A healthcare company that fought an 18-month battle with an activist investor just struck a $5.7 billion deal to end the fight

Reuters/ Steve Marcus

Elliott Management founder Paul Singer.

• Healthcare IT company Athenahealth reached an agreement with Veritas Capital and Elliott Management to be acquired in a $5.7 billion deal.
• The deal comes after a long-running push from Elliott for Athenahealth to sell itself.
• Under the two big investment firms, Athenahealth will be combined with Virence Health, a company Veritas acquired earlier this year.

The Athenahealth saga is coming to a close.

On Monday, the healthcare company reached a $5.7 billion agreement with Veritas Capital and Elliott Management to be acquired.

The deal, which values Athenahealth at $135 a share, follows months of pressure from Elliott to strike a deal and go private. Athenahealth provides technology used by doctors and hospitals.

Elliott took a stake in the company in 2017 and started putting pressure on the company to sell itself. In May, Elliott made a bid for the company at $160 a share.

Tensions came to a head in June after the company's then-CEO Jonathan Bush stepped down after apologizing amid a report that he had assaulted his former wife 14 years ago. He also faced other allegations of misconduct involving women who worked for him at Athenahealth. Bush is a nephew of President George H.W. Bush and co-founded the company back in 1997.

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This wasn't Athenahealth's first brush with activist investors. In 2014, Greenlight Capital's David Einhorn shorted the company, arguing the stock was overvalued.

What's next

Under the two investment firms, Athenahealth will be joined up with Virence Health, a company Veritas acquired in 2018 for $1 billion from GE Healthcare.

Virence's chairman and CEO Bob Segert will lead the new company, which will be privately held. The combined company will keep the name Athenahealth.

Athenahealth is known for its cloud-based electronic health record software doctors and hospitals use to keep track of patient information and billing. Virence, for its part, also works with medical practices, providing technology that helps them track patients and billing, and coordinate their outpatient practices.

"Combining with Virence will create new opportunities for collaboration and growth," Athenahealth executive chairman and former GE CEO Jeff Immelt said in a release Monday. "Operating as a private company with Veritas's ownership and support will provide athenahealth with increased flexibility to achieve our purpose of unleashing our collective potential to transform healthcare."

Joined up, the two could have a bright future.

"The combined company, at some point, could become a more formidable competitor, especially in the population health area, which remains the next significant growth opportunity within healthcare IT industry," Cantor Fitzgerald analysts wrote in a note Monday.

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