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In this edition of our mid-tier orthopedic company profiles, we focus on three players in the spine segment’s top ten: ATEC (#7), SeaSpine (#10) and ZimVie (#6). The best growth stories in spine have typically come from companies in the mid-tier, and that is certainly the case for ATEC and SeaSpine. Both are carving a path through the competition with annual growth rates several times the market average. However, ZimVie expects to go in the opposite direction for the next three to five years as it attempts to fix operational issues and establish a clear identity.
Below we’ll briefly recap each company’s history and major milestone events. We’ve included sales by segment from 2019 to 2022 projected close based on our estimates and company-provided guidance.
ATEC
The California-based company reinvented itself in recent years. ATEC grew rapidly between 2006 and 2014, a period during which it more than tripled its revenue to $207 million. However, by then, growth had slowed substantially. ATEC began a years-long slide that saw it sell its international business to Globus Medical in 2016 and culminated in revenues under $100 million in 2018. Since then, ATEC has revitalized its portfolio and distribution. Its focus on procedural solutions resulted in rapid growth, and ATEC now looks to challenge spine’s largest players.
Revenue Performance
ATEC provided 2022 orthopedic sales guidance of $325 million, representing growth of almost 34% compared to 2021. It will mark the fourth consecutive year that the company drove growth of more than 23%. ATEC enjoyed buoyant growth even in the pandemic-stricken 2020 when many other spine companies sustained double-digit losses. Exhibit 1 shows ATEC’s orthopedic sales from 2019 through projected 2022 close. Exhibit 2 shows the company’s sales by orthopedic product segment.
ATEC attributes its success to its procedural investment thesis, pointing out that surgeons, unlike device companies, don’t think in terms of implants or widgets. They think in terms of procedural interventions for specific pathologies. ATEC’s focus on the entire procedure has resulted in more products, and therefore sales, per case.
Exhibit 1: ATEC Orthopedic Sales 2019 to 2022P ($ Millions)
| Segment | FY19 | FY20 | FY21 | FY22P |
|---|---|---|---|---|
| Spine | $103.6 | $132.4 | $222.8 | $297.5 |
| Growth % | 24.3% | 27.8% | 68.3% | 33.5% |
| Orthobiologics | $9.8 | $12.5 | $20.4 | $28.0 |
| Growth % | 17.9% | 27.0% | 64.1% | 37.0% |
| Total | $113.4 | $144.9 | $243.2 | $325.5 |
| Growth % | 23.7% | 27.7% | 67.9% | 33.8% |
Exhibit 2: ATEC Orthopedic Sales Split by Segment
Recent Developments
In early 2020 ATEC announced its intent to purchase EOS imaging, only to terminate the agreement two months later as the COVID-19 pandemic swept the globe. However, the companies finally came to an agreement to complete the purchase in December of that year. EOS imaging technology joined ATEC’s AlphaInformatiX platform for spinal surgery, providing crucial access to key hospital systems in the U.S. and international markets.
Following its 2016 departure from the international scene, ATEC is once again ready to expand its reach globally. However, the company is approaching international sales in a targeted way. ATEC CEO Patrick Miles said, “Anybody who’s been around the spine space knows the five or six great international markets. We’ll go toward markets that have a good paying environment and a clinically sophisticated environment. We’re going to go into these markets with the best of the best, which is such an advantage. A lot of people dump in these markets, and that’s not our way.”
SeaSpine
In 2012, Integra LifeSciences began a strategic transformation to optimize its business. Portfolio realignment as part of that transformation resulted in the 2014 announcement that Integra would spin off its spine business into a new public company called SeaSpine. Since then, that company has vastly expanded its portfolio and emerged as a consistent share-taker with growth well above market average.
Revenue Performance
SeaSpine hit its stride in 2018 with high single-digit growth that accelerated into 2019. While the company took an understandable step back during the pandemic year of 2020, its losses were modest compared to the rest of the spine market. SeaSpine’s new product engine didn’t miss a beat in 2020, as it launched 19 new products. Those launches paid off, as the company expects to notch its second consecutive year with growth exceeding 20%. Exhibit 3 shows SeaSpines’s orthopedic sales from 2019 through projected 2022 close. Exhibit 4 shows the company’s sales by orthopedic product segment.
With 2022 projected orthopedic sales of $234 million, SeaSpine claimed the tenth spot for largest spine companies. Continued new product momentum, a growing enabling technology portfolio and improved distribution could help the company quickly surpass similarly sized competitors.
