When a company holds cash equal to half its market value while its stock keeps dropping, someone's bound to notice. Steel Partners Holdings noticed, and now they're making their move on InMode Ltd. (INMD).
Steel Partners went public Wednesday with an unsolicited proposal to buy 51% of InMode at $18 per share. That's a 29% premium to where the stock traded on January 23, before word of a potential deal started circulating. The medical technology company's shares are currently trading at $16, up 5.82%, which puts them near the high end of their 52-week range of $13.14 to $19.78.
Steel Partners isn't some random suitor. They already own about 800,000 shares of InMode, roughly 1.3% of the company. According to their letter, they've tried repeatedly to discuss this proposal privately but got nowhere, so they're taking it public.
The Case Against InMode's Management
The letter reads like an activist investor's greatest hits compilation. Steel Partners hit InMode on three main fronts: abysmal stock performance, questionable capital allocation, and serial guidance disappointments.
The performance numbers are rough. Total shareholder returns clocked in at negative 19.18% over the past year, negative 59.35% over three years, and negative 53.24% over five years. Those aren't the kind of figures that inspire confidence in the current game plan.
Then there's the cash situation. InMode reported $532.3 million in cash and equivalents as of the third quarter 2025, with zero debt. That's nearly half the company's market capitalization just sitting there. Steel Partners argues management has failed to return this excess capital to shareholders in any meaningful way.
Guidance Cuts Keep Coming
Perhaps most damaging is InMode's track record on guidance. Steel Partners noted the company has lowered its outlook seven times over the past nine quarters, including another downward revision to 2025 revenue and gross margin expectations earlier this month.
The preliminary numbers tell the story. InMode expects fourth quarter sales of $103.60 million to $103.80 million, slightly below the $104.44 million consensus. Full year 2025 revenue was narrowed to $370.2 million to $370.4 million from a previous range of $365 million to $375 million, basically matching the $370.55 million Wall Street forecast.
But the real kicker is the 2026 outlook. InMode guided to $365 million to $375 million in sales, well short of the $384.47 million analysts were expecting. When you're consistently missing expectations and sitting on a mountain of cash, activist investors start circling.
What Happens Next
Steel Partners says the offer would be funded entirely through existing cash and available credit, with no financing contingencies. They're positioning this as a sure thing if InMode's board engages.
The firm also made clear they're willing to negotiate with InMode's leadership but aren't afraid to take a binding offer directly to shareholders if management continues stonewalling. Translation: this isn't going away quietly.
Whether InMode's board views this as opportunistic bottom-fishing or a fair shake for frustrated shareholders probably depends on how confident they are about turning things around. With half their market cap in cash and years of declining returns behind them, that's a tough case to make.
