Symmetry Surgical, a subsidiary of orthopedic implants and instruments maker Symmetry Medical , recently entered into a distribution agreement with Canada-based AMT Electrosurgery Inc. (“AMT”). Per the deal, AMT will be the sole distributor of Symmetry Surgical’s entire portfolio of medical devices in Canada.
The distribution agreement is in line with Symmetry Surgical’s focus on worldwide expansion of its business inclusive of all brands under the erstwhile Codman Surgical Instruments and SSi. AMT supplies specialized surgical systems to more than 400 hospitals in Canada. Given AMT’s strong presence in the Canadian market, this partnership should further expand Symmetry’s foothold in the global market.
Earlier, in June, Symmetry Surgical had completed a distribution agreement with Japan Surgical Specialty (‘JSS’) Corporation to sell its products in the Japanese market. The company had also completed a distribution agreement to directly distribute its offerings in Australia and New Zealand.
Symmetry Medical is the largest OEM provider of implants and related surgical instruments and cases to orthopedic devices manufacturers. Its major customers include Johnson & Johnson’s (JNJ - Analyst Report) DePuy, Stryker (SYK - Analyst Report) and Zimmer Holdings .
The acquisition of the surgical instruments business of Codman and Shurtleff Inc. (Codman), a Johnson & Johnson enterprise, in December 2011 shaped Symmetry Surgical into a business worth $100 million. The Specialty Surgical Instruments (SSi) was acquired in 2007.
However, Symmetry Medical’s core OEM Solutions business is facing declining capital spending, procedural and pricing pressure from the weak global orthopedic market. In addition, the current weakness in the economic environment makes us cautious about the company’s future growth prospects. We believe that the company needs to improve its operational efficiency to overcome these macroeconomic challenges.
We currently have a Neutral recommendation on Symmetry Medical, which carries a short-term Zacks #4 Rank (Sell rating).