Johnson & Johnson's medical device sales continued to slide in the first quarter, although the conglomerate, which announced a major medical device business restructuring early this year, was quick to underscore that this effort was on track and going well.
Medical device sales were $6.1 billion for the quarter, a decline of 2.4% from the same quarter a year ago due to a negative currency impact of 2.9%. Johnson & Johnson ($JNJ) chalked up the businesses' operational sales growth to its cardiovascular electrophysiology products, joint reconstruction Orthopedics business, endocutters, energy and biosurgical products in the Advanced Surgery business and international Acuvue contact lenses via Vision Care.
|J&J CFO Dominic Caruso|
"We're pleased to see our medical device businesses showing continued signs of improvement, and our restructuring activities in that business are on track," summed up the rather upbeat J&J Finance VP and CFO Dominic Caruso. "And we look forward to discussing with you in more detail these activities on our May 18 Investor Day."
At that meeting, the company is slated to detail its strategy moving forward for its Consumer and Medical Device businesses, which have been heavily criticized by investors and suggested as potential spinoffs given their underperformance as compared to Pharmaceutical.
Caruso highlighted J&J's recent acquisition of NeuWave Medical, a minimally invasive soft-tissue microwave ablation company, for an undisclosed sum. But he seemed underwhelmed by the current market for medical device startups, arguing that valuations are too high.
That's an interesting notion in a sector almost chronically plagued by low valuations, particularly as compared to biotech peers. But the latter are likely much more sensitive to a volatile public market that has been punishing for biotech much of this year, as well as a relative dearth of IPOs.
"In certain areas of the market, valuations are still high," Caruso said on the call. "They're coming down, as you know, in biotech in particular. But in certain other areas, in med device, for example, certain valuations are still inflated, in our opinion. Things will get better as time goes on, we believe. We're patient, disciplined. And as I said earlier, we'll look for the right opportunity, but at the right time at the right valuation."