Healthways board responds to North Tide criticism, ideas

Directors: Post-transformation, company 'ideally poised to achieve sustainable, profitable growth'

Healthways' board of directors responded on Monday to criticisms from hedge fund North Tide Capital's manager Conan Laughlin regarding the wellness company's strategies and governance.

North Tide owns 11 percent of the Franklin-based company and Laughlin has been calling for the removal of CEO Ben Leedle, among other big changes, since last fall. Laughlin nominated himself and local executives Mac Crawford, Paul Keckley and Brad Karro to the company's board as a way to "usher in a new era of shareholder value creation at Healthways."

On Monday, Healthways fired back, saying again that it supports Leedle's plans and that the heavy lifting needed to right the company's ship has been done.

"The entire board is actively involved in Healthways' strategic direction and has been working closely with the leadership team on the company's transformation from a disease management company into the definitive leader in the global field of population health management services," the company said in a release. "The board fully supports CEO Ben Leedle and the current management team in their execution of the strategy, and we believe Healthways is ideally poised to achieve sustainable, profitable growth now that the transformation is complete."

To that end, the company called North Tide's recently released analysis of strategic alternatives "deeply flawed" and questioned its commitment to stockholders.

"We fundamentally disagree with North Tide's proposals, including replacing management and selling or spinning off certain core assets," said the board. "We believe their short-sighted and ill-conceived agenda would derail Healthways' strong momentum and destroy stockholder value."

The board has nominated four existing directors — Chairman John Ballantine and newly elected Daniel Englander as well as Warren Neel and Kevin Willis — for new one-year terms. (The company committed 18 months ago to gradually declassify its board.)

Shares of Healthways (Ticker: HWAY) closed Monday's session up slightly at $16.53. Year to date, they're up 8 percent.