Athenahealth CEO Jonathan Bush Steps Down as Company Considers Sale

Athenahealth announced Wednesday that Jonathan Bush, its co-founder and chief executive, is stepping down, and the healthcare IT company will explore “strategic alternatives” that could include a sale.

The news sent Athenahealth’s stock price up about 4 percent Wednesday morning, to more than $157 per share, as of this writing.

The moves come a month after Elliott Management, the activist investor that purchased a 9 percent stake in Watertown, MA-based Athenahealth (NASDAQ: ATHN) last year, made public an offer to buy the whole company for $160 per share in cash, which Elliott said would give Athenahealth an enterprise value of $6.9 billion.

In its offer letter to the company’s board, Elliott argued that Athenahealth’s stock has been underperforming and criticized the company for seemingly “reverting back to long-established patterns of challenged execution” and being “unwilling to explore strategic alternatives for maximizing value.” Elliott has since released two more letters putting pressure on the company. Athenahealth has said it’s undergoing a “thorough and deliberate analysis” of the May acquisition proposal, and that it also carefully considered an earlier offer made privately by Elliott.

Bush (pictured above), the nephew of former President George H.W. Bush, has come under increasing scrutiny in recent days. U.K.-based The Daily Mail reported allegations that Jonathan Bush physically abused his ex-wife more than a decade ago; Bush released a statement apologizing for his actions, according to Bloomberg. Past complaints about Bush’s conduct toward female employees have also surfaced in the past month, including a 2009 complaint, first reported by The New York Post, by a woman who reportedly left the company after she said he subjected her to a “sexually hostile” work environment, according to Bloomberg. Athenahealth reportedly settled the case.

Now, effective immediately, Bush is leaving the company he co-founded in 1997 and relinquishing his board seat, Athenahealth said in Wednesday’s announcement. The company said it has initiated a search for a new CEO.

To help smooth the transition, Athenahealth chairman Jeff Immelt has been named executive chairman, chief financial officer Marc Levine will take on greater day-to-day operational responsibilities, and board member Amy Abernethy will advise the management team on “data strategy,” Athenahealth said. Immelt, the former General Electric (NYSE: GE) CEO, was named Athenahealth chairman in February.

In a prepared statement, Immelt said Bush and Athenahealth’s board agreed a leadership change is “appropriate” as the company begins a new chapter. The possible moves include a sale of the company, a merger, or remaining independent under new leadership, Immelt said.

Bush got existential in his prepared statement about stepping down:

“I believe that working for something larger than yourself is the greatest thing a human can do. 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 lifetime 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 21 years, are now exactly the things that are in the way. I cannot imagine a single organization more loaded with potential to transform healthcare.”

Athenahealth’s products include cloud-based electronic health records software, mobile apps, and patient engagement and care services for hospitals and outpatient care centers. The company generated $1.2 billion in revenue last year, up 13 percent from the previous year. Its net income was $53.1 million in 2017, more than double its $21 million profit in 2016. Despite the leadership upheaval, on Wednesday Athenahealth reaffirmed its 2018 financial projections announced in February, which anticipate at least $1.3 billion in revenue this year.

Jeff Engel is a senior editor at Xconomy. Email: jengel@xconomy.com Follow @JeffEngelXcon

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