Exhibit 3: SeaSpine Orthopedic Sales 2019 to 2022P
| Segment | FY19 | FY20 | FY21 | FY22P |
|---|---|---|---|---|
| Spine | $77.8 | $76.0 | $99.6 | $122.5 |
| Growth % | 14.2% | -2.3% | 31.2% | 23.0% |
| Orthobiologics | $81.3 | $78.4 | $91.8 | $111.5 |
| Growth % | 7.9% | -3.6% | 17.1% | 21.4% |
| Total | $159.1 | $154.3 | $191.5 | $234.0 |
| Growth % | 10.9% | -3.0% | 24.0% | 22.2% |
Exhibit 4: SeaSpine Orthopedic Sales Split by Segment
Recent Developments
SeaSpine partnered with 7D Surgical in early 2020 to distribute the FLASH™ flagship navigation system. Just over a year later, SeaSpine announced its intent to acquire all issued and outstanding shares of 7D Surgical in a transaction valued at $110 million. With nearly 100 units currently in the field, SeaSpine is bullish about its pipeline for further placements via capital sale or earn-out agreement.
SeaSpine leadership claims that an increasingly complete product offering across spinal implants and orthobiologics, combined with the 7D platform, has attracted distributors from the company’s largest competitors. Company CEO Keith Valentine said, “A lot of the new products that we’re launching were key in making sure [the distributors] were comfortable transitioning, meaning the products fit nicely into the portfolio for their surgeons and their surgeons’ needs. We’re making the right investments in inventory to bring them over and to make sure that we can satisfy the demand. We are anticipating a faster ramp in how they’re able to go after the market.”
ZimVie
In February 2021, Zimmer Biomet announced its intent to spin off its spine and dental divisions into a new publicly-traded company that ultimately became ZimVie in the first quarter of 2022. Zimmer Biomet, lacking capital to work with, opted for addition by subtraction to achieve its strategic growth goals. The spine segment had long troubled Zimmer Biomet. A multitude of acquisitions created operational inefficiencies and a business that lacked identity. ZimVie faces an arduous turnaround as it seeks to find the right scale for its spine business.
Revenue Performance
ZimVie prioritized making cuts during the first half of 2022. It exited some unprofitable geographies in the first quarter and began the process of optimizing its portfolio. ZimVie also cancelled time-consuming, low-return projects. The company expects sales to decline in the low double digits due to ongoing cuts, choppy procedure volumes and volume-based procurement in China. Exhibit 5 shows ZimVie’s orthopedic sales from 2019 through projected 2022 close. Exhibit 6 shows the company’s sales by orthopedic product segment.
As its spine business stabilizes, ZimVie plans to use its core spine products to fund faster-growing categories like motion preservation and minimally invasive surgery. The company estimated that it serves $327 million of the total $990 million cervical disc opportunity. Tethered pediatric scoliosis care is a $245 million market, of which ZimVie serves $30 million. The company also serves $1.9 billion of the $5.1 billion minimally invasive surgery market.
Exhibit 5: ZimVie Orthopedic Sales 2019 to 2022P
Growth %-6.8%-12.9%-3.6%-5.2%
| Segment | FY19 | FY20 | FY21 | FY22P |
|---|---|---|---|---|
| Spine | $467.9 | $404.8 | $418.7 | $372.7 |
| Growth % | -3.9% | -13.5% | 3.5% | -11.0% |
| Orthobiologics | $85.1 | $76.7 | $75.6 | $67.8 |
| Growth % | -4.2% | -9.8% | -1.4% | -10.4% |
| Other | $54.7 | $47.6 | $45.9 | $43.6 |
| Total | $607.6 | $529.1 | $540.3 | $484.0 |
| Growth % | -4.2% | -12.9% | 2.1% | -10.4% |
Exhibit 6: ZimVie Orthopedic Sales Split by Segment
Recent Developments
ZimVie is realistic about its chances to contend with the largest players in core spine. Company CEO Vafa Jamali said, “Spine is a crowded market, and the biggest segment of that market is the core and complex, the rods and screws. That market is occupied, and it’s crowded. For us, a smaller player, it’s important to be very nimble and find areas where other people aren’t. We’re interested in growing pediatric scoliosis and the Mobi-C cervical disc, because in both of those markets the bigger opportunity is not taking someone else’s share.”
The company’s novel treatment for pediatric scoliosis, The Tether, received welcome news in the second quarter of 2022. Insurance coverage has been the greatest headwind for The Tether. However, ZimVie recently won a positive policy decision from Anthem Blue Cross Blue Shield, covering more than 30 million members. The Tether received a humanitarian device exemption in August 2019. More than 1,200 children have received the Tether since then, with approximately 50 surgeons in the U.S. performing the procedure.
In this edition of our mid-tier orthopedic company profiles, we focus on three players in the spine segment’s top ten: ATEC (#7), SeaSpine (#10) and ZimVie (#6). The best growth stories in spine have typically come from companies in the mid-tier, and that is certainly the case for ATEC and SeaSpine. Both are carving a path through the competition...
