By: Sarah Pringle – June 24, 2016
Globus Medical (GMED) , K2M Group Holdings (KTWO) , NuVasive (NUVA) , Orthofix International (TK) , Xtant Medical Holdings (XTNT) and Alphatec (ATEC) are among spine companies that investors should keep tabs as prospective targets or buyers following Zimmer Biomet Holdings’ (ZBH) recent $1 billion deal for LDR Holding (LDRH) , according to health care industry sources.
The Zimmer-LDR transaction, announced earlier this month, reaffirms that there continues to be an appetite for innovation in the spinal devices market despite risks the space has seen over the past several years, including regulatory challenges when it comes to the approval of new devices, high procedural costs and pricing pressures.
“It means there’s clear interest in the space,” one source said, requesting anonymity. “Some of the guys similar to LDR from a size and scale perspective become almost easier acquisition targets.”
Kohlberg & Co.’s recent play in the sector may also be indicative of more private equity interest in the space. Kohlberg purchased a majority stake in Amendia, which makes medical devices used in spinal surgical procedures, in May. Financial terms of the deal weren’t disclosed, but as The Deal previously reported, the transaction was said to fetch a valuation of about $170 million.
“I think the PE guys, when they see some of the multiples being paid for these businesses, it may spur them into action,” the source said. “It affirms the view that the spine market is an enormous market opportunity.”