Tracking the Great CEO Reshuffle of 2022

Medtech is seeing an unprecedented amount of top-level turnover at companies across the industry this year.

This trend is not limited to the medtech industry, of course. Challenger, Gray, & Christmas reported earlier this year that there were 774 CEO exits across the board in the first half of 2022, the highest first half total since the firm began tracking monthly CEO changes in 2002. The number was up 20% from the 591 CEO exits announced through June last year, and up 6% from the previous high of 728 exits announced in the first six months of 2006.

In terms of what's driving the trend, there are likely several factors at play. Andrew Challenger, senior vice president of Challenger, Gray, & Christmas, pointed out that the skills CEOs acquired and implemented during the pandemic are "extremely valuable" and many of these top-level executives are finding new opportunities. Other business experts have noted that a lot of CEO retirement plans were put on hold during the height of the COVID-19 pandemic, and now that companies have gotten a better handle on managing COVID-related disruptions, those leaders are finally able to enjoy their hard-earned retirement.

More recent monthly CEO exit reports from Challenger, Gray, & Christmas show the trend slowing somewhat, with August CEO exits up just 9% from July, and down 47% compared to August 2021.

In medtech, the turnover trend is as strong as ever, especially when it comes to involuntary leadership exits. At least three medical device companies have shown their CEOs the door just in the last six weeks. It seems that boards of underperforming companies are deciding that change is in order.

As noted last week in Pedersen's POV, this movement could end up being the best thing to ever happen to the industry. After all, a CEO who is, for whatever reason, no longer 100% committed to the company, is clearly no longer the best fit for that organization. And given the uncertainty that medtech companies faced during the height of the COVID-19 pandemic, now seems the perfect time for boards to clean house and get rid of CEOs who are just not cutting it.

Consider, for example, one of the best medtech turnaround stories in recent history. Just five short years ago, Zimmer Biomet had been struggling with quality control and supply chain problems, which created investor frustration and ultimately led to former CEO David Dvorak's resignation in July 2017. The board ended up bringing CEO Bryan Hanson in to right the ship.

In April 2018, after gaining better clarity on where Zimmer Biomet needed to improve, Hanson said it would take two years to turn the company around and return to positive market share growth. Under his leadership the company kept those turnaround efforts on track and, in some respects, ahead of schedule. By the end of 2019, the company had moved from a defensive position to an offensive position and had not only earned back trust from its customer base but also began to win new business.

MD+DI expects to continue reporting on this CEO turnover trend for however long it continues, and will update this slideshow accordingly.