Stryker Goes SpinelessStryker Goes Spineless

Stryker is divesting its spinal implant business. How will that impact the company's enabling tech business going forward?

Amanda Pedersen

January 29, 2025

8 Min Read
3D illustration of human anatomy (back view) with spine highlighted in bright red
Stryker CEO: This sale will place the spinal implants business in the hands of new owners that have extensive experience in the spine market, and it allows us to better align our resources.Image credit: artpartner-images / The Image Bank via Getty Images

At a Glance

  • Stryker gave investors a lot to digest this week, beginning with the news that it is divesting its spinal implant business.
  • Stryker also announced the retirement of CFO Glenn Boehnlein. Boehnlein’s decision follows a 22-year career at Stryker.
  • Earlier this month, Stryker agreed to buy Inari Medical in a deal valued at $4.9 billion

Portage, MI-based Stryker gave analysts and investors quite a bit to digest this week, beginning with the news that it will be selling its U.S. spinal implants business to Viscogliosi Brothers, a family-owned investment firm specializing in the neuro-musculoskeletal space, to create a newly formed company called VB Spine.

After closing, VB Spine will become a strategic partner to Stryker with exclusive access to Mako Spine and Copilot for use with VB Spine’s implants in spine procedures. The company expects the transaction will enhance the focus of both Stryker and VB Spine to meet the needs of customers and their patients and is expected to achieve faster growth and deliver greater value for all stakeholders.

"It's just one of those things where we've moved into so many other faster-growing spaces. And this is really where we'd like to spend our time and our energy. It's, as you know, a very competitive market on the implant side of the business where we just haven't had the same degree of innovation that we've had in other parts of our portfolio." - Stryker CEO Kevin Lobo

Stryker CEO Kevin Lobo said during the company's fourth-quarter earnings call that the spinal implants business has faced challenges in achieving performance expectations for the company.

Related:Zimmer Biomet Eyes Expansion into $5B Foot & Ankle Market with Acquisition

"This sale will place the spinal implants business in the hands of new owners that have extensive experience in the spine market, and it allows us to better align our resources," Lobo said. "We continue to be excited about interventional spine, which is one of our fastest-growing businesses and was bolstered by the recent acquisition of Vertos Medical."

Lobo said Stryker also remains committed to enabling technologies for the spine market, including its Q Guidance System, Copilot, and Mako Spine.

"Why is now the time? As you know, we've been looking at this market for a long time, and we've been trying to make improvements in our spine business," Lobo said. "We are excited about the enabling tech with Copilot and Mako Spine but fundamentally just have better opportunities to invest our funds in other businesses. And the VB Brothers have a lot of experience in spine. They're going to provide the follow-on innovation that's required in the implant side of the business."

As for the partnership that will emerge from this transaction between Stryker and VB Spine, Stryker will provide the enabling tech and VB Spine will provide the implants.

"It's just one of those things where we've moved into so many other faster-growing spaces. And this is really where we'd like to spend our time and our energy. It's, as you know, a very competitive market on the implant side of the business where we just haven't had the same degree of innovation that we've had in other parts of our portfolio," Lobo said. "So this felt like the right time. We feel like we've got a really great partner. The business will be in good hands. Our employees will be in good hands, and so will our customers."

Related:Zimmer Biomet Is Pumped About Arnold Schwarzenegger Partnership

The spine market has shifted quite a bit in recent years. In February 2021, Warsaw, IN-based Zimmer Biomet first announced its spinoff of its spine and dental businesses, which ultimately formed Westminster, Co-based ZimVie. Then, in December 2023, ZimVie sold the spine business to HIG Capital.

Stryker provides more color on Inari acquisition

Stryker generated excitement early this year with the news that it plans to acquire Inari Medical for $4.9 billion. The management team provided a bit more color on that deal during the earnings call this week.

"Our entry into the peripheral vascular market is a logical adjacency to our neurovascular division given their complementary product portfolios and parallel sites of service," said Andy Pierce, group president of medsurg and neurotechnology at Stryker. "With the acquisition of Inari, Stryker will be a leading player in the fast-growing area of chemical thrombectomy treatment for venous thromboembolism, or VTE. Mechanical thrombectomy represents a $15 billion addressable opportunity, with the U.S. comprising the $6 billion of that opportunity."

Related:The Hips Don't Lie: Stryker Sees Continued Growth in Hips and Knees

Pierce said less than one-fifth of treatments for VTE today are done with mechanical thrombectomy. Stryker therefore expects the opportunity will expand over time as hospitals and clinicians look to elevate the standard of care for VTE, he said.

