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ConforMIS (CFMS) acquired the machining and polishing assets of Broad Peak Manufacturing for $6.5MM (~$5.7 cash and ~$0.7 common stock). The transaction includes supplies and equipment, and CFMS will retain ~20 of Broad Peak’s employees, leasing a manufacturing facility and office space in Wallingford, Connecticut.
Broad Peak had provided polishing services for iTotal® CR, iTotal® PS, iUni® and iDuo® femoral components since 2014. For 2Q17, CFMS noted a year-over-year decrease of -15.6% in sales of iTotal CR, iUni and iDuo; this integration could support a >50% reduction in polishing costs, starting in 1Q18.
The investment should also support launch of the FDA-cleared iTotal Hip, which has accelerated to 2H18 instead of 2019, as originally proposed.
“We anticipate that the integration of Broad Peak’s polishing resources and expertise will deliver rapid and potentially immediate benefits to ConforMIS,” said Mark Augusti, Chief Executive Officer and President of ConforMIS. “As we work to maximize the value of our existing customized knee implant systems and our planned iTotal Hip system, this transaction is just one example of the positive steps we are taking to continually improve every phase of our business.”
Following the acquisition, Ed Kilgallen, former Managing Director at Broad Peak, is now CFMS’ Vice President of Operations. Mr. Kilgallen brings a solid manufacturing and leadership background, having served as General Manager of Symmetry Medical’s Cork, Ireland facility before leading Broad Peak.
ConforMIS joins other companies that have acquired and integrated their suppliers as part of a larger, longer-term strategy, such as Globus Medical and NuVasive.
Sources: ConforMIS, Inc., ORTHOWORLD