In this edition of our mid-tier orthopedic company profiles, we focus on three players in the spine segment’s top ten: ATEC (#7), SeaSpine (#10) and ZimVie (#6). The best growth stories in spine have typically come from companies in the mid-tier, and that is certainly the case for ATEC and SeaSpine. Both are carving a path through the competition with annual growth rates several times the market average. However, ZimVie expects to go in the opposite direction for the next three to five years as it attempts to fix operational issues and establish a clear identity.
Below we’ll briefly recap each company’s history and major milestone events. We’ve included sales by segment from 2019 to 2022 projected close based on our estimates and company-provided guidance.
ATEC
The California-based company reinvented itself in recent years. ATEC grew rapidly between 2006 and 2014, a period during which it more than tripled its revenue to $207 million. However, by then, growth had slowed substantially. ATEC began a years-long slide that saw it sell its international business to Globus Medical in 2016 and culminated in revenues under $100 million in 2018. Since then, ATEC has revitalized its portfolio and distribution. Its focus on procedural solutions resulted in rapid growth, and ATEC now looks to challenge spine’s largest players.
Revenue Performance
ATEC provided 2022 orthopedic sales guidance of $325 million, representing growth of almost 34% compared to 2021. It will mark the fourth consecutive year that the company drove growth of more than 23%. ATEC enjoyed buoyant growth even in the pandemic-stricken 2020 when many other spine companies sustained double-digit losses. Exhibit 1 shows ATEC’s orthopedic sales from 2019 through projected 2022 close. Exhibit 2 shows the company’s sales by orthopedic product segment.
ATEC attributes its success to its procedural investment thesis, pointing out that surgeons, unlike device companies, don’t think in terms of implants or widgets. They think in terms of procedural interventions for specific pathologies. ATEC’s focus on the entire procedure has resulted in more products, and therefore sales, per case.
Exhibit 1: ATEC Orthopedic Sales 2019 to 2022P ($ Millions)
| Segment | FY19 | FY20 | FY21 | FY22P |
|---|---|---|---|---|
| Spine | $103.6 | $132.4 | $222.8 | $297.5 |
| Growth % | 24.3% | 27.8% | 68.3% | 33.5% |
| Orthobiologics | $9.8 | $12.5 | $20.4 | $28.0 |
| Growth % | 17.9% | 27.0% | 64.1% | 37.0% |
| Total | $113.4 | $144.9 | $243.2 | $325.5 |
| Growth % | 23.7% | 27.7% | 67.9% | 33.8% |
Exhibit 2: ATEC Orthopedic Sales Split by Segment
Recent Developments
In early 2020 ATEC announced its intent to purchase EOS imaging, only to terminate the agreement two months later as the COVID-19 pandemic swept the globe. However, the companies finally came to an agreement to complete the purchase in December of that year. EOS imaging technology joined ATEC’s AlphaInformatiX platform for spinal surgery, providing crucial access to key hospital systems in the U.S. and international markets.
Following its 2016 departure from the international scene, ATEC is once again ready to expand its reach globally. However, the company is approaching international sales in a targeted way. ATEC CEO Patrick Miles said, “Anybody who’s been around the spine space knows the five or six great international markets. We’ll go toward markets that have a good paying environment and a clinically sophisticated environment. We’re going to go into these markets with the best of the best, which is such an advantage. A lot of people dump in these markets, and that’s not our way.”
SeaSpine
In 2012, Integra LifeSciences began a strategic transformation to optimize its business. Portfolio realignment as part of that transformation resulted in the 2014 announcement that Integra would spin off its spine business into a new public company called SeaSpine. Since then, that company has vastly expanded its portfolio and emerged as a consistent share-taker with growth well above market average.
Revenue Performance
SeaSpine hit its stride in 2018 with high single-digit growth that accelerated into 2019. While the company took an understandable step back during the pandemic year of 2020, its losses were modest compared to the rest of the spine market. SeaSpine’s new product engine didn’t miss a beat in 2020, as it launched 19 new products. Those launches paid off, as the company expects to notch its second consecutive year with growth exceeding 20%. Exhibit 3 shows SeaSpines’s orthopedic sales from 2019 through projected 2022 close. Exhibit 4 shows the company’s sales by orthopedic product segment.
With 2022 projected orthopedic sales of $234 million, SeaSpine claimed the tenth spot for largest spine companies. Continued new product momentum, a growing enabling technology portfolio and improved distribution could help the company quickly surpass similarly sized competitors.
