Dive Brief:
- Johnson & Johnson announced Thursday that DePuy Synthes, the healthcare giant's orthopaedics company, has acquired CrossRoads Extremity Systems for an undisclosed amount.
- Tennessee-based CrossRoads makes implants and instruments for lower-extremity procedures, such as certain ankle and foot surgeries. In Thursday's announcement, J&J touted that surgeries for "conditions like bunions and hammertoes are among fast-growing segments of extremities procedures in orthopaedics and podiatry," noting that "in the United States alone, 1 in 4 people suffer from bunions, or hallux valgus, a progressive disorder of the foot in which deformity gradually increases and can eventually compromise desired lifestyle or mobility." According to the announcement, the private equity firm HealthpointCapital was the majority investor prior to the acquisition.
- This is the second pickup in the last several months for J&J's orthopaedics company. In December, DePuy Synthes announced that it acquired Israeli company OrthoSpin, which makes an automated strut system. DePuy made the acquisition through its affiliate, Synthes GmbH.
Dive Insight:
J&J's CrossRoads acquisition comes just weeks after the company told investors that it would be more aggressive on the M&A front going forward. Executives said in January that the company will be more active in deal-making for both the pharmaceutical and medical devices businesses.
New CEO Joaquin Duato said that while J&J is open to deals of all sizes, the company will be more focused on tuck-in acquisitions.
"As I said before, we don't have an artificial ceiling as far as deal size," Duato said. "It has to be something that has to be workable financially and in terms of value-creating for shareholders. Typically, larger deals are harder to make, both financially and operationally."
The CrossRoads pickup seems to fit into the preference for tuck-ins. J&J did not return a request for comment regarding a deal size by the time of publication.
The extremities company's portfolio includes staple compression plates and multiple implant products for bunions, including the minimally invasive miniBunion system.
J&J also highlighted CrossRoads's EcoSMART instruments, which are sterilized, reusable instruments for surgery meant to reduce waste in operating rooms. Following surgery, the instruments are put into a container, shipped back to CrossRoads for cleaning, inspection and reprocessing, and then the instruments are placed in a new, sterile package and sent back to the facility.
CrossRoads does help deepen J&J's orthopaedics portfolio. However, J&J highlighted that the ankle and foot additions will be "elective" surgeries, and the company is already experiencing pressure on surgical volumes across multiple businesses.
Over the last two years, pandemic surges have forced shutdowns of nonemergent care in the U.S. and across the globe. J&J and many other medtechs have seen volumes and businesses drop — at times, significantly — throughout the pandemic. And after procedure-reliant companies were seeing a recovery to pre-pandemic levels in 2021, the delta and omicron variants upended the rebound.
Industry executives and Wall Street expect the volatility to continue in 2022 as procedure volumes fluctuate with rising and falling COVID-19 cases and as hospitals and other healthcare facilities are experiencing labor shortages.
J&J CFO Joseph Wolk told investors in January that pandemic pressures are likely to continue through the first half of the year.
