Tenet Healthcare Corp. announced the addition of two board seats and independent directors Friday, fulfilling an agreement with investor Glenview Capital Management that prevents the hedge fund from seeking outright control of the company.
Tenet has added former Lincare Holdings CEO John Byrnes, 58, and Peter Wilver, the 57-year-old chief administrative officer of Thermo Fisher Scientific. The additions temporarily increase the size of the Tenet board to 14.
The new directors were nominated by Glenview and approved as independent directors by the other 12 members of the board.
Led by Larry Robbins, Glenview is Tenet's largest shareholder with 17.9 million shares or 18% of the company's outstanding common shares.
Byrnes and Wilver are the third and fourth Tenet board members nominated by Glenview in less than a year.
In January, Tenet, the nation's third-largest investor-owned hospital chain, added Glenview designees Matthew Ripperger and Randy Simpson to its board.
In exchange, Glenview agreed not to raise its stake in Tenet beyond 25% or join any other investor seeking to oust management or force a sale or merger of the company.
When that deal was cut, Glenview had accumulated its huge stake in Dallas-based Tenet and announced that it was trying to influence change at the struggling company.
The agreement also included a provision for Glenview to nominate two more board directors beyond Ripperger and Simpson as long as it maintained at least a 10% stake in the company.
The additions of Byrnes and Wilver this week make good on that pledge. In a letter to Glenview dated Nov. 2, Tenet Vice President and Deputy General Counsel Paul Castanon notes that the board additions satisfy the agreement.
“Glenview shall no longer have any rights to propose individuals for nomination to the board,” Castanon wrote under the previous agreement.
Byrnes, Wilver, Ripperger and Simpson will be included on a slate of directors that the board will nominate for election at the 2017 annual shareholders meeting.
That will give Glenview more influence on the board, in that the investor will have nominated four of the 12 directors who will ultimately serve on the board if shareholders approve the 2017 slate.
Between 1997 and 2015, Byrnes was CEO of Lincare, one of the nation's largest providers of oxygen and other respiratory therapy services to patients in their homes.
Wilver was CFO at Thermo Fisher Scientic for 11 years before being promoted to executive vice president and COO in 2015 in charge of the life-science company's global business services unit.
Tenet has had a rocky year.
The company's stock was trading at about $24 a share on Jan. 19 when the standstill agreement was reached. It closed Thursday at $17.48.
It had traded as high as $59.43 per share in July, 2015, until most hospital and physician-staffing stocks began a precipitous decline on rising labor costs and flattening volumes from the Affordable Care Act exchanges.
This week, Tenet reported a net loss from continuing operations of $9 million in the third quarter compared with a $28 million loss in the year-earlier quarter.
Though same-hospital revenue grew 5.3% in the quarter on a 1.4% increase on adjusted admissions, Tenet eked a less than 1% gain in adjusted EBITDA to $570 million from $566 million in the year-earlier quarter.
Tenet continued a string of financial misses in the second quarter when it posted a loss of $44 million and agreed to settle for $514 million a federal fraud case over allegedly making kickbacks to doctors for maternity referrals to four Atlanta hospitals it currently or previously owned.