We initiated a position in ConforMIS Inc. (NASDAQ:CFMS), a company that develops custom implants for joint replacement procedures. The company uses proprietary software to design knee implants that match a patient’s unique anatomy. The company also uses 3D printing technology to manufacture customized instruments. In our view, ConforMIS has unique technology that is patent protected and disruptive to the $14 billion joint replacement industry. Studies have shown that the company’s knee implants result in better patient outcomes versus traditional off-the-shelf implants. We believe ConforMIS is well positioned to take market share, especially because Medicare and other payors are shifting reimbursement away from a fee-for-service payment model and toward bundled payments. Because patients who receive ConforMIS implants have been shown to recover faster than patients who receive off-the-shelf implants, the total cost of care for these patients should be lower, which, in our view, should drive hospital adoption. (Neal Kaufman)
From Baron Growth Fund's third quarter 2015 letter.
