How Did Johnson & Johnson’s Medical Devices Segment Do in 2Q15?
An Investor’s Guide to Johnson & Johnson's 2Q15 Earnings
Medical devices segment
Johnson & Johnson’s (JNJ) Medical Devices segment fell by ~4.7% at constant exchange rates, reporting a revenue of ~$6,358 million for 2Q15 over 2Q14. The foreign exchange further impacted this segment negatively by 7.5% during 2Q15, resulting in an overall fall of ~12.2% in revenues for this segment.
Orthopaedics franchise
The orthopaedics franchise reported a sales increase of 0.9% at constant exchange rates, mainly driven by increased sales of sports medicine and hip and knee products. However, the continuous pricing pressure negatively impacted the growth of this segment.
Foreign exchange also had a negative impact of ~6.5% on the segment, resulting in a net decrease in revenues of ~5.6% for 2Q15 over 2Q14. Overall, the orthopaedics franchise reported sales of $2.3 billion, which is nearly 36.5% of total segment sales.
Surgical care franchise
Surgical care franchise sales rose 0.7% at constant exchange rates for 2Q15 following the launch of new Echelon Flex products. This was offset by lower sales of women’s health and urology products. Surgical care reported sales of $1.45 billion, which is nearly 22.8% of total segment sales.
Specialty surgery franchise
Specialty surgery franchise sales increased 4.5% at constant exchange rates for 2Q15, driven by increased sales of biosurgical and energy products as well as new product launches. Biosurgical product sales grew 8%, while energy products sales grew 6% worldwide.
Vision care franchise
Vision care franchise sales increased ~1.15 at constant exchange rates due to increased demand in markets outside the United States, mainly Japan. Overall growth was partially offset by pricing pressure due to competition.
Cardiovascular care franchise
Cardiovascular care franchise sales increased ~4.7% at constant exchange rates for 2Q15. This increase was driven by a 10% increase in the electrophysiology business, specifically the Thermocool SmartTouch contact force sensing catheter.
Diabetes care franchise
Diabetes care franchise sales fell ~2.1% at constant exchange rates for 2Q15 due to competitive pricing. This was partially offset by the Animas Vibe insulin pump and new product launches.
Diagnostics franchise
JNJ divested its orthoclinical diagnostics business to the Carlyle Group on June 30, 2014.
For medical devices, other major companies include Medtronics (MDT), Boston Scientific (BSX), Stryker (SYK), and Zimmer Holdings (ZMH). Investors can consider ETFs like the Health Care Select Sector SPDR ETF (XLV), which holds ~9.7% of its total investments in Johnson & Johnson.
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