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

Believes the Board Should Approve and Execute a 10% Buyback in Q4 2025 and Another 10% Buyback in Q1 2026

Maintains Board Has Legal and Fiduciary Duty to Act in Best Interests of Shareholders 

MIAMI, Sept. 9, 2025 /PRNewswire/ -- DOMA Perpetual Capital Management LLC, a significant stockholder of InMode Ltd. (NYSE: INMD) ("InMode"), today sent a letter to the Board of Directors of InMode (the "Board") urging the Board to return capital to shareholders. 

The letter can be downloaded here

The full text of the letter follows:

September 9^th, 2025

To the Board Members of InMode:

InMode's valuation has continued to contract. We believe this is partly due to management's chaotic leadership; one reason sales remain low is the detrimental decision to fire the head of sales for the US – the Company's largest market – without a clear plan for leadership and to increase sales in the region.ⁱ The Company's reputation and valuation suffer from management's consistent damaging comments regarding capital allocation, including CEO Moshe Mizrahy's recent assertion that buybacks have not been a good investment for shareholders and have shown no resultsⁱⁱ. Further, allowing Mr. Mizrahy to respond publicly to letters addressed to the Board – including a purposely misleading statement which thanked us for supporting him with our voteⁱⁱⁱ when, in fact, we voted against his re-election to the Board – shows the Company's governance structure and checks and balances must improve. Lastly, InMode's valuation has been negatively affected by management's constant guidance cuts, which have occurred quarter after quarter for multiple years now.^iv Why would management persist in making these negative comments that are driving the stock price down?

Despite our concern over these issues, our motivation in sending this letter is not to underscore management's deleterious conduct; our aim is to remind the Board of its legal and fiduciary duties to InMode's shareholders. We contend the Board is not upholding its duty to act in our best interest. It must continue to return capital to the InMode's true owners: its shareholders.

The Company maintains 53% of its current market capitalization in cash with no debt and generates more than 10% of its entire market capitalization in cash each year, even with current lower sales.^v There is no business justification to maintain such large sums of cash on the balance sheet, ignoring shareholder interests. The amount of cash InMode holds relative to the Company's size, extreme profitability, and zero debt is a unique case.

At this rate, in three years the Company will nearly hold its current market valuation in cash^vi. The Board has a legal and fiduciary duty to act in the best interest of shareholders, returning that money to its owners in the most accretive way possible. We agree that a small dividend could be warranted to attract shareholders who like dividends or who can only hold a stock if it pays a dividend. However, after subtracting the $510 million cash position, the Company's market capitalization is only $455 million, implying that the Company is trading at roughly 3x future free cash flow and 3x future earnings.^vii We believe the current, extremely depressed valuation of a company which possesses exceptional profitability and generates large amounts of cash every year represents a tremendous opportunity to continue returning money to shareholders.

The Board should approve and execute a 10% buyback before year-end, followed by another 10% buyback in the first quarter of 2026. 

By our calculations, after executing a total buyback of 20% – and dependent on prices paid – at end of 2026, the Company should maintain a similar cash level to what it holds today. InMode would, in essence, merely be using its free cash flow to acquire new shares.

We need to address a few misconceptions about buybacks posited by management in earnings calls and at conferences:

