Calls out Suspicious Timing, Lack of Disclosure and Leadership as
Confirmed by Negative Market Reaction
Notes More Excuses, More Delays and Need to Borrow Money
Notes Continued Concern over Lack of Operating Experience in Management
and on the Board
MARIETTA, Ga.–(BUSINESS WIRE)–Parker H. “Pete” Petit, David J. Furstenberg, and Shawn P. George (the
“MiMedx Shareholder Group”), significant shareholders of MiMedx Group,
Inc. (MDXG) (“MiMedx” or the “Company”) and nominees for election to the
Board of Directors of the Company at the upcoming shareholder meeting on
June 17th, issued the following public statement to their
fellow MiMedx shareholders.
Dear Fellow Shareholders:
After wading through the puffery of the MiMedx press release of April
11, 2019 (the “Press Release”), please consider the following when
evaluating what the Company’s Board has written and ask yourself- is
this Press Release more important for what it says, or what it fails to
The Board issued the Press Release hours after our nominations were made
and our intent to run a proxy contest to change the Board was announced.
Please ask why the Board ignored you for almost a year by failing to
communicate meaningful and specific information and, what prompted the
Board to publish this curious Press Release?
Negative Market Reaction and Shareholder Impact
Based on the market’s reaction and 21% drop in the stock as of market
close yesterday since the Press Release was issued, we understand why
the market believes the essential message of the Press Release is
negative- the Audit Committee investigation continues, without attendant
facts or substance, to explain why it drags on; the Company needs to
borrow money to continue the Audit Committee’s investigation, which will
dilute shareholders, and the Board provided no information on how much
or why revenues and profits have deteriorated.
Leadership Deficiencies and Ongoing Operating Issues
First, the Company’s Press Release, based on delays discussed therein,
seemingly admits the Board lacks the expertise and funding to continue
on the schedule previously established to pursue the game changing BLAs
and product development so essential to the Company’s future growth. The
Board’s firing of 24% of the workforce in December, including who we
believe to be the three top product development personnel in the
Company, speaks volumes. Please ask yourself-Who will develop and run
new product development and whether this Board is looking forward, or
backward, by retreating from the 25% of the business which offered the
fastest future growth namely the surgical, sports medicine and
Second, is there anyone on the Board, or in its interim management team,
who has built from the ground up a fast growth biopharma company?
Lawyers and consultants don’t run businesses. Operating people do. We
believe the Company’s operating leadership is not qualified and does not
have the necessary experience.
Third, the Press Release talked a great deal about the Board’s approval
of a new long-term strategic plan. As most shareholders know, the
Company had a long term 2020 plan that was revised and reviewed
annually, a plan that targeted revenue in 2020 of $560 million and
adjusted EPS of $1. The Company was well on its way to achieving these
targets when the Board decided to “take the company in a different
direction.” Apparently, this direction was a downward spiral. Current
management then decided to pay a consultant a substantial fee to develop
a new strategic plan. Why could current management not develop the plan
themselves, or follow the one which had been so successful?
Last, it is expected that the Board will in the coming days and weeks
issue more press releases now that the Leon County Circuit Court has
ordered the Company to conduct an Annual Meeting- the first in 25
months, and there will be a proxy contest. The Company has indicated in
writing to the Court that they intend to appeal the Order requiring the
Company to have an Annual Meeting. This could delay further and stall an
Annual Meeting and prevent you, the shareholders, from electing any new
What Shareholders’ deserve, but likely will not receive from the
We expect that in future Press Releases, the Board may try to take one
or more of at least three actions: a) create an illusion of progress; b)
continue to try to pass the blame to former management for this Board’s
failures; and c) announce the hiring of new executives, board member
appointments, and adjustments in the classes of directors.
On the first point, what you deserve as shareholders is factual
straightforward information on operating trends. Under the Board’s
leadership, just how badly have revenues deteriorated. On the second
point, the Board should publish now whatever it thinks it has to support
any claims that they are not the ones responsible for the current state
of the Company. Former executive management has never been given any
information on the meaning of their “for cause” terminations in spite of
multiple requests. The Board should let shareholders know what the over
50,000 hours of legal and accounting time on their investigation has
found. Exactly what has this investigation’s estimated $40 million in
lawyers, accountants and consultants bought and what does the Board have
to show for the estimated additional $30 million the Board has spent on
other lawyers, accountants and consultants? The shareholders have a
right to know- what has the investigation found?
On the last point, please ask- why is the Board making these moves now
and are they in the best interest of shareholders? In our view, their
judgment has been poor on many fronts, including the choice of interim
management, which has cost all shareholders substantially. We are not
pre-judging any potential hiring of personnel or the filling of empty
director seats because every candidate deserves a fair evaluation.
However, the Board’s motivation is relevant.
There will be more press releases coming as the proxy contest evolves.
In addition, there will be detailed commentary posted on our website
relative to MiMedx and the proxy contest. Please check our website
Parker H. “Pete” Petit (“Mr. Petit”), David J. Furstenberg, and Shawn P.
George (collectively, the “Participants”) intend to file with the
Securities and Exchange Commission (the “SEC”) a definitive proxy
statement and accompanying form of proxy to be used in connection with
the solicitation of proxies from the shareholders of MiMedx Group, Inc.
(the “Company”). All shareholders of the Company are advised to read the
definitive proxy statement and other documents related to the
solicitation of proxies by the Participants when they become available,
as they will contain important information, including additional
information related to the Participants. The definitive proxy statement
and an accompanying proxy card will be furnished to some or all of the
Company’s shareholders and will be, along with other relevant documents,
available at no charge on the SEC website at http://www.sec.gov/.
Information about the Participants and a description of their direct or
indirect interests by security holdings is contained in the Schedule
14A filed by Mr. Petit with the SEC on April 11, 2019. This document is
available free of charge from the sources indicated above.
The Dilenschneider Group