Voce Capital Management LLC plans to nominate four directors to the board of surgical-instrument maker Conmed Corp. (CNMD) in an effort to get the company to consider selling the business.
Voce, which sent Utica, New York-based Conmed a 13-page letter in November criticizing its performance and corporate governance, plans to nominate Daniel Plants, a managing director at the firm, and three health-care veterans to the board, Plants said yesterday in an interview. Voce, the San Francisco-based investment fund, wants the directors to run for election at Conmed’s annual meeting this year, Plants said.
The nominations are the latest move by Voce, which has said it owns less than 1 percent of Conmed, to pressure Conmed’s board. Voce said in the November letter that Conmed is run by a father-and-son duo who have overseen years of poor performance. The company could find a buyer among its competitors who might pay a high price for the business, giving shareholders a premium, Plants said then.
Conmed hasn’t started a sale process, Plants said, adding that he wants to vote in a slate of directors that could urge a sale or, if there’s no buyer, would have the industry experience to oversee a plan to improve the company’s performance and corporate governance.
In addition to himself, Plants will nominate James Green, who is chief executive officer of Analogic Corp., which produces medical-imaging equipment; Jeffrey Nugent, a veteran of several health-care companies including Johnson & Johnson; and Alan Kaganov, former head of business development at Boston Scientific Corp.
Robert Shallish, Conmed’s chief financial officer, declined to comment on Voce’s nominees.
“We think we have a good board,” he said in a telephone interview. “We believe our board understands their fiduciary duty and management has a plan for growth and improving operating performance.”
Since Voce filed its first letter, Conmed shares have risen 16 percent to close at $43.61 yesterday in New York.
Voce’s primary complaints are the company’s underperformance and the fact that Conmed, which is run by CEO Joseph Corasanti with the help of his father, Vice Chairman Eugene Corasanti, haven’t considered a sale of the company, Plants said. Voce also criticized the Corasantis for owning less than one percent of the stock, giving them less incentive to seek a buyer when they can hold onto salaried positions. The two collectively own 0.7 percent of the company, according to data compiled by Bloomberg.
In response to Voce’s November letter, Conmed said that its current operating plan is in the best interests of shareholders. The company said that it has boosted earnings per share by 30 percent in 2010, 15 percent in 2011 and 20 percent in 2012. The company also said that its shareholders received a 32 percent return on their investment during the first 10 months of 2013.
Plants nonetheless continues to think the company is mismanaged, he said. In the November letter, Plants wrote that Conmed’s operating margins are less than 10 percent while rivals Stryker Corp., Smith & Nephew Plc and Zimmer Holdings Inc. have higher margins. All three companies have operating margins of at least 14.5 percent, according to data compiled by Bloomberg.
Conmed, which is scheduled to report fourth-quarter earnings on Feb. 13, said in October that revenue for the three months through Sept. 30 fell 1.4 percent. The company has missed its own sales projections for six straight years, Voce said.
Voce used similar tactics to push Obaji Medical Products Inc. and Solta Medical Inc. to seek buyers. Both announced sales to Valeant Pharmaceuticals International Inc. last year after Voce started pressuring management at both companies.
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