K-V Pharmaceutical, which has faced a number of challenges over the past couple of years, has tapped Greg Divis as its permanent CEO. He had served as interim CEO since June and will continue to serve as president of Ther-Rx, the branded pharmaceutical subsidiary of the company. The news comes at the same time the company announced that former company CEO Marc Hermelin has resigned from the drugmaker's board of directors.
The HHS Office of Inspector General recently notified Hermelin that he will be excluded effective November 18, 2010. With him on the board, K-V could have lost the federal government as a customer and millions of dollars in federal reimbursement from Medicare and Medicaid programs. However, as a result of Hermelin's resignation and other agreements, K-V believes it has resolved its remaining issues with respect to HHS OIG and is positioned to continue to participate in Federal health care programs.
Hermelin was reportedly removed as CEO in December 2008 for cause, a company securities filing shows--something he disputed; he maintained he had retired, as Portfolio.com reported in June.
In 2007, Hermelin's 93-year-old father, K-V founder Victor Hermelin, went to court to try and have his son removed as a trustee of one of four trusts set up to benefit Victor Hermelin's five children and his ex-wife. The elder Hermelin charged his son had managed a $35 million trust to favor himself and selected relatives and has a conflict of interest in his dual roles as company president and trustee. But now Hermelin has agreed to resign as trustee of all family trusts that hold K-V stock and has agreed to divest his personal ownership interests in the company's Class A Common and Class B Common stock over an agreed upon period of time.
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