Tenet Healthcare board members Randy Simpson and Matt Ripperger, who both work for hedge fund company Glenview Capital Management, resigned from the healthcare company's board last week, citing "irreconcilable differences regarding significant matters impacting Tenet and its stakeholders."
Ripperger and Simpson joined the board 19 months ago, but Tenet continued to struggle during their tenure. Tenet’s stock price dropped to $12.92 per share last Wednesday after Tenet enjoyed $52 per share just two years ago. On Friday, Tenet's shares rose to $14.46 after the resignations, slightly above the $14.14 stock price the company's common stock opened at last Monday.
Axios reported the resignations could be the start of a battle between Tenet and Glenview, which owns 18% of Tenet.
In their letter, Simpson and Ripperger wrote they and Glenview believe “the most effective way forward to promote strong patient satisfaction and long-term value creation for Tenet is to step off this board.”
They said Glenview “may evaluate other avenues to be a constructive owner of Tenet. Glenview remains fully committed to its ownership stake in Tenet and its desire to drive improved performance, culture and value.”
Tenet created the two board seats for Glenview as part of an arrangement in January 2016. The agreement came in exchange of Glenview not challenging the company’s board of management at the annual meeting. That arrangement included an option for Glenview to proposed two additional board members.
Glenview is Tenet's biggest shareholder, but the hedge fund reduced its healthcare investments last year. It unloaded stock in 11 of 16 healthcare companies. That included hospital chains, such as all of its 11.59 million shares of Community Health Systems, and payers like Aetna, Anthem, Cigna and Humana.
Meanwhile, Tenet Healthcare, the Dallas-based for-profit health system with 70 hospitals, recently reported a $56 million loss in the second quarter because of declining admissions. Tenet saw a 4.5% decrease in total admissions in the first half of the year.
In announcing the second-quarter results, Trevor Fetter, chairman and CEO, said, “While we experienced a softer volume environment in the second quarter, our teams responded well with solid performance on cost control, which mitigated the impact on our results.”