Lewisville, Texas-based Orthofix announced Tuesday that its independent board of directors terminated for cause the medical device maker’s CEO Keith Valentine, CFO John Bostjancic and Chief Legal Officer Patrick Keran, from their respective roles, according to a press release.
The action comes after an investigation conducted by an independent outside legal counsel found that the three executives had “engaged in repeated inappropriate and offensive conduct that violated multiple code of conduct requirements and was inconsistent with the company’s values and culture.”
The company said it will immediately begin a search for permanent successors and temporarily named current executives to fill the posts, effective immediately. Catherine Burzik, chair of the company’s board of directors, was named interim CEO; Geoffrey Gillespie, vice president and corporate controller, was named interim CFO, and Puja Leekha, senior vice president and chief ethics and compliance officer, was named interim chief legal officer, according to the release.
Investors “reacted negatively to the news” because it came without warning, according to a Motley Fool report, while noting that the impact may not be long-listing and citing the company’s assertion that the matters were unrelated to the company’s finances. Orthofix’s shares fell 30% to close at $13.01 Tuesday.
The terminations come less than a year after Orthofix completed a merger with SeaSpine Holdings, creating a company with 1,600 employees and a product portfolio of biologics, spinal hardware solutions and growth therapies distributed in 68 countries. Founded in 1980 in Verona, Italy, the company is now ranked as the eighth largest orthopedic device maker gobally, according to its website.
The shakeup also comes just a few days after the company reported that its second-quarter net sales rose 58.4% to $187 million from the year-earlier period on a reported basis and 7% on a pro forma constant currency basis. In the quarter Orthofix had a net loss of $39.4 million compared to net income of $2.5 million in the year-earlier quarter.
All three of the terminated executives came from SeaSpine. Valentine was formerly president and CEO of SeaSpine from May 2015 through January, according to his LinkedIn profile. In November, the two companies announced Bostjancic, then CFO of SeaSpine since 2015, would become finance chief for the new combined company.
Keran’s LinkedIn profile still lists him as senior vice president corporate development and general counsel of SeaSpine since October 2015.
Burzik, who previously served as the company’ chair from 2021 to 2022, was re-appointed chair in June, according to the release. She was previously CEO of Kinetic Concepts, a global medical device company and prior to that held senior executive positions at Eastman Kodak and Johnson & Johnson.
“Orthofix’s core values are built around fostering, cultivating and preserving a culture that is respectful, and we do not condone harassing or inappropriate conduct or statements of any kind,” Burzik said in the statement.
Gillespie most recently served as vice president-corporate controller at Orthofix where he has worked for over 10 years. Prior to joining Orthofix, Gillespie worked for the industrial machinery supplier Flowserve in various financial reporting management roles. He began his career as an audit manager for Deloitte, according to his LinkedIn account.
The company and the executives did not immediately respond to requests for comment.
Orthofix also disclosed the recent executive changes in a filing with the SEC.