Athenahealth Inc’s (ATHN.O) Chief Executive Officer Jonathan Bush stepped down on Wednesday and the healthcare software maker said it was exploring options, including selling itself, following pressure from activist investor Elliott Management.
The company is in talks with third parties regarding a potential deal and the board has started looking for a replacement for Bush, it said.
Athenahealth’s shares rose as much as 8 percent to $163.94 in early trading. Elliott in May proposed an offer of $160 per share in cash for the company, valuing it at about $6.9 billion.
“It is easy for me to see that the very things that made me useful to the company … are now exactly the things that are in the way,” Bush said in a statement.
Bush, a nephew of former U.S. President George H.W. Bush, founded Athenahealth in 1997 and has been in the spotlight following media reports here of inappropriate comments.
Last week, Bush issued an apology after a report in U.K.’s Daily Mail newspaper said that he had assaulted his former wife 14 years ago.
Athenahealth spokeswoman Victoria Gavaza declined to comment on the reason for Bush’s departure.
“The resignation of the CEO will likely have a negative impact on the business. However, given the emergence in the press of several personal items, we understand the need to step aside,” Canaccord Genuity analyst Richard Close said.
The company, which has been under pressure from Elliott since it took a stake in the company last year, has in the past year cut jobs, hired former General Electric (GE.N) CEO Jeff Immelt as chairman and named a new finance head.
Immelt will now become executive chairman, the company said on Wednesday.
A spokesman for Elliott, which has an 8.9 percent stake in Athenahealth, said the company’s decision to explore strategic alternatives was “the right one”, adding that the hedge fund looked forward to participating as a bidder in the process.
“The company’s uneven performance over the past few years likely pushed Athenahealth’s major shareholders to advocate for exploring strategic alternatives,” Evercore ISI analyst Ross Muken said, adding that the company is unlikely to remain an independent entity.
Athenahealth, whose cloud-based service is used to track revenue from patients, physicians and hospitals, said CFO Marc Levine will assume greater day-to-day operational responsibilities.
Cantor Fitzgerald analyst Steven Halper said a sale could fetch a higher valuation following the company’s announcement.
“We assume any sale of the company will be equal or greater than Elliott’s current offer of $160 per share,” Halper wrote in a note.
Lazard and Centerview Partners are the company’s financial advisers, and Weil, Gotshal & Manges LLP is providing legal counsel.
Source: Reuters.com