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Smith & Nephew Makes Strategic Investment in Surgical Robotics with Acquisition of Blue Belt Technologies BY EDITOR, OCTOBER 29, 2015
Smith & Nephew (LSE:SN, NYSE:SNN), the global medical technology business, announces it has agreed to acquire Blue Belt Holdings, Inc. (“Blue Belt Technologies”) for $275 million, securing a leading position in the fast-growing area of orthopaedic robotics-assisted surgery.
“Our experience working with Blue Belt Technologies and our customer insight has convinced us that robotics will become increasingly mainstream across orthopaedic reconstruction in the foreseeable future,” said Olivier Bohuon, Chief Executive Officer of Smith & Nephew. “This acquisition is a compelling strategic move, with the combination of complementary products and R&D programmes creating a platform from which we can shape this exciting new area of surgery. It reinforces our distinctive orthopaedic reconstruction strategy, which combines cutting edge innovation, disruptive business models and a strong emerging markets platform to drive outperformance.”
Today, Blue Belt Technologies’ Navio surgical system provides robotics-assistance in unicondylar or partial knee replacement surgery through CT-free navigation software and a unique hand-held, robotic bone-shaping device. It is a highly portable system that can be moved freely within hospitals or ambulatory surgical centres. Navio brings a high degree of implant placement accuracy, combined with attractive economics and ease of use.
The combination of Blue Belt Technologies with Smith & Nephew’s Knee Implant franchise has a powerful rationale.
- Creates a strong combined partial knee portfolio from which to accelerate growth in the attractive area of partial knee replacement surgery:
Smith & Nephew is at present Blue Belt Technologies’ most successful implant sales partner, with the Navio robotics system available for the JOURNEY UNI partial knee and the recently acquired ZUK unicompartmental knee.
Total knee system - due to launch in 2017, bringing Navio to surgeons performing total knee procedures and supporting Smith & Nephew products such as JOURNEY II.
Eric Timko, President and CEO of Blue Belt Technologies, commented: “Blue Belt Technologies has redefined robotics in orthopaedic surgery, establishing strong traction with customers who are attracted by the high degrees of implant placement accuracy made possible by Navio, as well as its ease of use, portability and attractive economics. We are delighted to be joining with Smith & Nephew, with whom we share a passion for innovation and a mission to support healthcare professionals. Together, we will realise the many opportunities to bring the benefits of robotics-assisted surgery to more patients and new indications.”
Navio has been developed as an open platform for partial knees and Smith & Nephew will continue to support customers choosing to use implants from other manufacturers.
We expect annual revenue growth at Blue Belt Technologies to be in excess of 50% over the medium-term from a 2015 base of approximately $19 million. Investment in the combined R&D programmes and supportive clinical evidence will dilute Group trading profit margin by around 60bps in 2016, with the business becoming profitable in 2018. Return on capital employed is expected to exceed our weighted average cost of capital in year four.
The acquisition cost of $275 million is subject to any closing adjustments and will be funded from existing debt facilities. The transaction is expected to close around the year end, subject to the satisfaction of customary conditions. Approximately 120 employees, based in Pittsburgh and Minneapolis, USA and Manchester, UK, will be joining Smith & Nephew.
Ben Atwell / Matthew Cole
About Blue Belt Technologies
Piper Jaffray & Co. is acting as financial advisor and Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. is legal advisor for Blue Belt Technologies.
About Smith & Nephew