DOMA Perpetual Sends Letter Urging Board of Directors of InMode Ltd. to Resume Share Repurchase Program

Believes the Board Should Immediately Resume and Accelerate Buybacks

Asserts Board Should Remove Moshe Mizrahy as CEO of the Company

MIAMI, May 9, 2025 /PRNewswire/ -- DOMA Perpetual Capital Management LLC, a significant stockholder of InMode Ltd. (NYSE: INMD) ("InMode"), today sent a letter to the Board of Directors of InMode (the "Board") urging the Board to continue its stock repurchase program and to replace its CEO. 

The letter can be downloaded here

The full text of the letter follows:

May 9^th, 2025

To the Board Members of InMode:

For over a year, we have communicated publicly and privately with the Board of Directors of InMode (the "Board") about our concerns regarding the Company's capital allocation strategy and depressed valuation, with particular attention to the negative public statements and actions of CEO Moshe Mizrahy. During this period, InMode's stock price has continued to decline and Mr. Mizrahy's underperformance is clearly reflected in the Company's financials. Furthermore, we believe his reckless and antagonistic management style as CEO has gone unchecked.

Following Mr. Mizrahy's most recent comments, we are compelled to underscore the danger of allowing him to make financially uninformed public statements regarding capital allocation. In discussing recent buybacks, he said: "Now, actually from an investment point of view of the company, we actually invested $500 million, but it did not help the stock price. The stock price is around $15 today. So basically, it was not the best -- the best investment from the corporation point of view, and I'm sure it was not the best investment from the shareholders' point of view."ⁱ 

These remarks are both incorrect and damaging. The purpose and value of these buybacks is not in moving the short-term stock price, it is in creating long-term value for shareholders. We believe InMode's depressed stock price is a direct result of Mr. Mizrahy's dismal leadership and poor performance as CEO, which is further reflected in the financials of the Company.ⁱⁱ

Mr. Mizrahy's incorrect and misleading public commentary on how buybacks are meant to work, alongside his continued lack of financial results, are driving down the price of the Company's stock.ⁱⁱⁱ We will not speculate on Mr. Mizrahy motivations, but InMode's shareholders are suffering because of his words and actions as CEO. The Board, in its legal and fiduciary duty to represent all investors, must take action on their behalf.

In our view, the Board should immediately resume the Share Repurchase Program and "substantial additional capital return" announced in February^iv, and the Board should remove Moshe Mizrahy from his position as the CEO of the Company.

Whether or not Mr. Mizrahy understands how buybacks are meant to work, we expect the members of this Board to possess the financial literacy to know the value they can add to shareholders. The Board must work to immediately remedy the situation, restating the Company's commitment to returning the cash on the balance sheet to its owners: the shareholders.

InMode's buybacks should be resumed immediately; the Company's stock price remains a bargain due to continued mismanagement and Mr. Mizrahy's harmful public remarks. Cash sitting on the balance sheet produces no earnings and no shareholder return. Management's prior attempts at M&A have all failed. The value that is created from executing buybacks now will come to fruition when a new CEO steps in to manage the business and earnings acceleration resumes. The lower the Company's stock price and valuation, the more aggressive the Board should be returning the cash to shareholders in the form of buybacks. As the Company buys back its own stock, it is impossible to pick the bottom – what matters is to continue the buybacks as long as the price remains attractive. The Company currently holds approximately 60% of its market cap in cash, maintains no debt and has plenty of free cash flow.^v The money sitting on the balance sheet belongs to your shareholders and the most accretive way to return that money, until the valuation improves considerably, is through continued buybacks.

Mr. Mizrahy has lowered guidance almost every quarter since Q3 2023^vi. He chose to fire the US Head of Sales –InMode's largest market – right before the Company's most important quarter.^vii It should be no surprise that the US business is underperforming. In a recent letter to DOMA, Mr. Mizrahy refused to consider moving a portion of production outside of Israel, a move that would decrease potential risks as well as help to trim costs and grow margins, and claimed that he doubted the facilities in the Dominican Republic or Costa Rica are FDA-approved.^viii A simple online search would have clarified the sizable number of medical tech companies, many of which are significantly larger than InMode, with production facilities in these countries.^ix Shareholders deserve better than Mr. Mizrahy's antagonistic and uniformed approach to management. We maintain that the Board should remove Mr. Mizrahy from his position and replace him with someone better equipped to lead InMode. 

In our opinion, the Company must take action to protect the brand, including Morpheus8. It is a mistake to not increase prices, which the market should bear. Lowering margins hurts shareholders.

As of May 7th, InMode's market capitalization – discounting the approximately $500 million dollars in cash – is barely $375 million.^x This confers a value of only $375 million for InMode's inventory, worldwide distribution, global installed base in the tens of thousands, unique IP, unparalleled research team, brands like Morpheus8, its recurring disposable business and extended guarantee business, plus more than $100 million of free cash flow.^xi It is our conviction that InMode's current valuation is divorced from the reality of its excellent business, which maintains gross margins of nearly 80% even under this underperforming CEO.

