7 details on Zimmer Biomet's plan to spin off spine, dental

Spinal Tech

Zimmer Biomet announced plans to spin off its spine and dental units on Feb. 5 to focus more on its orthopedic and sports medicine units.

Bryan Hanson, CEO of Zimmer Biomet, discussed details of the spinoff during the 2020 earnings call, as transcribed by Seeking Alpha.

Seven things to know:

1. The split creates two independent publicly traded companies: Zimmer Biomet, focused on orthopedics, and NewCo, focused on spine and dental.

2. Zimmer Biomet shareholders received NewCo shares.

3. The pro forma revenues from the business units comprising NewCo hit $1 billion in 2019 and $897 million in 2020.

4. Mr. Hanson expects NewCo to thrive as an independent company with prioritized capital allocation to grow. As part of Zimmer Biomet, spine and dental unit growth wasn't a priority.

5. Zimmer Biomet decided to spin off the dental and spine lines together because they include similar implant materials and scalability prospects.

"Although there's not obvious reasons that you would look at from a strategic standpoint that those businesses would be together from a commercial perspective, there is a lot of capability and know-how and materials that are used for implants across dental as well as spine," said Mr. Hanson.

6. Zimmer Biomet projects the spinoff will be accretive to revenue by approximately 50 basis points over the course of its five-year strategic plan.

7. Zimmer Biomet expects the spinoff transaction to close in mid-2022.

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