Simpson, Ripperger resign from board due to ‘irreconcilable differences’

This article was updated and new stakeholder and coverage added

In a regulatory filing, Tenet Healthcare (THC) said that on August 17, Randy Simpson and Matt Ripperger jointly submitted a letter to Tenet’s board notifying the board that Simpson and Ripperger were resigning from the board, effective immediately.

At the time of their resignations, Simpson served on the Nominating and Corporate Governance Committee and the Quality, Compliance & Ethics Committee of the board and Ripperger served on the Human Resources Committee of the Board.

As further described in the Letter, Simpson and Ripperger stated that their resignations are “due to irreconcilable differences regarding significant matters impacting Tenet and its stakeholders”.

In the letter, the two said:

“Prior to joining the Board, and in an even deeper manner today, we developed great respect for the core mission of Tenet in improving health outcomes and for so many of the 130,000 employees of Tenet who are directly engaged daily serving patients and communities in need. We joined the Board nineteen months ago as nominees of our employer, #Glenview Capital Management, in the interests of serving all of Tenet’s stakeholders and with a view towards building value for all shareholders. Both we as individuals, and Glenview as an owner, have determined that the most effective way forward to promote strong patient satisfaction and long-term value creation for Tenet is to step off this Board, which also triggers the expiration of Glenview’s restrictive ‘standstill’ agreement in 15 days, after which Glenview may evaluate other avenues to be a constructive owner of Tenet. Glenview remains fully committed to its ownership stake in Tenet and its desire to drive improved performance, culture and value. On a personal note, we both hope that you as individuals have come to respect and appreciate our methodical approach and our genuine desire to work constructively and cooperatively to find mutually agreeable solutions and strategies to enhance Tenet. While our resignation does confirm that this path has been fully exhausted as co-Directors, we all share a continued responsibility to move Tenet forward with urgency and veracity.”

BAD HISTORY

Tenet has a spotty history as far as its board goes. Back in 2002, there was a board shake up along with management change after the company disclosed of mis-reported results along with massive insider trading. The event caused shares of THC to collapse from $200 to $50 that led shares to settle in single digits before shares started to head higher.

PRICE ACTION

THC closed at $12.65 on Friday. THC has a 52-week trading range of $12.54 – $24.96. On Monday’s trading, THC rose 14.4% to $16.53.

NEW ACTIVIST INVOLVED

Earlier Mony, it was announced in a 13G filing that hedge fund Camber Capital had purchased 5.7M shares, or a 5.7% stake, in the hospital chain.

WHAT’S NOTABLE

In a research note to investors, Leerink analyst Ana #Gupte raised her price target for Tenet to $30 from $23 in anticipation of activist restructuring and said she sees further upside to as much as $50 as the process works itself through.

The analyst noted that she believes the announcement by Glenview, in combination with the company’s 8-K filing, is an indication that Glenview is moving to an aggressive activist role to unlock value. Gupte reiterated an Outperform rating on the shares.

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This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.