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Johnson & Johnson’s Medical Devices Segment’s 4Q16 Earnings

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Jan. 27 2017, Updated 10:36 a.m. ET

Medical Devices segment

Johnson & Johnson’s (JNJ) Medical Devices segment rose ~0.2% to ~$6.4 billion in 4Q16 compared to 4Q15. The rise included an operational rise of 0.6%, which was offset by the negative impact of foreign exchange.

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Cardiovascular care franchise

The cardiovascular care franchise’s sales rose 10.5% to $485 million in 4Q16. This rise was due to a rise in the franchise’s electro-physiology business, specifically the ThermoCcool SmartTouch Contact Force Sensing Catheter. The rise was partially offset by the company’s divestiture of its Cordis business in 4Q15.

Diabetes care franchise

The diabetes care franchise’s sales fell 3.8% to $462 million in 4Q16 due to pricing pressures and competition from new pumps in the market. Its revenue fell due to lower prices and rebates for self-monitoring blood glucose (or SMBG) devices. The fall was partially offset by increased sales of strips for SMBG devices.

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Orthopedics franchise

The orthopedics franchise reported a fall of 1.5% in its revenue to $2.4 billion in 4Q15 due to lower sales of hip, knee, and spine products. The fall was partially offset by the sales of trauma products. The franchise’s revenue included an operational fall of 0.9%.

Surgery franchise

The surgery franchise’s sales fell 1.1% to $24 billion in 4Q16, driven by falling hernia product sales in terms of general surgery products and lower Mentor and Sterilmed sales in terms of specialty surgery products. The fall was partially offset by increased sales of endocutters, energy, and biosurgery products in terms of advanced surgery products.

Vision care franchise

The vision care franchise’s sales rose 11.3% to $721 million in 4Q16 following its strong performances in all major markets worldwide. On an operational basis, the revenue growth for this franchise was 10.3%.

In terms of medical devices, other major companies include Medtronic (MDT), Boston Scientific (BSX), Stryker (SYK), and Zimmer Biomet Holdings (ZMH). Investors can consider ETFs such as the Vanguard Dividend Appreciation ETF (VIG), which holds 3.9% of its portfolio in Johnson & Johnson.

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