M. Kathleen Behrens Wilsey, the current chairwoman of the board at Sarepta Therapeutics, is slated to serve as the next chair of MiMedx.
Beleaguered MiMedx will refresh the composition of its board of directors in cooperation with its largest shareholder, Prescience Point Capital Management, as the company continues to grapple with the financial mismanagement from the previous leadership team.
Last year, MiMedx was forced to restate its historical financial statements for 2012 to 2016 and part of 2017 following an audit that raised questions about earnings and its sales practices. As a result of the investigation, the company was forced to withdraw its financial guidance for 2018. After that announcement, Chief Executive Officer Parker H. “Pete” Petit abruptly resigned from his role. The company initiated a restructuring program that included the elimination of nearly one-fourth its employees as it planned a transition from a wound-care company to a biopharmaceutical company. That shift cost about 240 people their jobs in December.
In addition to the financial issues, MiMedx has been scrutinized by several government agencies over its sales practice. In 2017, short sellers Aurelius Value and Viceroy Research both published negative reports on MiMedx that included accusations of channel-stuffing as well make claims that the U.S. Department of Veterans Affairs is investigating the company. Also, the company has been embroiled in kickback scandals for the way the company marketed its wound care products.
Since then, the Marietta, Ga.-based company has been rebuilding its leadership team, most recently with the appointment of Timothy R. Wright as the full-time CEO. Now, the company is adjusting its board of directors. This morning, MiMedx said it will add six new directors to the board, including Wright. The refreshment plan includes the appointment of three of Prescience Point’s nominees, including M. Kathleen Behrens Wilsey, as the new chairwoman of the Board, as well as K. Todd Newton, who is expected to become the chairman of the Audit Committee after the Company’s 2019 annual meeting of shareholders. Wilsey is currently the chairwoman of Sarepta Therapeutics.
“The MiMedx Board and the current senior leadership team have been working tirelessly to address the fallout from the actions of the prior senior management team and get the Company back on track,” Charles R. Evans, the current chairman of the board, said in a statement. “Now that we have made substantial progress on these fronts, it is time to begin the board transition and refreshment process.”
The announcement of the new board caused an uptick in share price. Shares of MiMedx are up more than 4% this morning.
The 15 month-long independent investigation from the audit committee was concluded earlier this month. The investigation uncovered evidence of material wrongdoing on the part of the company’s prior senior management team, the committee announced. The committee said the previous management, including Petit, was aware of the financial issues but did nothing to prevent it. The committee said the previously issued financial statements for 2012 to 2016 will need to be restated. The committee also pointed to the sweeping change of the company’s leadership team, as well as the creation of a board-level ethics and compliance committee to prevent future abuses of power. The company also tapped BDO USA as its new independent registered public accounting firm. BDO has been engaged to serve as the company’s auditor for the current year and all prior periods since 2016 necessary to ensure the company’s reinstatement as a timely filer, MiMedx said earlier this week.
