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While orthopedic M&A volume has plummeted since 2020, the deals that do take place are major shakeups that change the competitive landscape: Globus and NuVasive as well as Orthofix and SeaSpine come to mind. Now Stryker and Zimmer Biomet each made consequential moves to start 2025.
Stryker Divests Spinal Implant Business
Stryker reached a definitive agreement to sell its spinal implant businesses in the U.S. and France to Viscogliosi Brothers to create VB Spine. The transaction is expected to close in the first half of 2025. Stryker reported spinal implant revenues of $707 million in its fourth quarter earnings report and a total of $10.9 billion in 2024 orthopedic sales.
The company will retain its growing technology ecosystem for spine, including Mako Spine which performed its first cases in October 2024. Stryker said the combination of its capital equipment reps and VB Spine’s implant reps will provide business as usual to its customers.
Why It Happened
The largest players in the market have shown, fairly conclusively by now, that there is little synergy between fulsome orthopedic and spine businesses within the same company. Spine rewards focus and specialization. Since its acquisition of K2M, Stryker struggled to build momentum in spine and couldn’t innovate at the same pace as its competition.
The chart below shows companies with spine sales around or above $1 billion: Globus Medical, J&J MedTech, Medtronic and Stryker. The chart reflects Stryker’s estimated spine sales before it recategorized its reporting structure.
The merger between Globus and NuVasive dropped Stryker to a distant third place in spine, with little momentum on the implant side.
Why It Matters
Once the transaction closes, two (VB Spine and Highridge Medical) of the six largest spine companies will be privately-held spin-offs from strategics. Both of those companies currently lack internal, flagship technology that seems increasingly important in the spine market. It will be interesting to see how the competitive dynamics shift as VB Spine, ATEC and Highridge battle it out in spine’s mid-tier.
Future Outlook
The divestiture cuts free an anchor on the company’s overall growth rate and allows Stryker to reallocate investment into higher growth areas. Those will likely come outside of orthopedics. The company previously mentioned peripheral vascular, urology, soft tissue robotics and healthcare IT as areas of interest.
Stryker doesn’t see any customer disruption or Mako Spine revenue disruption coming out of this move.
“The surgeons who are using our existing spine implants will now be obviously served by similar salespeople. That will be part of the VB Spine business. So there won’t be a lot of change in that respect,” said Stryker CEO Kevin Lobo. “What we thought we could do with Mako Spine in terms of the revenue isn’t much different with this partner. They’re going to be exclusive at least for the first few years, and then we’ll see beyond that, whether it stays exclusive or whether it becomes a more open system.”
Zimmer Biomet Acquires Paragon 28
Zimmer Biomet entered into a definitive agreement to purchase all outstanding shares of common stock of Paragon 28 for a total enterprise value of $1.2 billion. The transaction is expected to close in the first half of 2025.
Why It Happened
Zimmer Biomet worked diligently in recent years to elevate its overall growth rate by investing in faster-growing areas of orthopedics, like sports medicine and extremities. We estimate the company will generate around $7.6 billion in orthopedic sales in 2024.
Since 2020, foot and ankle emerged as a lucrative and fragmented market ripe for consolidation by companies like Stryker and Enovis. But Zimmer Biomet could never generate the same foot and ankle momentum as its peers. At the end of 2023, the company said foot and ankle revenues constituted just 4% of its S.E.T. category, or around $70 million.
“The growth drivers, those being CMFT, sports, and shoulder, are growing either upper-single digit or double digit,” Zimmer Biomet CEO Ivan Tornos said of the company’s S.E.T. businesses. “And the other three, foot/ankle, trauma and restorative therapies, are growing at different levels, but all of them growing.”
Paragon 28 moves Zimmer Biomet closer to its goal of category leadership or second player status for foot and ankle. The chart below shows our rough estimate for Zimmer Biomet’s foot and ankle revenues versus Paragon 28’s performance since its IPO.
Why It Matters
Paragon 28’s holistic approach to foot and ankle helped it weather the market’s ups and downs while remaining one of the best growth stories in orthopedics. It gives Zimmer Biomet innovative solutions across the entire foot and ankle spectrum and could supercharge that segment’s growth rate.
“Our business model has been really focused on the entire foot and ankle environment. All five subsegments really matter to us,” said Paragon 28 CEO Albert DaCosta. “That diversity really helps us when there’s fluctuations in the market. This year, in particular, has been a little bit unusual for us to try to rationalize what we’re hearing in the space because of the energy around some of our product launches. The short way of saying, we’ve heard some of our competitors talking about softness in the market. We looked carefully. We feel like we’ve grown through that.”
Future Outlook
We expect this move to offset some of the challenges the company faced in its S.E.T. category in recent years and meet competitive challenges from players like Enovis.
Beyond the immediate revenue and growth rate boons, Zimmer Biomet will also get access to Paragon 28’s promising technology ecosystem, Smart 28. That system could be an important differentiator in complex foot and ankle surgeries.
We’re bullish on this move for Zimmer Biomet. A big question, though, is how the culture that made Paragon 28 so successful will fare within a massive, global company. It could be a few years until we know the answer.
While orthopedic M&A volume has plummeted since 2020, the deals that do take place are major shakeups that change the competitive landscape: Globus and NuVasive as well as Orthofix and SeaSpine come to mind. Now Stryker and Zimmer Biomet each made consequential moves to start 2025.
