could all be on the table for discussion. The two parties could clash as athenahealth has grown into a force over the past decade with now more than 4,600 employees as Bush has emerged an outspoken, candid healthcare thought leader.
In February, Bush told Healthcare Dive he saw athenahealth moving toward networking and piecing together practices via technology, adding that approach would require a new architecture and style of business. He stated the company's focus for this year would hone in on cash savings and working to create a national patient index across the U.S. and a national calendar that acts like Open Table or TripAdvisor.
The company on Thursday announced the launch of MDP Labs, a new program hosted in the company’s San Francisco office, that invites all entrepreneurs with novel technologies that can help fix what is broken in healthcare to apply. The goal is to attract developers and entrepreneurs to help accelerate innovative solutions to the market.
MDP Labs is open to all healthcare and technology entrepreneurs, from seed-stage startups to mature companies. MDP Labs will not take equity in participating companies.