- Johnson and Johnson's medical device business continued recovering from the effects of the coronavirus pandemic, growing year-over-year for the second straight quarter after declining in every quarter of 2020.
- The medical device business grew 62.7% on a reported basis from a year ago. The recovery was driven by normalizing procedure volumes and favorable comparisons to the second quarter of 2020 when J&J's medical device sales fell by nearly 34%.
- While revenues grew across the company compared to the second quarter of 2020, the quarter's results were in line with or slightly above pre-pandemic levels — overall medical device sales totaled approximately $7 billion in the quarter compared to $6.5 billion in the second quarter of 2019, and orthopaedic sales in both the second quarter of 2021 and 2019 totaled about $2.2 billion.
J&J's return to growth could be a positive glimpse as to where procedure-dependent medtechs stand as the industry recovers from the pandemic. Orthopaedic rivals Stryker and Zimmer Biomet will add to the industry's recovery narrative heading into the second half of 2021 when the companies report in the coming weeks.
A return in electives is crucial for the industry as many companies rely on the lucrative procedures to drive overall revenues. Wall Street analysts and industry predicted elective volumes to return to pre-pandemic levels in the second half of 2021, and early reports suggest these predictions are on track.
Evercore ISI analysts wrote that J&J's sales numbers for the quarter are a "positive for Medtech trends, where most companies have assumed sequential improvement over 1Q."
However, as companies are recovering and procedure volumes are normalizing, COVID-19 cases are surging across the globe and hospitals are having to, once again, shut down procedures as a result.
"We are seeing light at the end of the COVID-19 tunnel," Ashley McEvoy, executive vice president and worldwide chairman of J&J's medical devices business, said during the Wednesday earnings call. "But this remains, as we all know, a very fluid situation."
McEvoy said that the pandemic's impact going forward will rely on the same factors as the last several quarters: vaccination rates, hospitals' ability to manage COVID-19 surges and maintain normal operations, and patient willingness to receive care in hospitals and other healthcare settings.
"It's not going to be linear," McEvoy added about the return of procedure volumes. "We do know hospital systems in the United States are starting to delay care right now. So, I think quarter-to-quarter it will improve, but it will never be a linear line."
J&J's overall orthopaedic sales grew by 53.4% on a reported basis, with the most substantial recovery coming in the knee business. After continuing 2020's declines by dropping year over year by nearly 10% in the first quarter of 2021, knee sales rose by 94.6% on an operational basis in the second quarter. Sales for the knee segment were down by about $22 million compared to the second quarter of 2019.
Meanwhile, hips and spine, sports and other reported sales grew year over year by 73.7% and 55.3%, respectively.
J&J's surgery sales also saw a substantial bounce-back, growing year over year by 62.6% to roughly $2.5 billion, a slight increase over the second quarter of 2019.
Much like the last 12-16 months, business is returning at different rates in different geographies, according to McEvoy. For example, China is largely driving sales for the Asia Pacific region, while Australia and Japan are back in lockdown and India continues to struggle.
Overall medical device sales grew on a reported basis by 77.2% in the U.S. and 51.6% internationally compared to the same period last year.
J.P. Morgan analysts wrote in a Wednesday report that J&J outperformed conservative overall device sales expectations by roughly $465 million, led by a $126 million beat for interventional solutions and a $95 million beat for orthopaedics.