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Analysis

Athenahealth Shareholder Lawsuits Dropped Over $5.7B Sale

By Jack O'Brien  
   January 29, 2019

Two months after athenahealth agreed to be acquired by two New York-based private equity firms for $5.7 billion, spurring three separate shareholder lawsuits, the plaintiffs have withdrawn their actions.

Three shareholder lawsuits involving athenahealth's $5.7 billion sale to Veritas Capital and Elliott Management Corp., two New York-based financial firms, were voluntarily dismissed Monday afternoon.

According to the Watertown, Massachusetts–based health technology servicer's filing with the Securities and Exchange Commission, signed by Marc Levine, CFO of athenahealth, after the announcement of its acquistion in a joint bid on November 11, three putative class-action lawsuits were filed in the folllowing two months. 

These lawsuits were preceded by an investigation from Kaskela Law LLC, a Radnor, Pennsylvania­–based law firm, on behalf of athenahealth's shareholders shortly after the merger agreement was announced.

Related: 4 Takeaways as athenahealth Sells for Less, Board Investigated

The class-action plaintiffs alleged that athenahealth leadership filed a "materially incomplete and misleading preliminary proxy statement" regarding the merger, and sought to halt the merger from proceeding. 

As part of a definitive proxy statement filed on December 21, athenahealth has agreed to new management arrangements.

Notably, the company will host a special meeting on February 7, where shareholders will vote on adopting the merger agreement.

The definitive proxy agreement also includes a discounted cash flow analysis from Centerview Partners LLC, which projected a price-per-share range of $121 to $148 as of November 8, though athenahealth agreed to be sold at $135 per share. 

Similarly, a discounted cash flow analysis from Lazard Frères & Co. LLC pointed to a higher EBITDA growth rate in the years ahead, projecting an increase from 5.3% to 7.1% by December 2022. 

Jack O'Brien is the finance editor at HealthLeaders, a Simplify Compliance brand.


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