Stryker Divests Spinal Implant Business
Stryker...
While orthopedic M&A volume has plummeted since 2020, the deals that do take place are major shakeups that change the competitive landscape: Globus and NuVasive as well as Orthofix and SeaSpine come to mind. Now Stryker and Zimmer Biomet each made consequential moves to start 2025.
Stryker Divests Spinal Implant Business
Stryker reached a definitive agreement to sell its spinal implant businesses in the U.S. and France to Viscogliosi Brothers to create VB Spine. The transaction is expected to close in the first half of 2025. Stryker reported spinal implant revenues of $707 million in its fourth quarter earnings report and a total of $10.9 billion in 2024 orthopedic sales.
The company will retain its growing technology ecosystem for spine, including Mako Spine which performed its first cases in October 2024. Stryker said the combination of its capital equipment reps and VB Spine’s implant reps will provide business as usual to its customers.
Why It Happened
The largest players in the market have shown, fairly conclusively by now, that there is little synergy between fulsome orthopedic and spine businesses within the same company. Spine rewards focus and specialization. Since its acquisition of K2M, Stryker struggled to build momentum in spine and couldn’t innovate at the same pace as its competition.
The chart below shows companies with spine sales around or above $1 billion: Globus Medical, J&J MedTech, Medtronic and Stryker. The chart reflects Stryker’s estimated spine sales before it recategorized its reporting structure.
The merger between Globus and NuVasive dropped Stryker to a distant third place in spine, with little momentum on the implant side.
Why It Matters
Once the transaction closes, two (VB Spine and Highridge Medical) of the six largest spine companies will be privately-held spin-offs from strategics. Both of those companies currently lack internal, flagship technology that seems increasingly important in the spine market. It will be interesting to see how the competitive dynamics shift as VB Spine, ATEC and Highridge battle it out in spine’s mid-tier.
Future Outlook
The divestiture cuts free an anchor on the company’s overall growth rate and allows Stryker to reallocate investment into higher growth areas. Those will likely come outside of orthopedics. The company previously mentioned peripheral vascular, urology, soft tissue robotics and healthcare IT as areas of interest.
Stryker doesn’t see any customer disruption or Mako Spine revenue disruption coming out of this move.
“The surgeons who are using our existing spine implants will now be obviously served by similar salespeople. That will be part of the VB Spine business. So there won’t be a lot of change in that respect,” said Stryker CEO Kevin Lobo. “What we thought we could do with Mako Spine in terms of the revenue isn’t much different with this partner. They’re going to be exclusive at least for the first few years, and then we’ll see beyond that, whether it stays exclusive or whether it becomes a more open system.”
Zimmer Biomet Acquires Paragon 28
Zimmer Biomet entered into a definitive agreement to purchase all outstanding shares of common stock of Paragon 28 for a total enterprise value of $1.2 billion. The transaction is expected to close in the first half of 2025.
Why It Happened
Zimmer Biomet worked diligently in recent years to elevate its overall growth rate by investing in faster-growing areas of orthopedics, like sports medicine and extremities. We estimate the company will generate around $7.6 billion in orthopedic sales in 2024.
Since 2020, foot and ankle emerged as a lucrative and fragmented market ripe for consolidation by companies like Stryker and Enovis. But Zimmer Biomet could never generate the same foot and ankle momentum as its peers. At the end of 2023, the company said foot and ankle revenues constituted just 4% of its S.E.T. category, or around $70 million.
“The growth drivers, those being CMFT, sports, and shoulder, are growing either upper-single digit or double digit,” Zimmer Biomet CEO Ivan Tornos said of the company’s S.E.T. businesses. “And the other three, foot/ankle, trauma and restorative therapies, are growing at different levels, but all of them growing.”
Paragon 28 moves Zimmer Biomet closer to its goal of category leadership or second player status for foot and ankle. The chart below shows our rough estimate for Zimmer Biomet’s foot and ankle revenues versus Paragon 28’s performance since its IPO.
Why It Matters
Paragon 28’s holistic approach to foot and ankle helped it weather the market’s ups and downs while remaining one of the best growth stories in orthopedics. It gives Zimmer Biomet innovative solutions across the entire foot and ankle spectrum and could supercharge that segment’s growth rate.
“Our business model has been really focused on the entire foot and ankle environment. All five subsegments really matter to us,” said Paragon 28 CEO Albert DaCosta. “That diversity really helps us when there’s fluctuations in the market. This year, in particular, has been a little bit unusual for us to try to rationalize what we’re hearing in the space because of the energy around some of our product launches. The short way of saying, we’ve heard some of our competitors talking about softness in the market. We looked carefully. We feel like we’ve grown through that.”
Future Outlook
We expect this move to offset some of the challenges the company faced in its S.E.T. category in recent years and meet competitive challenges from players like Enovis.
Beyond the immediate revenue and growth rate boons, Zimmer Biomet will also get access to Paragon 28’s promising technology ecosystem, Smart 28. That system could be an important differentiator in complex foot and ankle surgeries.
We’re bullish on this move for Zimmer Biomet. A big question, though, is how the culture that made Paragon 28 so successful will fare within a massive, global company. It could be a few years until we know the answer.
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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.
