investor presentation - conformis

Investor Presentation

September 2020

2

Forward-Looking Statements

This presentation contains forward-looking statements that involve substantial risks and uncertainties. All statements, other than statements of historical facts, contained in this presentation, including statements regarding our strategy, future operations, projected financial position, future revenues, projected costs, projected profits, projected margins, prospects, plans and objectives of management, are forward-looking statements. The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “target,” “potential,” “will,” “would,” “could,” “should,” “continue,” “grow,” “improve,” and “trend”, and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words.

We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. The forward-looking statements contained in this presentation reflect our current views with respect to future events, and apply only as of the date of this presentation. We assume no obligation to update any forward-looking statements.

Our business is subject to substantial risks and uncertainties, including those referenced in certain of our filings with theSEC under the heading “Risk Factors.” You are encouraged to read our filings with the SEC, available at www.sec.gov, including our Annual Report or Form 10-K for the year ended December 31, 2019 filed with the SEC on March 3, 2020, as well as our Quarterly Reports on Form 10-Q. You should give careful consideration to these risks and uncertainties.

© 2020 Conformis, Inc. Slide

3© 2020 Conformis, Inc.

• Founded: 2004

• Headquartered: Billerica, MA

• Ticker: CFMS

• Global employees: ~275

• International: Products sold

in 18 countries

• Milestone: Sold >110,000

personalized knees

Conformis Today

Key Statistics

Expanding Portfolio of Knee & Hip Implants

Comprehensive Dossier of Clinical and Health

Economic Benefits

Recognized Leader in Patient-Specific

Instrumentation and Personalized Implants

Proprietary Technology Platform with Broad

Patent Portfolio

Slide

44

A Paradigm Shift in OrthopedicsA personalized solution for patients that delivers demonstrated value to physicians and payors

CT Scan• Surgeon orders and sends a standard diagnostic CT scan to Conformis

Restore the native anatomy using 3D modeling• Convert the imaging data into a 3D model

Create the patient-specific implant and instruments• Single-use, patient-specific instruments include guides and instruments

necessary to fit our customized implants to the patient

Develop patient-specific pre-surgical plan• iView allows the surgeon to visualize preoperative planning, including

measurements, orientations and anatomic variants

Just-in-time delivery to the customer• Deliver implant, iJigs and iView within 6 weeks

Digitally driven manufacturing• Produce custom implant and patient-specific instruments

Patient-Specific Solution

Delivered Just-in-Time in a

Convenient Kit

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2

3

4

5

6


5

iFit Design

5

iFit Image-to-Implant Platform Technology

iFit JIT Delivery

Clinical Benefits

Economic Benefits

Intra-Op Benefits

iFit 3D Additive Printing

6

Expand hip product adoption to further accelerate sale

© 2020 Conformis, Inc.

Launching a New Investment Thesis

• We have experienced adoption challenges• Lead times and lack of intraoperative flexibility have

limited new surgeon adoption and compressed margins

• We compete in a large and profitable market that is undergoing a transformation• Procedural shift to outpatient / ambulatory surgery

centers (ASCs) creates significant opportunity

• We are the clear leader in personalized hip & knee implants with a capital-efficient delivery model• We are an innovator of the single-use kit, sterile

delivery model of implants and patient-specific instrumentation (PSI)

Present Situation Our Plan

Slide

Develop and launch a new ‘ASC’ knee to expand our product offering and aggressively target the ASC and hospital outpatient facilities

Generate value from PSI expertise & intellectual property portfolio

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ASC Opportunity is Compelling


U.S. Joint Replacement Procedures in ASC settings

This shift in elective knee procedures to ASC provides significant growth opportunity

Notable Drivers

0%

10%

20%

30%

40%

50%

60%

2016 2018 2020 2022 2024 2026

Procedure Shift to ASC2

Partial and Total Knee Procedures in 2024:

~370,0001

1) Company estimates based on projected shift in elective joint procedures.

2) According to Sg2, a Vizient company.

• Medicare / Medicaid reimbursement change

• Bundled “Episode of Care”

• Physician ownership: capital-efficient requirements

• Increased pressure on healthcare spending

• COVID-19 protocol accelerates trend

• Lack of “installed base” for larger players

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Common Challenges for Joint Replacement in the ASCHospitals and other medical facilities face similar challenges

Common Challenges

Limited Processing Capability

• 5–10 bulky instrumentation

• Potential source of costly infections

• Substantial manpower costs


Limited Efficiency

• All instrument trays require timely setup, break down, and sterilization

• Potential source of costly infections

Slide

Conformis Solution

• Single-use kit, delivered before surgery

• Set of disposable patient-specific guides

• One reusable tray

Limited Space

• Tray management

• Inventory storage

• Supply costs

99© 2020 Conformis, Inc. Slide

Future

New ASC KneeTarget U.S. Launch 2H, 2021

ASC Solution• Broader anatomical coverage than competitive

implants1

• Implant size matched to patient’s knee scan

• Approx. 3-week lead time

• Full range of standardized poly thickness options

• Product costs allows greater pricing flexibility

• Select patient-specific instrumentation

• Pre-packaged in a single-use, sterile kit with an

iView pre-surgical plan

Present

iTotal: Patient Specific iTotal: Patient Specific

Personalized Solution• Approx. 6-week lead time

• 3 patient-specific poly inserts

• Premium priced solution

• Custom made for each patient

• Patient-specific instrumentation

• Pre-packaged in a single-use, sterile kit with

an iView pre-surgical plan

Personalized Solution• Approx. 6-week lead time

• 3 patient-specific poly inserts

• Premium priced solution

• Custom made for each patient

• Patient-specific instrumentation

• Pre-packaged in a single-use, sterile kit with

an iView pre-surgical plan

Expand Our Portfolio with New ASC KneeNew product offering aimed at driving greater surgeon adoption

1) Company sponsored study.


