Athenahealth’s recent SEC filing stokes speculation about a potential takeover

athenahealth headquarters
A recent financial disclosure lays out a compensation plan for Athenahealth executives in the event of a sale. (Athenahealth)

Athenahealth may have tipped its hand to a future sale, based on a recent filing with the U.S. Securities and Exchange Commission.

On Friday, the EHR vendor disclosed that its board of directors approved a “change in control severance plan” this month for the company’s top executives, including CEO Jonathon Bush. According to the SEC filing, company executives will be compensated if they're terminated from three months before to 12 months after a sale. 

Bush, for example, would receive his normal payroll for 24 months along with his annual bonus, while several other executives would receive 12 months compensation. In 2016, Bush made $590,000 in base salary with an annual bonus of $690,000.

The disclosure comes a week after the company said it plans to trim 9% of its workforce to simplify its management structure, a move that would inject at least $100 million into the company's bottom line by the end of 2018.

Although the filing sparked a new round of speculation, one analyst told FierceHealthcare the probability of an acquisition was still low. 

RELATED: Athenahealth trims 9% of its workforce, reports $4M loss due to hurricanes Irma and Harvey

Athenahealth spokesperson Victoria Gavaza said the new change in control plan was developed after an annual review of the company’s compensation strategy by the board of directors.

In line with our focus to attract and retain top talent, especially as we continue to grow as an enterprise, our board adopted these plans as part of our overall compensation strategy and philosophy. Our plans are in line with the market and peer practices,” Gavaza said in an email to FierceHealthcare. 

Athenahealth has been a frequent target in the acquisition rumor mill, particularly after the hedge fund firm Elliot Management disclosed a 9.2% stake in the company in May. Elliot Management has a reputation for facilitating acquisitions, and last week’s filing is another hint that the EHR vendor is pursuing a buyer or preparing for some type of organizational transition.

But the filing also doesn’t mean an acquisition is in the works, and purchasing the company could be a hard pill to swallow. According to Dodge, the chances of an Athenahealth sale “aren’t all that high,” in part because most ambulatory providers have already invested in an EHR system thanks to the HITECH Act, and because MACRA penalties aren’t strong enough to compel physician practices to make any drastic IT upgrades.

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Athenahealth also isn’t likely to get any interest from major EHR players like Cerner, Epic or Allscripts looking for a larger chunk of market share, so a potential suitor may come from outside the healthcare industry, Dodge said. But, he added, “you don’t need to own an EHR to be a disruptor.”

Dodge said a third factor may boil down to the company’s enigmatic CEO.

“Jonathon Bush is part of the culture of that company and I’d argue he’s still their number one sales guy,” Dodge said. “He’s not going to be the senior vice president of healthcare at Oracle, or something like that. If you do buy athenahealth, you have to assume you lose Jonathon.”

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