Merit Medical (MMSI) Announces Pact With Starboard

Merit Medical Systems, Inc. (NASDAQ: MMSI), a leading manufacturer and marketer of proprietary disposable devices used in interventional, diagnostic and therapeutic procedures, particularly in cardiology, radiology, oncology, critical care and endoscopy, today announced that it has reached an agreement with Starboard Value LP and its affiliates (“Starboard”), an investment firm which owns approximately 8.7% of Merit’s outstanding common stock, pursuant to which the Company has nominated three new independent directors —Lonny Carpenter, David Floyd and James T. Hogan—for election to the Merit Board of Directors at the Company’s upcoming 2020 Annual Meeting of Shareholders, scheduled to be held on June 22, 2020.

In connection with the new director nominations, Merit also announced that Nolan E. Karras, David M. Liu, M.D. and Lynne N. Ward will not stand for re-election at the 2020 Annual Meeting and Franklin Miller, M.D. will resign from the Board not later than immediately following the 2020 Annual Meeting. Merit’s Board intends to appoint Ms. Ward to fill the vacancy resulting from Dr. Miller’s resignation, which would place her in the class of directors standing for re-election at the 2021 Annual Meeting. Kent W. Stanger, a founder of Merit, has previously announced that he will not stand for re-election at the 2020 Annual Meeting. Following the 2020 Annual Meeting, Merit’s Board will be comprised of nine directors, seven of whom will be independent. Merit’s Board intends to select a new Lead Independent Director following the 2020 Annual Meeting.

In addition, Merit’s Board will form a new Operating Committee, which will work with Merit’s management team to establish operating margin targets to be announced no later than the announcement of Merit’s third quarter 2020 financial results. Messrs. Carpenter, Floyd and Hogan and Fred P. Lampropoulos, Merit’s Chairman and Chief Executive Officer, will serve as members of the Operating Committee with Mr. Carpenter serving as Chair.

“We are pleased to welcome Lonny, David and Jim, three medical device industry veterans, to the Board of Directors,” said Mr. Lampropoulos. “They each bring industry experience and perspectives that we believe will support our mission of enhancing shareholder value. The actions we have taken across the company are already yielding positive results, including increased efficiency and progress towards operating margin improvement, as part of our goal to become a leaner, more efficient growth company. I am excited to work together with the entire Merit team as we continue to build on our momentum.”

Mr. Lampropoulos continued, “On behalf of the entire Board, I thank Kent, Nolan, Frank and David for their distinguished service and many contributions to Merit. We appreciate their leadership in positioning the Company for continued success and wish them the very best.”

Jeff Smith, Chief Executive Officer of Starboard, said, “We appreciate the constructive dialogue we have had with Merit over the last several months. We believe that Merit is an outstanding company and I am confident the appointment of these new directors will bring additional insights and valuable expertise as Merit focuses on improving profitability and growth. We look forward to continuing to work closely with management and the Board as we pursue our common goal of enhancing shareholder value.”

Pursuant to the agreement, Starboard agreed to withdraw its director nominations previously submitted to the Company and support the Board’s full slate of directors at the 2020 Annual Meeting. Starboard also agreed to abide by customary standstill provisions and voting commitments. The complete agreement will be filed by the Company with the U.S. Securities and Exchange Commission (“SEC”) as an exhibit to the Current Report on Form 8-K.

Skadden, Arps, Slate, Meagher & Flom LLP is serving as legal counsel to Merit and Wells Fargo Securities, LLC and Perella Weinberg Partners are serving as Merit’s financial advisors. Olshan Frome Wolosky LLP is serving as legal counsel to Starboard.

About Lonny Carpenter

Mr. Carpenter served for almost thirty years in various roles at Stryker Corporation, including Group President of Global Quality & Operations and Europe/Canada/Latin America/Middle East/Africa Commercial Operations, Group President of Global Quality and Operations, Group President of Instruments and Medical, President of the Medical Division and served in multiple Vice President roles in Operations, Supply Chain, Project Management, and Acquisition Integrations. Prior to Stryker Corporation, Mr. Carpenter served in the United States Army where he rose to the rank of Captain, Army Aviation Helicopter Pilot, 101st Airborne Division.

Since May 2018, Mr. Carpenter has served on the Board of Directors of Novanta Inc. Mr. Carpenter also sits on the Board of two privately held companies, The Boler Company, since May 2019, and Orchid Orthopedics Solutions, since July 2019.

Mr. Carpenter received a Bachelor’s degree in Engineering from the United States Military Academy at West Point.

About David Floyd

Mr. Floyd has served on the board of directors of NN, Inc. since May 2016 and the board of Healthcare Outcomes Performance Company since April 2020. Mr. Floyd also serves as an external advisor to Bain & Company and GLG Institute, since March 2019 and August 2018, respectively. Previously, Mr. Floyd served as a Group President of Stryker Corporation from November 2012 to June 2019. Prior to that, Mr. Floyd served in numerous senior leadership roles in several medical device companies, including as U.S. President and then Worldwide President of the DePuy Orthopaedics Division (now DePuy Synthes) at Johnson & Johnson. Mr. Floyd also served as General Manager and then President of the Spine Division at Abbott Laboratories, President and Chief Executive Officer of AxioMed Spine Corporation, and Vice President of U.S. Market and then President of Centerpulse Orthopedics Inc.

Previously, Mr. Floyd was a member of the board of two privately held companies, Apos Therapy Ltd. from 2012 to 2015 and AxioMed from 2004 to 2005. He also was a founding board member from 2009 to 2012 and first CEO from 2011 to 2012 of OrthoWorx, a business league supporting the orthopedic medical device manufacturing industry.Mr. Floyd received his Bachelor’s degree from Grace College.

About James Hogan

From 2005 to 2016, Mr. Hogan served in various roles at Medtronic plc, including President of Latin America and Director of Gastroenterology and Urology for Western Europe. Prior to that, Mr. Hogan founded three medical device companies in the cardiology, urology and vascular fields.

Since 2019, Mr. Hogan has served as a director of ProLung, Inc. Mr. Hogan also sits on the Board of Xenocor, Inc., a privately-held company, a position he has held since 2019. Additionally, he has served as a Consulting Partner to BioConnexus.

Mr. Hogan holds Bachelor’s degrees in Chemistry and Psychology, in addition to a Master’s degree in Business Administration, from the University of Minnesota.

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