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Healthcare software provider Athenahealth to cut 9 percent of workforce
October 19, 2017 / 8:09 PM / a month ago

Healthcare software provider Athenahealth to cut 9 percent of workforce

(Reuters) - Athenahealth Inc (ATHN.O), which is under pressure from activist investor Elliott Management, said it would reduce about 9 percent of its workforce as part of efforts to generate $100 million to $115 million in savings by the end of 2018.

The healthcare software provider employs 5,528 people, according to its website.

“This is a fundamental refocusing of the entire company,” a company spokeswoman told Reuters.

Athenahealth, which also trimmed its 2017 revenue expectations on Thursday, is increasingly targeting selling to hospitals, a market it classifies as “fiercely underserved” by the current healthcare IT companies.

Elliott Management in May disclosed a 9.2 percent stake in Athenahealth and said it planned to push operational and strategic changes at the company.

Athenahealth has already said it plans to separate the roles of chairman and chief executive and recruit an independent chairman.

The layoffs would mainly affect sales, marketing, general and administrative, and some client-facing teams in the United States, the spokeswoman said.

Athenahealth said it expected charges of about $15 million to $25 million, largely due to the downsizing.

The Watertown, Massachusetts-based company cut its 2017 revenue forecast to between $1.20 billion and $1.22 billion, blaming weak demand and the recent spate of hurricanes that swept across North America.

Athenahealth had previously expected revenue of between $1.21 billion and $1.25 billion.

The company’s net income fell to $13 million, or 32 cents per share, in the third quarter ended Sept. 30, from $13.9 million, or 35 cents per share, a year earlier.

Excluding items, the company earned 56 cents per share.

Revenue rose 10.1 percent to $304.6 million.

Analysts on average were expecting a profit of 50 cents per share and revenue of $310.5 million, according to Thomson Reuters I/B/E/S.

Reporting by Tamara Mathias in Bengaluru; Editing by Sriraj Kalluvila

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