DOMA Perpetual Sends Letter Urging Board of Directors of InMode Ltd. to Return Capital to the Shareholders

Core Viewpoint - DOMA Perpetual Capital Management LLC urges InMode Ltd.'s Board to approve a 10% share buyback in Q4 2025 and another 10% in Q1 2026, emphasizing the Board's legal and fiduciary duty to act in the best interests of shareholders [1][5]. Financial Position - InMode holds 53% of its market capitalization in cash with no debt, generating over 10% of its market cap in cash annually despite lower sales [2][3]. - The company's market capitalization, after accounting for its $510 million cash position, is approximately $455 million, indicating a valuation of roughly 3x future free cash flow and earnings [3]. Buyback Proposal - The proposed buyback of 20% is expected to maintain the company's cash levels while utilizing free cash flow to acquire shares [4]. - The letter addresses misconceptions about buybacks, arguing that they are a strategic tool for capital allocation, especially when valuations are depressed [4][8]. Management Concerns - The letter criticizes management's chaotic leadership and detrimental decisions, such as firing the head of sales in the U.S. without a clear plan, which has negatively impacted sales and the company's reputation [1][5]. - Management's repeated guidance cuts over multiple years have contributed to the decline in InMode's valuation [1]. Legal and Fiduciary Duties - The Board is reminded of its legal obligations to shareholders, with potential legal consequences for failing to act in their best interests [5]. - The letter emphasizes that the market is observing the Board's actions, and failure to return capital could expose directors to liability under Israeli law [5]. Strategic Capital Allocation - The letter argues that the Board should consider future value when allocating capital, especially given InMode's potential for higher future sales through innovation and R&D investments [8]. - It suggests that if management believes in the company's future success, they should act on the current depressed valuation to generate shareholder returns [8].