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DePuy Synthes reported 1Q20 orthopedic revenue of USD $2,038 million, -7.5% vs. 1Q19. Johnson & Johnson, the parent company of DePuy Synthes, lowered its 2020 full-year guidance to account for the negative impact of COVID-19. Guidance for total reported sales was lowered from a range of $85.4 billion to $86.2 billion (+4% to +5%) in January to the range of $77.5 billion to $80.5 billion (-5.5% to -2%) in April. The updated guidance attempts to account for the macroeconomic impact of the pandemic as well as its overall impact on the global health system. The company also assumes, based on earlier affected markets, that the curve of COVID-19 infections is skewed toward the acute short term instead of a prolonged impact. This model operates under the premise that elective procedures and doctor visits become mostly permissible in the second half of 2020.
From that perspective, Johnson & Johnson’s model sees signs of mitigation in the third quarter and modest recovery beginning in the fourth quarter. Company leadership noted that its Medical Devices segment will be the most negatively impacted and is the most affected by uncertainty. DePuy Synthes comprises about one-third of JNJ’s Medical Devices segment. Elective procedures are expected to decline -65% to -85% in the second quarter and -20% to -60% in the third quarter. The fourth quarter could bring stabilization, but a massive rebound in the short term is unlikely. Company leadership estimates 4Q20 recovery of deferred procedures in the range of 0% to 15%. The combination of all these factors is expected to produce a negative impact of -$4 billion to -$7 billion for JNJ’s Medical Devices segment in 2020.
- Excluding the impact of COVID-19, hip sales remained competitive with the overall market and grew in the low single digits. The primary stem ACTIS, KINCISE surgical automated system and VELYS hip navigation system were key drivers for hip sales in the quarter.
- Likewise, knee replacement sales continued to improve when excluding the negative impact of the pandemic. We estimate knee sales grew around 4% when excluding COVID-19 impact, driven by the ATTUNE system and especially the ATUNE Cementless rotating platform launched in late 2019.
- DePuy Synthes remained a share donor in spine, however, even when excluding the pandemic impact. Despite an estimated decline in the mid-single digits, company leadership pointed to positive uptake of newer products like Conduit and VIPER PRIME.
“In Medical Devices, we are experiencing a near term negative impact and expect this to continue while elective procedures are deferred and hospital resources are redeployed to address patients impacted by this pandemic. That said, Medical Devices has historically been a strong market and we believe the underlying fundamentals of the market remain intact. We continue to see tremendous potential over the long-term to serve our patients and customers.” – Alex Gorsky, Johnson & Johnson Chairman and Chief Executive Officer
Revenue Data
All revenue data is provided in USD millions unless otherwise noted. Sales and growth rates are estimated on an as-reported basis.
Segment Sales
| 1Q20 | 1Q19 | $ Chg | % Chg | |
|---|---|---|---|---|
| Joint Replacement | $779.4 | $834.0 | ($54.6) | (6.5%) |
| Knees | $344.0 | $369.0 | ($25.0) | (6.8%) |
| Hips | $337.0 | $361.0 | ($24.0) | (6.6%) |
| Extremities | $98.4 | $104.0 | ($5.6) | (5.4%) |
| Spine | $323.4 | $371.9 | ($48.6) | (13.1%) |
| Trauma | $627.8 | $657.6 | ($29.8) | (4.5%) |
| Sports Medicine | $142.7 | $157.6 | ($14.9) | (9.4%) |
| Orthobiologics | $87.9 | $98.5 | ($10.6) | (10.8%) |
| Other (CMF) | $76.8 | $83.3 | ($6.6) | (7.9%) |
| Total | $2,038.0 | $2,203.0 | ($165.0) | (7.5%) |
Geographic Sales
| 1Q20 | 1Q19 | $ Chg | % Chg | |
|---|---|---|---|---|
| US | $1,250.0 | $1,318.0 | ($68.0) | (5.2%) |
| OUS | $788.0 | $885.0 | ($97.0) | (11%) |
| EMEA | $364.5 | $409.3 | ($44.9) | (11%) |
| Asia Pacific | $267.9 | $312.0 | ($44.0) | (14.1%) |
| Rest of World | $155.6 | $163.7 | ($8.1) | (4.9%) |
| Total | $2,038.0 | $2,203.0 | ($165.0) | (7.5%) |
Earnings
| Amt | % of Sales | |
|---|---|---|
| Sales | $20,691.0 | |
| Cost of Sales | ($7,062.0) | 34.1% |
| Selling and Admin | ($5,203.0) | 25.1% |
| R & D | ($2,580.0) | 12.5% |
| Other | ($50.0) | 0.2% |
| Net Earnings | $5,796.0 | 28% |
Mike Evers is ORTHOWORLD’s Digital Content Strategist. He can be reached by email.
DePuy Synthes reported 1Q20 orthopedic revenue of USD $2,038 million, -7.5% vs. 1Q19. Johnson & Johnson, the parent company of DePuy Synthes, lowered its 2020 full-year guidance to account for the negative impact of COVID-19. Guidance for total reported sales was lowered from a range of $85.4 billion to $86.2 billion (+4% to +5%) in...
