Electronic healthcare company athenahealth on Thursday laid off 500 workers and said it would rely on an IDEXX Laboratories Inc. executive who also is on its board to help it reorganize and focus more on profits.
The operator at the Belfast medical billing operation would not relay calls to management and said employees are not allowed to comment on whether it was impacted. WABI reported some workers were issued pink slips.
“We’re not providing a breakout of layoffs at this time,” athenahealth headquarters spokeswoman Victoria Gavaza wrote in an email to the Bangor Daily News. “All geographies are impacted to varying extents. We didn’t announce any change of plans specific to our space in Maine.” She said the most significant changes are in sales, marketing, administration and client support.
The Belfast Chamber of Commerce said about 900 people work at the medical billing facility, which took over the former MBNA call center in 2008.
Behind the cuts was Elliott Management, an activist hedge fund that buys large stakes in big companies in an effort to influence their business and management. The fund bought 9.2 percent of athenahealth on May 18. On Aug. 1 athenahealth said it would review its operational and financial strategy, leadership and governance to save $100 million to $115 million by the end of 2018.
“We took into account feedback from shareholders with a significant share [in the company],” CEO Jonathan Bush said on conference call with investors Friday morning. He said the company is “fighting headwinds” in a lackluster market and the belt-tightening isn’t a one-time event.
“The arrival of our activist investor caused the company to look at itself through a different lens,” athenahealth interim Chief Financial Officer Jack Kane said. “Our mindset has changed with the new management processes in place.”
The company said it would make those savings, including by cutting about 500 jobs through its seven locations, or about 9 percent of its total workforce. It is closing offices in San Francisco and Princeton, New Jersey, selling a corporate jet and reorganizing to trim layers of management. It also plans to rent out excess space in existing offices.
CEO Jonathan Bush said IDEXX Laboratories Inc. Chief Financial Officer Brian McKeon, who was appointed to athenahealth’s board on Sept. 5, will be a major part of the company’s retooling. McKeon also is executive vice president and treasurer of IDEXX, a Portland animal health company.
At the time McKeon was appointed to the board, Bush said, “We believe Brian’s expertise, especially in driving operational focus and profitability, will support the strategic initiatives we have underway to accelerate value creation across the athenahealth business and work toward our mission to become healthcare’s first platform company.”
Part of the savings will be used to improve the company’s profitability. The worker cuts came the same day the company announced financial results for its third quarter ended Sept. 30. Revenue rose 10 percent to $305 million over the previous year’s third quarter, and net income using common accounting rules was $13 million, down from $13.9 million last year.
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