Stryker to Acquire Mobius Imaging and Cardan Robotics for $370M

Kalamazoo, Michigan-based Stryker Corporation, the #1 robotics company in orthopedics, announced a definitive agreement to acquire Mobius Imaging as well as its sister company Cardan Robotics.

The purchase price was a cash payment of $370 million with up to $130 million in potential development and commercial milestone payments. The transaction is subject to customary closing conditions and is expected to close in the fourth quarter, with no material 2019 earnings impact anticipated.

This purchase is indicative of the rising importance of robotic-assisted surgery—in Stryker and the med tech industry as a whole.

Stryker Corporation

Founded in 1941 by medical doctor and inventor Homer Stryker, M.D., Stryker is now an international leader among medical technology companies.

Dissatisfied with the available medical technology, Dr. Stryker began inventing and constructing his own orthopedic frames. What began as a small family business, now employs over 33,000 employees worldwide. Today Stryker develops and markets many varieties of medical technologies, including orthopedic, medical, surgical, and neurotechnology.

Stryker’s corporate responsibility statement reads, “Our commitment to people and planet: We believe the health of the world is as important as the people who live in it. We are committed to making responsible decisions that help people and preserve the planet for future generations.” Its mission includes giving and volunteerism. Stryker partners with causes like Operation Smile and was listed as #12 on Forbes’ 2019 Best Employers for Women list.

Stryker’s current market segments include:

• Orthopedics (including reconstructive and trauma implants and related products)
• MedSurg (including surgical equipment and navigation technology, endoscopic and communications systems, emergency medical equipment, patient handling, intensive care disposable products, remanufactured medical devices and other related products)
• Neurotechnology and Spine (including neurovascular products, spinal implant systems and other related products)

Stryker’s products also include implants used in joint replacement or trauma surgeries, and other products that are used in various medical specialties.

Mobius and Cardan Robotics

Shirley, Massachusetts-based Mobius Imaging was founded in 2008. It develops, manufactures and markets Airo TruCT, a mobile, real-time, intra-operative CT imaging system. Airo supports clinical procedures in spine surgery, brain surgery, orthopedic surgery, surgical navigation, emergency department, and radiation oncology.

The FDA first granted 510(k) clearance to an earlier version of the Airo CT system in 2013 and added a pediatric indication for the product last year.

Mobius Chief Executive Officer Eugene Gregerson described the Airo CT as “designed to give surgeons immediate access to fresh CT images on demand while not disturbing the surgical theater…With its very large bore and small footprint, the Airo is optimized for intraoperative use.”

Mobius’ sister company Cardan Robotics, founded in 2015, is currently developing robotic and navigation technology for spinal and interventional radiology procedures. Cardan Robotics states that “it is working with top surgeons to develop innovative technology to set the future direction of spine surgery.”

Stryker’s Acquisition of Mobius and Cardan Robotics

In its release announcing the acquisition, Stryker stated that Mobius focuses on “integrating advanced imaging technologies into medical workflow, which can enhance a clinician’s ability to obtain high-quality images.”

Spencer Stiles, Stryker’s Group President, Orthopaedics and Spine and Interim President, Joint Replacement, said of the purchase, “This acquisition brings expertise in advanced imaging and robotics as well as a robust product pipeline that add to Stryker’s portfolio and will allow the Spine division to provide more complete procedural solutions, including sales, service, and support.”

Stiles continued, “We look forward to working together to advance Stryker’s mission to make health care better and accelerate our pursuit of category leadership in neurotechnology, orthopedics and spine.”

The acquisition is the second major medtech exit for Mobius CEO and co-founder Eugene Gregerson. Gregerson previously co-founded Breakaway Imaging, which sold its O-arm imaging system to Medtronic’s surgical navigation systems business in 2007.

What’s Next for Stryker

The acquisition gives Stryker immediate entry into the intra-operative imaging segment. This acquisition also puts Stryker into the rapidly growing spinal robotic assist technology market.

The Airo CT system is complemented by the Cardan Robotics system, which was previously marketed as the Orion surgical suite. This combined technology allows both imagining and robotic navigation technology for spinal procedures, including the use of a robotic arm which integrates with the Mobius CT scanner, creating a full imaging, navigation, and robotic solution for spine procedures.

Industry-wide Movement Toward Robotics

Analysts and investors note that Stryker’s acquisition signals a clear industry-wide movement toward robotics acquisitions in the field of medical technology.

Stryker’s announcement comes on the heels of Siemens Healthineers August 8 announcement of acquisition of Corindius Vascular Robotics. This announcement also comes just before the world’s biggest medtech company—Medtronic—is scheduled to unveil their latest surgical robotic assist system at an event in Connecticut in September. Additionally, NuVasive, Inc. unveils their Pulse spinal robotic surgery application in late September at the annual meeting of the North American Spine Society (NASS).

Robotics with navigation and the promise of more precise surgery is clearly the wave of the future in spine and neurosurgery.

Wall Street Reacts

Wall Street analysts reacted to the news of the acquisition with notes to their clients analyzing the potential growth.

Cantor Fitzgerald analyst Craig Bijou wrote, “While this transaction is not likely to have an immediate material financial impact, the acquisition further supports our view that enabling technologies, including advanced imaging and robotics, will be an integral facet of spine surgery moving forward. We think the acquisition better positions SYK to compete with the others in the top 6 spine companies—MDT (NC), JNJ (NC), NUVA (N), GMED (OW) and ZBH (OW)—that all have either commercialized enabling technologies (including robotics) or are in some stage of development…The acquisition gives SYK Spine business immediate entry into the intra-operative imaging segment. Longer-term, we expect the technology and pipeline to enhance SYK’s development of its Mako spine robot.”

Canaccord Genuity analyst Kyle Rose echoed this sentiment. He stated, “We view the M&A positively as it provides Stryker’s Spine division with an immediate entry into the intra-operative imaging market, complements its existing implant and navigation offerings, and significantly bolsters the company’s robotic and navigation expertise, something we continue to view as the future of spine surgery. What’s more, we believe the addition of these technologies, when fully integrated into SYK’s broader product portfolio (navigation and implant systems), substantially improves SYK’s ability to compete head-to-head with Medtronic on bundled contracts given MDT’s very public focus on using its ‘enabling technologies’ to secure market share and pull through implant utilization.”

Analyst Joanne K. Wuensch of BMO Capital Markets noted the growing trend of robotics acquisitions. She stated, “Robotics is running wild in Medical Technology, as this marks yet another robotic acquisition following Siemens Healthineers’ acquisition of Corindius Vascular Robotics for $1.1B on August 8, 2019. Further, we expect the grand unveiling of Medtronic’s minimally invasive surgical robotic platform on Tuesday, September 24 in Hartford, CT, where we will see the robotic system used in a cadaver lab setting. While Stryker’s acquisition participates in an entirely different surgical domain, there is a clear underlying theme, as robotics is becoming widely recognized across the industry…We believe the combination of Mobius and Cardan helps Stryker close the gap between its spine competitors who have commercialized robotic solutions today.”