Almost exactly three years after taking on the role, Ken Reali has stepped down from his post as chief executive of Bioventus.
Reali’s departure came after he was informed earlier this week that the company’s board of directors had “determined” he would transition out of the role, according to a filing (PDF) with the U.S. Securities and Exchange Commission (SEC) on Wednesday.
With Reali’s official resignation Tuesday, Bioventus said it has already begun looking for a permanent replacement. In the meantime, Anthony Bihl—who previously served as the company’s CEO between 2013 and 2020—has re-assumed the role on an interim basis.
In the wake of his termination, per the SEC filing, Reali signed a severance agreement granting him his full salary for 18 months after his ouster. He’ll also receive 150% of his target 2023 bonus, which will be paid out throughout that 18-month severance period.
In Bioventus’ Wednesday press release announcing the executive switch-up, William Hawkins, the company’s executive chairman, thanked Reali for his “valuable contributions” and “dedicated leadership,” and added, “We are urgently looking to address our performance and execution, unlock long-term value and deliver on the expectations of our shareholders.”
Though Bioventus said in the SEC filing that Reali’s departure was “not related to any matter relating to the company’s operations, policies or practice,” it came just a few days after the tech maker backed out of its acquisition of surgical implant maker CartiHeal.
The CartiHeal deal was first announced in April 2022, stemming from an acquisition option baked into a mid-2020 partnership agreement between the two companies. Shortly after CartiHeal secured FDA approval for its Agili-C cartilage repair implant in March 2022, Bioventus offered up a total of $450 million to acquire the company.
After reworking the purchase plan as it dealt with some financial issues, Bioventus ultimately agreed to pay $100 million upfront to acquire CartiHeal, then to dole out another $350 million across about five years as CartiHeal hit certain milestones.
The acquisition wrapped up in July—complete with the $100 upfront payout—but at the end of February, Bioventus announced that it had put forth a settlement agreement with the former shareholders of CartiHeal that would free Bioventus from its responsibility to shell out the remaining $350 million of the deal. The company had a month to seek out other funding options in a last-ditch effort to hold onto CartiHeal, but in an annual report (PDF) published at the end of March, Bioventus confirmed that it had been unable to find an alternative funding source, therefore transferring ownership of CartiHeal back to its original sellers.
“We can give no assurance that we will be able to obtain the necessary financing or negotiate acceptable terms to reacquire CartiHeal and its assets,” Bioventus concluded in the report.
The buyout breakdown came as Bioventus plummeted into the red. In its full-year earnings report published last week, the company reported a net loss of more than $213 million for 2022, compared to a net income of nearly $10 million the year before.
The net loss represents the combination of steadily increasing sales—which reached $512 million last year, up nearly 19% compared to 2021—and an operating loss that stretched to $251 million, thanks in large part to a $189.2 million impairment charge that Bioventus attributed to “the decline in our market capitalization.” Additional losses came from restructuring and compensation costs, as well as acquisition-related expenses, the company said.