Tenet Jumps After Adding Directors From Top Investor Glenviewby
Analyst raises rating as concerns ease on Glenview's stake
Agreement allows two more directors to come from Glenview
Tenet Healthcare Corp. rose as much as 6.3 percent in New York after the hospital chain added two new board directors from its largest shareholder, Glenview Capital Management.
Tenet expanded its board to 12 members to include Matthew Ripperger and Randolph Simpson of Glenview, owner of 18 percent of Tenet’s shares, and they will remain directors if the hedge fund keeps its stake at certain levels, according to a company filing. Tenet rose 68 cents, or 3 percent, to $23.76 at 11:27 a.m.
The Glenview appointments ease concerns that the hedge fund may suddenly sell its stake in Tenet, and may improve the company’s communication with investors, said Sheryl Skolnick, an analyst with Mizuho Securities USA. Hospital operators have been under pressure in recent months amid concerns that benefits from the Patient Protection and Affordable Care Act have slowed, and a mild flu season has hurt admissions.
“That relieves a huge amount of pressure, in our view, and makes strides in de-risking the stock,” Skolnick said in a note to clients, raising her rating on Tenet to buy from neutral.
Ripperger will resign from the board if Glenview’s stake falls below 10 percent of Tenet’s shares, and both he and Simpson will leave if the stake falls below 5 percent, according to the filing. The agreement also allows Glenview to propose two additional members to Tenet’s board effective Jan. 31, 2017.