Stryker's Inks Deal to Aid Its Pain Management Portfolio

Stryker Corporation SYK recently announced a definitive agreement to acquire Vertos Medical Inc., a privately held company providing a minimally invasive solution for treating chronic lower back pain caused by lumbar spinal stenosis.

As a result of the acquisition, Stryker is set to expand its minimally invasive pain management portfolio with differentiated treatments and expand its reach across ambulatory surgery centers.

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A significant number of individuals worldwide are impacted by lumbar spinal stenosis, which is the leading cause of pain and impairment. Nowadays, patients prefer quicker recovery periods and faster return to their regular lives. Thus, they are looking for the least invasive therapy alternatives. Vertos Medical's mild procedure provides a solution for pain relief and is likely to improve mobility without the need for major surgery.

This acquisition is likely to boost Stryker's minimally invasive pain management portfolio as the company continues to help its customers in restoring patients' quality of life with interventional solutions to address chronic pain.

This transaction is subject to customary closing conditions. Stryker and Vertos Medical are likely to continue to operate as separate entities and proceed with business as usual until the transaction closes.

More on Stryker's Past Acquisitions

Stryker has been following an acquisition-driven strategy to boost its growth profile.

In August, Stryker announced the completion of the acquisition of MOLLI Surgical Inc., a privately held company specializing in the development of wire-free soft tissue localization technology for breast-conserving surgery. As a result of the acquisition, MOLLI's portfolio is likely to boost Stryker's commitment to advancing surgical solutions in breast cancer care.

In July, Stryker completed the previously announced acquisition of Artelon, a privately held company specializing in innovative soft tissue fixation products for foot and ankle and sports medicine procedures. The acquisition highlighted Stryker's commitment to providing distinctive ligament and tendon reconstruction solutions and strengthening the company's product line in the soft tissue fixation sector.

In 2023, the company acquired several companies to increase its offerings. These include Cerus, which designs, develops and manufactures neurovascular products used for the treatment of hemorrhagic stroke. The business has been integrated with Stryker's Neurovascular business.

In 2022, Stryker acquired Vocera Communications, entering into the fast-growing digital care coordination and communications segment. In 2021, the company acquired a medical device company, TMJ Concepts, that manufactures patient-specific temporomandibular joint reconstruction prosthesis systems.  Stryker also acquired privately-held OrthoSensor in the same year to advance in the field of smart device technologies, including intraoperative sensors, wearables and smart implants.

Per management, these buyouts continue to represent Stryker's focus on its strategy of boosting category leadership and market-leading growth.

Industry Prospects

Per a report by Grand View Research, the global pain management devices market was estimated to be $6.92 billion in 2022 and is anticipated to witness a CAGR of 9.5% from 2023 to 2030.

The growing prevalence of chronic conditions is one of the key aspects anticipated to contribute to the market's growth during the forecast period. The increasing prevalence of lifestyle diseases, such as diabetes and obesity, has boosted the demand for nerve and muscle stimulators. The rising prevalence of hypertension or trauma is another significant factor expected to propel market growth.

Given the market potential, Stryker's acquisition of Vertos Medical is likely to boost the company's business and generate additional revenues.

Notable Developments

In May 2024, Stryker announced the successful completion of the first European surgeries using the Infinity Total Ankle System with Adaptis and Everlast technology. Infinity with Adaptis builds on the legacy of the original Infinity Total Ankle, with a decade of clinical use.

In February, Stryker announced the successful completion of the first shoulder arthroplasty surgeries using Blueprint Mixed Reality Guidance in Europe. The Blueprint MR Guidance System allows surgeons and their instruments to be guided by 3D images and guidance widgets, which can be displayed on the patient and in the surgeon's line of sight without disrupting normal workflow.

Price Performance

For the past six months, SYK shares have rallied 17.2% compared with the industry's rise of 9.2%. The S&P 500 increased 17.9% in the same time frame.

Image Source: Zacks Investment Research

Zacks Rank & Other Stocks to Consider

SYK carries a Zacks Rank #2 (Buy) at present.

Some other top-ranked stocks in the broader medical space are Universal Health Service, Quest Diagnostics and ABM Industries. While Universal Health Service sports a Zacks Rank #1 (Strong Buy), Quest Diagnostics and ABM Industries carry a Zacks Rank #2.

Universal Health Service has an estimated long-term growth rate of 19%. UHS' earnings surpassed estimates in each of the trailing four quarters, with the average being 14.58%.

Universal Health Service has gained 41.1% compared with the industry's 34.8% rise so far this year.

Quest Diagnostics has an estimated long-term growth rate of 6.20%. DGX's earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 3.31%.

Quest Diagnostics shares have gained 3.7% so far this year compared with the industry's 10.2% rise.

ABM Industries' earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 7.34%.

ABM's shares have risen 24.1% so far this year compared with the industry's 11.9% growth.

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