Exhibit 3: SeaSpine Orthopedic Sales 2019 to 2022P
| Segment | FY19 | FY20 | FY21 | FY22P |
|---|---|---|---|---|
| Spine | $77.8 | $76.0 | $99.6 | $122.5 |
| Growth % | 14.2% | -2.3% | 31.2% | 23.0% |
| Orthobiologics | $81.3 | $78.4 | $91.8 | $111.5 |
| Growth % | 7.9% | -3.6% | 17.1% | 21.4% |
| Total | $159.1 | $154.3 | $191.5 | $234.0 |
| Growth % | 10.9% | -3.0% | 24.0% | 22.2% |
Exhibit 4: SeaSpine Orthopedic Sales Split by Segment
Recent Developments
SeaSpine partnered with 7D Surgical in early 2020 to distribute the FLASH™ flagship navigation system. Just over a year later, SeaSpine announced its intent to acquire all issued and outstanding shares of 7D Surgical in a transaction valued at $110 million. With nearly 100 units currently in the field, SeaSpine is bullish about its pipeline for further placements via capital sale or earn-out agreement.
SeaSpine leadership claims that an increasingly complete product offering across spinal implants and orthobiologics, combined with the 7D platform, has attracted distributors from the company’s largest competitors. Company CEO Keith Valentine said, “A lot of the new products that we’re launching were key in making sure [the distributors] were comfortable transitioning, meaning the products fit nicely into the portfolio for their surgeons and their surgeons’ needs. We’re making the right investments in inventory to bring them over and to make sure that we can satisfy the demand. We are anticipating a faster ramp in how they’re able to go after the market.”
ZimVie
In February 2021, Zimmer Biomet announced its intent to spin off its spine and dental divisions into a new publicly-traded company that ultimately became ZimVie in the first quarter of 2022. Zimmer Biomet, lacking capital to work with, opted for addition by subtraction to achieve its strategic growth goals. The spine segment had long troubled Zimmer Biomet. A multitude of acquisitions created operational inefficiencies and a business that lacked identity. ZimVie faces an arduous turnaround as it seeks to find the right scale for its spine business.
Revenue Performance
ZimVie prioritized making cuts during the first half of 2022. It exited some unprofitable geographies in the first quarter and began the process of optimizing its portfolio. ZimVie also cancelled time-consuming, low-return projects. The company expects sales to decline in the low double digits due to ongoing cuts, choppy procedure volumes and volume-based procurement in China. Exhibit 5 shows ZimVie’s orthopedic sales from 2019 through projected 2022 close. Exhibit 6 shows the company’s sales by orthopedic product segment.
As its spine business stabilizes, ZimVie plans to use its core spine products to fund faster-growing categories like motion preservation and minimally invasive surgery. The company estimated that it serves $327 million of the total $990 million cervical disc opportunity. Tethered pediatric scoliosis care is a $245 million market, of which ZimVie serves $30 million. The company also serves $1.9 billion of the $5.1 billion minimally invasive surgery market.
Exhibit 5: ZimVie Orthopedic Sales 2019 to 2022P
Growth %-6.8%-12.9%-3.6%-5.2%
| Segment | FY19 | FY20 | FY21 | FY22P |
|---|---|---|---|---|
| Spine | $467.9 | $404.8 | $418.7 | $372.7 |
| Growth % | -3.9% | -13.5% | 3.5% | -11.0% |
| Orthobiologics | $85.1 | $76.7 | $75.6 | $67.8 |
| Growth % | -4.2% | -9.8% | -1.4% | -10.4% |
| Other | $54.7 | $47.6 | $45.9 | $43.6 |
| Total | $607.6 | $529.1 | $540.3 | $484.0 |
| Growth % | -4.2% | -12.9% | 2.1% | -10.4% |
Exhibit 6: ZimVie Orthopedic Sales Split by Segment
Recent Developments
ZimVie is realistic about its chances to contend with the largest players in core spine. Company CEO Vafa Jamali said, “Spine is a crowded market, and the biggest segment of that market is the core and complex, the rods and screws. That market is occupied, and it’s crowded. For us, a smaller player, it’s important to be very nimble and find areas where other people aren’t. We’re interested in growing pediatric scoliosis and the Mobi-C cervical disc, because in both of those markets the bigger opportunity is not taking someone else’s share.”
The company’s novel treatment for pediatric scoliosis, The Tether, received welcome news in the second quarter of 2022. Insurance coverage has been the greatest headwind for The Tether. However, ZimVie recently won a positive policy decision from Anthem Blue Cross Blue Shield, covering more than 30 million members. The Tether received a humanitarian device exemption in August 2019. More than 1,200 children have received the Tether since then, with approximately 50 surgeons in the U.S. performing the procedure.
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Mike Evers is a Senior Market Analyst and writer with over 15 years of experience in the medical industry, spanning cardiac rhythm management, ER coding and billing, and orthopedics. He joined ORTHOWORLD in 2018, where he provides market analysis and editorial coverage.
