Athenahealth bulks up executive leadership, plans to cut $100 million in costs as part of growth plan
Athenahealth revealed plans this week to change its executive organizational structure with a broad initiative to ratchet up profitability. Founder Jonathan Bush will continue as CEO but the company is looking to hire for his president and board chairman titles.
The strategic initiative is seen as a reaction to falling than rising stock prices, rumors that the cloud-based EHR vendor is ripe for a takeover, activist investor Paul Singer’s firm Elliott Associates acquiring nearly 10 percent of athena’s stock, and what Bush has publicly described as uncertainty around healthcare legislation that is bad for business.
“Athena is the rare, early stage growth company that has reached $1 billion in revenue. As Athena enters its next stage of growth, it needs a management team and operating plan that can successfully tackle the next stage of growth,” said T. Rowe Price New Horizons Fund portfolio manager Henry Ellenbogen. “This plan is a large step in the right direction. Athena can become a market leader and build a durable and sustainable company.”
In addition to bringing in a new president and chairman, the appraisal spans the company’s operational, financial and governance strategies, Bush said in a statement on Tuesday. The company also plans to roll out initiatives aimed at sharpening athenahealth’s focus by generating cost savings and reinvesting in its highest-value growth areas.
Investment firms UBS and Leerink posted positive feedback on athenahealth’s plan. UBS, for its part, said it expects that shifting to a more profit-focused model will help athenahealth reap new opportunities.
“We are encouraged by the move, the focus on operating margin expansion, and see the changes as largely beneficial for investors,” Leerink stated in its take on the initiative. “And we look forward to additional information and clarity surrounding the cost-cutting initiatives.”