ConforMIS plunges on recall, guidance cut

ConforMIS (NSDQ:CFMS) shares plunged nearly 19% today after the Bedford, Mass.-based company recalled some 950 of its customized knee replacements and cut its outlook for the rest of the year.

The company received 3 complaints of moisture on the patient-specific instrumentation used with the implants, although all 3 procedures went off without a hitch, ConforMIS said. The recall affects its iUni, iDuo, iTotal CR and iTotal PS devices. Roughly 650 of the devices involved in the recall have already been implanted and the remaining 300 have shipped for scheduled procedures but not used, the company said.

“The company does not believe that the customized knee implants used in these procedures were themselves affected. While the number of complaints the company has received is small, and the company has not received any reports of adverse events related to these complaints to date, the company initiated this recall voluntarily and is working to resolve the complaints quickly,” ConforMIS said in a press release.

The instruments were made at a new plant in nearby Wilmington, Mass., between July 18 and August 28, the company said.

“Based on an initial assessment, ConforMIS believes that the recalled instrumentation held excess water before undergoing the commonly used ethylene oxide sterilization process and, as a result, may contain small amounts of ethylene glycol residue. Ethylene glycol residue may form when ethylene oxide comes into contact with water. ConforMIS has temporarily suspended its use of the ethylene oxide sterilization process and is working expeditiously to investigate the root cause of the excess moisture and evaluate potential corrective and preventative actions,” the company said. “ConforMIS is seeking the return of the approximately 300 knee replacement product systems, which include the patient-specific instrumentation sets. The company does not believe that the customized knee implants included with the sets themselves were affected.”

Production is expected to slow substantially in September and perhaps October, as it moves to an existing alternative sterilization process while it investigates and corrects the problem. That prompted ConforMIS to pare $8 million from its sales forecast for 2015, saying it now expects revenues of $64 million to $66 million, down from $72 million to $74 million.

CFMS shares closed down -18.9% at $16.05 apiece today.

 

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