Zimmer Biomet Takes a Transformative Step with Spine and Dental Spin-Off

February 10, 2021 Business, Medical Devices, Orthopedics, Zimmer Biomet

Zimmer Biomet is spinning-off its spine and dental businesses, a move that could unlock significant shareholder value.

Zimmer Biomet moved ahead with its ongoing transformation on Friday by announcing its intention to spin off its spine and dental businesses.

The spin-off will create a new publicly traded company and will allow Warsaw, IN-based Zimmer Biomet to focus on high-growth segments of the orthopedics market, including knees, hips, S.E.T. (sports medicine, extremities, and trauma), and CMFT (craniomaxillofacial and thoracic). The spin-off transaction is expected to close around mid-2022.

CEO Bryan Hanson said the planned spin-off is part of the third phase of the company’s transformation. Hanson took the helm at Zimmer Biomet in December 2017 and was tasked with righting the ship. The company had struggled with quality control and supply chain problems for about a year at that point, and those challenges had created investor frustration that ultimately led to former CEO David Dvorak’s resignation in July 2017. In October 2018, Hanson told investors that Zimmer Biomet would have to reduce the size of its portfolio in order to simplify the supply chain and improve service levels to customers. MD+DI editors recognized Zimmer Biomet as the medtech company of the year in 2019 because of its impressive turnaround efforts.

“You’ve heard me talk about our three phases of transformation,” Hanson said during the company’s earnings call Friday morning, according to SeekingAlpha’s transcript. “First was the hearts and minds and the execution challenges that we had in the very beginning. That’s what we talked about a lot in the beginning. The second phase of this was really doing a more robust, longer-term strategy, making sure that we brought innovation to the market and getting our execution straight. We’re clearly well into that phase. And third is our portfolio transformation. And that’s the goal of active portfolio management to change the complexion of the organization, so that we can have better goal of sustaining the mid-single-digit growth.”

The announcement prompted Needham & Co. to reiterate its buy rating on the stock.

By Amanda Pedersen | MD+DI

Image Credit: Zimmer Biomet

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About Peter Coffaro 474 Articles

A growth-driven and strategic executive, Peter Coffaro commands more than 25 years of progressive management success within the medical device industry. Recognized by the World Journal of Orthopedics, Exponential Healthtech, and MedReps.com as one of the top medical sales influencers in the industry; he has 10 years of combined sales management experience and has held positions as a Director, General Manager, Distributor, and Vice President. Peter has worked for some of the top orthopedic companies in the world - Zimmer, DePuy, and Stryker. He is also the founder of OrthoFeed: a popular blog that covers digital orthopedic news and emerging medical technologies. Peter is a three-time Hall of Fame award winner at Johnson and Johnson and has an extensive background in organizational development, business development, sales management, digital marketing, and professional education. Peter holds a B.S. degree in Biology and Chemistry from Northern Illinois University.