"Since bringing its ClotTriever and flow treater products to market in 2017, Inari has seen tremendous revenue growth in excess of 20% annually with a gross margin profile of approximately 85%," Pierce said.

In addition to its treatments for VTE, Inari has invested in four therapies to address unmet needs in other patient populations. These emerging therapies include chronic venous disease, dialysis access management, acute limb ischemia, and chronic limb-threatening ischemia. Together, Pierce said these therapies represent over $5 billion of incremental market segment opportunity globally. He added that Stryker's international presence can help Inari more rapidly into global markets.

In recent years, Inari has made strides globally and is currently helping improve patient outcomes in more than 30 markets, primarily in Europe and certain parts of Asia, Pierce said, adding that its international business is about 7% of sales.

"And with the addition of Inari, we will be equipped with a more comprehensive interventional endovascular portfolio. By launching the R&D and clinical capabilities of both organizations, we will have a greater opportunity to accelerate innovation and meet customer needs," Pierce said.

Vijay Kumar, a medtech analyst at Evercore ISI, pointed out during the Q&A portion of the earnings call that sometimes when deals are announced in the spine market, it triggers some sales force disruptions. But with the Inari deal expected to close by the end of February, a fairly quick closing, Kumar wondered if sales force disruption might be minimal in this case.

"We think the sales force is going to stay very engaged," Lobo said. "There isn't any overlap with our business. So ... we're not going to have the sales force integration challenges that we have had with overlapped deals. This plugs right alongside our existing business, and we plan to continue to make this business sing just the way they have as an independent company."

Kumar also brought up the fact that there has been "some noise" around a DOJ investigation. The analyst was referring to a civil investigative demand (CID) from the DOJ's civil division that cropped up early last year and pertains to allegations that Inari may have violated the anti-kickback statute and the false claims act. Specifically, the agency was looking into payments Inari made to healthcare professionals that were allegedly tied to services such as meals and consulting.

Pierce said the CID was an area where Stryker did go deep into gaining an understanding regarding what the risk was with that investigation. "And as you see, of course, we went through with the transaction," he said.

Stryker is still on the hunt for M&A

The CEO's commentary around M&A indicates that even though we've seen an uptick in deal activity from Stryker since the back half of 2024, the company isn't done shopping.

"We still have capacity to continue to do tuck-in deals," Lobo said. "And as a reminder, over the last 12 years, the majority of the deals we do are tuck-ins. And they can range in size. Most of them are kind of small [or] medium-sized. Occasionally, we do a large tuck-in. But we're still on offense and looking at acquisitions."

That said, he added that the company won't necessarily do an acquisition as large as Inari in the near term.

"But the adjacencies continue to be the ones that I've talked about. Peripheral vascular, obviously, I've mentioned that in the past, and we're very excited to be able to consummate that deal. And the other spaces, like I've talked about urology. I've talked about neuromodulation. I talked about soft tissue robotics. I've talked about healthcare IT. Those all remain very interesting spaces for us, but that's in addition to all of the tuck-ins."

Lobo said every single one of its businesses is out looking for deals, and the seven acquisitions announced last year were all within Stryker's existing businesses, and that will continue to be the majority of the deals that the company does.

"Those bring tremendous ROIC returns because we already have existing sales forces and call points," he said. "And once Inari is integrated into Stryker, we'll also continue to look within that peripheral space for follow-on acquisitions just as we do with all our businesses."

Stryker CFO to retire

Last but not least, Stryker announced that Glenn Boehnlein will retire from his role as vice president and CFO. Boehnlein’s decision follows a 22-year career at Stryker. Preston Wells, who currently serves as group CFO for Stryker’s orthopaedics group, will assume the role of vice president and CFO effective April 1.

“I want to thank Glenn for his performance drive, strong business partnership, and excellent leadership of the Finance and IT organizations. Glenn is a growth champion who invested in developing talent, including Preston Wells, who has been promoted to Chief Financial Officer,” stated Kevin A. Lobo, Chair and Chief Executive Officer, Stryker. “I am confident in Preston’s ability to help Stryker continue to deliver strong results."
Wells has held various finance roles at Stryker. In his current role, he collaborates with the Joint Replacement, Trauma & Extremities, Spine, and Digital, Robotics, and Enabling Technologies teams to deliver market leading growth, while providing financial and strategic leadership across the Orthopaedics Group. Previously, Wells led Investor Relations, Enterprise Financial Planning & Analysis, and the sales finance and sales operations teams that supported Stryker’s Spine business.

About the Author

Amanda Pedersen

Amanda Pedersen is a veteran journalist and award-winning columnist with a passion for helping medical device professionals connect the dots between the medtech news of the day and the bigger picture. She has been covering the medtech industry since 2006.

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