Following a string of missteps and controversy, Accretive Health Inc. on Tuesday replaced its co-founder, President and Chief Executive Mary Tolan with Stephen Schuckenbrock, former president of Dell Services.
Tolan, the politically connected former consultant who went head-to-head with the Minnesota Attorney General last year, will remain with the Chicago-based hospital billings and revenue management company as board chairman, where she will continue to play a hands-on role in managing customer relationships and courting new prospects, she said in a conference call with Wall Street analysts.
She'll replace another Accretive co-founder, serial entrepreneur J. Michael Cline. Cline will continue as a company director.
Schuckenbrock was previously head of Dell Services, an $8.5 billion business unit where he was responsible for Dell's global IT services. After nearly six years with the company, he resigned abruptly in December to "pursue other opportunities." Before that, he was co-chief operating officer and executive vice president of global sales and services for EDS, an IT services company acquired by Hewlett-Packard for $13.9 billion in 2008. He also was COO of the IT consulting firm The Feld Group.
His primary hurdle in his new position will be to restore investor confidence in the company, which has been embroiled in a tangle of financial and legal troubles over the last two years.
Shares of Accretive, which closed Tuesday down 2.4 percent at $10, once traded higher than $30 per share. Its stock price is down nearly 63 percent over the last two years. The announcement of Schuckenbrock's hire was made after the market closed Tuesday.
In a brief conference call, Tolan said Schuckenbrock will add "operational firepower to our leadership ranks" and will work closely with her to "grow and innovate in the company."
She said she had been seeking her replacement for some time, and when Schuckenbrock became available it was "really a chance to seize the day." His hire, she said, comes as the company looks to take on "a significant amount of new business."
Schuckenbrock called Accretive "a terrific company that has had an incredible past and a promising future" and said he believes "a significant amount of growth" lies ahead.
But first, he must help the company wade through a regulatory morass that deals with the way Accretive has booked revenue for certain types of contracts. Accretive early last month pulled at least nine quarters of financial statements going back to at least the second quarter of 2010 because of accounting discrepancies.
It also delayed the release of its fourth quarter and full-year 2012 financial results on the eve of their announcement, setting off a Wall Street sell-off.
In a March regulatory filing, the company said it is "still assessing whether restatement will be required for prior periods" and warned that investors should not rely on its financial statements for the 2009, 2010 and 2011 fiscal years. Accretive said it expects the restatements will have no impact on total revenue booked over the life of each existing contract and those that expired before 2012. It also said the revisions will not affect the timing or magnitude of cash flow from operations related to those contracts, and could lead to increases in future revenue.
The company has not explained how it committed the errors.
Schuckenbrock declined to answer when the company plans to release its fourth quarter and full-year 2012 earnings. "I will only tell you that the company will react to that situation and make its announcement as soon as they're ready," he said.
Accretive, which works with hospitals and other health care providers to manage revenue processes, reported $826.3 million in revenue in 2011, $606.3 million in 2010 and $510.2 million in 2009.
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