Dive Brief:
- Johnson & Johnson will leverage “internal strategic investments” to foster growth in its medtech segment, CFO Joseph Wolk said Tuesday during the company’s most recent earnings call.
- Those internal investments are “what will propel us to double-digit growth by the end of this decade, in the coming years with increasing performance,” Wolk said in response to an analyst question on whether the pharmaceutical company would be tapping M&A or internal investments as a growth agent. It “does not assume any inorganic additions at this moment in time,” he said.
- “We always are on lookout for strategic drivers that could complement our business that makes sense to be in our hands versus where the asset would currently reside, but also creates value for the risk we're bearing on behalf of shareholders,” Wolk said during the New Brunswick, NJ-based company’s third quarter earnings call, according to a transcript.
Dive Insight:
Sales of the pharma company’s medtech segment inched up by 2.5% for its third quarter, impacted by what Tim Schmid, J&J’s executive VP and worldwide chairman of medtech classed as “temporary headwinds” associated with its Abiomed medical device subsidiary, according to the transcript.
Although results for the segment came in below company expectations, “we are clear on where MedTech performance needs to improve, specifically cardiovascular and surgery outside the U.S. and are taking action to strengthen results,” Wolk said.
“While disappointing, the underlying fundamentals of the MedTech business remain strong,” he said.
Growth in J&J’s “innovative medicine” segment, which includes a range of medications across oncology, immunology and neuroscience, also helped offset the headwinds seen in the medtechs sector, Wolk said on the call.
In a Tuesday post on LinkedIn, Wolk touted the financial impact from J&J’s expanding portfolio, which now includes 29 products or platforms. Together, the portfolio has generated over $1 billion in annual revenue, Wolk, a 28-year company veteran who has served as its CFO for eight years, wrote.
“We are confident in our ability to exceed $100 billion in revenue for the first time in our Company’s 140-year history,” he said, referring to J&J’s updated 2026 full-year guidance which expects estimated reported sales to hit a range between $101 billion to $101.4 billion. “This momentum gives us a clear line of sight to double-digit growth by the end of the decade.”
The pharma company reported an uptick in both sales and operational growth for the quarter ended Sept. 30, with net sales growing by almost 6% to $25 billion, according to its earnings report.
However, the company’s Q3 net earnings of $210 million dropped by nearly 96% year-over-year, impacted by several M&A deals, including its acquisition of Firefly Bio, and the effect of a proposed resolution to litigation that has spanned decades.
Earnings per share of $0.09 for the quarter were impacted by a one-time special charge to its resolution of talc litigation in July, which concerned assertions that certain of its products including talcum powder, such as its baby powder, caused ovarian cancer.
The resolution included a $5.5 billion commitment by J&J to settle 95% of remaining claims after more than a decade of litigation, according to a press release at the time. The first claim payment of $3 billion is set to be made in 2027, with no additional payments due before 2028, J&J said at the time.
The business, which included the $5.5 billion commitment in its GAAP earnings for the quarter under pre-tax adjustments, is currently “trending to meet” that 95% threshold, Wolk said Tuesday.
