Boston-based Athenahealth is laying off a portion of its workforce to “decrease bureaucracy and consolidate capabilities" as part of a reorganization just two months after the company was taken private by Veritas Capital.
The company said the layoffs, announced to employees on April 23, would impact less than 4% of its global workforce.
The electronic health record (EHR) and practice management software vendor went private back in February after private equity firms Veritas Capital and Evergreen Coast Capital, a subsidiary of Elliott Management, acquired the company for $5.7 billion. As part of that deal, Athenahealth was combined with Virence Health, the former GE Healthcare value-based care assets that Veritas acquired in 2018.
“We recently launched the transformation of our business and are reorganizing our resources as we integrate athenahealth and Virence Health into a single company with a sharpened strategic focus and unified sense of purpose and direction,” a spokeswoman for Athenahealth said in a statement.
“As with any large transaction of this size, there are overlaps in functional areas," she said. "While we’ve had to make some difficult decisions, we have implemented a new organizational model that enables faster decision making, decreases bureaucracy and consolidates capabilities so we can best deliver value to the 160,000 providers on our network.”
Athenahealth’s acquisition concluded a months-long sales process that began when Elliott Management, an activist hedge fund, proposed a cash offer to take over Athenahealth in a deal worth nearly $7 billion. That kicked off a tumultuous several months in which founder and longtime CEO Jonathan Bush was forced to resign and the company began considering outside offers under the direction of chairman and former GE CEO Jeff Immelt. UnitedHealth and Cerner were reportedly among those who submitted initial bids.
When the company's acquisition by one of its top investors was announced back in November, company shareholders filed three separate class action lawsuits alleging that Athenahealth executives were holding back on sharing crucial information about how they arrived at a final sale price of the company of $5.7 billion. The lawsuits were voluntarily dropped in January after the company released an amended proxy statement, according to an SEC filing and court documents.
On October 2017, Athenahealth said it would lay off 9% of its then 5,305-person workforce, or approximately 500 people. Those reductions followed layoffs in October 2016, when the company cut 102 people in San Francisco and another 40 in Atlanta, representing 3 percent of its then 5,200-person workforce, according to the Boston Business Journal.
The Boston Business Journal also reported there has been a slight dip in the employee ranks even before the layoffs occurred. When the Veritas Capital acquisition was announced in November, Athenahealth had approximately 5,000 employees worldwide. As of March 1, the company had 4,901 employees. Beyond Watertown, Athenahealth has offices in Belfast, Maine; Austin, Texas; Atlanta, Georgia; and India, the Boston Business Journal reports.