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Zimmer Biomet's Next CEO

By Julie A. Vetalice

None of us expects that the CEO hunt at Zimmer Biomet (ZBH) will close swiftly. “We have initiated a thorough search to identify the best candidate to serve as Zimmer Biomet’s next CEO. We are seeking a strong leader, whose strategic and operational track record aligns with Zimmer Biomet’s commitment to growth and enhancing stockholder value,” said board chairman Larry Glasscock, in the 2Q17 revenue commentary, because…of course they are. There’s much work to be done.

My ORTHOWORLD colleagues and I expect to see a candidate with experience in certain specific challenges: M&A integration, timely reconciliation of revenue-hindering disruptions, portfolio diversification.

We’re mindful of the potential names that are out there; the ones we’ve heard are all linked to medtech and healthcare. ZBH is the second-largest company in orthopaedics, by our estimates, and over 90% of the company’s overall annual revenue derives from orthopaedics, but we wonder about availability of a candidate with sufficient experience in ortho, in a company running at that size—in other words, we maintain that the board will likely cast its nets in waters other than just medical technology. The new CEO may not come from medtech at all.

Here’s some background on five of the possible candidates we’ve heard about.

Those with direct orthopaedic experience:

Jeff Binder, President & CEO of Immucor, formerly President & CEO of Biomet

Immucor is owned by TPG Capital, the same company that had partially owned Biomet. Mr. Binder was moved to his present position in June 2015, after the Zimmer/Biomet transaction closed. He had been President and CEO of Biomet since 2007.

Binder’s 20+ years of executive experience has primarily been in ortho and spine, including leadership posts at Howmedica Orthopedics, DePuy Orthopaedics, Spinal Concepts and Abbott Spine. (The latter was eventually acquired by Zimmer in 2008).

During his term at the helm of Biomet, the company reached 35 years of clinical results with the Oxford Partial Knee, purchased spinal company Lanx and also bought DePuy’s trauma business, so that JNJ could proceed with its purchase of Synthes. Also of note, in 2011, rumors floated that Biomet wanted to buy Smith & Nephew—a switch from early 2007, when a regulatory filing revealed that SNN offered to buy BMET. Instead, Biomet was purchased by a private equity consortium later that year.

Of those names mentioned in the public domain, Mr. Binder makes sense for his familiarity and insights on plant issues that have led to supply shortages of key products in the last year.

Stephen MacMillan, CEO of Hologic, formerly President & CEO of Stryker

Hologic offers clinical diagnostics, imaging and interventional/treatment services that focus on women’s health and well-being—including skeletal health. Mr. MacMillan joined the company in December 2013 after 2005 to 2012 with Stryker. Previous time was spent at Pharmacia and at Johnson & Johnson—the latter on the pharma side.

MacMillan’s orthopaedic experience at Stryker included acquisitions like Memometal, Orthovita and OtisMed, divestitures like the OP-1 product line, the very first Tritanium product launch and the move of overall revenue from $4.2 billion in 2004 up to $8.3 billion by 2011.

It seems unlikely that this is a time for Mr. MacMillan to make a switch; Hologic appears to be in a stable position.

Doug Kohrs, Managing Director of Responsive Arthroscopy

Mr. Kohrs’ current firm, which he describes as an Innovative Sports Medicine Company focused on Value Based Healthcare, was established in mid-2016 after his former start-up, Responsive Orthopedics, was bought by Medtronic for its low-cost total hip and knee replacements.

It’s probably easier to list the connections to companies with which he hasn’t been affiliated. Kohrs’ 35+ years of experience includes time employed at American Medical Systems, Sulzer Spine-Tech, Tornier, Zimmer Spine; he sits on numerous boards, including Lima Corporate and MedShape, and past seats have included AxioMed Spine, Axya Medical, Bio2 Technologies, Disc Dynamics, ev3, Innova Spine, Kyphon, Pioneer Surgical, SpineCore, Tenex, Vergent Biosciences, etc.

Mr. Kohrs’ background includes management of companies with revenue in the low hundreds of millions—that’s a different leadership experience than one in the billions. Plus, from what we know of Mr. Kohrs, we just don’t see him leaving the start-up life. He looks like he is having too much fun.

Those without:

Gail K. Boudreaux, CEO and Founder of GKB Global Health

Ms. Boudreaux has been a Director on the Zimmer Biomet Board since 2012, serving on its Audit and Corporate Governance committees. Boudreaux formed her own healthcare strategy and business advisory firm in 2015, after serving as CEO of insurance provider UnitedHealthcare from 2011 through 2014, and Executive Vice President to its parent, UnitedHealth Group, from 2008 to early 2015. Prior to that, she held leadership positions at Health Care Services Corporation, Blue Cross Blue Shield of Illinois and Aetna. In 2009, she was named among Forbes’ list of the 100 Most Powerful Women.

Honestly we can’t say that she has no orthopaedic exposure; of course she does, sitting on the ZBH board. This would be an interesting choice! Ms. Boudreaux would lend greater payor insight to the company’s strategy at a time when reimbursement remains a top priority for industry and customers. Also, of the candidates on this list, she has led the largest company: UnitedHealthcare achieved revenues of nearly $120 billion in 2014.

Michael Rousseau, former President of Abbott Laboratories Cardiovascular and Neuromodulation business and former CEO of St. Jude Medical Devices

Mr. Rousseau just left Abbott earlier this month, per an SEC filing. A Morningstar analyst added his hat to the ring, reportedly suggesting that he may be looking for something new now. All of his experience has been in cardio.

It’s absolutely possible that the final candidate will be an outsider to ortho.

What’s your take? Leave a comment below.

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