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On Wednesday, Paragon 28 Inc (NYSE: FNA) announced its acquisition by Zimmer Biomet (NYSE: ZBH), both rated Market-Outperform by JMP Securities. The deal was finalized through a cash transaction that valued Paragon 28 at approximately $13 per share, equating to an equity value of around $1.1 billion and an enterprise value of about $1.2 billion. According to InvestingPro data, Paragon 28 has demonstrated strong revenue growth of 18.2% over the last twelve months, with revenues reaching $245 million.
According to JMP Securities, Paragon 28’s existing portfolio of high-growth devices, which focuses exclusively on foot and ankle products, positioned the company as a strong candidate for acquisition. The firm highlighted Paragon 28’s recent strides towards financial growth, including achieving EBITDA positivity in the third quarter of 2024 and progressing towards cash flow positivity, anticipated by the fiscal year 2026 or potentially earlier. InvestingPro analysis reveals the company maintains a healthy financial position with a current ratio of 3.5, indicating strong liquidity to meet short-term obligations. For deeper insights into Paragon 28’s financial health and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.
The acquisition price represents an approximate 8% premium over Paragon 28’s closing price on the day of the announcement, which was $12.00 per share. This premium is considered below the typical range for take-out premiums within the sector. Paragon 28’s stock has seen a significant recovery from its low point of $4.89 in the third quarter of 2024, with InvestingPro data showing an impressive six-month return of 38.4%. The stock previously traded at higher levels, having launched at $16 per share in the fourth quarter of 2021 and reaching a peak of $23.95 in the same quarter.
The transaction brings together Zimmer Biomet’s extensive portfolio and global reach with Paragon 28’s innovative extremity product offerings, which have shown high growth potential. The financial performance of Paragon 28, including its positive EBITDA and expected future cash flow positivity, likely contributed to its attractiveness as an addition to Zimmer Biomet’s business.
Investors have observed the movement in Paragon 28’s stock price, which reflects the recent acquisition news and the company’s journey from its initial public offering to the present. The acquisition is part of Zimmer Biomet’s ongoing strategy to enhance its market position and product portfolio in the orthopedic devices sector.
In other recent news, Paragon 28 has seen strong growth in its revenue for the fourth quarter and the full year of 2024. The company’s preannouncement of its fourth-quarter revenue is expected to be between $71.5 million and $71.8 million, a significant 18-19% increase year-over-year. This surpasses the consensus estimate of $69.6 million. For the entire year, the revenue is anticipated to be within the range of $255.9 million to $256.2 million, indicating similar growth. Needham analysts maintain a Buy rating on the company’s shares, reflecting confidence in Paragon 28’s momentum and growth potential. Despite not providing revenue guidance for 2025, the consensus estimate for 2025 revenue stands at $292 million, hinting at an estimated growth of 14%. The company’s recent developments, including the launch of 13 new products, demonstrate its commitment to continued growth and operational efficiency. The analysts from Needham will be closely monitoring the upcoming detailed financial results and guidance to potentially adjust their assessments and expectations for Paragon 28’s future performance.
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