By the numbers
Medtech Q3 sales: $8.64 billion
2.5% increase year over year
Cardiovascular: $2.31 billion
4.3% increase year over year
Surgery: $2.53 billion
0.6% decrease year over year
Vision: $1.46 billion
4.4% increase year over year
Orthopedics: $2.35 billion
3.2% increase year over year
Johnson & Johnson’s medtech segment missed internal expectations in the third quarter after the healthcare giant’s cardiovascular unit stumbled for the second quarter in a row.
Tim Schmid, J&J’s worldwide chairman of medtech, said on a Tuesday earnings call that the underlying procedure environment for medtech remains stable. Schmid said that pressure was concentrated in two main areas: sales outside the U.S. and its Abiomed business.
“To be clear, our performance is below the standard we have set internally and below the expectations we previously communicated to investors,” Schmid said. “Simply put, we can do better, and we absolutely will. And right now, we are focused solely on the actions needed to deliver stronger results in the fourth quarter and beyond.”
J&J’s medtech segment brought in $8.64 billion in sales over the third quarter, representing year-over-year growth of 2.5%. It’s the second quarter in a row where sales growth has stepped down — the company grew medtech sales by more than 7% in the first quarter and last year’s fourth quarter.
The softer growth is primarily due to a slowdown in the cardiovascular unit, where the company’s Abiomed business has declined the past two quarters. Cardiovascular sales totaled $2.31 billion in the third quarter, representing growth of 4.3%. The lower growth is in contrast to recent double-digit growth for the unit.
Abiomed challenges
The Abiomed business, which J&J acquired in 2022 for $16.6 billion, struggled for the second straight quarter. Abiomed posted a 2.3% sales decline, bringing in $412 million. Schmid attributed the decline to lower patient volume following an unfavorable study of the Impella heart device that was conducted in the U.K.
The trial studied 300 patients with severe left ventricular dysfunction and extensive coronary disease receiving complex percutaneous coronary interventions. Evaluation after nearly two years showed better outcomes for the standard of care (43%) than Impella (36.6%). And there was no difference in about 20% of patients.
There was also a higher rate of death from any cause for patients treated with Impella than with the standard of care.
“Ultimately, Abiomed remained in a temporary headwind, as you saw in Q3,” Schmid said. “But our conviction in the long-term opportunity has not changed at all.”
Schmid said that J&J does not view these challenges as structural and ones that will have a long-term impact on the business, adding that the company is not “seeing any changes in the patient need, nor to reimbursement, access, or any meaningful competitive pressures.”
Last quarter, Schmid attributed the decline in procedure volumes for Abiomed to caution among surgeons rather than an underlying problem with the business.
Schmid, on the Tuesday call, said the company has questions about the study, such as whether best practices were used.
“So, our focus today is really on education and advancing the clinical evidence base to show the incredible impact that Impella has in both saving and improving lives, and so we believe it’s a short-term headwind,” Schmid added.
Schmid reiterated confidence that the business will return to growth and be a strong contributor for J&J going forward. The company is awaiting results from its PROTECT IV study of nearly 1,300 patients that is expected to be released next year.
