Johnson & Johnson
(NYSE: JNJ)
reported more MedTech growth as its fourth-quarter results came in ahead of the consensus forecast.
Shares of JNJ rose slightly before the market opened on the back of the results.
The New Brunswick, New Jersey-based company posted profits of $4.1 billion. That equals $1.70 per share on sales of $21.4 billion for the three months ended Jan. 1, 2024. Johnson & Johnson recorded a 28% bottom-line gain on sales growth of 7.3%.
Adjusted to exclude one-time items, earnings per share totaled $2.29. That landed 1¢ ahead of expectations on Wall Street. Sales also topped projections as analysts expected revenues totaling $20.99 billion.
“Johnson & Johnson’s full year 2023 results reflect the breadth and competitiveness of our business and our relentless focus on delivering for patients,” Joaquin Duato, chair and CEO, said in a news release. “We have entered 2024 from a position of strength, and I am confident in our ability to lead the next wave of health innovation.”
MedTech sales of $7.7 billion marked 13.3% year-over-year growth for the quarter. Johnson & Johnson recorded $30.4 billion in MedTech sales for the full year, representing 10.8% growth. The acquisition of Abiomed contributed 4.7% growth in sales as well.
On the company’s fourth-quarter earnings call, Duato noted highlights in the quarter including positive updates for the Ottava surgical robot platform, the acquisition of Laminar to enter the left atrial appendage space and positive pulsed field ablation updates from the company’s Biosense Webster unit.
Duato recently shared that he expects new products to drive Johnson & Johnson MedTech’s growth in the future.
“We are accelerating growth through commercial execution, differentiated innovation and moving into higher-growth markets, Duato said on the call. “At the same time, we are making strong progress in our pipeline. … As we look ahead, I have never been more excited about the future of our business.”
Johnson & Johnson expects 2024 revenues to grow 5%-6% to $88.2 billion to $89 billion. It projects adjusted EPS between $10.55 and $10.75 for the year.
J&J talks M&A following Abiomed success
Joseph Wolk, Johnson & Johnson EVP and CFO, was asked on the earnings call about the company’s “appetite” toward M&A.
“We are very well-positioned to continue to entertain many types of deals,” Wolk said. “We have the parameters of making sure they’re a strategic fit. … Familiarity with the space has proven to be our most successful platform. We want to make sure we’re earning a fair return to compensate shareholders.”
Wolk said the Abiomed acquisition has already surpassed internal deal models and performed better than Wall Street’s expectations. He also touted the company’s cash outlay on smaller licensing partnerships and deals, highlighting the variety in Johnson & Johnson’s M&A and investment portfolio.
“We are agnostic to sector and agnostic to size,” Duato noted. “Our preference is to be in a radius in which we have internal capabilities. [We also look at] know-how and go into products that represent significant progress from the point of view of improving the current standard of care and that are first-in-class and best-in-class.”
Electrophysiology helps to drive growth
Johnson & Johnson reported the MedTech growth was driven primarily by electrophysiology products. The company also pointed to contact lenses, wound closure products and biosurgery solutions. However, Duato centered on the EP work done at Biosense Webster as a key part of the company’s business.
Carto 3, the latest mapping system from the EP unit, is a key part of the several catheter-based products coming out of that business, Duato said.
“We have a strong leadership in electrophysiology and 20 years of understanding this field,” he said. “When it comes to our strategy in cardiac ablation, we have multiple, but one is our Carto mapping system. That is a fundamental pillar.”
Another focal point for the EP business is the Varipulse system, which just received Japanese approval. The company also submitted Varipulse for CE mark and expects to submit to the FDA in 2024 as well.
Varipulse is Johnson & Johnson’s answer to the pulsed field ablation (PFA) competition that continues to heat up. Last month, Medtronic became the first company to win an FDA nod for PFA to treat paroxysmal and persistent AFib. Boston Scientific just this month said it expects FDA approval for its Farapulse PFA system in the first quarter of 2024.
Duato says Varipulse offers workflow and procedural efficiency, while the company also offers dual-energy catheters that gives electrophysiologists options while still influencing PFA adoption.
“It’s key for us to have a workflow that enables the type of progress that electrophysiologists are already used to,” Duato said. “Our suite of catheters is going to be, from day one, fully integrated. … We’re very positive about our growth in 2024 based on the strength we have in this area and we’re positive about the outlook of our ablation business moving forward.”