Zimmer ($ZMH) snatched up a Pennsylvania startup with a cutting-edge knee treatment surgical procedure, giving the medical device, implant and surgical product manufacturer a big boost to its own offerings in the space.
Of course, as these things go, neither side is disclosing financial details. But Zimmer's purchase of Knee Creations, which launched in 2007, allows both to score significant wins.
Zimmer sees a great opportunity to beef up its own knee treatment offerings with Knee Creations' subchondroplasty procedure, first introduced in late 2010. The treatment is designed to counter the effects of fluid buildup in bone marrow beneath cartilage in the knee, which can be caused by injury or osteoarthritis. Diagnosed through an MRI, the condition leads to cartilage degeneration, pain and impaired mobility if left untreated. Knee Creations' procedure uses minimally invasive surgery to inject a biomimetic bone substitute filler into the defective area to promote healing and preserve joint function. The company's website touts its treatment as a same-day operation that can be done in outpatient facilities.
What's more, medical devices and treatments gain market share these days if they can reduce the cost of care, and Zimmer is tapping into this with Knee Creations. Plus, as baby boomers continue to age, that demographic is mushrooming with patients who have osteoarthritis or other knee-related conditions, giving Zimmer an area ripe for growth. Zimmer's sales of knee and hip implants are down as well, so the acquisition gives it potential for new revenue in another area to counter that trend.
Knee Creations, on the other hand, gives its investors an exit through its sale to Zimmer. So far, the company has raised angel equity and Series A financing to date, from investors including the founders (Viscogliosi Brothers), Praefinium and Philadelphia Medical Investment Group. And in an era where startup funding is becoming increasingly hard to come by, Knee Creations still gets to find a wider audience for its signature treatment. Zimmer, with 8,500 employees around the world, sells its wares in more than 100 countries.
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