• New Knee with Poly Options• Pre-select implant size to best fit patient’s knee anatomy • Includes iView Pre-Surgical Plan • Full range of polyethylene inserts for each surgery • Leverage iTotal platform1 with clinical outcome data• Broader anatomical coverage v. competitive Off-the-Shelf (OTS) knees2

• Shorter Lead Times• Pre-packaged solution to be delivered within approx. 3 weeks

• Greater Pricing Flexibility• Ability to competitively price the product given new target product

costs

• Aggressively Target the ASC Opportunity • Leverage unique delivery model to aggressively target the hospital

outpatient and ASC spaces

Anticipated Benefits:

Same Efficient Solution with Better

Pricing and Flexibility

1) Clinical studies on iTotal Total Knee Arthroplasty system.2). Company sponsor study.

New ASC Knee Offers Attractive Benefits Target product profile intended to directly address customer feedback

1111

Product Gross Margin ImprovementSelect standardization enables lower cost of goods

Patient-Specific Knee

2019

45%-50%

2022 - 2024

70%+

ASC KneeValidated Targeted Production Savings Planned changes between platforms to reduce COGS

Significant cost savings opportunities with new ASC knee offering:

• Eliminate implant design labor cost

• Lower femur casting costs

• Less machining time

• Improved material costs

• Standardize production quantities

• Less scrap



Conformis Uniquely Positioned to Win in the ASC

Conformis Advantage: Right Product at the Right Price

Capital-Light Delivery Model• Just-in-time delivery addresses sterilization / lack of inventory space

Pre-Packaged Procedural Kit with iView • Total knee replacement-in-a-box improves efficiencies

Partnership with Stryker® Validates Approach

Attractive Target Price • Lower COGS allows aggressive targeting of the ASC segment

Conformis is the IDEAL

SOLUTION for ASC

Customers

iView

Re-usable Instrumentation

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Clinically Demonstrated Benefits

Safety & Efficacy

OUTCOME Publications & Conference Proceedings

Higher Patient Satisfaction

• Reimann, et al. – Journal of Orthopaedics. 2019• Schroeder, et al. – Orthopaedic Proceedings of Bone & Joint Surgery. 2019• Katthagen, et al. – ICJR World Arthroplasty Conference. 2015• Ogura, et al. – Knee Surgery, Sports Traumatology, Arthroscopy. 2018

Better Alignment

• Schroeder et al. – The Journal of Knee Surgery. 2018• Ivie, et al. – The Journal of Arthroplasty. 2014• Levengood, et al. – The Journal of Knee Surgery. 2017• Arbab, et al. – The Knee. 2018

Better Health Economic Outcomes

• O’Connor, et al. – American Health & Drug Benefits. 2019• Buch, et al. – Reconstructive Review. 2019• Culler, et al. – Arthroplasty Today. 2017• Namin, et al. – Value in Health. 2019

Better Range of Motion • Zeller, et al. – British Association for Surgery of the Knee. 2017• Buch, et al. – Reconstructive Review. 2019

Better Functional Results

• Zeller, et al. – ICJR Pan Pacific. 2016• Zeller, et al. – The Journal of Arthroplasty. 2017• Wang, et al. – International Orthopaedics. 2018• Reimann, et al. – Journal of Orthopaedics. 2019

Better Fit

• Koeck, et al. – The Knee. 2011• Carpenter, et al. – The Journal of Arthroplasty. 2014• Demange, et al. – International Orthopaedics. 2015• Schroeder, Lennart, and Gregory Martin (May 25, 2018)• Meier, et al. – Clinical Orthopedics and Related Research. 2019• Meier, et al. – Knee Surgery, Sports Traumatology, Arthroscopy. 2019

Demonstrated in:

50+ Clinical Studies

30+Peer-Reviewed Publications

© 2020 Conformis, Inc. 13Slide

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Conformis Re-Defining Patient Satisfaction

Conformis patients are more satisfied with their knee replacements and more likely to recommend a Conformis knee to a friend

© 2020 Conformis, Inc. 14Slide

Improve Patient Reported Satisfaction & Overall Quality Measures Grow Referral Base

p=0.007 p=0.003p=0.003

Conformis Patients 77% vs Non-Conformis Patients 36%

2.1x

Patients who respond as ‘Extremely Likely’

recommend Conformis 2.1x more than OTS

p<0.0001

1515© 2020 Conformis, Inc.

