Athenahealth Inc (ATHN.O) shares jumped nearly 20 percent on Thursday, after hedge fund Elliott Management disclosed a large stake in the healthcare software provider, saying it planned to push operational and strategic changes at the company.
News of Elliott's 9.2 percent stake in Athenahealth added more than $800 million to the company's market value, which surpassed $5 billion on Thursday.
The investment was disclosed in a securities filing and did not come with a letter from the fund, leaving Elliott's actual investment thesis and plan unclear for now.
Elliott's filing contained the standard language of a new activist campaign, saying the fund would seek to engage in a dialogue with Athenahealth's board regarding "numerous" operational and strategic opportunities to increase the stock price.
"We believe they (Elliott) see what we see, a great platform and product suite that is likely set to be a long-term winner but has struggled with value creation," Evercore ISI said in a research note.
The note said paths for the company include streamlining its investment, pushing stock returns over growth, and exploring the sale of the company to a private equity firm, a technology company, or a healthcare services company.
Late in April, shares of the company sank after reporting disappointing first quarter results.
"We are aware of Elliot’s filing and look forward to talking with them to hear their views about the Company and discuss the actions we are taking...," Athenahealth spokeswoman Holly Spring said in a statement, adding that the company is confident in its direction.
Athenahealth was co-founded by CEO Jonathan Bush, a cousin to former U.S. President George W. Bush and an executive who has publicly criticized the Republican party's plan to overhaul the U.S. healthcare system.
"While the company has had two consecutive quarters of less than stellar results, the core platform remains strong and steps to increase shareholder value should be viewed positively," Cantor Fitzgerald said in a research note.
(Additional reporting by Natalie Grover in Bengaluru; Editing by Sai Sachin Ravikumar and Nick Zieminski)