Vicki Holt, chief executive of Protolabs, is speaking at the MANOVA conference, a first-time event in October that aims to tackle the biggest topics in health, wellness and health technology. It's a perfect fit for her company, she said, because the medical device industry is important for Protolabs as a manufacturing-services company, and many trends affecting her business are relevant to companies participating in MANOVA. The Medical Alley Association, a founding partner, and 2023 Partners, the business development and content partner, are aiming to capitalize on the area's medical technology leadership in producing the new conference.
Q: What are those megatrends that you can help medical device companies solve?
A: These are trends such as reduced size of the product, life-cycle shortening, and more particularly because every device today carries a lot of electronics, medical device manufacturers have to continually upgrade as technology upgrades. There is also the desire for products to be able to be mass-customized — more tailored for individual patient needs. That is conducive to lower volume production, which traditional manufacturers have a hard time doing economically. Our business model is really relevant to that market.
Q: What do you hope to take away from the conference?
A: We want to really understand the trends that are impacting the medical community, both device manufacturers but also hospitals and caregivers. I thought it would be a great place for us to learn, for Protolabs to listen to what our customers are working on and what's important to them. But also to share a little bit about how our company can help. I plan to be talking about what is happening in the medical device product development arena and how Manufacturing 4.0, which is information technology and software combining with hardware, is really enabling something that we call Product 4.0, or Product 4.0 revolution. Our software is what enables us to be able to very quickly and cost effectively produce lower volumes of custom parts. Traditional manufacturers have a lot of front-end engineering that's very expensive that is associated with each individual custom part. We've automated a lot of that front-end engineering with software, which allows us to manufacture the parts very quickly and very cost effectively in low volumes. That allows companies to mass customize.
Q: What do you think of the ambition of the MANOVA conference?
A: The challenges in health care are much, much bigger than innovating the next medical device, we know that. The cost of health care continues to rise — how are we going to manage that? The whole transition that is taking place in health care to move toward outcome-related tracking. Those trends provide great fodder for dialogue with some really great thought leaders in the area.
Q: How is Protolabs' health?
A: Business is going great; 2018 is a very strong year for us. We've been helped by the economy, but we are also helped by the fact that more and more individual product developers and companies are understanding what our business model can bring to them. If you look at our trailing 12-month results, we are approaching that $450 million point. I have to get over that half a billion mark. It's a really fun business model and a great team of people to work with.
Q: Do you see any headwinds to growth?
A: Certainly all of the turmoil surrounding the tariffs is not a positive thing for North American manufacturers. So that potentially, if it doesn't get resolved in a positive way, could be a negative. The tariffs do not directly impact us, but they impact our customers, who are the manufacturers. So that is a concern, as is the fact that at some point there will have to be a setback in the economic cycle.
Q: When you were hired as president and CEO in 2014, you were challenged to reach $1 billion in annual revenue. How are you progressing?
A: This company will hit a billion dollars, I'm convinced of it. We are on a very steady growth path and we continue to grow double digits. We expect to continue that trajectory organically. We'll augment that periodically with acquisitions but responsibly grow and continually delight our customers and service more and more of them. That's the strategy, and we'll execute to that.
Q: How are you benefiting from corporate tax cuts?
A: We grow profitably, we have no debt, we invest a lot of capital in our business, but we do so from the cash flow from operations that we generate. We've been spending on capital expenditures. We do have the authority for share repurchase, but we really haven't done any share repurchase this year. We are investing in manufacturing, plant and equipment and in the growth of our business in the form of new buildings. Year-to-date we've invested $43 million in manufacturing, plant and equipment; that compares to about $20 million the prior year.