DePuy Synthes reported 1Q20 orthopedic revenue of USD $2,038 million, -7.5% vs. 1Q19. Johnson & Johnson, the parent company of DePuy Synthes, lowered its 2020 full-year guidance to account for the negative impact of COVID-19. Guidance for total reported sales was lowered from a range of $85.4 billion to $86.2 billion (+4% to +5%) in January to the range of $77.5 billion to $80.5 billion (-5.5% to -2%) in April. The updated guidance attempts to account for the macroeconomic impact of the pandemic as well as its overall impact on the global health system. The company also assumes, based on earlier affected markets, that the curve of COVID-19 infections is skewed toward the acute short term instead of a prolonged impact. This model operates under the premise that elective procedures and doctor visits become mostly permissible in the second half of 2020.
From that perspective, Johnson & Johnson’s model sees signs of mitigation in the third quarter and modest recovery beginning in the fourth quarter. Company leadership noted that its Medical Devices segment will be the most negatively impacted and is the most affected by uncertainty. DePuy Synthes comprises about one-third of JNJ’s Medical Devices segment. Elective procedures are expected to decline -65% to -85% in the second quarter and -20% to -60% in the third quarter. The fourth quarter could bring stabilization, but a massive rebound in the short term is unlikely. Company leadership estimates 4Q20 recovery of deferred procedures in the range of 0% to 15%. The combination of all these factors is expected to produce a negative impact of -$4 billion to -$7 billion for JNJ’s Medical Devices segment in 2020.
- Excluding the impact of COVID-19, hip sales remained competitive with the overall market and grew in the low single digits. The primary stem ACTIS, KINCISE surgical automated system and VELYS hip navigation system were key drivers for hip sales in the quarter.
- Likewise, knee replacement sales continued to improve when excluding the negative impact of the pandemic. We estimate knee sales grew around 4% when excluding COVID-19 impact, driven by the ATTUNE system and especially the ATUNE Cementless rotating platform launched in late 2019.
- DePuy Synthes remained a share donor in spine, however, even when excluding the pandemic impact. Despite an estimated decline in the mid-single digits, company leadership pointed to positive uptake of newer products like Conduit and VIPER PRIME.
“In Medical Devices, we are experiencing a near term negative impact and expect this to continue while elective procedures are deferred and hospital resources are redeployed to address patients impacted by this pandemic. That said, Medical Devices has historically been a strong market and we believe the underlying fundamentals of the market remain intact. We continue to see tremendous potential over the long-term to serve our patients and customers.” – Alex Gorsky, Johnson & Johnson Chairman and Chief Executive Officer
Revenue Data
All revenue data is provided in USD millions unless otherwise noted. Sales and growth rates are estimated on an as-reported basis.
Segment Sales
| 1Q20 | 1Q19 | $ Chg | % Chg | |
|---|---|---|---|---|
| Joint Replacement | $779.4 | $834.0 | ($54.6) | (6.5%) |
| Knees | $344.0 | $369.0 | ($25.0) | (6.8%) |
| Hips | $337.0 | $361.0 | ($24.0) | (6.6%) |
| Extremities | $98.4 | $104.0 | ($5.6) | (5.4%) |
| Spine | $323.4 | $371.9 | ($48.6) | (13.1%) |
| Trauma | $627.8 | $657.6 | ($29.8) | (4.5%) |
| Sports Medicine | $142.7 | $157.6 | ($14.9) | (9.4%) |
| Orthobiologics | $87.9 | $98.5 | ($10.6) | (10.8%) |
| Other (CMF) | $76.8 | $83.3 | ($6.6) | (7.9%) |
| Total | $2,038.0 | $2,203.0 | ($165.0) | (7.5%) |
Geographic Sales
| 1Q20 | 1Q19 | $ Chg | % Chg | |
|---|---|---|---|---|
| US | $1,250.0 | $1,318.0 | ($68.0) | (5.2%) |
| OUS | $788.0 | $885.0 | ($97.0) | (11%) |
| EMEA | $364.5 | $409.3 | ($44.9) | (11%) |
| Asia Pacific | $267.9 | $312.0 | ($44.0) | (14.1%) |
| Rest of World | $155.6 | $163.7 | ($8.1) | (4.9%) |
| Total | $2,038.0 | $2,203.0 | ($165.0) | (7.5%) |
Earnings
| Amt | % of Sales | |
|---|---|---|
| Sales | $20,691.0 | |
| Cost of Sales | ($7,062.0) | 34.1% |
| Selling and Admin | ($5,203.0) | 25.1% |
| R & D | ($2,580.0) | 12.5% |
| Other | ($50.0) | 0.2% |
| Net Earnings | $5,796.0 | 28% |
Mike Evers is ORTHOWORLD’s Digital Content Strategist. He can be reached by email.
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Mike Evers is a Senior Market Analyst and writer with over 15 years of experience in the medical industry, spanning cardiac rhythm management, ER coding and billing, and orthopedics. He joined ORTHOWORLD in 2018, where he provides market analysis and editorial coverage.
