NextGen Healthcare Founder and Director Sheldon Razin announced his nomination of four new candidates to the company’s board in an effort to improve the company’s performance.
Razin, along with fellow director Lance Rosenzweig, issued a letter to stakeholders saying that Board Chair Jeffrey Margolis and his allies had established an “imperial boardroom culture.”
“Despite the Company’s dramatic underperformance during Mr. Margolis’ tenure, he has consistently dismissed divergent viewpoints and focused instead on tightening his grip over corporate decision-making,” wrote Razin and Rosenzweig.
“In our view, an adequately refreshed and reinvigorated Board is essential to ending years of stagnation and underperformance relative to peers,” they said.
Margolis and NextGen representatives did not respond to Healthcare IT News‘ requests for comment by press time. However, NextGen released a statement pushing back on Razin’s performance claims and revising its board slate to exclude both Razin and Rosenzweig.
WHY IT MATTERS
This past Tuesday, the company announced the selection of two new directors: Dr. Geraldine McGinty, a faculty member at Weill Cornell Medicine, and Pamela Puryear, former chief human resources officer at Walgreens Boots Alliance.
Razin and Rosenzweig in their letter called the self-directed board refreshment a “reactionary and self-serving attempt on the part of certain incumbents to further concentrate their control.”
They characterized NextGen’s performance as plateauing and cited it as evidence of the need for new leadership.
“Regrettably, it has become clear to us that most of the board is unwilling to take the steps that we feel are needed to reverse NextGen Healthcare’s anemic growth, deteriorating margins, poor hiring and operational practices, and wasteful capital allocation policy,” they wrote.
As reported by Bloomberg, NextGen’s shares have fallen about 18% this year.
Razin’s new nominees include:
- Kenneth H. Fearn, founder and managing partner at Integrated Capital LLC
- Ramon Gregory, senior vice president of customer care at Samsung Electronics America
- Julie Schoenfeld, an entrepreneur in residence at the California Institute of Technology
- Ruby Sharma, managing partner at RNB Strategic Advisors
NextGen’s Board of Directors, minus Razin and Rosenzweig, issued its own public statement in response to the letter, urging stakeholders not to be “misled” by Razin’s “false claims.”
“The first time we learned that Shelly desired – and had secretly interviewed other candidates – was when he publicly announced his alternative, control slate of directors,” said the board.
The statement said the board intended to add two additional nominees to its director slate and that it was making “good progress” on the selection of a new CEO.
“New leadership has transformed the company into a market leader with integrated and scalable platforms and an exceptionally engaged team of executives and employees,” the statement said.
THE LARGER TREND
NextGen has been at a transition point for several months, with former president and Chief Executive Officer Rusty Frantz announcing his mutual separation from the company in June after six years.
But as the board noted in its statement to shareholders, KLAS also recognized the vendor as one of its Best in KLAS awardees for ambulatory electronic health records and practice-management software in 2021.
ON THE RECORD
“We want to affirmatively state that we have no interest in engaging in a rancorous public election contest,” said Razin and Rosenzweig.
“We are already starting to work with our slate to prepare a facts-based evaluation of NextGen Healthcare’s current challenges and a thoughtful strategic plan for positioning the company to achieve the results shareholders so desperately deserve,” they added.