ZimVie goes all-in on dental as it sheds spine business in $375M private equity deal

Less than two years after Zimmer Biomet spun out its spine and dental businesses into a separate, standalone company, the resulting entity, ZimVie, is already undergoing another transformation.

It’s now planning to splice off the spine business, leaving behind only the dental segments under the ZimVie name. According to an announcement Monday, Miami-based private equity firm H.I.G. Capital has agreed to take on the spine business.

When the deal is sealed, H.I.G. will hand over $315 million in cash to ZimVie, plus a promissory note worth $60 million that’ll accrue interest at a yearly rate of 10%—for a total deal value of $375 million.

“The ZimVie spine business has a solid foundation with a market-leading product portfolio, strong surgeon satisfaction and exceptional patient outcomes,” Mike Gallagher, managing director at H.I.G., said in the announcement. “We see a tremendous opportunity to partner with the spine leadership team to support best-in-class innovation and robust commercial execution.”

“The combination of H.I.G.’s expertise in the medical device space and the capabilities of ZimVie spine management will create an innovation engine for distributors, surgeons and patients,” Gallagher continued, referencing H.I.G.’s investments in several dozen healthcare companies, including Augmedics, Click Therapeutics and more.

ZimVie’s board of directors has already signed off on the deal, which is set to close in the first half of next year as long as it secures certain regulatory approvals, among other closing conditions.

Once H.I.G. takes over the spine segment, ZimVie will emerge as a “well-positioned, pure-play dental company in higher-growth end markets,” according to the announcement.

In addition to allowing the company to double down on its dental department, the acquisition is also expected to boost ZimVie’s financial standing, as it plans to use the proceeds from the buyout to pay down its debts. As of the end of the third quarter this year, ZimVie held nearly $800 million in total liabilities, down from the more than $883 million it tallied at the end of 2022.

“This transaction is intended to create a leaner, more focused ZimVie with a leading position in attractive and growing global dental markets,” said CEO Vafa Jamali.

Shareholders seemed to welcome the move, as ZimVie’s stock jumped more than 40% after the news of the sell-off broke on Monday morning—rising from a little over $11 per share on Friday afternoon to around $16 by mid-morning, its highest point in over a year.

The spine business has given ZimVie some trouble for quite some time. Most recently, its third-quarter earnings showed a net loss of $5.1 million for the period, a steady decline from the $800,000 in net income the company had reported a year prior, which ZimVie attributed primarily to “lower net sales and higher cost of products sold in the spine products category.”

And, earlier this year, while reporting a growing net loss in the first quarter, the company announced plans to lay off approximately 5% of its global workforce. During a call with investors at the time, Jamali said the cuts were “aimed, in particular, to increase efficiency and profitability of our spine portfolio in all markets.”