A New York hedge fund attempting to insert hospital CEO Nancy Schlichting and two other representatives into the board of directors of TeamHealth has a history of shareholder activism in the healthcare sector.
Jana Partners won three board seats at Walgreen Co. in late 2014 after declaring the drugstore chain underperforming just before Walgreen agreed to merge with Swiss company Alliance Boots.
Schlichting, who is the retiring CEO of Henry Ford Health System in Detroit, got to know Jana at that time.
She was on the board of directors of Walgreen during the Jana board push. And she remains a board member today of the merged entity, Walgreens Boots Alliance.
Schlichting has served on the board of Walgreen and the successor company since 2006.
Now Schlichting and Jana are eyeing TeamHealth, the giant hospitalist staffing company in Knoxville. Schlichting declined to comment for this story.
Last month, Jana demanded three board seats at TeamHealth, saying that strategic missteps by management and the TeamHealth board had left the company's stock undervalued.
Jana has proposed a slate composed of Schlichting, former CVS Caremark Chairman Edwin Crawford and Jana partner Scott Ostfeld.
In a statement, TeamHealth CEO Michael Snow said the TeamHealth board is evaluating whether to bring the slate forward for shareholder election at the company's upcoming annual shareholder meeting.
“The nominating committee of the TeamHealth board of directors is reviewing and considering Jana's nominations and will make a recommendation it believes is in the best interest of all TeamHealth shareholders,” Snow said.
He declined to comment further and the company said it has not announced the date of the meeting.
Typically, a company whose fiscal year closes Dec. 31, such as TeamHealth, would hold its annual shareholder meeting during the second quarter of the following year.
Jana gained its leverage at TeamHealth this year by spending $231 million to acquire 5.9 million shares of TeamHealth, or 8% of its common shares. The hedge fund has more than $11 billion of assets under management.
At an investment conference in New York last May, Jana managing partner Barry Rosenstein said the firm's activism at Walgreen helped to revamp the chain's board and smooth the way for major operational changes by Stefano Pessina, the new CEO of the merged company, according to a May 2015 story in the Street.
Layers of management were streamlined at Walgreen, store management was reorganized and distribution improved, Rosenstein said. Before the merger, Walgreen had 12 layers of managers between the CEO and store managers, compared with an average of five at leaner rivals.
Rosenstein was added to the Walgreen board of directors in September 2014. He remains on the board with Schlichting.
A receptionist who answered the phone Tuesday in Rosenstein's New York office said the company had no comment for this story.
In a note to investors this week, J.P. Morgan downgraded TeamHealth's stock from overweight to neutral after the price had run up to more than $43 a share from about $33 before the Jana announcement. The research note said the premium was presumably based on investor speculation that the Jana plan might rekindle merger talks between TeamHealth and rival Amsurg.
Late last year, TeamHealth's board rejected a $7.8 billion buyout offer from Nashville-based AmSurg, which then withdrew its offer.
