#United States #Miami #share buyback #InMode Ltd #DOMA Perpetual

DOMA Perpetual Takes a Stand for InMode Shareholders

In a bold move, DOMA Perpetual Capital Management LLC, a prominent shareholder of InMode Ltd. (NYSE: INMD), has formally reached out to the company’s Board of Directors with a letter advocating for immediate action concerning the company's share repurchase strategy. The communication, dated January 15, 2025, highlights serious concerns about InMode's declining stock price and urges the Board to promptly execute a tender offer and subsequent share buyback.

Background on InMode Ltd.

InMode Ltd. has established itself as a leader in the med-tech field, primarily focusing on innovative technologies for aesthetic procedures. Despite the company's strong market position, recent reports indicating a drop in sales have significantly impacted its stock valuation, leading to a price approximately $16 per share at the time of the letter. This realization has triggered DOMA, one of InMode's substantial shareholders, to advocate for a more proactive financial strategy to bolster investor confidence and improve the overall standing of the company.

Concerns Raised by DOMA Perpetual

The letter from DOMA Perpetual outlined several pressing issues regarding InMode’s management and strategic oversight:

1. Ineffective Leadership Decisions: DOMA criticized CEO Moshe Mizrahy for creating instability within the organization by dismissing key executives, particularly those responsible for sales in critical regions. This leadership shakeup, combined with inadequate replacements, has led to notable operational shortcomings and declining performance metrics.

2. Cash Hoarding and Low Valuation: InMode reportedly has approximately $684 million in cash reserves, which DOMA argues should be utilized to improve shareholder returns rather than accumulated without purpose. The current stock price reflects an undervaluation, trading below its cash holdings plus projected future earnings, marking one of the lowest valuations historically for the company.

3. Lack of Risk Management Strategies: DOMA pointed out the necessity for InMode to diversify its production locations outside of Israel. They strongly recommend utilizing options such as the Dominican Republic or Costa Rica to reduce operational risks and enhance cost efficiencies, particularly given the current geopolitical climate.

Proposed Course of Action

To address these issues, DOMA has articulated a detailed action plan that includes:

• - Executing a tender offer for 30% of the company’s stock, which could restore trust among investors and signal commitment from management.
• - Following this, a 10% share buyback should be operational in 2025 to further acknowledge shareholder value.
• - Implementing a modest dividend program in 2025 to engage shareholders who prefer dividend-paying securities.
• - Establishing immediate appointments for vacant sales leadership roles to stabilize operations and drive revenue growth.
• - A continuous and clear disclosure of financial health and sales performance by region to maintain transparency and build investor trust.

This strategic approach not only aims to enhance the company’s financial health but also seeks to align management actions more closely with shareholders' interests.

DOMA's Commitment to Shareholders

Pedro Escudero, CEO and CIO at DOMA Perpetual, emphasized the legal and fiduciary responsibilities that the Board of InMode has towards its shareholders. The letter concludes with a firm commitment to hold the Board accountable, should they fail to take adequate corrective actions. DOMA has enlisted legal counsel to assist in any necessary advocacy for shareholders' rights moving forward.

Final Thoughts

The dialogue initiated by DOMA Perpetual highlights critical discussions around corporate governance, shareholder engagement, and strategic financial management. InMode Ltd.'s response to these calls for action will likely shape its future trajectory in the market, influencing not only investor relationships but also its operational integrity. As this story unfolds, stakeholders will closely monitor InMode’s forthcoming decisions and their implications for the company’s growth and valuation.