- Athenahealth on Wednesday announced Jonathan Bush has stepped down as CEO, president and board of directors member, effective immediately, and that it is exploring "strategic alternatives" for the company, including a possible sale or merger.
- During the transition, former GE Chairman Jeff Immelt, who joined athenahealth in February, will serve as executive chairman.
- Bush’s exit from the company, which he helped found more than 20 years ago, comes a week after The Daily Mail reported that he assaulted an ex-wife. The move also comes as Elliot Management has put pressure on the embattled company to accept an acquisition deal.
Trading shares of athenahealth were initially halted on Wednesday but resumed and were trading up in early activity.
Athenahealth and Bush have been fighting with Elliott Management since the activist investor disclosed it had purchased 9.2% of company stock in May 2017. Elliot said in an SEC filing the stock was "significantly undervalued and represent an attractive investment opportunity."
Since that time, the Watertown, Massachusetts-based company has held off Elliot's hostile takeover attempts while reconfiguring its management structure and product offerings and trimming excessive expenses. However, while revenues increased year-over-year for 2017 and the first quarter of 2018, bookings were weaker than expected.
That likely caused Elliott to more aggressively push its plan for the company in early May, when it made an unsolicited offer for a deal valued around $6.5 billion. A week later, unpleased with a lack of response aside from a boilerplate press release from athenahealth, Elliott again urged the company to consider a sale, adding "we may be able to raise our offer substantially" to sweeten the deal.
On May 24, Elliott released a compilation of shareholder comments supporting the possible company sale, highlighting that athenahealth's largest shareholder, Janus Henderson, expressed its support in a May 15 SEC filing for exploring a sale process and raised concern over the company's execution of strategic initiatives.
Bush has always been known as an unusual and outspoken CEO. In the past week, he has made news in light of allegations of physically assaulting an ex-wife more than a decade ago and inappropriate behavior at an industry event last year. On May 29, Bush issued an apology for the physical assault.
"I believe that working for something larger than yourself is the greatest thing a human can do," Bush said Wednesday in a prepared statement. "A family, a cause, a company, a country — these things give shape and purpose to an otherwise mechanical and brief human existence. athenahealth is a near once in a life time example of such a thing. With that lens on, 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. I cannot imagine a single organization more loaded with potential to transform healthcare."
Leerink analysts wrote Wednesday that the news increases the likelihood of athenahealth being acquired.
"Jonathan Bush successfully built ATHN, but we ultimately believe that with his removal the board will be more focused on maximizing shareholder return. In our view today's announcement is a significant positive for current shareholders," the analysts wrote.
The company reaffirmed its 2018 guidance and added there is no assurance the news will result in a merger, sale or other business combination involving the company. "The company does not intend to make further announcements regarding the review unless and until the Board has approved a specific transaction or other course of action requiring disclosure," according to a statement.
Athenahealth's board has begun a process to identify CEO candidates. In addition to Immelt as executive chairman, Marc Levine, EVP, CFO, chief accounting officer and treasurer, will take on more day-to-day operational duties. Board member Amy Abernathy will advise on data strategy.