UFP Technologies to Acquire AQF Medical for €43 Million to Expand Global Medical Device Supply Chain Capabilities

On August 26, UFP Technologies, Inc. (NASDAQ: UFPT) agreed to acquire AQF Medical, a manufacturer of medical technology components, for €43 million (approximately RMB 338 million).

“For many years, UFP Technologies and AQF Medical have been deeply engaged in similar market segments and application areas. This has given us a profound understanding of their processes and materials,” said R. Jeffrey Bailly, Chairman and Chief Executive Officer of UFP Technologies. “Furthermore, we share numerous customers, and the leadership team and customer service expertise of AQF Medical will play a significant role in driving the international business growth of UFP.”

The acquirer, UFP Technologies, was founded in 1963 and is headquartered in Newburyport, Massachusetts, USA. With annual sales nearing USD 300 million, UFP employs approximately 2,000 people across 16 facilities in the United States, the Dominican Republic, and Mexico.

The company is a provider of integrated design and manufacturing solutions for medical devices, sterile packaging, and other highly engineered custom products. Leveraging its expertise in flexible materials and medical device manufacturing, UFP Technologies has expanded its business scope to encompass every stage of the value chain, including design talent, skilled engineering capabilities, material selection, rigorous prototype testing, manufacturing, quality management systems, and supply chain management.

As a key player in the medical device supply chain, UFP Technologies serves as an outsourcing partner to most of the world’s leading medical device manufacturers. Its single-use and single-patient devices and components are widely utilized in various medical devices and packaging applications, including minimally invasive surgery, infection prevention, wound care, wearable devices, orthopedic soft goods, and orthopedic implants.

For more than half a century, UFP Technologies has established its reputation as the preferred resource for thermoplastic welding in medical devices. This method is favored over adhesive bonding or hot-air welding due to its ability to form exceptionally strong seals. The technology is widely applied in areas such as wound care, protective packaging, temperature management, laparoscopic equipment, and medical balloons.

AQF Medical, the acquiree, is a leading European manufacturer of custom-engineered foam and thermoplastic components. Headquartered in Navan, Ireland, the company also operates a joint venture in Singapore. With nearly 40 years of experience in designing and developing foam solutions, AQF Medical provides global customers with comprehensive services spanning product design, prototype manufacturing, and mass production supply.

Currently, AQF Medical has developed a variety of innovative medical device solutions, such as cross-linked closed-cell polyethylene foam for orthopedic implant packaging, mesh polyester-based and polyether-based polyurethane foams for negative pressure wound therapy (NPWT), thermoplastic polyurethane (TPU) for protecting orthopedic implants, and highly absorbent foams for advanced wound care dressings.

Overall, there are three major areas of business overlap between UFP Technologies and AQF Medical. The two companies may collaborate in the following areas: specialty thermoplastic polyurethane products, such as orthopedic packaging and covers for surgical devices (including robotic systems); polyurethane foams for negative pressure wound therapy; and antiseptic applicators for skin preparation. This acquisition will expand UFP’s product portfolio and scale, supporting its expansion into markets outside the United States.

R. Jeffrey Bailly, Chairman and Chief Executive Officer of UFP Technologies, stated, “AQF Medical’s expertise in specialty foam and film conversion, along with their strategically positioned facilities for the medical technology market, enables us to meet customer demand for expanded manufacturing operations in Europe. Their joint venture facility in Singapore will also allow us to support the Asian market locally.”

From October 2021 to March 2022, the company acquired three firms: Advant Medical, DAS Medical, and Contech Medical. After selling its molded fiber technology subsidiary in July 2022, UFP Technologies has embarked on a new round of acquisitions this year.

In recent years, UFP Technologies has continuously expanded its product portfolio and business scale through acquisitions. According to the company’s disclosure, the acquisition of AQF Medical marks its fourth deal this year.

In 2024, UFP Technologies also completed three acquisitions besides AQF Medical:

On July 16, 2024, UFP Technologies announced the acquisition of Marble Medical. Founded in 1988 and headquartered in Tallahassee, Florida, Marble Medical develops and manufactures adhesive-based medical components and disposable devices. This acquisition serves as a strong complement to UFP’s platforms for surgical robot covers and lamination equipment. As a preferred converter for 3M, Marble Medical leverages its precision die-cutting capabilities to provide UFP’s customers with a broader range of innovative solutions that integrate highly specialized adhesive technologies.

On July 15, 2024, UFP Technologies announced the acquisition of Welch Fluorocarbon for $40.6 million. Founded in 1985 and headquartered in Dover, New Hampshire, Welch Fluorocarbon specializes in the development and manufacture of thermoformed and heat-sealed implantable medical device components utilizing thin-gauge high-performance films. The addition of Welch Fluorocarbon provides UFP with film thermoforming capabilities, while its expertise in the development and manufacturing of implantable medical device components serves as a valuable complement to UFP’s existing film platform.

On July 1, 2024, UFP acquired AJR Enterprises for $110 million. Headquartered in St. Charles, Illinois, with additional manufacturing facilities in the Dominican Republic, AJR Enterprises develops and manufactures disposable safe patient handling systems. Reportedly, AJR achieved approximately $70 million in sales in 2023 and $75 million in sales during the 12-month period ended March 31, 2024. With its expertise in cut-and-sew manufacturing services and specialized fabrics, combined with UFP’s extensive experience in thermoplastic bonding, the company is well-positioned to provide a comprehensive suite of development, commercialization, and manufacturing services for the safe patient handling and transfer equipment market.

UFP Technologies expects that these acquisitions will collectively add approximately $90 million in revenue and $20 million in EBITDA, while expanding its capabilities in medical skin-contact adhesives, specialty fabrics, and implantable materials.

Here, VCBeat’s Orange Data Bureau has compiled a review of UFP Technologies’ acquisition activities prior to 2024:

According to publicly available statistics, UFP Technologies has completed at least 13 mergers and acquisitions, several of which involved transaction values exceeding $50 million. The acquired companies are primarily concentrated in two key areas—medical devices and packaging, as well as foam products and materials technology—serving to expand the company’s core business.

UFP Technologies Announces Second Quarter 2024 Results. The company’s second-quarter sales increased 10.1% to $110.2 million, compared with $100 million in the same period of 2023. Year-to-date sales through June rose 8.8% to $215.2 million, up from $197.8 million in the same period of 2023. Second-quarter sales in the medical market grew 10.8% to $95.4 million, while sales in the non-medical market increased 6.3% to $14.8 million.