1. The tax implication has been overstated. In the vast majority of the world, dividends are subject to a dividend tax. No board or company would refuse to issue a dividend simply because of taxation; the notion is ridiculous. It is equally illogical to use the same argument against executing a buyback. Buybacks and dividends are capital allocation tools which are meant to be strategically deployed, taking into account many factors. Perhaps one of the most important factors to consider in capital allocation is a company's valuation. When the valuation is high, a special large dividend may be the best course of action. When the valuation is severely depressed, buybacks can be an effective tool for creating shareholder value.
2. The price paid matters. For a buyback, the Board should take into consideration the total cost to repurchase the stock including transaction fees, taxes, etc. If the final price is still a bargain, why should the taxation matter? With InMode's current stock price, the total price paid, including a buyback tax, would be approximately about 4 to 5 times free cash flow^viii; a similar valuation applies to earnings. According to the filing dated January 16, 2025, Mr. Mizrahy found InMode's price so attractive he chose to buy 1,524,196 shares of the Company for himself at $23,858,317, an inferred average price of $15.65 per share^ix. If the CEO and Board Member is taking advantage of the Company's low valuation, why would the Board refuse to do so on behalf of shareholders? 
3. Strategic capital allocation evaluates present value versus future value. The Company's future value should dictate how the Board allocates capital, especially when the valuation is depressed. If InMode is likely to experience higher future sales – as it continues to innovate, taking current technology into new areas such as urology and ophthalmology and invests in R&D, while maintaining SG&A at a high level, waiting for the market to recover – buybacks are the right tool to generate shareholder return. If the opposite were true, and the valuation was depressed with the Company's future in doubt, then management should be cutting costs aggressively, laying off staff, protecting margins and pausing all investment. This would be the only scenario in which a buyback would not make sense: when, despite an extremely low valuation, there is a possibility that the valuation will continue to fall into the foreseeable future. Clearly, this is not the case for InMode.
4. Buybacks are not designed to push up the stock price. When buying back stock, it is impossible to pick the bottom. It is not uncommon for a stock price to continue to languish following a successful share repurchase. Buybacks should not be used as a tool to drive up a stock price, nor can you guarantee that a company will notch its lowest tick in price by executing a buyback. It is not correct to say that a buyback didn't work just because the stock price didn't make gains.^x The value created from a buyback is for long-term investors who care about future growth and believe in the strength of the business.
5. Having executed prior share repurchases is not a reason to hold off on executing new buybacks. Apple has bought back more than $700 billion of its stock in recent years.^xi Apple's board and management are buying opportunistically, without regard to their own history or an arbitrary decision that they've already bought enough. What ought to determine the size and extent of a share repurchase program is the company's cash balance, its capacity to continue generating cash and, most importantly, the price paid for the stock versus management's expectations for the company's future. If the price paid is very low and expectations are high, buybacks offer an incredible means of value creation. If the Board is concerned about InMode's future and is worried that sales will not recover or that R&D has run its course on developing new products, then why is management expanding sales teams and investing in new areas like urology and ophthalmology? It is clear that management and the Board believe deeply in the future success of the business. The Board should take advantage of the opportunity offered by InMode's current depressed valuation to generate shareholder return.
6. Timing and speed matter. We agree with management's assessment that interest rates play a big role in the general market recovery for cyclical companies like InMode. Many Wall Street banks perceive several interest rates cuts to come this year and more into next year.^xii Over the next 6 to 9 months, the opportunity to buy shares at advantageous prices may vanish, as the Company's valuation and actual sales should react positively to interest rate cuts. We believe the window of opportunity to continue the capital return is closing.
7. Holding cash for an M&A transaction is not an excuse to defer a buyback. If an attractive M&A event arises, the Company should use its balance sheet and debt capacity to execute. In recent public communications, management has plainly stated that an M&A deal is not imminent, nor is the company actively pursuing deals as it had in the past with an internal team or person dedicated to bringing deals.^xiii Even if InMode were considering a deal, there is no excuse not to continue to return capital due to the Company's vast cash reserves and debt capacity.

We have been in direct communication with InMode's board via public and private letters, as well as video conference calls. We continue to urge you to do the right thing to generate value for your shareholders. The Board has a legal and fiduciary duty to act prudently, loyally, and lawfully in considering whether, how, and when to return capital to shareholders. The Board's failure to act without clear and valid justification could potentially expose directors to legal and financial consequences if they were found to have breached their fiduciary duties. Israeli courts have taken a relatively strict position in upholding laws that protect minority shareholders, including imposing the potential of personal liability for company board members for breaches of duty. The market is watching, as are investors. InMode's board must do the right thing for shareholders, working to return the cash sitting on the balance sheet, and creating value for the Company's true owners.

