Immelt steps into new challenge as chairman of athenahealth

Just months after leaving the helm of General Electric Co., Immelt will become chairman of Athenahealth Inc., maker of an online platform that helps doctors manage their practices. At roughly $5.4 billion, it has a market value approximately 4 percent that of GE.

Athenahealth has seen its sales growth slow for several years, and it has come under pressure from a prominent activist investor wanting to shake up how the business is run.

Elliott Management Corp., led by billionaire Paul Singer, disclosed a 9.2 percent stake in the company last May and said it would seek talks with management about possible changes in the company’s operations, board composition and dividend policy. It also said it may push for a potential sale.

In August, Athenahealth said it planned to split the roles of chairman and chief executive. Jonathan Bush, one of its founders, has served as chairman, CEO, and president. The company has said it will search for a new president and it expects cost cuts to produce $100 million to $115 million in savings.

Immelt-Jeff-CROP.jpg
Jeffrey Immelt. Photographer: Andrew Harrer/Bloomberg

Shares of Athenahealth rallied 27 percent in 2017, coming much of the way back from a 36 percent rout the year before. But they remain well below the high of more than $204 hit in March 2014, trading at about $134 on Wednesday in New York.

Immelt, who navigated a turbulent period at GE as he refocused the company on its core industrial businesses in the wake of the U.S. financial crisis, stepped down after 16 years in the CEO and chairman posts last year. He said he can help Athenahealth grow.

“I’ve always had a real affinity for founders that are trying to scale,” Immelt, who is 61, said in an interview. “When I looked at Athenahealth, I see a certain size company that has a chance to be multiples of that.”

The role is separate from Immelt’s other post-GE job, as a venture partner at investment firm New Enterprise Associates. Immelt said he plans to invest $1 million of his own money in Athenahealth, based in Watertown, Massachusetts. His connections to hospital systems from his time running GE’s health-care business will help the company as it seeks to expand beyond smaller practices, he said.

“I can get into any hospital CEO’s office,” said Immelt, who as GE’s chief previously squared off against Elliott in a showdown over a 3-D printing company.

Bush, who will remain Athenahealth’s chief executive, said that he appreciates Immelt’s deep knowledge of health care and his experience coaching executives.

“We need to keep our focus sharp and we need to keep our company efficient,” said Bush, a cousin of former president George W. Bush and brother of entertainment figure Billy Bush. Immelt, he said, will help evaluate opportunities and strategic direction.

Athenahealth said in November that it had named a former Hewlett Packard executive, Marc Levine, as its chief financial officer.

Henry Ellenbogen manages the $22 billion T. Rowe Price New Horizons Fund, which holds a major investment in Athenahealth. He said Immelt’s appointment is key to its effort to transition to a more mature growth company.

“It’s really a credit to the company,” Ellenbogen said of Immelt’s appointment. “I put it in the context of the transition Athena has taken over the last year.”

GE shares suffered as Immelt transformed the sprawling conglomerate into a more focused industrial manufacturer, falling 35 percent during his tenure.

The problems have continued under new CEO John Flannery, who cut GE’s dividend by half and faces questions from the Securities and Exchange Commission regarding the company’s accounting for some insurance policies. GE has said it is cooperating with the inquiry.

Immelt declined to discuss his former company’s woes, including the SEC probe.

“I love the company, I believe in the management team, I’m a huge shareowner,” he said. “I just have great faith in the company to really get ahead. That’s all I can really say.”