Medtronic Acquires Mazor Robotics for $1.64 Billion to Transform Spine Surgery with Integrated Robotic Solutions

VCBeat (WeChat ID: vcbeat) has learned that on September 20, Eastern Time, Medtronic, a global leader in medical technology, announced the acquisition of Israeli orthopedic robotics company Mazor Robotics for $1.64 billion.Within an hour of the announcement, Mazor’s stock price rose by 7.5%, while Medtronic’s stock price fell by less than 0.1%.

Mazor Robotics is an Israeli medical device company and a global leader in the manufacture of robotically guided systems for spinal surgery. Mazor Robotics originated from surgical robotics research conducted at the Robotics Laboratory of the Faculty of Mechanical Engineering at the Technion – Israel Institute of Technology, and was co-founded in 2001 by Professor Moshe Shoham and Eli Zehavi.

Mazor’s core technologies have received more than 15 FDA clearances, hold over 50 core patents, and have been featured in more than 60 publications, establishing the company as a global leader in the spinal robotics market. In 2011, the company launched its flagship product, the Renaissance System, followed by the next-generation Mazor X System in 2016. By September 2013, Mazor Robotics’ systems had been deployed in 54 hospitals worldwide, including only 28 in the United States.To date, more than 200 Mazor systems have been used clinically across four continents, guiding the placement of over 250,000 implants in 40,000 surgeries, thereby establishing minimally invasive spine surgery as a standard procedure in many hospitals.

Since 2007, Mazor has been listed on the Tel Aviv Stock Exchange and, as of May 2013, on NASDAQ, with a current market capitalization of approximately $5.275 billion.

Medtronic is one of the world’s largest companies in medical technology, services, and solutions. In 2015, it surpassed Johnson & Johnson to become the world’s largest medical device company. Medtronic’s operations are primarily divided into four major segments: Cardiovascular Group (CVG), Minimally Invasive Therapies Group (MITG), Restorative Therapies Group (RTG), and Diabetes (DIAB). Medtronic’s orthopedics business falls under RTG, which accounts for only 25% of the company’s total revenue. In fiscal year 2017, Medtronic reported total revenue of $29.7 billion, with the RTG segment—where orthopedics resides—generating $7.366 billion.

Although orthopedics accounts for only a small portion of Medtronic’s business, and the company ranks fourth in the global orthopedic market—behind Johnson & Johnson’s DePuy Synthes, Zimmer Biomet, and Stryker—Medtronic is the undisputed leader in global spine and musculoskeletal care, earning it the industry title of “Spine King.”

This acquisition of Mazor Robotics by Medtronic will consolidate its position as a global leader in spinal surgery technology and facilitate the introduction of Mazor Robotics’ core technologies to the global market. Mazor’s proprietary core platform technologies, including the Mazor X robotic guidance system and the Renaissance® surgical guidance system, are transforming spinal surgery from freehand procedures into precise, advanced, guided interventions.

By integrating Medtronic’s spinal implants, navigation, and intraoperative imaging technologies with Mazor’s robotic-assisted surgery (RAS) system, Medtronic aims to provide an integrated spine surgery solution for surgical planning, execution, and verification.

“We believe that robot-assisted surgery is the future of spinal surgery, providing surgeons with the ability to perform complex procedures with greater precision, reproducibility, and control. Medtronic is committed to accelerating the adoption of robot-assisted surgery and transforming spinal surgery and its outcomes through surgical solutions that integrate implants, biologics, and enabling technologies.”Geoff Martha, Executive Vice President and President of the Restorative Therapies Group at Medtronic, said“The acquisition of Mazor adds a robotically assisted guidance system to our expanding portfolio of enabling technologies. We intend to further cultivate Mazor’s innovations in the field of surgical robotics and leverage them as a foundation for future growth.”

Building on the relationship established in May 2016, this transaction is grounded in a multi-stage strategic and equity investment agreement between Medtronic and Mazor. In August 2017, Medtronic expanded its partnership to become the global exclusive distributor of the Mazor X system, which has seen successful installation of more than 80 units since its launch. With the announcement of this acquisition agreement, the union of the two companies aims to accelerate the advancement and adoption of the Mazor Renaissance system, thereby delivering broader benefits to patients, healthcare providers, and healthcare systems.

“Today is a historic day for spinal surgery and a pivotal event in market development. I would like to express my gratitude to all those who have been instrumental and influential in our success.”Ori Hadomi, CEO of Mazor Robotics, said,“The full integration of the Mazor team and product portfolio with Medtronic will maximize our global reach through Medtronic’s channels, strengthen the market leadership of our systems, and drive the realization of our innovation vision.”

VCBeat also learned that the acquisition is expected to be completed during Medtronic’s third fiscal quarter ending January 25, 2019, subject to customary closing conditions, including receipt of regulatory approvals and approval by Mazor’s shareholders. Consistent with its long-term financial objectives, Medtronic anticipates that the acquisition will generate a double-digit return on invested capital (ROIC) in the fourth year post-closing, with increasing contributions thereafter.