Athenahealth has announced they are trimming 4 percent of their total workforce. With a large 900-person campus in Belfast, Maine that once belonged to MBNA credit cards, and a workforce of about 5,000 headquartered in Watertown, Massachusetts, there is considerable local concern in an area of Maine that offers few well-paying jobs. Reportedly dozens of jobs there will be lost. This caps a tumultuous period with the company. Athenahealth was acquired last November by Veritas Capital and Evergreen Coast Capital, then merged with a GE Healthcare spinoff they owned, Virence Health, in value-based care, under the Athenahealth name. Bangor Daily News
IBM Watson’s Drug Discovery product, which was targeted to pharmaceutical companies, is being cut back to work with only current partners and with clinical trials due to poor sales. According to The Register, a tart-tongued UK tech website which actually reached an IBM spokesperson, IBM’s Ed Barbini stated that “We are not discontinuing our Watson for Drug Discovery offering, and we remain committed to its continued success for our clients currently using the technology.” Also Seeking Alpha. IBM Watson and Watson Health, like Athenahealth, are moving through a rocky period of closing initiatives (Watson Workplace), layoffs, executive departures (head Deborah DeSanzo last November), bad publicity, and clients like MD Anderson who don’t part quietly. [TTA 8 Nov 18].
Another merged health infotech company may have a new owner soon. Waystar, which was formed by the acquisition of ZirMed and Navicure in 2017 and manages revenue cycles for 450,000 practices, is rumored to be up for sale by owner Bain Capital. Interested parties include Visa and Oracle. Bloomberg
CVS’ pickup of Aetna, and Cigna‘s acquisition of Express Scripts are reported to be clearing the Department of Justice anti-trust review within the next few weeks, just in time for pumpkin season. The DOJ may have concerns on some assets related to Medicare drug coverage and may require a sell-off to resolve them. One potential buyer is WellCare Health Plans, which this week completed its acquisition of Meridian Health Plans and entered the S&P 500 on Monday. The Cigna-Express Scripts combine may not require any asset selloff. Seeking Alpha (report is from the Wall Street Journal).
The once blazingly hot Athenahealth is up for sale but can’t seem to get arrested by another healthcare company. Both Cerner and UnitedHealthcare passed on an acquisition. One of the larger shareholders, Elliot Management, initiated moves toward a hostile takeover in May, and in the process managed to oust founder and CEO Jonathan Bush on still-murky charges of past domestic abuse and workplace sexual harassment. Mr. Elliot is partnering with Bain Capital which owns Waystar, a revenue cycle management (RCM) company from the merged ZirMed and Navicure. Waystar could benefit from Athenahealth’s systems and IP. Mr. Bush would receive a relatively small sum in a sale –$4.8 million– with new executive chair and former GE CEO Jeffrey Immelt earning $150,000 a month in salary and $150,000 in restricted stock perhaps looking for a new job. Elliot’s reputation is that of a corporate raider–taking over businesses to strip assets and sell off the remains. New York Post, POLITICO Morning eHealth.
UPDATED 19 Sept Reports from yesterday indicate that Mr. Elliot has ‘balked’ at the $160 per share price that Athenahealth is asking, and may be angling for a lower price, according to the NY Post report. Reportedly no one else–Cerner and UnitedHealthcare–is interested, though Athenahealth has extended the bid deadline to 27 September. There may be problems uncovered by the due diligence. It’s also a recognized hardball lowball strategy to get the share price way down. The industry is betting on the latter because the former is difficult to contemplate for customers and healthcare as a whole. Also HealthcareITNews.