Orthofix Terminates Executives Over Inappropriate & Offensive Conduct

There were huge shakeups at Orthofix today after the spine and orthopedics company announced it was terminating its core leadership “for cause.” The board’s independent directors voted to remove CEO Keith Valentine, CFO John Bostjancic, and Chief Legal Officer Patrick Keran from those respective roles, immediately.

The board also requested Valentine resign from the board.

The board said that Catherine Burzik, Chair of the Orthofix board, has been appointed Interim Chief Executive Officer; Geoffrey Gillespie, Orthofix Vice President, Corporate Controller, has been appointed Interim Chief Financial Officer; and Puja Leekha, Orthofix Senior Vice President, Chief Ethics and Compliance Officer, has been appointed Interim Chief Legal Officer. 

In a release, Orthofix said the board’s decision follows an investigation conducted by independent outside legal counsel and directed and overseen by the company’s independent directors. As a result of the investigation, the board determined that each of these executives engaged in repeated inappropriate and offensive conduct that violated multiple code of conduct requirements and was inconsistent with the company’s values and culture.

Orthofix said the matters are unrelated to and do not impact its strategy, results of operations or previously filed financial statements.

Burzik said, 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. We require all employees – and especially our leaders – to behave in accordance with the Company’s values. The Board did not make these decisions lightly. We believe they are necessary to ensure our employees, investors, customers, and other stakeholders have confidence in the company’s leaders.”

The board said it will immediately begin a search for permanent successors.

The news caused shares of the Lewisville, TX-based company to drop nearly 27%.

Ryan Zimmerman, an analyst with BTIG, commented on the board’s decision in a research note and added that there were so many unanswered questions.  

“We spoke with board members and interim management of the company and while they highlighted that this was confined to personal matters (and code of conduct) and not specific to company financials, it's hard to separate the public-facing management that investors knew well and the potential impact to the business,” Zimmerman wrote. “Interim management can put their positive spin on it, but Keith Valentine was a well-known entity in the spine market between customers, distributors, and investors. It's unknown at this time, but we worry about potential business fallout.”

Nearly a year ago, Orthofix and Carlsbad, CA announced plans to combine in an all-stock merger of equals. The merger was completed in January.