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Zimmer Biomet recently announced plans to spin off its dental and spine businesses to form NewCo, enabling the musculoskeletal health care leader to focus on the $43.2 billion orthopedics market.
The planned transaction will allow both companies to better meet the needs of patients and customers and is expected to lead to greater value for stakeholders, according to a news release. The spine portfolio addresses all areas of spinal surgery while the dental business is considered a global leader in oral reconstruction. Combined, the two markets represent $21 billion.
NewCo, an independent publicly traded company, is well positioned in premium dental segments such as surgical, restorative and digital, and regenerative solutions. Product offerings include the T3® Implant, the Tapered Screw-Vent® Implant System, the Trabecular Metal™ Dental Implant, the BellaTek® Encode Impression System and Puros® Allograft Particulate.
The move is part of the third phase of Zimmer Biomet’s transformation and is intended to drive value and accelerate growth.
"We believe NewCo will thrive as an independent company with prioritized capital allocation to pursue strategic growth opportunities and investment strategies in the large and growing spine and dental markets,” Zimmer Biomet President and CEO Bryan Hanson said, according to the release. “This planned transaction underscores our commitment to ensuring our long-term priorities remain aligned with shareholders' best interests as we drive the business forward to meet customer needs and advance our mission to alleviate pain and improve the quality of life for people around the world."
The spin-off will create stronger growth portfolios while better aligning resources and processes with each company’s strategic priorities. It also will enhance capital allocation, improve operating efficiencies and provide each company with financial profiles that more accurately reflect their strengths and opportunities.
The spine and dental platforms provide NewCo with the flexibility to pursue multiple avenues, accelerating growth and operating margins. The company will also be positioned to commercialize key new product launches and existing product offerings with a focused execution strategy for each geography it operates in.
“NewCo is expected to drive innovation and extend its competitiveness through product and technology enhancements fueled by optimized resource allocation and targeted deployment, enabling it to meet customer needs more directly,” according to the release.
Hanson will continue to lead Zimmer Biomet as its President and CEO. The search for the NewCo CEO is in its final stages. The Board of Directors, management and headquarters will be announced as those details are finalized. The spin-off is expected to be completed by mid-2022.