Medipharm Labs says ISS recommends shareholders vote for director nominees

MediPharm Labs (MEDIF) announced that Institutional Shareholder Services published a report on May 30 recommending that MediPharm shareholders vote the GREEN Proxy or voting instruction form FOR the Company’s nominees for the Board of Directors at the upcoming Annual and Special Meeting of Shareholders on June 16. The ISS Report concludes: “As the dissident has not presented a compelling case for change, shareholders are recommended to vote FOR all management nominees.” In explaining the reasons for its recommendation, the ISS Report reviews each of Apollo’s major claims and concludes that there is insufficient evidence to support any of them. Statements in the ISS Report that refute Apollo’s claims include the following: “Since Q2 2022, quarterly revenues have more than doubled, adjusted EBITDA has swung from a $6.3 million loss to a $0.1 million gain, gross margins have expanded 50.9 percentage points over Q2 2022, and the company’s SG&A has remained fairly stable. Against this backdrop, it is challenging to validate the dissident’s claims that the company’s costs have ‘ballooned’ or that revenue is ‘imploding’. In particular, it also seems incorrect to suggest the company has experienced poor post-acquisition integration over a period where revenues and gross margins have risen dramatically while SG&A expenses have remained relatively flat…LABS has experienced multiple years of improving financial results, which overlap with Pidduck’s tenure as CEO as well as a series of acquisitions and non-core asset divestitures. Management has communicated a logical strategy that focuses on higher margin, international markets where the company can leverage a competitive advantage. Moreover, there does not appear to be sufficient evidence that the company is in imminent danger of running out of cash…. the company has generally outperformed peers and experienced a clear operational turnaround. Meanwhile, the dissident’s assertions about the company’s peril are not able to be sufficiently validated with available information. As such, the dissident has not presented a case for board change.”