Ryan Zimmerman, Managing Director and Medical Technology Analyst, BTIG
There is a growing trend towards the introduction of medical robotics into human surgery.
This former director of surgery for a major Chicago hospital and equity analyst picks the latest and most innovative participants in this high return business sector.
Ryan Zimmerman is a Managing Director and Medical Technology Analyst at BTIG.
He provides coverage across the medical technology sector, focusing primarily on orthopedic and surgical companies.
Prior to BTIG, Mr. Zimmerman was a senior associate at Canaccord Genuity, providing medical technology coverage with an emphasis on musculoskeletal companies.
Previously, he was the Director of Surgery at Advocate Christ Medical Center, where he oversaw operations for a Level 1 trauma hospital in the Chicago area.
Mr. Zimmerman also held hospital management roles at Presence Health and was a fellow in hospital management at the University of Pennsylvania Health System.
He is board certified in hospital management and is a fellow in the American College of Healthcare Executives.
Mr. Zimmerman earned a B.S. in anthropology and zoology from the University of Michigan and a Master of Healthcare Administration from the University of Illinois-Chicago School of Public Health.
“The lens we look through is consistency of execution, whether internal expectations are higher than external expectations — meaning can the company consistently beat and raise numbers quarter-to-quarter. And can management drive, and can the business model support, growing leverage and improving profitability over time?
Those are the lenses through which we look at companies. If we can see that consistently, that’s a good set of criteria when we look for growth companies.
We cover a variety of sectors in medical technology — everything from surgical robotics, orthopedics, ophthalmology, neurovascular, etc.
All of them have nuances, pockets of growth which we are excited about.
Certainly, certain markets are more mature.
Areas like joint reconstruction or cataract surgery are more mature, and so the valuations associated with those companies can be lower just given the maturity of those markets and the growth rates associated.
But within that, you still look for those that are taking share, exceeding those growth rates, and so forth.
So I wouldn’t say that you can’t find opportunity in one market versus the other. We think you can find opportunity in all market segments within medtech.”
The older Americans get, the more we want to remain young and medical robotics satisfies that market demand.
“Certainly, there are demographic trends that support continued uptake, and Stryker has done a fantastic job of positioning itself to capitalize on that.
And in tandem with that, physicians have been looking at robotics as — I don’t want to call it standard of care, but it’s certainly becoming to the point where two-thirds of Stryker’s knees are done robotically and I believe over a third to a half of their hips are done robotically now in the U.S.
It’s lower outside the U.S., but I think what you’re seeing — I’ll give you a little anecdote: When Stryker first launched its Mako system many years back — they acquired the system in 2013 — we had asked them how many sites could potentially have a robot in knee replacement, and they said about 2,500.
Today, their installed base stands at 3,000.
So they’ve eclipsed even their earliest expectations in terms of the adoption.
And last night on their earnings call, they were asked a similar question and they said, “We don’t think there’s an upper limit.”
Ultimately, robotics could become standard of care in knee replacement and we’re certainly moving towards that in the orthopedic field.”
New innovations in the medical robotics sector are powering new investment opportunities.
“I certainly think there are a lot of benefits to robotics in the sense that it does reduce variability and it does improve surgical outcomes in a lot of instances.
It is also a marketing tool — there’s no doubt about that.
As far as downside goes, the systems are costly.
Sometimes there is concern about dominance in a given market and the ability of one manufacturer to dominate over another and not have optionality in certain markets.
That isn’t the case for orthopedic robotics, but it’s certainly a theme.
And it’s been a theme in the surgical and the soft-tissue side with Intuitive Surgical’s (NASDAQ:ISRG) dominance for so many years in soft-tissue robotics.
But that’s starting to change with newer systems coming to market.”
New medical robotics systems mean new stocks.
“One of the areas that we are excited about right now is the use of AI in areas such as spine surgery.
And there’s a company that we recently took public called Carlsmed (NASDAQ:CARL) out of Carlsbad, California, that uses the patient’s images to produce implants for spine surgery that are personalized to the patient using AI to help produce that.
This is very novel, and the clinical outcomes are improved.
It’s no different, in my view, than buying a custom suit that fits better versus a suit that’s off the rack.
And the benefits afforded with that are personalized to the patient.
So this is a growing trend we are seeing in medicine and something we’re watching closely.”
Read the entire interview and get all the newest updates on medical technology stocks, exclusively in the Wall Street Transcript.
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