The Board's legal and fiduciary duties to its shareholders require it to act in the face of a depressed valuation and persistent underperformance. We believe the business and its shareholders will be best served by removing Mr. Mizrahy from his position and reinstating and accelerating the share buyback program.

Sincerely,

Pedro Escudero

CEO & CIO

DOMA Perpetual Capital Management LLC

About DOMA Perpetual Capital Management LLC:

DOMA Perpetual Capital Management LLC is an asset management firm based in Miami, Florida. DOMA Perpetual strives to achieve great investment results by identifying attractive, uncorrelated companies with sustainable competitive advantages, while limiting exposure to downside risks. It employs an opportunistic, fundamentals-based strategy that invests in companies across a variety of sectors and market caps throughout the globe.

Contact:

DOMA Perpetual Capital Management LLC

[email protected]

Disclaimer

This letter has been prepared by DOMA Perpetual Management LLC and its affiliates ("DOMA"). The views expressed herein reflect the opinions of DOMA and are based on publicly available information with respect to InMode Ltd. ("InMode, Ltd." or the "Company"). DOMA recognizes that there may be confidential information in the possession of the Company that could lead it or others to disagree with DOMA's conclusions. DOMA reserves the right to change or modify any of such views or opinions at any time and for any reason and expressly disclaims any obligation to correct, update, or revise the information contained herein or to otherwise provide any additional materials.  

For the avoidance of doubt, this press release was not produced by any person that is affiliated with InMode Ltd., nor was its content endorsed by InMode Ltd. This press release is provided merely as information and is not intended to be, nor should it be construed as, an offer to sell or a solicitation of an offer to buy any security nor as a recommendation to purchase or sell any security. One or more funds managed by DOMA currently beneficially owns shares of the Company.

Some of the materials in this press release contain forward-looking statements. All statements contained herein that are not clearly historical in nature or that necessarily depend on future events are forward-looking, and the words "anticipate," "believe," "expect," "potential," "could," "opportunity," "estimate," "plan," "once again," "achieve," and similar expressions are generally intended to identify forward-looking statements. The projected results and statements contained herein that are not historical facts are based on DOMA's current expectations, speak only as of the date of these materials and involve risks, uncertainties and other factors that may cause actual results, performances or achievements to be materially different from any future results, performances or achievements expressed or implied by such projected results and statements. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control of DOMA.

ⁱ InMode Q1 2025 Earnings Call Transcript

ⁱⁱ InMode Company Filings, DOMA Perpetual Internal Calculations

ⁱⁱⁱ InMode Earnings and Conference Call Transcripts:

Q3 2023 Earnings Call "One, our previous experience with buyback. Actually, we did buyback for $100 million did not help. Did not help at all. And the stock did not react to that." - Moshe Mizrahy

Oppenheimer 34th Annual Healthcare MedTech & Services Conference (03/12/24) "One thing we don't want to do is a buy back. We prefer to do dividend if that will be the, I would say, the solution so everybody will enjoy with some money." - Moshe Mizrahy

Canaccord Genuity MedTech, Diagnostics and Digital Health & Services Forum (11/18/22) "We spent $100 million buying back stock, it didn't help the stock."- Moshe Mizrahy

^iv https://www.prnewswire.com/news-releases/inmode-reports-fourth-quarter-and-full-year-2024-financial-results-board-of-directors-has-approved-a-new-share-repurchase-program-302366770.html

^v InMode Company Filings, DOMA Perpetual Internal Calculations, Market Cap is calculated as the shares outstanding as of April 28^th 2025, net of share repurchases announced by the Company, and a stock price as of May 7^th.

^vi InMode Company Filings, DOMA Perpetual Internal Calculations

^vii https://www.prnewswire.com/news-releases/inmode-announces-departures-of-president-of-north-america-chief-medical-officer-and-vp-of-sales-usa-as-part-of-a-global-reorganization-strategy-302263201.html

^viii https://www.prnewswire.com/news-releases/inmode-responds-to-doma-perpetuals-letters-302393786.html

^ix Database of medical device manufacturers registered with FDA:

Dominican Republic:

https://www.accessdata.fda.gov/scrIpts/cdrh/cfdocs/cfrl/rl.cfm?start_search=1&establishmentName=&regNum=&StateName=&CountryName=DO&RegistrationNumber=&OwnerOperatorNumber=&OwnerOperatorName=&ProductCode=&DeviceName=&ProprietaryName=&establishmentType=5&pagenum=100

Costa Rica:

https://www.accessdata.fda.gov/scrIpts/cdrh/cfdocs/cfrl/rl.cfm?start_search=1&establishmentName=&regNum=&StateName=&CountryName=CR&RegistrationNumber=&OwnerOperatorNumber=&OwnerOperatorName=&ProductCode=&DeviceName=&ProprietaryName=&establishmentType=5&pagenum=100   

^x InMode Company Filings, DOMA Perpetual Internal Calculations, Market Cap is calculated as the shares outstanding as of April 28^th 2025, net of share repurchases announced by the Company, and a stock price as of May 7^th. 

^xi Bloomberg Database, InMode Company Filings

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SOURCE DOMA Perpetual