It was a surprise retirement.
Tornier N.V. announced on November 12 that the company’s President and CEO, Doug Kohrs was retiring. David Mowry, the company’s chief operating officer was immediately named interim president and CEO.
Kohrs was clearly the captain of this ship. Sean Carney, the company’s board chair noted Kohrs’, “leadership and contribution in building the Tornier business over the past six years. Doug was instrumental in bringing Tornier public, leading the recent acquisition of the OrthoHelix business and expanding our international footprint, core capabilities and the innovation pipeline.”
Why?
In the world of publicly traded companies, retirements are usually well-orchestrated and telegraphed well ahead of time to keep investors calm. So why didn’t this happen with Kohrs and Tornier?
BMO Capital Markets analyst Joanne Wuensch wrote that she was not a fan of this announcement, “particularly on the heels of the departure of CFO Carmen L. Diersen in July 2012. We could speculate that the departure is simply a personal decision (and take it at face value), or take the view that after several missteps since its February 2011 IPO, it was time for new senior leadership. What we do not read into this announcement is anything nefarious (the consulting agreement appears to imply that they are departing on reasonably good terms).”
Bank of America analyst Bob Hopkins said that his conversations with the company suggested that Kohrs did want to retire over the course of the next 12-18 months. However he believes Kohrs departure was probably hastened “due to [Tornier’s] recent well-documented issues and the lack of value creation since the IPO. Importantly, we do not believe any new issues have arisen since last week’s Q3 call, and Mr. Kohrs has signed a six month consulting agreement with [Tornier] to help with the transition, and remains one of the largest shareholders.”
Kohrs, according to a company SEC filing, will receive $2, 500 per month for up to eight hours of consulting services per month and will be compensated at a rate of $300 per hour for any additional hours.
Mowry and O’Boyle Assume Leadership
Mowry joined Tornier in July 2011 as chief operating officer. He has 23 years of medical device industry experience in various engineering and management assignments. Prior to Tornier, Mowry served as senior vice president and president of the Neurovascular Division of Covidien plc, and in the same position with ev3 Inc., prior to its acquisition by Covidien. He is a graduate of the United States Military Academy in West Point, New York with a degree in engineering.
Kevin O’Boyle, the former chief financial officer of NuVasive, Inc. and one of Tornier’s non-executive board members was named interim vice chairman to serve as a liaison between Mowry and the board.
Wuensch said that while the company clearly has work to do, her thesis is that, with the distribution changes well under way, and the OrthoHelix acquisition filling an important hole in the company’s extremity bag, the current strategy should accelerate the top-line growth rate over the coming quarters.
While this “unnecessarily awkward transition” creates as much risk as opportunity for the company, Hopkins said he continues to see real long-term value in the franchise. He notes that Kohrs, “leaves behind a strong bench; the Tornier brand remains strong; their markets are healthy; Warburg [owner of 47% of Tornier] has a best in class track record with management changes in their portfolio companies and Tornier remains comfortable with 2012 guidance and with 2013 guidance that calls for a return to double-digit top-line growth by midyear.”
Kohrs’ Record
Kohrs was CEO of American Medical Systems Holdings, Inc.from 1995 to 2005 before turning that firm into a publicly-traded company. Prior to that he co-founded Spine-Tech, Inc. which was later acquired by Sulzer Medica A.G.
According to a July 2012 TwinCities Business article, Kohrs left American Medical in 2006 to become entrepreneur-in-residence at Split Rock Partners. That’s when he convinced a group of investors to buy the French family-owned Tornier. Tornier’s sales have grown from $100 million in revenues in 2006 to $261 million last year. When he took over, Tornier sold 23 products in 15 European countries; today it sells 100 products in 45 countries worldwide, including Japan, China, Australia, and Argentina. Headcount worldwide has jumped from 350 to 800.
Whether Kohrs stays retired or continues his serial entrepreneurial track record is unknown.
