Bush Scion Is Out as Health Firm’s Chief After Intense Activist Campaign

Jonathan Bush resigned on Wednesday as the chief executive of Athenahealth amid a battle with the hedge fund Elliott Management.

A member of one of America’s best-known political families resigned on Wednesday from the health care technology company he started more than two decades ago, in a victory for one of the world’s most powerful hedge funds.

Jonathan Bush, a nephew of one president and cousin of another, stepped down as chief executive of Athenahealth under intensifying pressure from Elliott Management, which last month made a hostile takeover offer for the company. The $35 billion hedge fund is renowned for its use of sharp-elbowed tactics to accomplish its investing goals.

Late last month, a 2005 court filing that accused Mr. Bush of hitting his ex-wife surfaced. A few days later, Bloomberg News reported on a 2007 complaint filed with Massachusetts regulators by a female employee who cited inappropriate conduct by Mr. Bush.

In announcing his departure, Athenahealth said it was evaluating its strategic options, including a possible sale. For now, the company said, it will be run by Jeffrey R. Immelt, the chairman of the Athenahealth board and until last year the chairman and chief executive of General Electric.

Mr. Bush, 49, is a nephew of President George Bush and a cousin of President George W. Bush. Athenahealth, based in the Boston suburb Watertown, provides billing and other digital services for 114,000 medical providers and stores more than 110 million patient records.

In making its hostile takeover offer, Elliott argued that strategic and management miscues had left the company greatly undervalued. Athenahealth initially tried to defend itself against Elliott’s offensive, but pressure mounted as other shareholders, including Janus Henderson and ClearBridge, pushed the company to consider purchase offers. Both Janus and ClearBridge criticized Athenahealth’s management.

As the fight escalated, court papers surfaced alleging that Mr. Bush had physically and verbally abused his former wife, Sarah Selden. In one 2005 incident, he pushed her into a wall, “repeatedly slamming his closed fist into her sternum, his hand landing just inches from their baby who was crying,” according to a Massachusetts court filing reviewed by The New York Times.

Mr. Bush issued a public apology last month. “I take complete responsibility for all these regrettable incidents involving my dear former wife,” he said in a statement.

Mr. Bush, who worked as a New Orleans ambulance driver during college and afterward enlisted in the Army as a medic, founded the company that would become Athenahealth in 1997. It evolved into a technology firm that provided digital services to medical offices and digitally stored patient records.

The company was Mr. Bush’s passion. In the years before smartphones, he would go to bed with a pager clipped to his underwear in case of urgent calls.

Athenahealth sold shares to the public in 2007 and expanded rapidly, posting years of double-digit revenue growth. It maintained some of its start-up culture. Employees called themselves “Athenistas.”

But there were problems. Employees filed at least a dozen harassment and discrimination complaints against the company. A number of the complaints, filed with the Massachusetts Commission Against Discrimination, accused Mr. Bush of inappropriate workplace conduct.

An Athenahealth spokeswoman said the company was committed to maintaining a safe and respectful environment for all employees. Mr. Bush didn’t respond to a request for comment.

Amy Bridget Pooser, who worked for 10 years at Athenahealth, at one point as Mr. Bush’s chief of staff, said she had witnessed his offensive behavior, including inappropriate remarks about women.

“The same parts of his personality that caused him to sometimes be offensive to people are the same qualities that made him a revolutionary,” said Ms. Pooser, who now is a consultant in the health care industry. Still, she said, she was “devastated” to hear that Mr. Bush is stepping down.

In May 2017, Elliott disclosed that it had acquired a 9.2 percent stake in Athenahealth.

The hedge fund is known for its aggressive tactics. During a 12-year legal battle with Argentina over Elliott’s investments in the government’s defaulted bonds, for example, the hedge fund managed to seize an Argentine naval vessel in Ghana in 2012.

Elliott’s pursuit of a company run by a member of the Bush dynasty was notable in part because the hedge fund is run by Paul E. Singer. He has played a leading role as a financier of conservative politics. In the run-up to the 2016 election, Republican presidential hopefuls solicited Mr. Singer’s support. He ended up backing Senator Marco Rubio of Florida, a blow to Jeb Bush, one of Mr. Rubio’s rivals.

After disclosing its stake in Athenahealth, Elliott spent months pushing the company to cut costs and to name an independent chairman. Athenahealth announced layoffs last fall. Mr. Immelt joined as chairman in February.

In May, Elliott went public with an offer to buy the company for $160 a share, valuing it at $6.5 billion.

“Athenahealth as a public-company investment, despite all of its promise, has not worked for many years, is not working today and will not work in the future,” wrote Jesse Cohn, an Elliott official, in a May 7 letter to Athenahealth’s board.

Athenahealth’s shares rose more than 4 percent to $157.44 on Wednesday, giving the company a market value of about $6.4 billion.

Stephen Spruiell, an Elliott spokesman, praised Athenahealth’s decision to open itself up to a sale. “We look forward to participating as a bidder in the company’s strategic exploration process,” he said.

Announcing his resignation on Wednesday, Mr. Bush said, “It’s easy for me to see that the very things that made me useful to the company and cause in these past 21 years are now exactly the things that are in the way.”

Athenahealth’s annual shareholder meeting was scheduled for Wednesday evening in Watertown — the first annual meeting not attended by Mr. Bush.

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