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With athenahealth's founder and CEO Jonathan Bush out of the picture, what's next?

With athenahealth founder and CEO Jonathan Bush out of the picture, after having stepped down from the healthcare company he founded and led for 21 years, speculation about what’s next is rampant.

Bush stepped down on June 6, culminating months long-pressure from activist investing firm Elliott Partners and recent accounts of sexual misconduct involving women

Bush resigning increases the probability that athenahealth will be bought, David Larsen, an analyst at Leerink Partners, wrote in a note to clients the same day Bush exited. 

“The board will be more focused on maximizing shareholder return,” Larsen said.

For its part, Elliott said it welcomed the news that the company would consider a sale, although a statement issued by athenahealth said it could also opt to stay independent. Another option? A merger.

“We have long believed that athenahealth is a great company, and we look forward to participating as a bidder in the company’s strategic exploration process,” the investment firm said in a statement.

Elliott’s May 7 proposal would value athenahealth at $6.46 billion. Other large investors have also supported the company exploring a sale.

Piper Jaffray analyst Sean Wieland said athenahealth is still in a strong position, and expects any sale to be more than the $160 per share that Elliott has proposed.

“I think there’s better growth days ahead for the space as a whole, and in particular that there’s better growth days for athena,” Wieland stated in his memo. “They’re a disruptive software company in an industry ripe for disruption.”

Bush built athenahealth, based in Watertown, Mass., by taking on what he called “the back-office scutwork” that relieved small hospitals and doctors to do what they do best – take care of patients.

As athenahealth considers its options and embarks on the search for a new CEO, former GE CEO and athenahealth chairman Jeff Immelt, has been appointed executive chairman. 

“To ensure athenahealth maximizes shareholder value and is best positioned to realize the full potential of its premier healthcare technology platform, the board has authorized a thorough evaluation of strategic alternatives, including a potential sale or merger or continuing as an independent company under new leadership,” Immelt said in a statement. “We approach this process with an open mind and a commitment to continuing to strengthen the company.”

Piper Jaffrey’s Wieland speculates on which companies might be best suited to acquire athenahealth. 

He suggested that as a vertical SaaS company, potential buyers are many. They include mega software companies such as Microsoft, Oracle or Salesforce. He noted that financial buyers are also keen on the company's recurring revenue and strong ability to drive incremental margins.

“We believe there will be no shortage of bidders and with a $160 bid per share from Elliott Management on the table, $160 is the downside here,” Wieland added. “We are raising our price target to $179.”

Twitter: @Bernie_HITN
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