Shares of Orthofix Medical (NASDAQ: OFIX) were down more than 26% as of 2:15 p.m. ET on Tuesday after the healthcare company announced it had fired CEO Keith Valentine, CFO John Bostjancic, and chief legal counsel Patrick Keran for cause after an investigation by the spinal implant company. The healthcare stock is down more than 33% so far this year.
The shake-up came without warning and investors reacted negatively to the news. Catherine Burzik, chair of the company’s board of directors, was appointed interim CEO, company vice president Geoffrey Gillespie was named interim CFO, and senior vice president Puja Leekha was named interim chief legal officer. The firings of Valentine, Bostjancic, and Keran came at the direction of the board after the company said it found through an investigation by independent legal counsel that the three executives had engaged in inappropriate and offensive conduct. All three former executives came over to Orthofix late last year from SeaSpine after the two companies merged.
The impact on the company’s stock was immediate, but it may not be long-lasting. The company said the decision had nothing to do with its finances or financial strategy. The Texas company had a strong second-quarter report. Six-month revenue was $362 million, up 61.3% year over year. Even without additional SeaSpine-related sales, Orthofix sales would have been up 7% year over year. The company, thanks to the expense of the merger, said it had a six-month earnings-per-share (EPS) loss of $2.77 compared to an EPS loss of $0.10 through the first six months of 2022.
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