Elliott Raps Athenahealth's 'Careless' Acquisition Response

The private equity firm says it has heard nothing from leadership at Athenahealth, one week after Elliott made a cash offer to buy the company for $160 per share and take it private in a deal valued at about $7 billion.

Elliott Management Corp. has sent a second letter to the board at Athenahealth Inc., urging them to prod the medical IT company's leadership to take up the acquisition bid made by the private equity firm.

"Last week, we made public our interest in acquiring Athenahealth, Inc. at a price of $160 per share in cash. Additionally, we made clear that we may be able to raise our offer substantially if given access to diligence," Elliott Partner Jesse Cohn said in the letter sent Monday.

"Since that time, we have heard nothing from the company beyond its cursory, boilerplate press release," Cohn said. "We have received no direct communication despite our emails and messages to Athenahealth offering to discuss next steps or to answer any questions regarding our proposal. None of the company’s advisors has contacted us."

Athenahealth issued a brief statement Monday night reiterating its response last week to the Elliott bid and said it would respond to the proposal "in due course."

Cohn called the silence from Athenahealth's leadership "concerning because, unfortunately, this is the same pattern of behavior we experienced when we tried to get the company to engage in November."

"Athenahealth's board refused to engage with us, despite our repeated offers to make ourselves available for discussion," Cohn said. "Moreover, as far as we are aware, Athenahealth did not even engage an investment bank to evaluate our interest, as no investment back or other third-party advisor contracted us."

The only response that Elliott has received so far from Athenahealth "amounted to nothing more than a one-paragraph letter dismissing our interest," Cohn said.

"This letter was dashed off so quickly that Athenahealth forgot to even sign it. (a signed version was transmitted to us 45 minutes later)," Cohn said. "Though minor, we found this careless oversight illustrative of the broader lack of seriousness with which Athenahealth has treated our efforts to engage."

In the acquisition bid pitched last week, Cohn said that Watertown, Massachusetts-based Athenahealth has a history of underperformance both strategically and operationally.  

"Unfortunately, we are faced now with the stark reality that Athenahealth as a public-company investment, despite all of its promise, has not worked for many years, is not working today and will not work in the future," Cohn said.

"Given Athenahealth's potential, this reality is deeply frustrating, but the fact remains that Athenahealth as a public company has not made the changes necessary to enable it to grow as it should and to create the kind of value its shareholders deserve."

Athenahealth Responds

Athenahealth issued the following statement late Monday:

"As stated in our May 7, 2018 press release, consistent with its fiduciary duties and in consultation with its independent financial and legal advisors, the athenahealth Board of Directors is carefully reviewing Elliott Management's proposal to acquire the Company for $160 per share in cash."

"The board will determine the course of action that it believes is in the best interest of the Company and athenahealth shareholders and will respond to Elliott Management's proposal in due course."