Zimmer Biomet's Strategic Acquisition of Paragon 28: A Deep Dive

Zimmer Biomet Holdings, Inc. (NYSE: ZBH) has announced a definitive agreement to acquire Paragon 28, Inc. (NYSE: FNA), a leading medical device company focused exclusively on the foot and ankle orthopedic segment. The acquisition, valued at approximately $1.2 billion, is expected to enhance Zimmer Biomet's financial profile, immediately accelerate revenue growth, and be accretive to adjusted EPS within 24 months of deal close. This strategic move aligns with Zimmer Biomet's commitment to investing in higher growth end-markets and expanding its portfolio.

Paragon 28, established in 2010, has an extensive suite of surgical offerings and product systems spanning all major foot and ankle segments, including fracture and trauma, deformity correction, and joint replacement. The company's singular focus on bringing innovative solutions to address areas of unmet need in the foot and ankle segment has positioned it as an industry leader. This acquisition will strengthen and expand Zimmer Biomet's foot and ankle offerings, complementing its global footprint and existing infrastructure, and accelerating U.S. and international growth.

Ivan Tornos, President and Chief Executive Officer of Zimmer Biomet, expressed enthusiasm about the acquisition: "This proposed transaction further diversifies Zimmer Biomet's portfolio outside of core orthopedics and positions us well in one of the highest growth specialized segments in musculoskeletal care, while creating cross-selling opportunities in the rapidly growing ASC space. Paragon 28's broad and innovative foot and ankle portfolio, robust product pipeline, and dedicated and highly trained sales force, combined with Zimmer Biomet's global reach and capabilities, will uniquely position us to address the unmet patient needs of this highly complex anatomy."

Albert DaCosta, Chairman and CEO of Paragon 28, shared his excitement about joining forces with Zimmer Biomet: "We are incredibly proud of the legacy we have built at Paragon 28 as an industry leader committed to continuously improving the outcomes and experiences of patients suffering from foot and ankle conditions. Joining Zimmer Biomet is an exciting new chapter for Paragon 28 and an incredible opportunity to advance our mission and continue to deliver groundbreaking solutions in the foot and ankle segment."

The proposed transaction is expected to immediately accelerate Zimmer Biomet's revenue growth, with Paragon 28's projected 2024 net revenue between $255.9 and $256.2 million, representing 18.2% to 18.4% growth over the prior fiscal year. Although initially expected to be approximately 3% dilutive to adjusted earnings per share in 2025 and about 1% dilutive in 2026, the acquisition is projected to be accretive to adjusted earnings per share within 24 months of deal close. Zimmer Biomet plans to fund the proposed transaction through a combination of cash on the balance sheet and other available debt financing sources, maintaining a strong balance sheet and continuing to support its stated capital allocation priorities.

The acquisition agreement includes a non-tradeable contingent value right (CVR) entitling Paragon 28 shareholders to receive up to $1.00 per share in cash if certain revenue milestones are achieved. The CVR will be payable in whole or in part if net sales exceed $346 million up to $361 million during Zimmer Biomet's fiscal year 2026. This milestone structure reflects Zimmer Biomet's confidence in the integration potential and market penetration capabilities of Paragon 28's products and sales force.




In conclusion, Zimmer Biomet's acquisition of Paragon 28 is a strategic masterstroke in specialized orthopedics, aligning with the company's long-term growth strategy and bringing immediate benefits to its portfolio and financial profile. The acquisition strengthens and expands Zimmer Biomet's foot and ankle offerings, complements its global footprint, and accelerates revenue growth and EPS accretion. The CVR milestone structure reflects Zimmer Biomet's confidence in Paragon 28's integration potential and market penetration capabilities, positioning the combined entity for success in the rapidly growing foot and ankle segment.