athenahealth Announces Strategic Initiatives to Drive Increased Levels of Profitable Growth and Enhance Shareholder Value
Thursday, August 3rd, 2017
athenahealth, Inc. a leading provider of network-enabled services for hospitals and physician groups, announced that the Board of Directors and management team are conducting a strategic review of the Company’s operational and financial strategy, leadership and governance. The Company intends to implement a series of initiatives that will sharpen its focus, generate cost savings and reinvest in its highest-value growth areas. The Board and management team are also working to preserve and build upon the Company’s culture of innovation, while ensuring that resources and talent are appropriately aligned with growth and the significant upside opportunities. This review takes into account the input of athenahealth shareholders representing a significant majority of outstanding shares as the Company works to accelerate sustainable, profitable growth and enhance both shareholder and market value.
“We have enjoyed 20 years of remarkable and rapid growth, helping healthcare organizations of all sizes reinvent workflows, advance connectedness and achieve strong financial and clinical results,” said Jonathan Bush, chief executive officer of athenahealth. “To continue executing on this mission, we are today announcing changes intended to achieve greater levels of profitable growth and unlock value. I am fully supportive of these initiatives and believe they are critical to driving value creation at athenahealth.”
Brandon Hull, Lead Director of the athenahealth Board, said, “The Board is unified in its belief that this review is a positive step to fortify the Company’s foundation. Given the growth of the Company and our increased scale and scope, we believe there is an opportunity to target current spending to drive enhanced, sustainable value for all athenahealth shareholders.”
The athenahealth Board and management team have commenced a comprehensive review of its operations, cost structure and capital allocation, with the assistance of a globally recognized consulting firm. The review will include all parts of athenahealth’s business, including sales and marketing, research and development, general and administrative, service operations, product portfolio and organizational structure.
In conducting its review, athenahealth has identified approximately $100 million in cost-savings opportunities that will drive efficiency and targeted investment in the Company's fast-growing hospital and network services businesses. athenahealth will provide additional information regarding details of these strategic initiatives, including plans to significantly increase operating margins, in 2018 and thereafter, by its third quarter 2017 earnings release anticipated in October 2017.
Structure and Governance
athenahealth also announced today that the Board of Directors has committed to further enhancing the depth of talent at the senior management level and intends to augment its senior management structure to establish the role of president. The president will be responsible for the execution of athenahealth’s business operations and will report to athenahealth CEO, Mr. Bush. As previously announced, the Company is also working to identify a CFO who has a record of operating discipline and value-creating capital allocation as well as attracting, developing and retaining top talent. The Board has retained a leading search firm to fill the president and CFO roles promptly.
The Board is also taking steps to strengthen its governance profile. The Board plans to separate the roles of chairman and CEO and is working to recruit an independent chairman. In addition, the Board has begun a search process to appoint an additional independent director. Given the Company’s enhanced focus on profitable growth and disciplined capital allocation, the Board’s skills matrix for new director candidates emphasizes individuals who have significant financial expertise and executive operating experience for high-growth, public companies and a record of profitably scaling high-growth businesses, particularly in the healthcare and technology sectors.
Mr. Hull concluded, “The Board is committed to acting in the best interests of all athenahealth shareholders. In addition to the review, we believe that the governance enhancements and additional depth of talent we are seeking will most effectively enable us to execute on the initiatives announced today and deliver value to shareholders. We are committed to these changes and we look forward to successfully executing upon them.”