Medtronic's acquisition of Mazor strengthens Medtronic's technological portfolio for spine surgery, and drives Mazor Robotics' vision to bring its core technology to the forefront of the global market. Mazor's proprietary core platform technology, including the Mazor X Robotic Guidance System (Mazor X), and the Renaissance Surgical-Guidance System (Renaissance), are transforming spinal surgery from freehand procedures to accurate, state-of-the-art, guided procedures. By combining Medtronic's spine implants, navigation, and intra-operative imaging technology with Mazor's robotic-assisted surgery (RAS) systems, Medtronic intends to offer a fully-integrated procedural solution for surgical planning, execution and confirmation. The companies plan to showcase this technology integration next week at the NASS (North American Spine Society) 2018 Annual Meeting in Los Angeles, Calif.
"We believe robotic-assisted procedures are the future of spine surgery, enhancing surgeons' abilities to perform complex procedures with greater precision, consistency and control. Medtronic is committed to accelerating the adoption of robotic-assisted surgery and transforming spine care through procedural solutions that integrate implants, biologics and enabling technologies," said Geoff Martha, executive vice president and president of the Restorative Therapies Group at Medtronic. "The acquisition of Mazor adds robotic-assisted guidance systems to our expanding portfolio of enabling technologies, and we intend to further cultivate Mazor's legacy of innovation in surgical robotics with the site and team in Israel as a base for future growth."
This transaction builds on a relationship originated in May 2016 under a multi-phased strategic and equity investment agreement between Medtronic and Mazor. In August 2017, Medtronic expanded the partnership to become the exclusive worldwide distributor of the Mazor X system, leading to the successful installation of more than 80 Mazor X systems since launch. With the announcement bringing the two companies together, Medtronic aims to accelerate the advancement and adoption of RAS in spine to the benefit of patients, providers, and the healthcare system more broadly.
"Today is a historic day for spine surgery and a defining event in the market's evolution, and I want to acknowledge and thank all of those whose contribution and faith have been so critical and impactful to our success," said Ori Hadomi, CEO of Mazor Robotics. "The Mazor team and product portfolio's full integration into Medtronic will maximize our impact globally through Medtronic's channels, advance our systems' leadership position in the marketplace, and drive the realization of our vision to heal through innovation."
The acquisition is expected to close during Medtronic's third fiscal quarter ending Jan. 25, 2019, subject to the satisfaction of customary closing conditions including receipt of regulatory clearances and approval by Mazor's shareholders. The transaction is expected to be modestly dilutive to Medtronic's fiscal 2019 adjusted earnings per share, but given the current strength of Medtronic's business, the company expects to absorb the dilution.
Consistent with its long-term financial objectives, Medtronic projects the acquisition to generate a double-digit return on invested capital (ROIC) by year four, with an increasing contribution thereafter.
Medtronic's financial advisors for the transaction are Perella Weinberg Partners LP and Goldman Sachs & Co. LLC, with Meitar Liquornik Geva Leshem Tal and Ropes & Gray LLP acting as legal advisors. Mazor's financial advisor is J.P. Morgan Securities LLC, Duff & Phelps LLC, with Kirkland & Ellis LLP and Luchtenstein Levy Wiseman Law office acting as legal advisor.
Mazor, founded in 2001, pioneered the application of robotics technology and guidance for use during spinal procedures, and is the market segment's leader. In 2011, the company introduced the Renaissance system and in 2016 launched the next generation Mazor X system. To date, more than 200 Mazor systems are in clinical use on four continents and have guided the placement of more than 250,000 implants during some 40,000 procedures, enabling minimally-invasive spine surgery to become standard procedure in many hospitals. Mazor's core technology has received more than 15 U.S. Food and Drug Administration clearances and has been the subject of more than 60 publications. Mazor holds more than 50 patents worldwide.
Medtronic plc, headquartered in Dublin, Ireland, is among the world's largest medical technology, services and solutions companies. The company employs more than 86,000 people worldwide, serving physicians, hospitals and patients in more than 150 countries.