J&J’s 2Q23 Results Show It’s a Force to Be Reckoned with in Medtech

Johnson & Johnson reminded everyone in medtech that it was a force to be reckoned with by presenting stellar 2Q23 earnings. And during an earnings call, the New Brunswick, NJ-based company’s executives noted that it was hungry for deals.

“When it comes to M&A, look, we continue to look for opportunities,” Johnson & Johnson’s Joaquin Duato said, according to a Seeking Alpha transcript of the earnings call. “And our number one criteria in looking for opportunities is the medical innovation, how they improve patient care, how do we see the science behind the product. So, we are agnostic in that sense to Medtech and Pharmaceuticals. It's all about identifying areas that are going to have a significant impact in patient care. When it comes to Medtech, certainly, as we have commented, we are continuing to look forward for opportunities to grow into areas that are close to where we are today.”

The company has had some huge deals over the past few years. The most recent is the acquisition of Abiomed for $16.6 billion, which was one of the biggest medtech deals of 2022. Three years before the Abiomed deal, J&J announced it was acquiring Auris Health for $3.4 billion.

Joe Wolk, Johnson & Johnson’s Executive VP and CFO did not pull punches when it came to speaking about the firm’s interest in acquisitions.

“I would say our appetite is pretty voracious at this point,” Wolk said according to a Seeking Alpha transcript. “I don't think it -- unequivocally doesn't change, whether it's big or small, it has to be a really good strategic fit utilizing the expertise and capabilities that we have and has to provide financial value.”

A Deeper Look into the Earnings

The firm said that it adjusted 2023 profit of $10.70 to $10.80 per share, above estimates of $10.65 per share and its prior forecast of $10.60 to $10.70 per share.

The medtech growth was attributed to electrophysiology, trauma in ortho, wound closures in general surgery, biosurgery in advanced surgery, and contact lenses in vision. 

“Overall, results were encouraging, with revenue of $25.53 billion (6.3% Y/Y, 7.5% xFx) and adjusted earnings per share of $2.80, above consensus of $24.67B and $2.62, respectively,” Ryan Zimmerman, a BTIG analyst wrote in research notes.

Zimmerman added, “Specifically within Medtech, Johnson & Johnson expects a stable procedural and staffing environment with normal seasonality throughout the balance of the year with the potential for accelerated VBP and OUS headwinds in the second half of 2023.”