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Medtronic's Titan Spine Buyout to Boost Spine Surgery Range

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Medtronic, plc (MDT - Free Report) recently completed the acquisition of titanium spine interbody implant and surface technology company, Titan Spine. The deal’s closure was announced back in May 2019 and is expected to fortify the company’s position in the field of procedural solutions for spine surgery.

Financial terms of the deal were kept under wraps.

Titan Spine currently leads the category of surface-enhanced titanium interbody implants with its unique nanoLOCK platform. Notably, interbody implants are parts that can be inserted between the vertebrae during spinal fusion surgery. This helps relieving pressure on the nerves and holding the vertebrae in place while fusion occurs.

According to Medtronic, the implant material and shape plays a pivotal role in the bone growth process during fusions and currently, titanium interbody devices witness buoyant demand in the spine surgery market.

Medtronic expects this purchase to be strategic for its portfolio as Titan Spine’s surface-enhanced titanium implants when combined with Medtronic’s comprehensive biologics portfolio can improve patient outcomes in spinal procedures.

Financial Impact of the Pact

The buyout is expected to be inconsequential to Medtronic's fiscal 2020 adjusted earnings per share. However, it is estimated to meet Medtronic's long-term financial metrics for acquisitions.

Market Potential in Spine Space

Per a Mordor Intelligence report, the global Spinal Surgery Devices market is projected to reach a value worth $16.6 billion by 2021 at a 5% CAGR from 2016 onward.  Taking such abundant prospects into account, we believe, the company’s latest development is a strategic fit.

Medtronic’s Advancement in Spine Arm

In a bid to grow in the field of robotics spine surgery, Medtronic earlier bought Mazor Robotics, an Israel-based robotic surgical guidance systems company, for a consideration of $1.64 billion. Per Medtronic, this consolidation is a calculated move in favor of the company's brisk spine surgery business.

The buyout has combined Medtronic's market-leading spine implants, navigation and intra-operative imaging technology with the acquired company's robotic-assisted surgery (RAS) systems. Following the conclusion of this takeover, Medtronic launched the Mazor X Stealth Edition robotics guidance platform in January and has already received a positive feedback for this integration of best-in-class robotics and navigation capability.

Share Price Performance

Over the past year, shares of Medtronic have outperformed its industry. The stock has gained 14.1% compared with the industry’s 9.5% rise. 

Zacks Rank & Key Picks

Medtronic currently carries a Zacks Rank #3 (Hold). A few better-ranked stocks in the broader medical space are DENTSPLY SIRONA (XRAY - Free Report) , Penumbra (PEN - Free Report) and CONMED Corporation (CNMD - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

DENTSPLY’s long-term earnings growth rate is expected to be 11.5%.

Penumbra’s long-term earnings growth rate is projected at 21.5%.

CONMED’s long-term earnings growth rate is estimated at 13.3%.

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