Zimmer Biomet announced on October 23, 2023, its intention to acquire Monogram Technologies, a company specializing in robotic solutions for orthopedic surgeries, for approximately $177 million. This acquisition aims to enhance Zimmer’s offerings in robotic knee replacement procedures, following the Food and Drug Administration (FDA) clearance of Monogram’s mBôS robot in March 2023.
The mBôS robot utilizes advanced CT scans and artificial intelligence for navigation during orthopedic surgeries. According to the announcement, Zimmer plans to integrate Monogram’s robotics with its own implant solutions, with market availability projected for early 2027. The completion of this acquisition is subject to regulatory approvals and the agreement of Monogram’s shareholders.
Strategic Growth in Orthopedic Robotics
The acquisition is anticipated to expand Zimmer’s portfolio of orthopedic robotics, providing surgeons with a broader array of tools and technologies. Currently, Zimmer’s Rosa robot is designed for imageless surgeries or can utilize 2D X-rays for surgical planning. In contrast, Monogram’s robot employs CT imaging to enhance predictive navigation capabilities.
Zimmer’s Chief Executive Officer, Ivan Tornos, expressed that this acquisition will create “the most comprehensive and flexible technology ecosystem” to support diverse surgeon preferences. He highlighted the potential for the combined entity to lead in developing fully autonomous robotic capabilities, which could significantly redefine standards in orthopedic surgery.
The deal stipulates that Zimmer will purchase all of Monogram’s outstanding shares at $4.04 per share in cash, resulting in a total equity value of around $177 million and an enterprise value of approximately $168 million. Additionally, Monogram’s shareholders may receive up to $12.37 per share in common stock contingent on achieving specific development, regulatory, and revenue milestones by 2030.
Market Reaction and Future Projections
Following the announcement, Monogram’s shares surged by over 75%, reaching $5.78 in early trading. This market response reflects strong investor confidence in the strategic benefits of the acquisition.
Zimmer has been actively pursuing growth in its robotics segment through new product introductions and acquisitions. Notably, last year, the company received 510(k) clearance for its Rosa shoulder system and formed a partnership with Think Surgical, the manufacturer of a wireless handheld robotic knee surgery device.
Looking ahead, Zimmer anticipates that the acquisition of Monogram will begin contributing to revenue growth in 2027 while being neutral to earnings per share during the initial three years. The company expects the acquisition to become accretive to earnings starting in 2028. This strategic move follows Zimmer’s earlier proposal to acquire Paragon 28 for $1.1 billion, a deal that successfully closed in April 2023.
Overall, the acquisition of Monogram Technologies marks a significant step for Zimmer Biomet as it aims to solidify its position in the rapidly advancing field of orthopedic robotics.