The couple who made Moorestown pharma-tech developer Tabula Rasa HealthCare Inc. a Wall Street favorite and then tried to stay in control after its stock price crashed and shareholders rebelled, agreed to leave after that its board of directors has reached an agreement with its main critic – the company. first shareholder.
Tabula Rasa announced Wednesday that chief executive and chairman Calvin H. Knowlton, 72, and his wife, co-chairman and chief marketing officer Orsula Knowlton, 54, will “retire” from the company, which advises medical providers on how to which prescribed medications might interact and suggests different combinations to better serve patients.
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Brian Adams, chief financial officer and co-chairman of the company, has been named interim CEO. Michael Purcell, a seasoned corporate auditor who joined the board in 2018, is the new chairman of the board.
As part of their departure, the Knowltons will receive their base salary, which totals $1.1 million per year for an additional 18 months, as well as health care and job placement services; plus shares currently worth $2 million for Calvin Knowlton and $1.4 million for Orsula Knowlton.
The Knowltons previously owned about 3% of the company, although their stake has dwindled due to both a sharp decline in the share price and margin calls from banks that funded loans on Calvin shares. Knowlton before they lose value.
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With the Knowltons’ departure, the board sold the company to California-based Indaba Capital Management LP, which owns about a quarter of Tabula Rasa’s shares, mostly acquired when the share price fell during the last year.
The stock briefly topped $80 at its 2018 high before losing more than 90% of its peak value as costs rose following a series of unprofitable acquisitions and sales and profit projections fell . The stock rose about 7.7% in Wednesday’s trading, closing at $4.90 per share.
Tabula Rasa also said Indaba founder Derek Schrier and ally Jonathan D. Schwartz joined the board upon the Knowltons’ departure. A. Gordon Tunstall, the former lead director who Schrier said relied too much on the Knowltons instead of seeking other shareholders, also agreed to leave the board as soon as Indaba names a replacement.
“The Knowltons have helped lay a solid foundation for the business” and build a strong management team that can drive sales, said Purcell, a retired Deloitte & Touche audit partner who joined the board. in 2018, in a press release.
Interim CEO Adams predicted ‘continued growth’, rising sales, earnings and share value as more health plans and patient care providers ‘at risk’ use Tabula Rasa’s pharmacy, drug risk management and business services.
The Knowltons defended their case in brief statements: Calvin Knowlton boasted of “strong momentum” and Orsula Konwlton said the couple were grateful for being able to help clients and patients.
The board also agreed to governance reforms and established a three-person strategic review committee, led by investor Schrier, to continue selling “non-core” businesses acquired by the Knowltons and “explore other opportunities to create value” – an investment banking phrase that typically includes consideration of a possible sale of the business.
In a statement, Schrier called the deal “a constructive agreement” to “open a new chapter” in the history of Tabula Rasa. He said the changes would help customers and patients as well as investors.
In a letter to board members earlier this year, Schrier wrote that the Knowltons had become “an ineffectual husband-and-wife management team” whose tenure had recently been characterized by “sustained underperformance” and a “appalling corporate governance” under a board that defended the Knowltons, instead of all shareholders.
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The couple have deep ties to Philadelphia’s pharmaceutical community. Calvin Knowlton headed a department at the city’s historic school of pharmacy, University of Science (now part of St. Joseph’s University) in the early 1990s when Orsula Voltis Thomas was earning her doctorate there. She went to work for her former Philadelphia-based drug management company, excelRx, in 1996. They later married and raised a family of 10 children, including those from previous marriages.
Knowlton sold his excellentRx in 2005 to Omnicare Inc. for $270 million, and the pair launched what is now Tabula Rasa, Latin for “blank slate,” the following year.
Backed by venture capitalists including Philadelphia-based Rittenhouse Ventures, they took the company public in a $52 million initial public offering in 2016. Over the next two years, the stock rose. increased, giving the company a value of over $1.5 billion. They bought a series of small businesses and sales topped $300 million last year. But by then, the stock price was already down as the company failed to translate new sales and business into profits.
The couple are finishing a 44,000 square foot mansion on nine acres on the border of Moorestown and Cinnaminson townships, which Schrier in his campaign for their ousting used as a symbol of how the Knowltons were spending the millions they got of the losing company. advance their lifestyles while shareholders lost value as the stock plummeted.
In a June board election, only a minority of shareholders voted for the Knowltons and their ally Tunstall, all of whom ran unopposed. At a 3-to-1 ratio, shareholders in June also voted against Knowltons’ salary package — he raised $6 million in cash and stock last year; she received $3.8 million.
Schirer increased the pressure on Tabula Rasa after the board, instead of acting on shareholder dissatisfaction, agreed to give additional shares to the Knowltons and adopted a “poison pill” plan designed to make more difficult a hostile takeover.
“The dissenters won,” said Charles Elson, a corporate governance consultant in Newark, Del. “The shareholders have made their point of view, the board of directors has rallied. The writing was on the wall, and now you see them coming out.