Following slower-than-expected growth in 2017, EHR vendor Athenahealth plans to cut 9% of its workforce to streamline its operational efficiencies and simplify the company’s management structure.
The company, headquartered in Watertown, Massachusetts, announced the workforce cuts in third-quarter financials, noting that the board of directors and the management team began a strategic review of the company’s operational and financial strategy in August. Through a new strategic plan that includes shuttering offices in San Francisco and Princeton, New Jersey, the company expects to save $100 million to $115 million by the end of 2018. Most of that will go toward the company’s bottom line.
The 9% workforce reduction equates to about 500 jobs. During an earnings call Friday morning, CEO Jonathan Bush said the cuts are intended to “make the company move faster.”
“We’re still in the early execution stages of this process, but I believe the actions we’re taking position us to deliver more consist profitable growth,” he said.
Although Athenahealth’s third-quarter revenue was up 10% compared to last year, Bush acknowledged that 2017 revenue has fallen below expectations, pointing to “lackluster market conditions in the post-Meaningful Use era” that have slowed the company’s growth rate.
The EHR vendor also anticipates $4 million in losses from hurricanes Irma and Harvey. Jack Kane, director and interim chief financial officer at Athenahealth, said the losses were tied to disruptions that negatively impacted claims and collections. He said Texas and Florida are both in the company’s top five states in terms of provider count.
Third-quarter losses tied to the two hurricanes amounted to less than $2 million, and the company expects to lose another $2 million in the fourth quarter.
“The impact has largely stabilized,” Kane said in an earnings call. “We do not anticipate a material effect on results beyond fourth quarter.”