ConforMIS Acquires Machining & Polishing Assets from Broad Peak

ConforMIS Inc., a medical technology company that offers joint replacement implants customized to fit each patient’s unique anatomy, announced that it has acquired the machining and polishing assets of Broad Peak Manufacturing, LLC, a high-precision surface preparation and finishing facility. The purchase price for the machining and polishing assets is approximately $6.5 million consisting of $5.75 million in cash and approximately $0.75 million in common stock. Under the terms of the deal, ConforMIS will integrate most of the Broad Peak employees, acquire supplies and equipment, and lease a fully operational manufacturing facility and office space in Wallingford, Connecticut.
 
Broad Peak has provided polishing services for ConforMIS’ femoral implant component including iTotal CR, iTotal PS, iUni, and iDuo since 2014. Starting in the first quarter of 2018, ConforMISestimates that the integration of the Broad Peak polishing operations will result in a reduction in the cost of polishing of up to 50 percent, and potentially more, with a potential 200 basis point improvement in overall gross margin.
 
“This acquisition represents an important step in enhancing the manufacturing of our customized knee implants,” said Mark Augusti, CEO and president of ConforMIS. “Our goal is to continuously invest in specific areas of our business that will improve overall operational efficiencies while maintaining our commitment to quality product for our patients. Integrating Broad Peak’s proven and innovative manufacturing operation directly into ConforMIS’ operations will allow us to further reduce costs, improve gross margin, and add additional manufacturing expertise that we intend to leverage as part of our larger plan to continually improve our manufacturing operations and our gross margin.”
 
Under the terms of the agreement, ConforMIS will lease the manufacturing facility in Wallingford, Conn., and approximately twenty Broad Peak machining and polishing personnel will join the ConforMISteam, including Ed Kilgallen, former managing director at Broad Peak, who has joined ConforMIS as its vice president of operations.
 
“As a highly proficient supplier of polishing services to ConforMIS, Broad Peak has a combined 70+ years’ experience in the aerospace and medical device industries, and we are extremely excited about our new role as part of the ConforMIS team,” said Kilgallen. “We look forward to playing an even larger role in the development of ConforMIS’ manufacturing technology and to continuing to help deliver high-quality customized knee implants to patients, surgeons and hospitals globally.”
 
“We anticipate that the integration of Broad Peak’s polishing resources and expertise will deliver rapid and potentially immediate benefits to ConforMIS,” Augusti added. “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.”