- Tenet Healthcare's board of directors reached an agreement with Glenview Capital Management under which Glenview withdraws its proposal to allow shareholders to take action by written consent without a meeting.
- Glenview — Tenet's largest shareholder — submitted its proposal last month, after in a filing complaining of underperformance and poor governance. The proposal could have allowed the removal of members of the board.
- In addition, Glenview has agreed to vote its shares in favor of all of the board’s nominees and support all board-recommended proposals at the company’s annual shareholder meeting.
Last August, two Glenview members left Tenet's board, citing "irreconcilable differences."
Since then, the company has sold off properties and announced layoffs. In addition, former CEO Trevor Fetter announced he would resign and stepped down sooner than expected.
The company, which currently owns 69 hospitals, last year identified $1 billion for divestitures in non-core markets and is already in the process of selling its revenue cycle arm Conifer.
In January, the Dallas-based company completed the sale of its Philadelphia properties and announced a definitive agreement to divest Des Pres Hospital to St. Luke's Hospital. Earlier this month, Tenet completed its divestiture of its Chicago property.
Tenet raised the number of expected layoffs from 1,300 to 2,000 in January. Last month, Tenet disclosed a $229 million loss for Q4 and a full year loss of $704 million.
However, the company had increased its 2018 guidance as its Q4 revenues were above market expectations. Tenet reported $4.97 billion in net operating revenue in Q4, a 2.4% increase over the same time period in 2016. Analysts had expected $4.87 billion for the period.
"The combination of flu-driven volumes in Q1 and seeming stabilization in broader volume trends, coupled with the cost cuts and efficiency initiatives mgmt. has put in place, should yield good NT results and translate into incremental positive stock momentum," Brian Tanquilut of Jefferies wrote at the time.
As part of the agreement with Glenview, the Tenet board is revising the company’s bylaws, including actions to:
- Revise the special meeting bylaw so that it can only be amended by a vote from shareholders representing a majority of the outstanding common stock;
- Hold its annual meeting at least every 13 months; and
- Add a shareholder rights plan bylaw with provisions including that approval from 75% of the members of the board of directors is required to adopt any future shareholder rights plan, and that the term of the rights plan must be limited to a maximum duration of one year plus a 90-day period to solicit shareholder approval of any longer duration, if applicable.
The special meeting bylaw gives Glenview more of a chance to exert its influence over the company.