Johnson & Johnson Cuts Full-Year Profit Forecast Amid Strong 13.4% Electrophysiology Growth

Jul 18, 2024 18:36 CST Updated 18:36

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Recently, Johnson & Johnson released its Q2 2024 financial report.The report shows that Johnson & Johnson's revenue in Q2 2024 was $22.45 billion, a year-on-year increase of 4.3%. The total revenue for the first half of the year was $43.83 billion, a year-on-year increase of 3.3%.Among them,Medical Technology Business Q2 Revenue Reached $7.957 Billion, a Year-on-Year Increase of 2.2%.Its four business lines are relatively balanced, with the cardiovascular business line growing by 15.6% year-on-year.

Johnson & Johnson Achieved Steady Growth in the First Half of the Year and Actively Expanded Its Business Through a Series of Mergers and Acquisitions. Johnson & Johnson Predicts Operating Revenue to Reach $89.4 Billion in 2024, a 6.4% Increase from the Previous Year.

It is worth mentioning that,Johnson & Johnson Lowers Full-Year Profit Forecast Due to Costs from Recent AcquisitionsThe company now expects adjusted operational earnings per share for 2024 to be $10.05, down from the $10.68 forecast issued in April. Johnson & Johnson said that a 5-cent per share benefit from improved performance will be offset by 68 cents per share in costs related to three acquisitions.

Johnson & Johnson's stock opened more than 3% higher after the announcement of the second-quarter earnings report.As of July 17, Eastern Time,Johnson & Johnson closed at $156.58 per share, up 3.69%.It opened at $151.55 per share on the same day, with the highest share price reaching $157.49 per share. The company's current total market value has reached $376.8 billion.

Johnson & Johnson Medical Technologies Revenue $8 Billion

Electrophysiology Growth 13.4%

In terms of specific business performance, Johnson & Johnson's pharmaceutical business reported Q2 revenue of $14.49 billion, a year-on-year increase of 5.5%; for the first half of the year, revenue reached $28.05 billion, a year-on-year increase of 3.3%.Medical Technology Business Q2 Revenue 7.957 Billion USD, Increased by 2.2% Year-over-Year.

In the treatment field, the oncology sector has seen strong growth, surpassing autoimmune to become Johnson & Johnson's highest revenue-generating area, with Q2 revenue reaching $5.09 billion, a year-over-year increase of 15.7%. In contrast, the autoimmune sector reported Q2 revenue of $4.722 billion, marking only a 5% year-over-year growth.

In the medical technology business,The growth was mainly driven by electrophysiology products in the cardiovascular field and Abiomed (interventional solutions), as well as wound closure products in the general surgery field.

In the cardiovascular field,Electrophysiology achieved a double-digit growth of 13.4%, with all regions experiencing strong growth.This performance was driven by global procedural growth, adoption of new products, and commercial execution, partially offsetting the increase in one-time inventory in the Asia-Pacific region in the previous quarter. Additionally,Abiomed achieved 15.4% growth, driven by double-digit increases across all regions and continued strong adoption of Impella 5.5 and Impella RP technologies.

Jessica Moore, Vice President of Investor Relations at Johnson & Johnson, said,Johnson & Johnson's global medical technology sales increased by 5.7% in the U.S. and 3.2% outside the U.S. Acquisitions and divestitures had a positive impact of 40 basis points on sales growth this quarter.Growth was driven by strong commercial execution, robust new product launches, and continued strong procedure volumes, but was partially offset by the performance in China as well as U.S. distributor inventory dynamics and competitive pressure on vision.

Excessive M&A costs

Johnson & Johnson Lowers Full-Year Profit Forecast

It is worth mentioning that on May 31 this year, Johnson & Johnson announced,Completed the acquisition of Shockwave Medical for $13.1 billion (approximately 95 billion RMB).Shockwave, an intravascular lithotripsy (IVL) technology provider, will become the 13th priority platform of Johnson & Johnson Medical Technologies, with expected annual sales of at least $1 billion. With this transaction, Johnson & Johnson regains its position as the top player in cardiovascular and the leading spot in medical devices.

And prior to this acquisition,Johnson & Johnson has made a series of acquisitions in the cardiovascular field. These include the $16.6 billion acquisition of Abiomed in 2022 and the $400 million acquisition of Laminar in November last year.The addition of the Shockwave intravascular lithotripsy platform complements Johnson & Johnson's Abiomed heart recovery and Biosense Webster electrophysiology technologies.

But it should be noted that the block trading acquisition has increased Johnson & Johnson's costs. Johnson & Johnson stated,Considering the costs generated by a recent series of acquisitions, the full-year profit forecast has been revised downward.

It is reported that, after Johnson & Johnson spent $13.1 billion to acquire device company Shockwave Medical,Its operating sales in 2024 will reach $89.4 billion, increasing by 6.4% over the previous year.Johnson & Johnson also acquired Proteologix Inc. in June and obtained the experimental eczema treatment NM26 from privately held Numab Therapeutics in July.

