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Web Broker Makes Peace With Activist Investor

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What You Need to Know

  • The new board special observer, James Murray, will be nominated to a regular board seat.
  • An independent chairman also will be nominated.
  • The new deal is similar to a deal eHealth made with Hudson Executive Capital in March.

A web-based health insurance broker, eHealth Inc., will be nominating a new, independent director to make peace with  activist investor firm Starboard Value LP.

EHealth also will move to nominate an independent chairman at its next annual meeting.

The new deal appears to resemble a March deal eHealth made with another activist investor firm, Hudson Executive Capital L.P.

EHealth is a 24-year-old Santa Clara, California-based company that started out as a pioneer in web-based health insurance sales. It continues to sell some individual major medical insurance online but now focuses mainly on selling Medicare Advantage plans and Medicare supplement insurance policies online.

The company maintains that all but one of its board members has been an independent director.

The Board Deals

Hudson Executive Capital invested in eHealth in February, when the company’s shares were selling for less than $55 per share, and it declared they were undervalued.

EHealth persuaded Hudson Executive Capital to sign a cooperation agreement by agreeing to appoint John Hass, the former CEO of Rosetta Stone, and Cesar Soriano, the CEO of Confie Corp., to serve on the eHealth as independent directors.

Now eHealth has persuaded Starboard Value to sign a cooperation agreement by consenting to add James Murray, a former president of Magellan Health and a former COO of Humana Inc., to the board as a “special observer.”

EHealth also has agreed to nominate a permanent independent board member at its next annual meeting, and to nominate a new independent chairperson at the next annual meeting.

The previous chairman, Ellen Tauscher, died of cancer in 2019, when she was 67.

(Photo: Michael Nagle/Bloomberg)