1) 2019 Orthoworld. The Orthopedic Industry Annual Report. 2) U.N. data, 2019.3) Conformis Hip Systems were implanted in a limited commercial launch in July 2018.

Full commercial launch

of the Conformis Hip System commenced in November 20193

2019

Similar to knee, life expectancy

continues to increase, global population is gaining weight, and individuals desire to live a more

active lifestyle2

$8B global hip

market is projected to grow in the low single digits1

New Hip Platform Drives Additional GrowthRecent hip introduction doubles addressable market opportunity

Slide

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Conformis Addresses Total Hip Replacement (THR) Challenges

Challenges: Notable Drawbacks with THR

• THR Traditionally is an UNGUIDED Operation• Heavily dependent on training, skill, and experience of

the surgeon

• 2D-Templating Can Be Inaccurate • Neck angles and offsets can be dramatically affected by

rotation on x-ray

• Standard Hips Offer Limited Neck Angles, Offsets• Capital-intensive delivery model, implant &

instrumentation

• Leg length / offset issues after THR

• Patient Dissatisfaction1 and Revision Rates2

Solution: Apply Conformis Philosophy

1) Jones, et al., and Anakwe et al.2) Labek, et al.

• Conformis Hip Systems uses 3D imaging technology to provide PRE-SURGICAL navigation of the patient’s specific implant for restoration of patient anatomy

Total Hip Replacement-in-a-Box

• Patient-specific instrumentation improves efficiencies

• iView surgical planning tool helps guide surgical procedure

• Hip system offers a range of femoral neck options

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Developing a Multi-Line Hip PortfolioCapital efficient delivery model remains central to the product offering


Customer Preference Guides Level of Customization

Slide

Proprietary iView provides a personalized

surgical roadmap

Personalized guides and bone models streamline the surgical procedure

iView Pre-Surgical Plan Patient-Specific Instrumentation Product Portfolio

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Anticipated New Product CadenceRobust pipeline drives growth

2020

LMR = Limited Market Release; FMR = Full Market Release


Hip• Total Hip Product

• Hip Line Additions

• Cordera Standard Hip Stem

• Hip Fit Analysis Software

• 2nd Hip Stem Design

ConformisTotal Hip System (FMR) Cordera

Standard Stem

Hip Line Additions

Knee• Identity CR

• Identity PS

• Constrained Poly Options CS/PS

• Identity Cementless System

• New ASC Knee

Identity iTotal(FMR)

Hip Fit Analysis

Software/ Cordera Match

Constrained Poly

IdentityCementless

(LMR)

Identity Cementless

(FMR)

New ASC Knee (LMR)

1st half 2nd half 1st half 2nd half 1st half 2nd half

2021 2022

Slide

New ASC Knee(FMR)

New ASC Knee:

Cementless(LMR)

2nd Stem(LMR)

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Strategic Partnership: StrykerCollaboration adds another profitable growth driver

© 2020 Conformis, Inc. 19

Leveraging the strengths of the respective organizations to further expand personalized care into low-cost, site-of-care settings / ASC

Conformis will develop, manufacturer, and supply patient-specific instrumentation for use in connection with Stryker’s knee implant offerings, including the market-leading Triathlon Total Knee System

Slide

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1) Stryker is a registered trademark of Stryker Corporation.

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Stryker: Private Label OpportunitySignificant revenue and profit potential

© 2020 Conformis, Inc. 20

Stryker is a leader in

the U.S. primary

knee reconstruction

market

$30M• $14 million upfront • up to $16 million in

milestone payments• Long-term supply

agreement

Collaboration:Capitalizing on Partner’s Strengths

Revenue from private

label products offers

potential to drive 10%–

20% of Conformis’ overall

revenue by 2024

Leadership Position:U.S. Primary Knees1

ASC Opportunity:Trend in Knee Procedures2,3

Revenue Potential:Drive Incremental Growth

10%–20%

Partnership validates

Conformis’ expertise in

design, development,

and manufacturing

excellence of PSI

Slide

~30% Share ~240,000 Units

Projected shift in knee

procedures to ASC

offers significant

opportunity

1) 2019 Orthoworld. - the Orthopedic Industry Annual Report and management estimates prior to the emergence of COVID19. 2) Management estimates based on projected shift in elective procedures.3) According to Sg2, a Vizient company.

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We Plan to Create Significant Shareholder Value2024 Financial Targets


RevenueCommitted to double digit

revenue growth

Gross MarginDeliver improved

gross margins

$160M - $190M

ProfitGenerate meaningful

operating income

$15M - $30M60%+

• New product introductions• International market expansion

into India, China, and Japan • Supply of private label products

• Growing contribution of higher margin knee and hip products

• Introduction of profitable private label products

• Scale business, leverage operating expense

• Improved cash flow • Accelerates time to breakeven

Slide

2222

Anticipated hip product adoption further accelerates revenue growth


Private label products drive additional profitable growth

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3

Conformis

New knee targets ASC procedure growth and drives gross margin expansion

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Slide

New Growth Drivers Create a Compelling Investment Thesis

Thank You!

investor presentation - conformis

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