Irvine-based prosthetic device maker Free-dom Innovations LLC has a new owner, as well as plans to increase its sales and research and development staffs and make a push for international expansion.
Health Evolution Partners Inc., a private equity firm in San Francisco, acquired a majority stake in Freedom Innovations last month. Terms weren’t disclosed.
The company’s prosthetic devices are made from carbon fibers and use electronic technology, including microprocessor controls in some products.
Health Evolution said Freedom’s senior management, including Chief Executive Maynard Carkhuff, will continue to lead the company and remain “significant shareholders.”
“Robust Pipeline”
Freedom “provides a tremendous platform for expansion in a dynamic and growing market and has a robust pipeline of new products,” said Ned Brown, an investment partner in the firm.
Health Evolution in-vests only in healthcare companies.
The deal is a cash-out for Freedom Innovation’s prior backers, Tailwind Capital of New York and San Francisco-based Telegraph Hill Partners, both of which took part in the recapitalization of the company in 2008.
“Private equity firms typically have a three- to five-year investment horizon, and we were at the four-year mark with our in-vestors,” Carkhuff said. “It was simply time for them to divest.”
Freedom Innovations found Health Evolu-tion after retaining investment banks Piper Jaffray & Co. and BMO Capital Markets in a search for new investors.
Freedom Innovations doesn’t disclose financial data, although Carkhuff indicated annual revenue has reached eight figures. He said he expects a faster pace of growth with Health Evolution’s backing.
“We had our first strategic planning meeting with Health Evolution Partners just yesterday,” Carkhuff said recently. “What we’re looking to do now is identify the ways we can accelerate growth, whether that’s through expanding our sales team quicker, ex-panding our direct selling effort in Europe faster (or) accelerating investment in our R&D pipeline.”
Freedom Innovations opened a European of-fice in the Netherlands last year.
Its devices include Plié, a microprocessor-controlled prosthetic knee, and the Renegade line of prosthetic feet.
Plié has been Freedom Innovations’ “high-growth product,” Carkhuff said.
He said the company aims to make more prosthetic devices featuring microprocessor controls, and Plié is the “first in that portfolio.”
Vanderbilt
Freedom has licensed what Carkhuff called the first completely powered prosthetic knee and ankle from Vanderbilt University in Nashville, Tenn. The microprocessor-controlled knee and ankle were developed over a seven-year period at Vanderbilt through a federal grant.
Freedom plans to commercialize the knee and ankle devices in 2014, Carkhuff said. The products are further along in development than other research and development projects, he added.
“I think there are seven different prototypes that have been developed,” the chief executive said. “It’s pretty far along, but our engineers need to sort of commercially harden the product. These products need to be guaranteed for three years.”
Freedom Innovations recently hired an engineering team that developed the Rio prosthetic knee at rival Össur Americas in Foothill Ranch, a unit of Iceland-based Ossur HF. Its other major competitor is Germany-based Otto Bock HealthCare GMBH, whose U.S. headquarters is in Minneapolis.
Freedom Innovations’ sales, marketing and distribution operations in the Nether- lands is well situated near its primary European markets of Germany and France, Carkhuff said.
The company makes its prosthetic devices in Gunnison, Utah. Its work force of 125 includes 30 corporate-office employees in Irvine.