Joe Wolk, Executive Vice President and Chief Financial Officer of Johnson & Johnson, said,The company has spent nearly $35 billion on acquisitions in the past 18 months and will "seize opportunities" to find deals to expand its product line."As the chief financial officer, it is my honor that we don't have to take any actions out of desperation," he said."We are thinking in terms of years, not quarters."

It is reported that in 2023, Johnson & Johnson spun off its consumer health division, which produces Tylenol and Listerine, to focus on higher-margin pharmaceuticals and medical device businesses.

Will continue to increase R&D investment

Drive Business Innovation and Development

Johnson & Johnson Executive Vice President and Chief Financial Officer Joe Wolk stated: "Johnson & Johnson delivered solid performance in the second quarter, driven by several milestone achievements in clinical and regulatory approvals, which have enabled us to better serve patients worldwide and address complex healthcare challenges. These results, which exceeded expectations, fully demonstrate the strength of Johnson & Johnson's diversified and extensive business portfolio, as well as our robust overall capabilities. Looking ahead,We will continue to increase R&D investment and promote strategic acquisitions, further enriching our product portfolio in the two major fields of innovative pharmaceuticals and medical technology, accelerating business innovation, and achieving long-term sustainable value growth.”

From the perspective of medical technology, Johnson & Johnson stated that it will continue to advance its product lines, launch new commercial products, and integrate strategic acquisitions to expand and further differentiate its product portfolio.In the cardiovascular field, Johnson & Johnson is enhancing our product portfolio and shifting toward higher-growth markets through strategic acquisitions such as Shockwave Medical.

In May this year,Johnson & Johnson Announces the Launch of CARTO 3 Version 8 Electroanatomical Mapping System.This is the latest version of Johnson & Johnson's 3D cardiac mapping system, which features machine learning capabilities to enhance the efficiency, reproducibility, and accuracy of the maps used by electrophysiologists to treat atrial fibrillation and other arrhythmias.

In the field of pulsed field ablation, Johnson & Johnson has taken the lead in launching the VARIPULSE platform in the European Union and Japan, receiving early positive feedback from doctors during external evaluations.The company also announced the results of the pivotal phase of the admIRE trial, in which the VARIPULSE platform demonstrated 85% peak primary effectiveness, minimal adverse events, short PFA application time, and low fluoroscopy exposure.

In the field of orthopedics, Johnson & Johnson has received 510(k) FDA approval for the clinical application of the VELYS robotic-assisted solution in unicompartmental knee replacement surgery.This solution is designed for both medial and lateral surgeries, allowing surgeons to guide precise implants without the need for CT scans.

In the field of surgical operations, Johnson & Johnson launched ECHELON 3000 in the United States, which combines 3D stitching and gripping surface technology to enhance suture line security.It has been proven that this can reduce leakage by 47%, lower surgical risks, and improve surgical outcomes.

In the field of surgical operations, Johnson & Johnson launched TECNIS Odyssey in the United States.And it is expected to be fully launched in the second half of 2024.

Johnson & Johnson stated that it will continue to advance its electrophysiology and cardiovascular product lines in the second half of this year.Prepare for VARIPULSE's upcoming approval in the United States and the regulatory submission of Impella ECP.In terms of robotic surgery, it is expected to submit an Investigational Device Exemption application for OTTAVA to the FDA in the second half of this year.

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Public information shows that Johnson & Johnson, established in 1886, is one of the most comprehensive healthcare enterprises globally with a wide range of business operations across three major fields: medical devices, pharmaceuticals, and consumer goods. As one of the first multinational corporations to enter the Chinese market since the reform and opening-up, Johnson & Johnson holds a pivotal position in China's medical industry.

It is worth mentioning that,Johnson & Johnson China recently announced that Edward Zhou (Zhou Mintao) will serve as the President of Johnson & Johnson Medical Technologies China, leading the advancement of the "Radiant Win" 2030 strategy and accelerating business growth.

It should be noted that in recent years, due to the constantly changing global market environment, multinational device companies have been accelerating adjustments and transformations to enhance competitiveness. Among these,Johnson & Johnson has never stopped its innovative transformation through various methods such as spin-offs, reorganizations, and mergers and acquisitions.

Regarding the latest performance, Joaquin Duato, Chairman and Chief Executive Officer of Johnson & Johnson, stated: "Johnson & Johnson's second-quarter results reflect the company's continued focus and efforts on medical innovation, and our product pipeline will become stronger."With RYBREVANT and TREMFYA nearing regulatory approval, along with the integration of Shockwave Medical’s products, I believe Johnson & Johnson has a solid foundation for both near-term and long-term growth."

So, what's next for Johnson & Johnson in achieving robust long-term growth? What technological innovations await Johnson & Johnson China in the future? Medical Device News will continue to keep a close watch.

END

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