Late last month, Healthways’ activist investor Boston-based North Tide Capital threw down the gauntlet again.
North Tide CEO Conan Laughlin announced that his hedge fund would nominate four new board members at Healthways’ upcoming annual shareholder meeting.
It’s a conflict Healthways wanted to avoid.
Healthways’ Chairman John Ballantine said that the board had offered an alternative proposal to North Tide, which Laughlin rejected. Instead, the hedge firm nominated four people to the Healthways board: former CVS Caremark CEO Edwin Crawford; former Caremark executive Bradley Karro; Paul Keckley, previously the executive director of the Deloitte Center for Health Solutions; and Laughlin himself.
This board scuffle is the latest in a sequence of conflicts between the Franklin-based health care services company and its most vocal investor.
A little background on North Tide: Laughlin launched the firm in 2011, and it currently manages about $1 billion worth of assets. As of the end of 2013, about 87 percent of those assets included investments in health care companies. At the time, North Tide owned more than $130 million worth of stock in managed-care company WellPoint and about $80 million worth of stock in generic drug maker Teva Pharmaceuticals.
The firm officially took on Healthways last October when North Tide changed its status with the Securities and Exchange Commission so that the hedge found could begin pushing for leadership changes at Healthways. At the time, though, Laughlin announced no plans to do so.
At the end of October, Healthways announced poor earnings for the third quarter — reporting a 64 percent drop in profits compared with the same period the previous year. In early December, Laughlin began pushing for CEO Ben Leedle’s removal. “We believe the board has an obligation to the shareholders of Healthways to remove Mr. Leedle from his position as CEO of the Company immediately, and initiate a formal process to identify a capable replacement,” Laughlin said in a letter to Healthways board. The board, in response, stood by Leedle.
Laughlin invested $6 million to purchase an additional 485,000 shares of Healthways during December 2013. By the end of the month, North Tide owned 3.85 million Healthways shares, or 11 percent of its common stock.
Date: Mar. 4, 2014