InMode and Doma Perpetual: A Clash Over Capital Allocation and Leadership

In a high-stakes corporate governance battle, Doma Perpetual Capital Management LLC has publicly demanded that InMode Ltd. (NYSE: INMD) accelerate its share repurchase program and remove CEO Moshe Mizrahy, citing poor financial performance and leadership failures. The dispute, rooted in differing views on capital allocation and valuation, has pushed InMode’s stock into uncharted lows and raised questions about the future of its boardroom strategy.

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InMode’s Financial Position: Strength Amid Declines

As of March 2025, InMode reported a robust $512.9 million in cash, cash equivalents, and marketable securities, with no debt. Despite a 3% year-over-year revenue decline to $77.9 million in Q1 2025, the company has returned $412 million to shareholders over the past 12 months via buybacks—equivalent to 27% of its outstanding shares.

The company’s non-GAAP gross margins remain strong at 79%, though operating margins have dipped to 23% from 27% in 2024 due to U.S. market weakness and tariffs. InMode also faces a 2–3% gross margin headwind from U.S. tariffs, a challenge compounded by weakened consumer demand in its core U.S. market.

Doma Perpetual’s Case: Buybacks Now, Leadership Change

Doma Perpetual, a significant shareholder, argues that InMode’s stock—trading near its 52-week low of $13.68—is undervalued at a P/E ratio of 6.11, far below its asset value. With $512 million in cash, Doma demands the board:
1. Resume aggressive buybacks to capitalize on the depressed valuation.
2. Remove CEO Moshe Mizrahy, blaming his mismanagement for repeated revenue downgrades, poor sales leadership decisions, and refusal to explore cost-saving production relocations.

Doma’s letter highlights Mizrahy’s public remarks dismissing buybacks as ineffective, which it claims undermined investor confidence. The firm also cites Mizrahy’s termination of the U.S. Head of Sales before a key quarter and his rejection of FDA-approved manufacturing alternatives in the Dominican Republic as evidence of poor judgment.

InMode’s Defense: Strategy vs. Shareholder Pressure

CEO Moshe Mizrahy has pushed back, emphasizing that InMode’s $500 million in buybacks since 2022 reflect disciplined capital allocation. He argues that a 30% tender offer proposed by Doma would trigger a 20% Israeli dividend tax, making it inefficient. Mizrahy also defends production in Israel, citing FDA-approved facilities and the need for proximity to engineering teams.

On leadership, Mizrahy highlights promotions of internal talent to U.S. sales roles and ongoing R&D investments, including two new platform launches annually. He asserts that InMode’s cash reserves are strategically held to pursue M&A opportunities, such as bids in the injectable sector.

Market Context: Mixed Signals on Value

Analysts remain divided. Jefferies upgraded INMD to “Buy” in late 2024, citing long-term innovation potential, but lowered its price target to $15, aligning with InMode’s depressed valuation. Canaccord Genuity and BTIG, however, downgraded the stock to “Hold” or “Neutral,” citing macroeconomic pressures and reduced revenue guidance.

The stock has fallen 22% year-to-date, underscoring investor skepticism about Mizrahy’s ability to navigate challenges.

The Governance Crossroads

The dispute hinges on two critical questions:
1. Is InMode’s cash better used for buybacks or M&A? Doma argues that buying shares at a P/E of 6.11 is a “no-brainer,” while Mizrahy prioritizes flexibility for strategic acquisitions.
2. Does Mizrahy’s leadership align with shareholder interests? His track record includes repeated revenue downgrades and a 22% stock decline since 2023, raising governance concerns.

Conclusion: A Balance of Risks and Opportunities

InMode’s strong liquidity and 80% gross margins suggest it can weather near-term headwinds. However, Doma’s demands highlight critical governance gaps:
- Buybacks vs. M&A: A 20% tax on tender offers complicates Doma’s proposal, but InMode’s cash hoard could still support smaller repurchases.
- Leadership: Mizrahy’s public dismissals of buybacks and failure to stabilize U.S. sales create credibility risks. A leadership change might unlock value but also introduce execution risks.

The stock’s $14.56 price (as of May 2025) trades at 6.1x 2025 non-GAAP EPS guidance, a valuation that assumes significant operational improvement. Investors must decide whether Mizrahy can deliver—or if Doma’s push for change is the better path.

For now, the board faces a pivotal choice: appease activists with buybacks and leadership changes, or stick to its strategy and risk further shareholder alienation. The outcome will likely hinge on whether InMode can reignite growth in its core markets while managing geopolitical and regulatory risks.