Healthways, North Tide strike a deal

Ex-Caremark CEO out of the picture as three directors agree to step down; new committee to review strategies

Healthways executives and the hedge fund manager Conan Laughlin at North Tide Capital have struck a deal to have the latter take three board seats and work with a newly named chairman to vet the company's strategies.

The compromise avoids a contested proxy vote scheduled for later this month. It calls for Healthways Chairman John Ballantine, Warren Neel and Daniel Englander to step down from the 11-member board to make room for Laughlin, veteran health care strategist Paul Keckley and former CVS Caremark official Brad Karro to take their place. North Tide also had pushed for ex-Caremark CEO Mac Crawford to join the board — and take over as executive chairman — but Crawford is not a part of the agreement announced Tuesday.

Healthways and North Tide — which owns 11 percent of the Franklin-based company — also have pledged to set up a Strategic Review Committee that will evaluate the company's growth plans. That group will include four directors, two of them North Tide delegates, and be chaired by Karro.

“We are pleased to have reached this agreement with Healthways, which we believe is in the best interests of all stockholders, and we look forward to getting started working with management and the Board to create value for shareholders, customers and employees,” Laughlin said.

Laughlin late last year launched a blistering attack on Healthways, saying that the company's management and board had lost credibility with investors and that CEO Ben Leedle needs to be replaced. Earlier this year, the parties exchanged settlement offers without success.

“We appreciate the productive and supportive comments we have received from many stockholders in recent weeks regarding Healthways’ strategic direction, our management team, and the progress the Company is making toward achieving sustained growth and profitability,” Ballantine said. “We have also heard their, and many of our customers’, concerns about the cost and disruption to our business of continuing the proxy contest with North Tide, and so we are pleased to reach this agreement.”

Shares of Healthways (Ticker: HWAY) were down slightly to $16.70 in pre-market trading. Year to date, they're up about 10 percent.