Athenahealth announces layoffs, possible office move
Move reflects 3 percent workforce reduction at Watertown-based software company
Athenahealth, the Watertownbased health care software company, on Thursday became the latest technology company in the area to announce layoffs — as well as a potential shakeup in its longstanding office space.
Chairman and CEO Bob Segert announced that 178 positions would be cut from athenahealth’s ranks, in addition to just over 100 employees being “redeployed to higher priority areas of our business,” according to a companywide e-mail obtained by the Globe.
As of November, athenahealth — which develops technology for health care settings — had about 1,500 employees in Greater Boston and about 6,500 globally, according to Segert.
When asked for comment on the job cuts, an athenahealth spokesperson clarified that the layoffs account for less than 3 percent of the company’s workforce.
“At athenahealth, we are continuously reviewing and evolving our structure and priorities in line with our growth strategy, macroeconomic conditions, and the evolving needs of our customers and business,” the statement said. “While this represents a small percentage of our total employees, it is difficult to say goodbye to any of our people and we are actively working to support all impacted employees.”
With the thinner workforce may come a pared-down footprint in Watertown’s burgeoning life-sciences hub, where athenahealth once held an outsized presence. Segert said in the e-mail that the company is “exploring moving to new, leased office spaces for our Watertown and Austin offices,” because of persistent low office attendance.
“As a result, we are looking for new, innovative spaces with smaller footprints that support flexible work and better align our financial investment in office space to our current hybrid work environment,” Segert wrote.
Until 2019, athenahealth owned its 29-acre Arsenal Street campus, but decided to sell it to focus more on its health care products. The company sold the 11-building complex for $525.5 million to Alexandria Real Estate Equities, and in turn, leased about half the space from Alexandria through 2034.
In the e-mail to employees, Segert attributed the costcutting measures to industry trends, including the waning of COVID-19 levels, the sluggish recovery of doctor visits, and hiring that has “continued to outpace our revenue growth.” He also pointed to unfavorable economic conditions, such as inflation, higher interest rates, and “changing tax regulations.”
“The combination of these factors has weighed on overall revenue growth and has put increasing pressure on the financial performance of the business,” Segert wrote.
These moves come after less drastic cost-cutting measures, including slowing hiring and limiting third-party spending, Segert noted. As of March 1, the company will also eliminate its mobile device and home Internet reimbursement programs and its transportation subsidy, the e-mail said.
Segert also noted that “some work we’ve done in the past will be right-sized or eliminated,” and that elements of the company’s operations organization would be streamlined.
Athenahealth is just the latest local tech firm to suffer layoffs as the sector buckles under the weight of pandemic-era growth and uncertain market conditions, with companies such as Wayfair, HubSpot, DraftKings, and Cometeer also slashing their ranks recently.
The biotech industry is also bracing for a rocky 2023, with falling stock prices, dried-up private funds, and sparse acquisitions stoking fear in local leaders.
In late 2022, Segert told the Globe that he would be interested in taking athenahealth public again, after private equity firms Bain Capital and Hellman & Friedman acquired the company for $17 billion in November 2021. Athenahealth initially went public in 2007.
“When you think about athena, it was a great public company and it lost its way a little bit,” said Segert. “We’ve transformed that, created a ton of value. It’s ready to go public again, if we so choose that path.”