At athenahealth, the CEO is out and it may be up for sale

The co-founder and CEO of athenahealth is stepping down and the medical software company is exploring a potential sale. It is already weighing a buyout offer from a frustrated shareholder.

The resignation of Jonathan Bush is effective immediately.

Athenahealth Inc. said Wednesday that Chairman Jeff Immelt, the former leader of General Electric Co., will become executive chairman. Chief Financial Officer Marc Levine will take on more responsibilities while the company searches for its next CEO.

Bush, 49, was CEO, president and board member since co-founding athenahealth in 1997. Levine, meanwhile, joined the company last December after serving as chief financial officer of JDA Software Group Inc.

Athenahealth, based in Watertown, Massachusetts, makes medical record, revenue cycle and care coordination products and delivers most of its offerings through cloud-based software.

"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 a statement issued through athenahealth. "With that lens on, it's easy for me to see 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."

The executive's resignation comes a few days after the New York Post reported that several years ago, Bush settled a sexual harassment claim with a former employee.

His departure and the athenahealth board's decision to consider a new path also comes a month after prominent investor Elliott Management Corp. said it had grown frustrated with the company's performance, and made a bid of about $6.5 billion to take the company private.

Elliott Management said in a letter that the company "despite all of its promise, has not worked for many years ... and will not work in the future."

The bid, for $160 per share, is under review.

Wednesday's announcements make it more likely that athenahealth will eventually be acquired, Leerink analyst David Larsen wrote.

The Elliott Management bid likely represents a floor for a deal price that could climb as high as $180 per share, SunTrust Robinson Humphrey analyst Sandy Draper said in a separate note.

"With Mr. Bush stepping down ... we believe it will make it easier for potential buyers to make substantial changes without having to go around him," Draper wrote.

Athenahealth shares climbed more than 6 percent to $157.45 in afternoon trading.