Johnson & Johnson ($JNJ) posted 10.2% sales growth in its medical devices and diagnostics business last quarter, but take out the boon from its multi-billion-dollar Synthes buyout, and the healthcare giant is facing declines in most of its med tech units.
J&J reaped about $7 billion in revenue from its device and Dx arm, the company's largest business, buoyed by $2.4 billion in orthopedics sales, a 59.7% jump over the prior year. That leap is due almost entirely to J&J's $21.3 billion buyout of Synthes, which accounted for 14% of medical device growth and 5.7% of the company's overall revenue jump.
But despite all those soaring numbers, the ortho business is a solitary bright spot on an otherwise sluggish quarterly report. Diabetes devices tumbled 10.4% to $600 million, and surgical care slipped 7.2% to $1.5 billion on the quarter, while vision care and specialty surgery posted mostly flat sales.
J&J's diagnostics unit continued its downward trend, too, slipping 6.8% to $477 million as the company debates whether to sell it or spin it off. CEO Alex Gorsky said earlier this year that J&J would mull its options with the $2 billion business, and CFO Dominic Caruso said on an investor call Tuesday that it's still too early in that process to say anything publicly.
No matter what it decides to do about diagnostics, J&J remains confident it can keep expanding its ortho dominance, and the company is counting on cardiovascular growth out of its Cordis business, which reported 6.4% sales growth on the quarter.
Standing in its way are mounting costs related to lawsuits over all-metal hips and vaginal mesh implants, and J&J posted a $529 million litigation charge for the quarter. The company had to fork over millions in the first few suits over its now-discontinued devices, and with thousands more pending in courts around the world, that figure is likely only to grow.
Companywide, J&J reported $17.5 billion in first-quarter sales, an 8.5% increase, and net income of $3.5 billion, beating analyst projections.
- read J&J's release
- check out the full Q1 results (PDF)
- here's FiercePharma's take