Sincerely,

Pedro Escudero

CEO & CIO

DOMA Perpetual Capital Management LLC

About DOMA Perpetual Capital Management LLC:

DOMA Perpetual Capital Management LLC is an asset management firm based in Miami, Florida. DOMA Perpetual strives to achieve great investment results by identifying attractive, uncorrelated companies with sustainable competitive advantages, while limiting exposure to downside risks. It employs an opportunistic, fundamentals-based strategy that invests in companies across a variety of sectors and market caps throughout the globe.

Contact:

DOMA Perpetual Capital Management LLC

[email protected]

Disclaimer

This letter has been prepared by DOMA Perpetual Management LLC and its affiliates ("DOMA").  The views expressed herein reflect the opinions of DOMA and are based on publicly available information with respect to InMode Ltd. ("InMode, Ltd." or the "Company"). DOMA recognizes that there may be confidential information in the possession of the Company that could lead it or others to disagree with DOMA's conclusions. DOMA reserves the right to change or modify any of such views or opinions at any time and for any reason and expressly disclaims any obligation to correct, update, or revise the information contained herein or to otherwise provide any additional materials.               

For the avoidance of doubt, this press release was not produced by any person that is affiliated with InMode Ltd., nor was its content endorsed by InMode Ltd. This press release is provided merely as information and is not intended to be, nor should it be construed as, an offer to sell or a solicitation of an offer to buy any security nor as a recommendation to purchase or sell any security. One or more funds managed by DOMA currently beneficially owns shares of the Company.

Some of the materials in this press release contain forward-looking statements. All statements contained herein that are not clearly historical in nature or that necessarily depend on future events are forward-looking, and the words "anticipate," "believe," "expect," "potential," "could," "opportunity," "estimate," "plan," "once again," "achieve," and similar expressions are generally intended to identify forward-looking statements. The projected results and statements contained herein that are not historical facts are based on DOMA's current expectations, speak only as of the date of these materials and involve risks, uncertainties and other factors that may cause actual results, performances or achievements to be materially different from any future results, performances or achievements expressed or implied by such projected results and statements. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control of DOMA.

ⁱ InMode Ltd. (2024, Oct 1). Announces Departures of President of North America, Chief Medical Officer and VP of Sales USA as Part of a Global Reorganization Strategy. PRNewsWire. https://www.prnewswire.com/news-releases/inmode-announces-departures-of-president-of-north-america-chief-medical-officer-and-vp-of-sales-usa-as-part-of-a-global-reorganization-strategy-302263201.html

ⁱⁱ InMode Ltd.  Q1 2025 Earnings Call

ⁱⁱⁱ InMode Ltd. (2025, May 28). InMode Response Letter to DOMA by Moshe Mizrahy, CEO, Dated May 29, 2025. PRNewsWire. https://www.prnewswire.com/news-releases/inmode-response-letter-to-doma-by-moshe-mizrahy-ceo-dated-may-28-2025-302466390.html

^iv InMode Ltd.  Quarterly Earnings Releases

^v InMode Ltd.  Company Filings, DOMA Perpetual Internal Calculations

^vi DOMA Perpetual Internal Calculations

^vii DOMA Perpetual Internal Calculations, InMode Company Filings

^viii DOMA Perpetual Internal Calculations (assuming cash discounted from the valuation), InMode Company Filings

^ix InMode Ltd.  Company Filing (2025, January 16). https://www.sec.gov/Archives/edgar/data/1742692/000117891325000139/xslSCHEDULE_13D_X01/primary_doc.xml

^x InMode Ltd. at Jefferies Global Healthcare Conference 06/04/2025

^xi Mishra, R. (2025, August 8). Apple's $704 billion decade-long buybacks exceed market cap of all but 13 companies worldwide. Yahoo! Finance. https://finance.yahoo.com/news/apples-704-billion-decade-long-213225306.html

^xii Foimbert. (2025, August 12). Wall street now sees 3 fed rate cuts before year-end. CNBC. https://www.cnbc.com/2025/08/12/wall-street-now-sees-3-fed-rate-cuts-before-year-end.html

^xiii InMode Ltd.  at BNP 3rd Annual Aesthetics Day 05/19/2025, Company transcripts

SOURCE DOMA Perpetual