Steel views this as a breach of fiduciary duty. The activist investor argues that conditioning access to basic information on surrendering shareholder rights—specifically the ability to hold the board accountable—contradicts the board's stated commitment to "the highest standards of corporate governance, transparency, and objectivity. Steel says it has repeatedly offered to pause litigation during talks and has been ready to sign a standard non-disclosure agreement since July.
The timing matters. On September 16, InMode disclosed that a competing proposal from Chief Executive Officer Moshe Mizrahy's group had expired without closing. Steel's offer is now the only bid on the table.
Steel's letter attacks the board's independence. The activist points to overlapping board service between directors and Mizrahy at other companies, deals between InMode and companies whose directors approved them, and a proposed buyer group led by Mizrahy that included InMode's own manufacturer and its United Kingdom distributor. Steel contends the board lacks the independence required to evaluate competing proposals fairly or to challenge the CEO.
InMode's operating performance has deteriorated. The company reported second-quarter results on August 5. Revenue was $95.6 million, flat year-over-year, with gross margin declining to 75% from 80% and non-GAAP operating margin falling to 17% from 28%. Management lowered full-year non-GAAP operating income projections to between $68 million and $73 million—the sixth time the company has cut earnings projections since February 2024. The company told shareholders it expects these trends to continue.
Steel also notes that InMode has suspended earnings calls and cut back investor communication. After a failed strategic review, an expired insider proposal, and continued operating uncertainty, the activist says shareholders have received no evidence of a credible plan under current leadership.
Steel's letter signals what comes next. If the board does not engage meaningfully before the October 30 deadline, Steel says it will pursue all available remedies to hold the board accountable and replace directors with ones shareholders choose. The activist frames this as a matter of protecting shareholder interests against what it characterizes as a board that has breached its duties of loyalty and care by failing to supervise a CEO whose conduct has raised serious questions under U.S. securities laws.
The board's response to Steel's ultimatum remains to be seen. The company has not asked Steel a single question about the details of its offer and has told shareholders nothing about it, according to the letter.
Business information, not medical or legal advice. Verify regulatory status at FDA.gov.
