Business & Tech

Jonathan Bush steps down from athenahealth

Jonathan Bush.
Bloomberg photo by David Rogowski
Jonathan Bush.

Jonathan Bush, a brash business executive from a famous political family, stepped down on Wednesday from the helm of athenahealth amid an aggressive takeover bid from a New York hedge fund that wants to shake up the Watertown-based health care software company.

Bush’s decision follows the sudden resurfacing in recent weeks of years-old allegations of improper behavior involving women, including his admission that he physically attacked his first wife before they divorced.

His departure clears away an important impediment to the $7 billion buyout bid by Elliott Management: Bush’s reluctance to relinquish control over the company he’d built over two decades.

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In a statement, Bush said he had come to accept that “the very things that made me useful to the Company and cause in these past twenty-one years, are now exactly the things that are in the way.”

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The company, which has about 2,000 employees locally, makes Internet-enabled information technology tools for health practices and has cast itself as a disruptor in the sector.

Athenahealth said Wednesday that it has initiated “a process to explore strategic alternatives,” including “a sale, merger, or other transaction . . . as well as continuing as an independent company.”

Athenahealth is only the latest Boston company to be remade by Elliott and other activist hedge funds.

Even athenahealth’s new executive chairman, Jeff Immelt, had his own clash with a hedge fund at his former company, General Electric, which is now in the midst of massive restructuring.

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Immelt declined to discuss his expanded role at athenahealth after a brief shareholder’s meeting Wednesday.

In a statement, the company said his “focus is on supporting a smooth transition” as athenahealth searches for a new chief executive. Chief financial officer Marc Levine will take over operational responsibilities.

Elliott, which controls 9 percent of athenahealth’s stock, has urged the company to consider a sale, arguing that it is underperforming and may do better under new ownership. Janus Henderson Group, another major investor, has agreed.

Bush in the past week faced mounting questions about his conduct, following news reports revealing that he hit his then-wife in 2005 as they were going through a divorce.

Reports also surfaced regarding complaints filed with the Massachusetts Commission Against Discrimination, in 2007 and 2009, that accused Bush of inappropriate conduct toward women who worked for him.

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Bush, who is also giving up his position as president and his membership on the board of directors, did not say Tuesday whether the revelations played into his decision to leave the company.

Elliott has declined to comment on any of the allegations against Bush.

In a statement, the firm praised the decision to consider a sale or merger.

“We have long believed that athenahealth is a great company, and we look forward to participating as a bidder in the company’s strategic exploration process,” the statement said.

Bush’s departure, just hours before the company’s annual shareholder meeting at the athenahealth headquarters, caps a dramatic reversal of fortune for a charismatic leader long seen as a visionary in the field.

Friends have said Bush is so dedicated to athenahealth that they can’t imagine him ever doing anything else. In 2016, he wrote in a blog post that he so enjoyed the startup-like feel of his company that he worried about how it would change as it grew.

“I wake up in cold sweats most nights fearing the opposite — that success and scale could, like a thief in the night, rob me and athenahealth of our edge,” he wrote in the article published on LinkedIn in 2016.

Bush, a cousin of former president George W. Bush, has long made the argument that services like those being developed by athenahealth can reduce medical costs and improve care by easing the administrative burden on doctors.

“I’m sad about it,” said Dr. Jim Greenberg, a Boston obstetrician who has known Bush for more than a decade. He described athenahealth as “the one company that was different” in a world of closed health records systems that have trouble communicating with one another.

“I think ultimately it’s going to make our health care more expensive,” he said of Bush’s departure.

Even before the allegations of impropriety, Bush was known for shooting from the hip in interviews, sometimes making off-color or irreverent remarks.

Asked in a Bloomberg TV interview about investors short-selling his stock, he shrugged: “I’m already rich. Who cares?

Elliott is deadly serious about the bottom line, however, and Bush resisted its advances.

When Elliott announced its bid for athenahealth last month, the hedge fund noted that its offer to buy the company last year had been rebuffed. And though it agreed to review Elliott’s most recent offer, athenahealth noted in a public back-and-forth with the hedge fund that the bid was “unsolicited” and accused the firm of “attempts to publicly pressure the board and management team.”

Nicole M. Boyson, a finance professor at Northeastern University, said athenahealth might have believed the company was safe because it has a corporate charter that is relatively resistant to shareholder activism.

But she said it is rare for a buyout target to issue the kind of noncommittal response to a suitor that athenahealth did to Elliott last month, and that the Watertown firm may have gotten a better outcome if it had acted sooner to begin a review like the one it initiated Wednesday.

“The takeaway is, you should respond to the activists, you should acknowledge them,” she said. “You don’t necessarily have to do what they tell you, but my research shows that your willingness to meet them halfway is better for shareholders in the long run.”

Athenahealth previously cut about 500 jobs from its global workforce of about 5,000 during the discussions with Elliott. The company’s stock jumped on Wednesday’s news, ending the day up 4.2 percent at $157.44 — close to the $160 per share price that Elliott has offered for the company.

Immelt said the company would consider a sale “with an open mind and a commitment to continuing to strengthen the company — including its rich data asset, platform strategy, and culture of innovation.”

Regardless of what happens, the company will look very different without Bush at the helm. And it’s not clear what’s next for Bush.

“I believe that working for something larger than yourself is the greatest thing a human can do. A family, a cause, a company, a country — these things give shape and purpose to an otherwise mechanical and brief human existence,” Bush said in his resignation statement. “Athenahealth is a near once in a lifetime example of such a thing.”

Andy Rosen can be reached at andrew.rosen@globe.com.