Elliott Management's letter to the athenahealth board proposing a take-private (May 2018)

About this letter

Jesse Cohn, partner and senior portfolio manager at Elliott Management, wrote this letter to the board of athenahealth on 7 May 2018. Elliott's funds owned common stock and economic equivalents representing 8.9% of the company, and the full text was filed with the SEC in an amendment to Elliott's Schedule 13D alongside a press release.

The letter follows a year of private engagement with management and the board, and a private approach in November about a possible take-private, which Elliott says the company refused to discuss. It now proposes publicly that Elliott acquire athenahealth for $160 per share in cash. The letter is organised under five headings: background to the proposal, Elliott's experience in private equity, details and financing, due diligence requirements, and next steps. Much of the background section is a critique of the company's record as a public investment.

What to notice

1. 1

   Elliott lists execution failures: five CFOs in four years, a long-held 30% operating margin target against 14% achieved in 2017, and 2017 bookings guidance cut twice and still missed.

“athenahealth as a public-company investment, despite all of its promise, has not worked for many years”