Orthofix fired these 3 top executives (its CEO, CFO and CLO from left to right) for cause, after an investigation found they violated multiple code of conduct requirements.
Stock suffers biggest selloff in 28 years after board votes unanimously to oust 3 top executives ‘for cause’
The executives engaged in “repeated inappropriate and offensive conduct” inconsistent with the company’s values, Orthofix said.
- Spine device maker Orthofix Medical on Tuesday said it terminated the employment of its CEO, CFO and chief legal officer after an independent investigation by outside counsel determined the three managers engaged in “repeated inappropriate and offensive conduct.” The company’s shares tumbled 30% after the announcement, closing at $13.01 on the Nasdaq.
- Three other executives were named to fill the roles on an interim basis, including Catherine Burzik, current chair of the Orthofix board, who now steps into the CEO position, effective immediately. Burzik, who was re-appointed chair in June after serving in the post from 2021 to 2022, replaces Keith Valentine as CEO, Orthofix said.
- The management shakeup prompted a stock downgrade to “neutral” from BTIG analyst Ryan Zimmerman, who said Valentine was well known in the spine market, and he is concerned about the impact of the sudden leadership change on Orthofix’s business.
Orthofix, which also manufactures orthopedic implants, biologics and bone growth stimulation therapies, competes against medtech heavyweights such as Medtronic, Stryker, Zimmer Biomet and others across its markets. Looking to broaden its portfolio and take share from its larger rivals, the Lewisville, Texas-based company earlier this year acquired SeaSpine Holdings, a maker of product lines complementary to its own.
Valentine, SeaSpine’s chief executive since 2015, became CEO of the combined company. Before joining SeaSpine, he was president and chief operating officer of NuVasive, the spine device maker whose $3.1 billion acquisition by Globus Medical was just finalized.
In addition to Valentine, Orthofix terminated CFO John Bostjancic and Chief Legal Officer Patrick Keran. It named Geoffrey Gillespie, the company’s corporate controller, as interim CFO, and Puja Leekha, chief ethics and compliance officer, as interim chief legal officer.
The decision to oust the three executives followed an investigation that was conducted by outside legal counsel and overseen by the company’s independent directors. The board determined that each executive engaged in repeated inappropriate and offensive conduct that violated multiple code-of-conduct requirements and is inconsistent with the company’s values and culture, Orthofix said.
“Orthofix’s core values are built around fostering, cultivating and preserving a culture that is respectful, and we do not condone harassing or inappropriate conduct or statements of any kind,” Burzik said in a statement. The decisions, she said, “are necessary to ensure our employees, investors, customers, and other stakeholders have confidence in the Company’s leaders.”
The matters involving the three departed executives are not related to Orthofix’s operational results or previously filed financial statements and do not impact its strategy, the company added.
Orthofix in 2012 was convicted of U.S. criminal and civil violations related to the illegal promotion of its bone growth stimulators and subsequently restated several years of its financial results after it was found to have inflated revenue and income.
BTIG’s Zimmerman said he was worried about potential business fallout, and risk to the SeaSpine merger’s success, despite speaking with Orthofix board members and interim management who said the company’s latest troubles are confined to personal matters.
“It’s hard to separate the public-facing management that investors knew well and the potential impact to the business,” the analyst wrote in a note to clients.
Orthofix said its board would immediately begin a search for permanent successors.
Orthofix Medical Inc. investors suffered their worst day in nearly 30 years on Tuesday, after the spine and orthopedics company fired three top executives “for cause.”
The company OFIX, 2.31% said following an investigation by independent legal counsel overseen by its independent directors, the board voted unanimously to terminate then-Chief Executive Keith Valentine, Chief Financial Officer John Bostjancic and Chief Legal Officer Patrick Keran, effective immediately.
“As a result of the investigation, the board determined that each of these executives engaged in repeated inappropriate and offensive conduct that violated multiple code of conduct requirements and was inconsistent with the company’s values and culture,” the company said in a statement.
The stock plummeted 30.2% to $13.01, which was the lowest close since Dec. 2, 2008. The stock, which went public in May 1992, suffered its biggest one-day percentage drop since the record 33.9% selloff on Oct. 17, 1995.
The selloff has shaved about $206.5 million off Orthofix’s market capitalization, bringing it down to about $478 million as of Tuesday’s close.
The company said the terminations won’t change its strategy, results of operations or previously filed financial statements.