InMode urged to return 10% of capital to shareholders in Q4 2025 and Q1 2026.

• Bloomberg financial analyst • InMode Ltd. (NYSE: INMD) • 10% buyback in Q4 2025 • 10% buyback in Q1 2026 • Board has legal and fiduciary duty • Return capital to shareholders • Valuation contraction due to chaotic leadership • Sales remain low due to head of sales firing • No clear plan for leadership and sales increase in US • Company reputation and valuation suffer from management decisions.

DOMA Perpetual Capital Management LLC, a significant stockholder of InMode Ltd. (NYSE: INMD), has sent a letter to the Board of Directors urging them to approve and execute a 10% buyback in Q4 2025 and another 10% buyback in Q1 2026. The letter emphasizes the Board's legal and fiduciary duty to act in the best interests of shareholders.

The letter highlights several key points, including the contraction of InMode's valuation, which the company attributes to management's chaotic leadership. The firing of the head of sales in the US, InMode's largest market, without a clear plan for leadership and increased sales, has contributed to low sales. Additionally, the company's reputation and valuation have suffered from management's comments regarding capital allocation and CEO Moshe Mizrahy's assertion that buybacks have not been a good investment for shareholders.

DOMA Perpetual argues that the Board must return capital to shareholders, given that InMode maintains 53% of its current market capitalization in cash with no debt and generates more than 10% of its entire market capitalization in cash each year. The company believes that the Board has a legal and fiduciary duty to act in the best interests of shareholders and that a 20% buyback, dependent on prices paid, would be beneficial for shareholders.

The letter addresses misconceptions about buybacks, stating that the tax implications have been overstated and that buybacks are a strategic capital allocation tool. It also notes that InMode's current stock price, including a buyback tax, would be approximately 4 to 5 times free cash flow, indicating a significant opportunity for shareholder value creation.

DOMA Perpetual emphasizes that the Board should take into account the present value versus future value when allocating capital, especially given the company's depressed valuation and future growth prospects. The letter also notes that the window of opportunity to continue the capital return may be closing due to potential interest rate cuts.

The Board's failure to act without clear and valid justification could potentially expose directors to legal and financial consequences, as Israeli courts have taken a relatively strict position in upholding laws that protect minority shareholders.

References:

https://www.prnewswire.com/news-releases/doma-perpetual-sends-letter-urging-board-of-directors-of-inmode-ltd-to-return-capital-to-the-shareholders-302550020.html