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Update 3/1/22: The ZimVie spin-off is complete. ZimVie has announced its Board of Directors.
In February 2021, Zimmer Biomet announced its intent to spin off its spine and dental divisions into a new publically traded company that became known as ZimVie. Today, the company announced that the spin-off will complete on March 1, 2022.
While there is no current market for ZimVie common stock, “when-issued” trading of ZimVie common stock is expected to begin February 14, 2022, under the symbol ZIMVV. “Regular-way” trading of ZimVie common stock is expected to begin on NASDAQ on March 1, 2022, under the symbol ZIMV.
ZimVie Has Large Market, but Plenty of Baggage
ZimVie enters the market with just over $1 billion in annual total revenue. For 2021, unaudited spine revenues totaled $540 million.
The spine segment has long been a trouble spot for Zimmer Biomet. After waves of successive acquisitions, the business lacked a cohesive identity. The portfolio had gaps in some areas and redundancies in others. Multiple integrations brought recurring sales disruptions, and leadership turnover led to a lack of focus and discipline.
Spinning off spine and dental allowed Zimmer Biomet to keep its strategic growth goals in reach while allowing the spine business to receive focused management.
Company CEO Bryan Hanson said, “It’s time for active portfolio management. We don’t have as much capital to work with, so this is one of the most significant ways to impact and influence the portfolio. We felt that this was the most significant way that we could drive value for our shareholders and our businesses and our team members. So that’s the reason for the spin.”
Returning its base spine business to health is ZimVie’s priority in the segment. The company plans to actively manage its portfolio to fill gaps and reduce overlap. It will also exit some unprofitable APAC and EMEA counties that are holdovers from previous acquisitions. A drastic reduction in active development projects will allow priority projects to receive more focus.
Spine Turnaround is a Longterm Play
Stopping the bleeding in its base spinal implant business will allow ZimVie to fund innovation in its key growth strategic growth areas of motion preservation and minimally invasive surgery. Both of those markets are underserved with ample room for growth, but also face significant barriers.
ZimVie leaders pointed to the Mobi-C cervical disc replacement, The Tether for pediatric scoliosis, and minimally invasive solutions as key focus areas to generate sustainable, long-term growth.
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.
ZimVie must overcome an unfavorable reimbursement landscape to expand the Mobi-C and Tether markets. Surgeons are reimbursed 44% more for fusion than a cervical disc replacement. Reimbursement for The Tether is limited and often requires an appeal.
Minimally invasive surgery can often require cost-prohibitive enabling technology to deal with restricted anatomy visualization. Additionally, minimally invasive approaches initially increase procedure time and cost while the learning curve is overcome.
ZimVie Outlook for 2022 and Beyond
The company expects mid-single-digit declines in its spine business for the near term, effectively offsetting dental gains. However, within five years, ZimVie expects its spine business to grow in the low-single digits.
While ZimVie does have the ROSA Spine robotic system, company leaders don’t view it as a strategic priority. The company’s enabling technology interests are visualization and access. ZimVie will likely purchase a solution rather than engage in a drawn-out development project.
Update 3/1/22: The ZimVie spin-off is complete. ZimVie has announced its Board of Directors.
In February 2021, Zimmer Biomet announced its intent to spin off its spine and dental divisions into a new publically traded company that became known as ZimVie. Today, the company announced that the spin-off will complete on March 1, 2022.
...
Update 3/1/22: The ZimVie spin-off is complete. ZimVie has announced its Board of Directors.
In February 2021, Zimmer Biomet announced its intent to spin off its spine and dental divisions into a new publically traded company that became known as ZimVie. Today, the company announced that the spin-off will complete on March 1, 2022.
While there is no current market for ZimVie common stock, “when-issued” trading of ZimVie common stock is expected to begin February 14, 2022, under the symbol ZIMVV. “Regular-way” trading of ZimVie common stock is expected to begin on NASDAQ on March 1, 2022, under the symbol ZIMV.
ZimVie Has Large Market, but Plenty of Baggage
ZimVie enters the market with just over $1 billion in annual total revenue. For 2021, unaudited spine revenues totaled $540 million.
The spine segment has long been a trouble spot for Zimmer Biomet. After waves of successive acquisitions, the business lacked a cohesive identity. The portfolio had gaps in some areas and redundancies in others. Multiple integrations brought recurring sales disruptions, and leadership turnover led to a lack of focus and discipline.
Spinning off spine and dental allowed Zimmer Biomet to keep its strategic growth goals in reach while allowing the spine business to receive focused management.
Company CEO Bryan Hanson said, “It’s time for active portfolio management. We don’t have as much capital to work with, so this is one of the most significant ways to impact and influence the portfolio. We felt that this was the most significant way that we could drive value for our shareholders and our businesses and our team members. So that’s the reason for the spin.”
Returning its base spine business to health is ZimVie’s priority in the segment. The company plans to actively manage its portfolio to fill gaps and reduce overlap. It will also exit some unprofitable APAC and EMEA counties that are holdovers from previous acquisitions. A drastic reduction in active development projects will allow priority projects to receive more focus.
Spine Turnaround is a Longterm Play
Stopping the bleeding in its base spinal implant business will allow ZimVie to fund innovation in its key growth strategic growth areas of motion preservation and minimally invasive surgery. Both of those markets are underserved with ample room for growth, but also face significant barriers.
ZimVie leaders pointed to the Mobi-C cervical disc replacement, The Tether for pediatric scoliosis, and minimally invasive solutions as key focus areas to generate sustainable, long-term growth.
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.
ZimVie must overcome an unfavorable reimbursement landscape to expand the Mobi-C and Tether markets. Surgeons are reimbursed 44% more for fusion than a cervical disc replacement. Reimbursement for The Tether is limited and often requires an appeal.
Minimally invasive surgery can often require cost-prohibitive enabling technology to deal with restricted anatomy visualization. Additionally, minimally invasive approaches initially increase procedure time and cost while the learning curve is overcome.
ZimVie Outlook for 2022 and Beyond
The company expects mid-single-digit declines in its spine business for the near term, effectively offsetting dental gains. However, within five years, ZimVie expects its spine business to grow in the low-single digits.
While ZimVie does have the ROSA Spine robotic system, company leaders don’t view it as a strategic priority. The company’s enabling technology interests are visualization and access. ZimVie will likely purchase a solution rather than engage in a drawn-out development project.
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ME
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.
