HAS SHAREHOLDER ACTIVISM REACHED HEALTHCARE
Afsaneh Naimollah
Healthcare Executive focused on AI, Next Gen Tech, Board Member and advisor. Former Global Head of Technology Group at Barclays Capital
Please read our full version of our June HIT Greatest hits newsletter HERE
On May 7th athenahealth received an unsolicited takeover offer from Elliott Management, one of the largest and most aggressive hedge funds on Wall Street. Elliott’s current offer is for $160 a share in cash; bringing total deal size to ~$7B. The offer compares to a trading range of $120-130 a share prior to the announcement.
Take-private transactions in our industry have been few and far between. Imprivata, Advisory Board, Envision Healthcare are some of the notable examples. Both the management and the board of these companies believed they were better off as private entities and proactively sought alternative options. In the case of athena, Elliott signaled its intention after it acquired 9.5% of the company last year. But until Jonathan Bush’s recent departure, the company refused any serious dialogue with Paul Singer, Elliott’s big boss.
Has shareholder activism finally reached healthcare? Would we see more financial buyers and hedge funds pursuing underperforming assets? In our opinion, the potential takeover of athena will not be an isolated event. Why shouldn’t activists pull up their chair and participate in reshaping our industry? Let’s face it, when it comes to successful restructuring of companies and industries, history is on the side of financial buyers. Most large M&A deals struck amongst strategic buyers and sellers fail to deliver in the long run. In an economically robust environment, this gives further impetus to hedge funds and PE firms to reach deeper into their pockets and make deals happen.
If you are a CEO of a mature health tech company in the current climate, the picture is not pretty. The startups are innovating faster than you can grow your company, your industry is navigating a shifting landscape and your stock price is underperforming the broader market. This is certainly true for the majority of public companies in our space. Our advice is not to resist market forces. So next time when Wall Street calls, invite them in and let the bidding begin!
Please read our full version of our June HIT Greatest hits newsletter HERE