By Michael Erman
July 15 (Reuters) – Johnson & Johnson said on Wednesday that its medical device unit underperformed in the second-quarter, driving shares down 2% in premarket trading, even as strong sales of Tremfya for autoimmune conditions and cancer treatment Darzalex helped it beat Wall Street estimates.
U.S. demand for its Impella heart pumps, acquired through its $16.6 billion 2022 buyout of Abiomed, dropped during the second quarter by 2% after having grown 14% during the first quarter, it said.
CFO Joseph Wolk said in an interview that Abiomed revenue took a hit following the release of a U.K. study that raised questions about the use of Impella pumps during certain high-risk coronary procedures.
Wolk said J&J expects the franchise to return to growth, aided by additional data expected in the first half of next year that could further demonstrate the efficiency of the pumps.
“When you have 28 platforms that generate at least $1 billion in revenue on an annual basis, we’re not dependent on one asset,” Wolk said.
Shares gained 0.4% to $254.94 in early trading.
BROAD MEDTECH DEMAND STABLE
During a conference call with investors, J&J Executive Vice President Tim Schmid, said that “procedure volumes continue to be stable, and we’re not seeing evidence of a broad base slowdown in demand.”
Sales at J&J’s medtech unit came in at $8.93 billion, below analysts’ average estimate of $8.97 billion, according to data compiled by LSEG.
“Overall medtech procedures were solid as shown by strength in ortho, vision and stability in surgery,” Evercore ISI analyst Vijay Kumar said.
Kumar said the results could help ease concerns around broad demand for medical devices. Hospital operator HCA Healthcare warned on Tuesday of weaker surgical volumes and a higher number of patients dropping out of Affordable Care Act plans, pushing shares down in J&J and other medtech companies such as Stryker and Intuitive Surgical.
RAISES ANNUAL SALES FORECAST
J&J’s second-quarter sales grew nearly 7% to $25.31 billion, above analysts’ average estimate of about $25.05 billion.
The pharmaceutical unit helped boost total sales. It generated $16.38 billion in quarterly sales, ahead of analysts’ estimate of $16.1 billion.
Adjusted earnings per share stood at $2.90, topping expectations of $2.85.
The company now expects annual sales of about $101.1 billion at the midpoint, compared with $100.8 billion previously. It also raised its adjusted earnings per share forecast to $11.68 at the midpoint, from $11.55 previously.
Sales of its psoriasis and inflammatory bowel disease drug, Tremfya, jumped 72.5% to $2 billion, well above estimates of $1.74 billion. Tremfya has become increasingly important as J&J works to replace lost sales from Stelara.
Revenue from Stelara, which treats psoriasis, Crohn’s disease and other autoimmune conditions, fell over 55% to $740 million in the quarter.
(Reporting by Michael Erman in New Jersey and Mariam Sunny and Puyaan Singh in Bengaluru; Editing by David Gregorio, Shinjini Ganguli, Caroline Humer and Nick Zieminski)
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