WARSAW, Ind. - Zimmer Biomet Holdings, Inc. (NYSE:ZBH), a global leader in medical technology, has entered into a definitive agreement to purchase OrthoGrid Systems, Inc., a company specializing in AI-driven surgical guidance for hip replacement. This acquisition, expected to close by the end of the fourth quarter of 2024, includes OrthoGrid's flagship Hip AI system, two FDA-cleared orthopedic applications, and over 40 patents.
OrthoGrid's technology, which uses fluoroscopy-based real-time imaging, offers an alternative to CT-based systems that can create bottlenecks in operating room workflows. The Hip AI system allows for real-time analysis, providing surgeons with automated measurements and guidance for optimal implant placement, all while maintaining a minimal footprint in the operating room.
Jim Lancaster, President of Recon at Zimmer Biomet, emphasized the system's alignment with the market's growing demand for fluoroscopy-based solutions and its role in enhancing the company's hip surgery portfolio. He also highlighted the system's adaptability to individual surgical techniques and workflows.
OrthoGrid's Co-Founders, Edouard Saget and Richard Boddington, expressed enthusiasm for the acquisition's potential to further their goal of solving orthopedic challenges through innovative technology.
The transaction is subject to standard closing conditions. Zimmer Biomet, with over 90 years in the industry, offers a wide range of medical technologies and is active in over 25 countries, with sales in more than 100 countries. OrthoGrid, based in Salt Lake City, Utah, has been providing AI-enabled surgical guidance since 2012, with distribution in North America and Asia.
Zimmer Biomet Holdings has secured $2.5 billion in credit facilities, as part of its strategy to maintain a strong liquidity position. The company has also entered into significant partnerships, including a co-marketing agreement with RevelAi Health for AI-powered solutions and an exclusive distribution agreement with THINK Surgical, Inc. for the TMINI Miniature Robotic System, expected to be available in select U.S. markets in 2024.
In terms of analyst ratings, Piper Sandler and RBC Capital maintained an Overweight and Outperform rating respectively, while Citi and Goldman Sachs (NYSE:GS) reiterated a Neutral stance. These ratings followed Zimmer Biomet's investor day presentation of a long-range plan for 2024 to 2027, which includes mid-single-digit revenue growth and strategic mergers and acquisitions.
InvestingPro Insights
Amid Zimmer Biomet Holdings, Inc.'s (NYSE:ZBH) strategic acquisition of OrthoGrid Systems, Inc., the company's financial health and market performance provide context for its investment capacity and stability. Zimmer Biomet's market capitalization stands at a robust 22.54 billion USD, underscoring its significant presence in the medical technology industry. A notable aspect of Zimmer Biomet's financial strategy is its share buyback program, as highlighted by an InvestingPro Tip, which indicates management's confidence in the company's value.
Investors may find Zimmer Biomet's current valuation particularly compelling, with a Price/Earnings (P/E) ratio of 23.78 and an adjusted P/E ratio for the last twelve months as of Q1 2024 at 18.79. This adjusted P/E ratio suggests a potentially favorable entry point when considering near-term earnings growth. The company's PEG ratio, which stands at 0.2 for the same period, further signifies that the stock may be undervalued relative to its earnings growth prospects. Another InvestingPro Tip points out that Zimmer Biomet is trading at a low P/E ratio relative to near-term earnings growth, which may attract value-oriented investors.
Additionally, Zimmer Biomet's commitment to shareholder returns is evidenced by its consistent dividend payments over the past 13 years. The dividend yield as of 2024 is 0.88%, with the last dividend's ex-date being June 26, 2024. This steady dividend history, coupled with analysts' predictions that the company will remain profitable this year, provides a reassuring signal of financial stability and prudent fiscal management.
For readers interested in a deeper analysis, there are additional InvestingPro Tips available, offering insights into stock volatility, trading positions, and profitability metrics. These can be accessed at https://www.investing.com/pro/ZBH, where one can explore a comprehensive set of tools and analytics to inform investment decisions.
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