Jeff Immelt plays key role in shepherding athenahealth sale
While General Electric was mired in financial struggles this week, its former CEO was masterminding the sale of a healthcare IT company.
Just seven months after Jeff Immelt resigned from GE’s top job, he was named chairman of athenahealth, a provider of digital services for doctors. In June, he was elevated to executive chairman after the CEO stepped down. And on Monday, Athenahealth said it would sell itself for $5.7 billion in a deal Immelt helped broker.
“Outsiders think this is like baseball and that if you have struck out a few times, you’re not allowed to play—but that’s not true” said Jeffrey Cunningham, who’s been a corporate executive and served on several boards. “It’s perfectly acceptable that he’s starting a second act.”
Of course, many would disagree with that assessment. To GE pensioners and investors, who’ve seen the value of the company shrink by more than half a trillion dollars over the past 18 years, Immelt’s tenure was a disaster. He was put in charge of an iconic powerhouse that for decades had been seen as corporate America’s crown jewel. A handful of ill-fated acquisitions and the financial crisis’ devastating blow to GE’s enormous finance division turned the firm into a case study of a conglomerate that lost its way.
His 16-year tenure ended abruptly in 2017 when shareholders grew frustrated by his failure to arrest the stock’s slide. It’s only plunged further since, leaving it at levels not seen since the financial crisis. That’s sparked even greater ire among those who blame Immelt for the company’s dwindling fortunes.
To others, he’s a world-class executive who had the near impossible task of shepherding a massive industrial company into a more nimble, high-tech future. It’s not surprising, then, that another firm would bring him in to lend a hand, said Cunningham, now a professor at the Thunderbird School of Global Management at Arizona State University.
“Typically, an outsider measures only outcomes and not process, and therefore they are subject to bias and a delusion about how business works,” he says, adding another baseball analogy: “You may be facing a pitcher—called the digital revolution—that everyone’s going to strike out on.”
Immelt played a critical role in helping athenahealth navigate through a challenging year, John Fox, a company spokesman, said. “Thanks in part to his great leadership, we’re now positioned well for our next phase of growth and success,” Fox said.
Immelt’s February appointment as athenahealth’s chairman came after Paul Singer’s Elliott Management pushed the firm to make changes to its operations and governance structure, and consider a sale.
At the time he joined the board, Immelt saw plenty of opportunity for the firm to grow. “When I looked at athenahealth, I see a certain size company that has a chance to be multiples of that,” he said in an interview with Bloomberg.
In June, he was named Executive Chairman after CEO Jonathan Bush abruptly resigned amid allegations of assault against his ex-wife and complaints about inappropriate behavior with female employees. Immelt’s first order of business was announcing that the board would evaluate “strategic alternatives,” including a sale or a merger, which Elliott had suggested all along.
On Monday, Elliott and private equity firm Veritas Capital struck a deal to buy athenahealth in an all-cash transaction. It will be combined with Virence Health, Veritas’s healthcare services company, which helps manage revenue and workflow for hospitals and physician practices. Virence CEO Bob Segert will run the combined entity.
The deal is expected to close early next year, and when it does, stock awards worth about $1.1 million that Immelt has previously received will vest, according to data compiled by Bloomberg.
Veritas, based in New York, invests in technology-focused companies. In April, it agreed to buy part of GE’s healthcare IT business for $1.05 billion.