Restructuring specialist replaces Parker Petit as MiMedx CEO
Mimedx was down more than 30% at the market open on news that CEO Parker Petit would resign and be replaced with interim CEO, David Coles.
Mr. Coles commented, "I am honored to join MiMedx and look forward to working with my new colleagues as they continue to build on the Company's market expansion and growth opportunities. MiMedx will remain focused on executing its strategy to deliver operational and clinical successes that are expected to drive long-term value creation."
You can gain insight into Coles' role based on his resume of being an expert in corporate restructuring. Here's a piece of his bio from Alvarez & Marsal:
David Coles, a Managing Director with Alvarez & Marsal North America Commercial Restructuring LLC, has more than 25 years of financial restructuring experience. He specializes in performance improvement and interim management for underperforming businesses.
Mr. Coles is basically a restructuring specialist coming in to fix the issues he inherited from Petit and get MiMedx on stable footing, if that's even possible.
"The Board is confident that now is the right time for MiMedx to transition its leadership team as we look to the future and prepare our Company for its next chapter," said Mr. Evans. "David brings years of valuable executive leadership and operational experience, and we are pleased to have him in this interim role at MiMedx, a global biopharmaceutical company serving clinicians and improving patients' lives around the world."
While the management remains confident that they have no outstanding debt and sufficient liquidity, there is still allegations of inflated earnings and improper sales practices which prompted a subpoena last year from the Securities and Exchange Commission (SEC).
In addition, the U.S. Department of Justice is also reviewing these matters, and while MiMedx continues to cooperate with these regulatory agencies, they do not plan on providing updates until the investigations are concluded.
The company has also established an Ethics and Compliance Committee to strengthen oversight.
In reviewing these changes, it's also important to remember that the company is still in the process of restating financial statements for 2012-2016 and still hasn't provided accurate data for the fourth quarter of 2017 and the first quarter of 2018.
These leadership changes will do nothing but increase speculation amongst short sellers that there was fraudulent activity under Parker Petit's watch. While Petit is out as CEO, he is still remains on as a director on the board. This clearly muddies the stance that MiMedx is taking to prepare their company for the next chapter. MiMedx stated that the board and management decided to take decisive action with initiatives to improve corporate compliance and internal operations.
With the problems that MiMedx and their employees are facing, it would make sense to completely remove Parker Petit from his director role on the board and any remaining employees involved in these fraudulent activities.
How decisive can these actions be when the one accused by short sellers of being responsible is still associated with the company?