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ActivArmor

by Eric Peterson on September 8, 2019, 10:59 am MDT

www.activarmor.com

Pueblo, Colorado

Founded: 2014

Privately owned

Employees: 4 (plus contractors)

Industry: Bioscience & Medical

Products: 3D-printed casts and splints

Armed with a better method for healing broken bones, President and COO Diana Hall is using additive manufacturing to disrupt the market for casts and splints.

Growing up in Pueblo, Hall had firsthand experiences that led to her founding ActivArmor. "My brother died of cystic fibrosis," she says. "Growing up, I spent a lot of time at Children's Hospital and I saw a lot of patients having to adapt to medical devices, rather than the other way around."

After studying chemical engineering at the Colorado School of Mines, Hall worked in software development and testing for Fortune 500 companies for seven years, then changed course in 2014. "When I had my daughter, I took some time off and moved back to Pueblo and started running a mentoring program for children in poverty," she says.

She saw kids having trouble with casts, including one little boy whose arm cast got soaked in the shower and he hid the water damage to avoid getting in trouble. "He ended up with permanent scarring on his arm," says Hall. "I knew that with 3D printing, you could use the same plastic as Legos and create any sort of custom-fit immobilization device. I made a prototype for him on my 3D printer and said, 'Take this to your doctor and ask him if you could wear this instead.' The doctor called me and said, 'Can you make me some more of these?'"

Working with the U.S. Food and Drug Administration (FDA) and advisors with FDA experience, Hall developed test protocols for 3D-printed casts and splints, then launched ActivArmor with a patent-pending process for scanning, designing, and 3D printing custom casts and splints that are categorized by the FDA as Class I medical devices. 

Hall describes ActivArmor as "a digital casting and splinting service." The company works with clinics across the country from the company's headquarters in downtown Pueblo utilizing a contract manufacturer in Cañon City for on-demand 3D printing. 

Following two years of field tests in collaboration with clinics across the country, ActivArmor went to market in 2015 in Colorado and across the country in 2017.

After a scan at a clinic, the patient receives their cast or splint in three to four business days. "The products are made from 100 percent ABS, which is the same plastic as Legos. They're tested for biocompatibility, microporosity, et cetera, so they don't trap moisture against the skin, so they're completely hygienic. . . . You can wash, bathe, and shower like normal. It's about continuing your active lifestyle while healing, while being immobilized. If you need a splint later in the healing phase, this transitions to a removable splint."

The status quo for casting and splinting is time-intensive for both the patient and clinic.  With ActivArmor, says Hall, "All of that casting and splinting through the healing phase is replaced by a 30-second, in-clinic scan." 

The end result? "You're cutting a week off of whatever your healing time is," she says. "There are financial benefits to the patient as well as the clinic. You're taking the inventory out and the labor out, and you're replacing it with a 30-second scan."

The company's process has trade secrets at the scan, design, and manufacturing level. "There are layers of IP," says Hall. allowing that the business model hinges on additive manufacturing. "3D printing has really opened up the ability to do customization. The only way to customize back in the old days was to squish it directly on the patient. You'd have to have inventory in your closet, and you'd have to have labor and staff."

ActivArmor will have 12 clinics reselling its casts and splints as of October 2019, and Hall expects to have 20 in major metropolitan areas by the end of 2020.  "We're opening up clinics all over," she says.

The wholesale price is "substantially below Medicare rates," says Hall. The patient "may have a copay or deductible or an imaging fee, depending on the clinic or negotiated rates, but it is affordable. It's for everyone."

The company utilizes an on-demand manufacturing model by partnering with contract shops. "I work with a company [in Cañon City] that was doing things like motherboard assembly," says Hall. "I put my equipment in there and my IP and I trained them. . . . That saves me in overhead."

ActivArmor has a second contract partner in place for demand spikes or contingencies, but Hall says a decentralized manufacturing model might be in the cards in the future with regional partners across the U.S. "A distributed model would help me with turnaround time," she explains.

The company's growth curve is starting to resemble the metaphorical hockey stick. "Our sales doubled in the last quarter and we're expecting them to double again in the next quarter and triple by the end of next year," notes Hall. "More than anything, we're proving the proof of process. We're proving this can be a standard of care. It will never eliminate casting and splinting, but it can be a really nice benefit to patients if they want to return to their active lifestyle while they're healing."

While she recently hired Dean Miller as CEO, Hall says ActivArmor currently relies on contractors for design and administration more than salaried employees, explaining, "You just can't have staff sitting there waiting to see if someone breaks their arm, so as we scale . . . I keep them as 1099s as long as I can."

Challenges: "Scaling," says Hall. "How do we meet the demand? Everyone says, 'What about the marketing?' I have more demand than I can handle right now because we're the only ones doing it. Marketing is not my problem. Here's what my real problem: In September, I'm goingto be in eight different states, and that's just the beginning of September. And I'm a single mom."

Opportunities: Market Research Engine forecasts the U.S. market for casts and splints to grow from about $2.2 billion in 2018 to $3 billion in 2024. "The average person breaks two bones in their lifetime," says Hall. "And we fit all body parts -- we do legs, arms, all of that."

No matter the bone, she adds, "It's really about how much of that do we have access to. Right now, our market entry strategy is higher-end sportsmedicine. That's where we're focused."

Hall says she plans to have ActivArmor's products covered by Medicaid in 2020, "but right now my target market entry is: Who's going to be that early adopter? Who's going to be that innovator who's going to say, 'Yeah, I want to introduce a new technology into my clinic instead of using that plaster out of the closet?'"

She says that the business model dovetails into broader trends in healthcare. "Outsourcing is in my opinion the future of medicine and you can see that with billing and coding, with emergency rooms, imaging." It's about liability as well as efficiency. "We're doing all of the quality-control tests, we're responsible for all of that. It's all about skill and labor and time."

"Everybody's outsourcing to save time and costs. That's what we're doing with a casting and splinting service."

Needs: "Money for expansion," says Hall. "I'm trying to go nationwide and fund the growth."

While ActivArmor is largely self-funded to date, she's currently looking for "accredited investors who want to get a piece of equity before we go big. By the end of next year [2020], I'm going to be at the venture capital, Series A level. By then, the valuation is going to be much different than it is right now. I'm profitable, but I'm not running in the black yet. I will be at the break-even point at the end of next year. . . . Every investment dollar is leveraged by grant funds. We have the Colorado Office of Economic Development Advanced Industries grant as well as the PEDCO grant."

Hall adds, "I'm not to the point where I'm interested in giving up control of my company. Smart money comes at an expense."

ActivArmor also needs talent. "My CAD design capacity has to double and triple," says Hall. "I'm constantly hiring. I really like the labor pool here. I've got PCC students and CSU students and I'm trying to help with the brain drain coming out of Pueblo. If we can keep those folks here and give them a living wage, that helps me a lot."

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merle obrien

Living in a ski town and having 2 boys who play sports, I found the article really interesting. Thank you for this article.