Zimmer Biomet Holdings, Inc. (NYSE: ZBH), a global leader in medical technology, has finalized its strategic acquisition of Paragon 28, Inc., a premier medical device company specializing exclusively in the rapidly expanding foot and ankle orthopedic market. This transaction, completed on April 21, 2025, marks a significant milestone in Zimmer Biomet’s growth strategy and strengthens its leadership in one of the highest growth segments within musculoskeletal care.
The acquisition involved a cash payment of \(13.00 per share to Paragon 28 shareholders and the issuance of a non-tradeable contingent value right (CVR) that could provide up to an additional \)1.00 per share based on the achievement of revenue milestones. Upon closing, Paragon 28 ceased trading on the NYSE and became a wholly-owned subsidiary of Zimmer Biomet.
This acquisition strategically complements Zimmer Biomet’s existing fracture & trauma, joint replacement, and biologics portfolios, while significantly bolstering its foot and ankle offerings. Paragon 28’s specialized sales organization enables the creation of a dedicated foot and ankle sales channel within Zimmer Biomet, leveraging a portfolio that addresses a $5 billion fast-growing market segment with mid to high single-digit annual growth. This market expansion is expected to accelerate Zimmer Biomet’s Weighted Average Market Growth Rate (WAMGR) and enhance its penetration in the fast-growing Ambulatory Surgery Center (ASC) space, known for favorable reimbursement routes.
Zimmer Biomet’s FY 2024 financial results revealed robust performance, with total revenue reaching \(7.68 billion and operating income at \)1.29 billion, reflecting its strong market positioning and operational execution. The company’s property, plant, and equipment stood at approximately $2.11 billion as of Q4 2024, highlighting its substantial capital investment in advanced technology and manufacturing capabilities.
From prior earnings call disclosures, the Paragon 28 acquisition is expected to be immediately accretive to revenue growth, contributing approximately 3% to diluted adjusted EPS in 2025. While anticipated to be about 1% dilutive to adjusted EPS in 2026 due to integration costs and investments, the transaction is forecasted to become accretive to adjusted EPS within 24 months post-closing.
Looking ahead to 2025, Zimmer Biomet projects constant-currency revenue growth between 3% to 5%, and adjusted earnings per share in the range of \(8.15 to \)8.35, excluding the acquisition’s impact. The company also anticipates free cash flow generation between \(1.1 billion and \)1.2 billion, underscoring strong cash conversion and financial leverage capabilities.
Ivan Tornos, President and CEO of Zimmer Biomet, expressed strong confidence in the acquisition’s strategic value: “This combination expands our leadership in the foot and ankle segment, one of the highest growth specialties in musculoskeletal care. Together, we will drive innovation at scale and leverage the power of Paragon 28’s dedicated foot and ankle commercial channel to help advance our mission to alleviate pain and improve the quality of life for people around the world.”
The acquisition is also expected to enhance cross-selling opportunities and accelerate adoption of innovative products in the fast-growing ASC market, providing both clinical and economic value.
Zimmer Biomet completed the \(1.1 billion acquisition of Paragon 28, expanding dominance in the \)5 billion foot and ankle orthopedic market growing at 7-8% annually.
The transaction includes an upfront $13 per share cash payment plus contingent value rights tied to revenue milestones.
The acquisition is immediately accretive to revenue growth and expected to be accretive to adjusted EPS within two years.
FY 2024 saw Zimmer Biomet generate \(7.68 billion in revenue and \)1.29 billion in operating income, positioning it well for sustainable growth.
Strategic focus on Ambulatory Surgery Centers and dedicated sales channels are anticipated to fuel innovation and market penetration.
For further details, the original 8-K filing can be accessed here: Source Link.
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