UFP Technologies announces $500M amended supply agreement with Intuitive Surgical

In a regulatory filing on Monday night, UFP (UFPT) said that the company, though a wholly owned subsidiary, and Intuitive Surgical SARL (ISRG), one of the company’s strategic medical customers, entered into that certain amendment to the manufacturing supply agreement dated April 25, 2014 as amended. Pursuant to the terms of the Amended Supply Agreement, among other things, for an initial four-year period commencing January 1, 2024, the Customer has agreed to purchase the majority of certain products from the company on a semi-exclusive basis. The Amended Supply Agreement also provides for volume-based pricing terms based on certain minimum purchase thresholds. The Amended Supply Agreement provides for automatic renewal for additional one-year terms following the initial term, subject to certain early termination rights for bankruptcies and uncured, material breaches held by both parties and non-renewal rights held by both parties. We currently estimate that sales under the Amended Supply Agreement will result in approximately $500M in revenue over the initial term of the Amended Supply Agreement if the Customer buys the specified number of products to take advantage of volume-based pricing under the Amended Supply Agreement. Should the Customer choose not to buy the specified annual or aggregate volumes it would not receive the agreed-upon pricing provided under the Amended Supply Agreement.