Lesley Gouldie of portable ventilator company Thornhill Medical at her office in Toronto, Ont., on Oct. 19, 2022.Tijana Martin/The Globe and Mail
A Toronto maker of portable intensive-care units has signed one of the biggest contracts in years between a small Canadian supplier and the U.S. Department of Defense.
Thornhill Research Inc. has been awarded a contract by the Defense Logistics Agency Troop Support, which manages the medical supply chain for the U.S. military. Thornhill will provide up to US$356-million of its portable, lightweight MADM anesthetic systems and MOVES SLC life-support-system equipment.
“This contracting vehicle is an important step in making our technology easily and widely available to the services when and as they need it,” Thornhill Research CEO Lesley Gouldie said.
“It’s a signal of their confidence that our technology can play a role in their future-fit material solutions,” particularly as the DoD looks to modernize its medical technology used in battlefield environments. “There are significant opportunities for us to continue growing our customer base in this sphere,” she said, including supplying emergency and disaster-relief agencies.
The five-year deal, which comes with a five-year renewal option, covers the U.S. Navy, Marine Corps, Air Force and Army, many of which already use Thornhill equipment. It means that the branches of the Armed Forces can quickly place orders rather than go through a protracted procurement process.
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It is one of the biggest U.S. defence contracts for a Canadian SME (small- and medium-sized enterprises) or woman-led business in at least the past decade, said Susannah Denovan Fortier, a spokeswoman for Canadian Commercial Corp. CCC is the Crown corporation mandated under a bilateral defence production-sharing agreement to act as prime contractor for all US$250,000-plus deals between Canadian vendors and the U.S. DoD.
The contract “is a game changer” for Thornhill, said Frederick Gerber, a retired U.S. Army medical operations executive in Arlington, Va., who advised the Canadian company on selling to the U.S. government.
“They’re now one step away from what they really want,” he said, “which is to make the U.S. government direct that Thornhill’s medical equipment be included in the sets, kits and outfits,” or SKO, of every medical company across the U.S. Army.
Thornhill already has a similar designation with the Marines and Navy, but getting that designation for the much larger Army “is the big prize,” representing US$1-billion-plus in potential business, Ms. Gouldie said. “We’ve been working hard on that,” but a decision is probably one to two years away and “hard to predict,” she added.
The DoD deal is Thornhill’s biggest to date, eclipsing the $223.7-million order received from the Canadian government in 2020 for its portable ICUs early in the COVID-19 pandemic amid a global ventilator shortage. Ottawa later scaled back its purchase of 40,000 ventilators from 15 vendors. As part of that, Thornhill only delivered 857 of its 1,020-unit order.
The MOVES SLC life-support system is a rugged, golf-bag-sized, 18 kilogram, battery-operated portable unit that features patient-monitoring tools, a concentrator that pulls oxygen from the air, an oxygen-conserving ventilator and suction. It doesn’t require an oxygen tank so it is easy and safe to transport, and can be slung over the shoulder.
Ottawa last year donated 100 of its unused MOVES SLCs to Ukraine, where the technology has been dubbed “the medical Javelin,” a nod to the portable Javelin missile systems used against Russian tanks.
Its MADM system is a toaster-sized vaporizer that can be carried by hand to deliver gas anesthesia near the front lines. The Marines signed a US$14-million, five-year contract to buy those devices in 2017.
Thornhill was spun out of Toronto’s University Health Network in 2004 by anesthesiologist Joseph Fisher. It won a U.S. Navy contract to develop a mobile ICU and entered the market in 2017. Ms. Gouldie joined in 2015 as chief commercial officer. The South African-born chartered accountant and veteran corporate executive loved the product and mission to bring better medical care to the battlefield. She became CEO in 2019.
By early 2020, Thornhill was growing fast and had traction, with 200 MOVES SLC units sold to the U.S. Marines and armed forces in Israel, Australia and Singapore. It had 30 employees and could make 50 units monthly.
The pandemic transformed Thornhill. Revenues increased tenfold to nearly $100-million in 2021 and remained at the level in 2022 thanks to the domestic deals.
To ensure the sudden burst of success wouldn’t later prove its undoing, Ms. Gouldie made two key moves: She forged a partnership with auto-parts giant Linamar Corp., which has since manufactured the devices under contract and handles supply chain matters; and instead of hiring more permanent staff, Ms. Gouldie brought on a “surge team” of consultants she’d worked with before. That swelled Thornhill’s ranks to 80 people but meant it wouldn’t be stuck with high fixed-labour costs.
The staff size shrank to 67 by late 2022, as revenues fell to below $10-million that year.
But the number of employees has subsequently expanded by 20 per cent as revenues rebounded to more than $20-million in 2023. Ms. Gouldie, who is anticipating revenue growth of at least 10 per cent this year, also leveraged the reputational boost of the big Canadian order to pursue business in the U.S. She brought on senior retired U.S. Armed Forces veterans as advisers to map out how to sell into the byzantine bureaucracy of the DoD, which required winning buy-in at several levels, and patience.
The DoD contract “is a validation of 10 years of work” said retired U.S. Air Force surgeon-general Charles Bruce Green, a Thornhill adviser.
With its modernization mandate “it’s the perfect timing for Thornhill to have this equipment available. MOVES and MADM are exactly what the military needs. Now that it’s available to the services, with no more hoops to jump through, the question will be when and how much” is purchased.