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Stryker's Mobius Imaging Buyout to Boost Its Spine Division

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Stryker Corporation (SYK - Free Report) recently announced an agreement to acquire Mobius Imaging for a deal value of $370 million upfront and up to $130 million of contingent payments. Expected to close in the fourth quarter of 2019, this transaction is likely to remain neutral to Stryker’s net earnings in the year.

For investors’ notice, Massachusetts-based Mobius Imaging provides intelligent and clear images in clinical settings to healthcare practitioners, thereby improving patient outcome.

How Does Stryker Stand to Gain?

Per management, with the latest buyout, Stryker’s Spine division is likely to foray into the intra-operative imaging space, which aligns with its implant offerings. Notably, Mobius Imaging’s Airo TruCT scanner — a real-time, diagnostic-quality CT imaging system — is expected to complement Stryker’s Spine division.

Speaking of the Spine division, it comes with a comprehensive portfolio for orthopedic surgeons and neurosurgeons specializing in spine surgery. The segment offers a broad spectrum of products like interbody devices, radiofrequency ablation products, devices used for spine navigation and cervical fixation, and many more.

In the second quarter, the segment witnessed double-digit improvement and organic growth of 12.4%.

Stryker Rides on Acquisitions

It is encouraging to note that, Stryker’s recent acquisition of K2M is also expected to be accretive for the Spine division.

Earlier this year, Stryker acquired Arrinex a California-based medical device company, with a view to expand its Ear, Nose and Throat portfolio, which is part of the Spine division.

Some other notable acquisitions include that of HyperBranch Medical Technology and Invuity.

Market Prospects

Grand View Research forecasts the global spinal implants and devices market to grow at a CAGR of 5.8% by 2024. Notably, increasing prevalence, subsequent rise in the treatment rates of degenerative spine disorders and a rapidly growing elderly populace are factors driving the market.

Hence, the latest development has been a well-timed one for Stryker.

 

 

Price Performance

Over the past year, the Zacks Rank #2 (Buy) stock has rallied 27.9% compared with the industry’s 0.8% growth.

Want More From the Industry?

Some other top-ranked stocks from the Medical Products industry are Baxter International (BAX - Free Report) , Medtronic (MDT - Free Report) and Surmodics (SRDX - Free Report) . While Baxter and Medtronic currently carry a Zacks Rank #2, Surmodics sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Baxter’s long-term earnings growth rate is expected to be 12.8%.

Medtronic’s long-term earnings growth rate is projected at 7.3%.

Surmodics’ long-term earnings growth rate is expected to be 10%.

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