Big investor offers about $6.5 billion for athenahealth

May 7, 2018 by Tom Murphy
Big investor offers about $6.5 billion for athenahealth
In this May 12, 2014, file photo, Paul Singer, founder and CEO of hedge fund Elliott Management Corporation, speaks at the Manhattan Institute for Policy Research Alexander Hamilton Award Dinner in New York. Prominent athenahealth investor Elliott Management Corp. is offering about $6.5 billion to take the medical billing software maker private after saying it has grown frustrated with the company's performance. Shares of athenahealth soared early Monday, May 7, 2018, after the shareholder outlined its proposal. (AP Photo/John Minchillo, File)

Prominent athenahealth investor Elliott Management Corp. is offering about $6.5 billion to take the medical billing software maker private after saying it has grown frustrated with the company's performance.

Athenahealth stock soared Monday after the shareholder outlined its unsolicited bid.

The investor says it owns about a 9 percent stake in athenahealth, and the company has not made the changes it needs to grow and create value as a public company.

Elliott Management said in a letter to athenahealth's board that the company "despite all of its promise, has not worked for many years ... and will not work in the future." The letter, signed by Partner and Senior Portfolio Manager Jesse Cohn, adds that athenahealth has not made changes that would enable it to create "the kind of value its shareholders deserve."

Cohn noted that the company's leadership team lacks stability after going through five chief financial officers in the last four years. He also said the company has had problems with product execution and has missed guidance targets.

"Athenahealth's team has shown that it lacks visibility into its business performance," Cohn's letter stated.

Cohn wrote that Elliott Management had approached athenahealth about a deal last November involving the hedge fund and other parties it did not name, but athenahealth "refused to engage."

Athenahealth said Monday its board plans to carefully review the proposal from Elliott Management, which was founded by billionaire investor Paul Singer. Watertown, Massachusetts-based athenahealth makes medical record, revenue cycle and care coordination products and delivers most of its offerings through cloud-based software.

Elliott Management plans to take over athenahealth for $160 per share in cash. That's a 27 percent premium to the stock's Friday closing price of $126.08. The hedge fund also said it might "substantially improve" that price if it is allowed to do additional private diligence.

Leerink analyst David Larsen sees the offer as a positive.

He noted that athenahealth recently reported good first-quarter results, but the company is still dealing with a slow-down in the electronic medical records market and increased competition. He said in a research note that the company is making progress on a push to cut costs and expand operating margin, but it will take "considerable time" for big changes.

"In our view, Elliott's offer presents a good path to unlock value for current shareholders and we view the proposal favorably," Larsen wrote.

Shares of athenahealth Inc. jumped more than 16 percent to close at $146.75, while broader indexes rose slightly. The stock had slid about 5 percent so far this year as of Friday's close.

Explore further: BMC Software agrees to be sold for $6.6 billion (Update)

Related Stories

Riverbed Technology accepts $3.6B takeover bid

December 15, 2014

Private equity firm Thoma Bravo and a Canadian teacher pension will pay about $3.6 billion to take Riverbed Technology private a couple months after the computer networking equipment maker promised a thorough review of its ...

Dell board committee seeks info on investor plan

May 13, 2013

Dell board members say they need more details from investor Carl Icahn if he wants them to seriously consider his latest challenge to Michael Dell's $24.4 billion plan to take the computer maker private.

Elliott offers to buy Compuware for $2.35B (Update)

December 17, 2012

(AP)—Compuware shares jumped 17 percent Monday, after one of its largest shareholders offered to buy the software development company for about $2.35 billion in a bid to turn it around.

Recommended for you

Tiny 'water bears' can teach us about survival

March 20, 2019

Earth's ultimate survivors can weather extreme heat, cold, radiation and even the vacuum of space. Now the U.S. military hopes these tiny critters called tardigrades can teach us about true toughness.

A decade on, smartphone-like software finally heads to space

March 20, 2019

Once a traditional satellite is launched into space, its physical hardware and computer software stay mostly immutable for the rest of its existence as it orbits the Earth, even as the technology it serves on the ground continues ...

Researchers find hidden proteins in bacteria

March 20, 2019

Scientists at the University of Illinois at Chicago have developed a way to identify the beginning of every gene—known as a translation start site or a start codon—in bacterial cell DNA with a single experiment and, through ...

Turn off a light, save a life, says new study

March 20, 2019

We all know that turning off lights and buying energy-efficient appliances affects our financial bottom line. Now, according to a new study by University of Wisconsin-Madison researchers, we know that saving energy also saves ...


Please sign in to add a comment. Registration is free, and takes less than a minute. Read more

Click here to reset your password.
Sign in to get notified via email when new comments are made.