ARTICLE SUMMARY:
Almost a year after Zimmer Biomet spun out its dental and struggling spine businesses into an independent $1 billion company, ZimVie, the new company, is on track to meeting its efficiency and cash flow targets. But it has yet to prove that it can innovate its way to sustainable growth in a crowded and extremely competitive market.
When Zimmer Biomet announced in 2021 that it would spin out its dental and spine businesses, the new company’s weaknesses were glaring. Named ZimVie, it would have sales of roughly $1 billion, divided almost evenly between the two businesses. While its portfolio was well established, with leading market positions in attractive categories, it had a heavy debt load, bloated infrastructure, and mature brands, which had suffered from insufficient investment in R&D under the umbrella of the parent.
Within ZimVie, the outlook for its dental business (46% of sales), with its focus on implants and digital technologies, was stronger, with potential for growth right out of the box. ZimVie Spine was another matter. Initial goals were centered on stabilization. The spine business would be up against a COVID-19 stricken hospital environment, characterized by wildly fluctuating procedure volumes, pricing constraints, lack of access to hospitals for US medical device reps, rising inflation, a weak foreign currency exchange, and unpredictable supply chains—all big barriers for a company that would be evaluated for success, in the near term at least, based on its operational efficiency and tight financial controls. Moreover, spine, in particular, is a fragmented, hypercompetitive industry, dominated by deep-pocketed players with strong ties to customers. (See “Can a Spin Out Revive Zimmer Biomet’s Spine Business?” MedTech Strategist, March 16, 2021.)
