Don’t mistake Stryker’s latest $500 million deal in the spine market as a simple tuck-in acquisition, says one analyst while another says it could help Stryker give Medtronic a run for its money.
On Wednesday, orthopedics company Stryker announced that it was buying Mobius Imaging and its sister company, GYS Tech, (which does business as Cardan Robotics), for $370 million upfront cash and up to $130 million in milestone payments.
Per Stryker’s announcement Mobius Imaging, founded in 2008 and based in Massachusetts, is focused on “integrating advanced imaging technologies into medical workflow, which can enhance a clinician’s ability to obtain high-quality images.” Its Airo TruCT scanner is a mobile, real-time, diagnostic-quality CT imaging system. Cardan Robotics, founded in 2015, is developing novel robotics and navigation technology systems for surgical and interventional radiology procedures.
“This acquisition brings expertise in advanced imaging and robotics as well as a robust product pipeline that add to Stryker’s portfolio and will allow the Spine division to provide more complete procedural solutions, including sales, service, and support,” said Spencer Stiles, Stryker’s Group President, Orthopaedics and Spine, in the news release announcing the deal.
On the face of it, it appears that the Kalamazoo, Michigan device company was doing what it has a penchant for — tuck-in acquisitions. However, one analyst believes Wednesday’s announcement has far-reaching ramifications.
“The transaction would have been just another [Stryker] tuck-in but we believe the transaction has broader implications for [Stryker] and its plans in spinal robotics,” wrote Ryan Zimmerman, a research analyst with BTIG, in a research note Thursday. “At a high level we believe investors should view the transaction positively as [Stryker] made another differentiated bet on robotics with the acquisition.”
Another differentiated bet is, of course, a reference to the first bet the company took on robotics when it bought Mako Surgical for $1.65 billion back in 2013. The decision to buy Mako six years ago was bold because none of the larger ortho players had envisioned joint replacement procedures to be done by a robot back then let alone spend a billion dollars to get that capability.
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