Johnson & Johnson (J&J) reported a complex second quarter for its MedTech division, characterized by a significant deceleration in its cardiovascular business that fell short of both internal expectations and Wall Street projections. While the broader MedTech segment posted total sales of $8.93 billion—a 4.5% increase year-over-year—the cardiovascular unit, long considered a primary engine of growth for the healthcare titan, saw its momentum stall. Revenue for the cardiovascular group reached $2.4 billion, representing a 4% increase, a sharp contrast to the 13% growth recorded in the first quarter of 2024 and the nearly 12% growth seen in the final quarter of 2023.
The slowdown was primarily driven by challenges within the Abiomed business, the heart-pump manufacturer J&J acquired for $16.6 billion in late 2022. During a Wednesday earnings call with investors, Tim Schmid, J&J’s Worldwide Chairman of MedTech, addressed the performance directly, acknowledging that the quarterly results did not meet the company’s standards. Despite the setback, Schmid emphasized that the company has identified the specific variables contributing to the decline and has implemented a strategic plan to restore the unit to double-digit growth.
The Abiomed Contraction and the CHIP-BCIS3 Trial
The most significant drag on the cardiovascular unit’s performance was the 2% revenue decline in the Abiomed division, which brought in $440 million for the quarter. While international markets showed some resilience, they were unable to offset a notable contraction in the United States. According to J&J leadership, this decline is not the result of structural failures or changes in reimbursement, but rather a shift in physician behavior following the release of unfavorable clinical trial data.
The trial in question, CHIP-BCIS3, was conducted in the United Kingdom and studied 300 patients suffering from severe left ventricular dysfunction and extensive coronary disease. These patients were undergoing complex percutaneous coronary interventions (PCI). The study compared outcomes for patients treated with the Impella heart pump against those receiving the standard of care.
The results, presented earlier this year at the American College of Cardiology’s annual meeting and published in the New England Journal of Medicine, were sobering for J&J. After nearly two years of evaluation, the data showed that the standard of care led to better clinical outcomes for 43% of patients, compared to only 36.6% for those treated with the Impella device. Furthermore, the trial reported a higher rate of "death from any cause" in the Impella group (47 deaths) compared to the control group (33 deaths).
Divaka Perera, the lead author of the study, stated at the time of the presentation that the findings strongly suggested the device should not be used routinely in this specific patient population without further evidence of clinical benefit. This conclusion triggered a wave of caution among interventional cardiologists and surgeons, leading to a reduction in procedure volumes as the medical community re-evaluated the device’s risk-benefit profile in complex PCI cases.
Management Response and Behavioral vs. Structural Impacts
In addressing the Abiomed decline, Tim Schmid was careful to frame the issue as a "behavioral" phenomenon. He argued that the underlying medical need for heart-assist devices remains unchanged and that access to the technology has not been restricted. Instead, the current slump is viewed by J&J as a period of "physician caution" while clinicians digest the new data.
"It’s really driven by physician caution as they really interpret this new data, rather than anything structural," Schmid told analysts. He reiterated that there are no current commercialized competitors to the Impella in its specific class, which J&J views as a key competitive advantage that will eventually facilitate a recovery.
To counter the negative sentiment from the CHIP-BCIS3 trial, J&J is pinning its long-term hopes on the PROTECT IV study. This larger-scale clinical trial involves nearly 1,300 patients and is specifically focused on high-risk percutaneous coronary interventions. J&J believes that the more robust data set from PROTECT IV will provide a more definitive and favorable picture of the Impella’s utility. However, results from this study are not expected until 2027, leaving the company to manage a multi-year gap in definitive clinical validation for this specific indication.
Performance Divergence: Shockwave and Electrophysiology
While Abiomed struggled, other segments within the cardiovascular unit showed signs of strength. The Shockwave business, which J&J acquired for $13.1 billion earlier this year to bolster its presence in the intravascular lithotripsy (IVL) market, remained a standout performer. Shockwave delivered 14.6% year-over-year growth, demonstrating the high demand for its technology, which uses sonic pressure waves to break up calcified plaque in coronary and peripheral arteries.
The electrophysiology (EP) business, which focuses on treating heart rhythm disorders like atrial fibrillation, grew by 4.4%. While positive, this growth was tempered by two primary factors: competitive pressures in the emerging Pulsed Field Ablation (PFA) space and inventory challenges in China.
The EP market is currently undergoing a massive technological shift from traditional thermal ablation to PFA, a non-thermal method that is considered safer and faster. Competitors such as Boston Scientific and Medtronic have made significant strides with their respective PFA platforms, Farapulse and PulseSelect. J&J is working to defend its market-leading position with its own PFA technology, Varipulse, but the transition period has created a volatile competitive environment. Additionally, J&J’s EP business faced headwinds in China due to volume-based procurement (VBP) policies and local inventory adjustments, a common theme for multinational medtech firms operating in the region.
Broader MedTech Segments: Orthopedics, Vision, and Surgery
Beyond the cardiovascular unit, J&J MedTech’s other three core pillars showed steady, if not spectacular, growth.
- Vision: This segment was the top performer in terms of growth percentage, rising 6% to $1.45 billion. The growth was supported by strong demand for contact lenses and surgical vision products, including intraocular lenses used in cataract surgeries.
- Orthopedics: Revenue reached $2.42 billion, a nearly 5% increase year-over-year. This growth was fueled by the continued adoption of robotic-assisted surgery and high demand for knee and hip replacement procedures, which have seen a sustained post-pandemic recovery.
- Surgery: The surgery unit brought in the highest total revenue at $2.65 billion, growing 3.9%. This segment benefited from the continued global increase in surgical procedure volumes and the company’s strong position in advanced stapling and wound closure technologies.
In total, J&J MedTech reported $8.93 billion in sales for the quarter. While the 4.5% overall growth rate is respectable, it highlights the pressure the company faces to invigorate its high-value cardiovascular acquisitions to justify the billions spent in M&A over the last 24 months.
Strategic Outlook and Market Implications
J&J’s shift toward becoming a pure-play pharmaceutical and medtech company—following the spin-off of its consumer health business, Kenvue—means that the performance of its MedTech division is under greater scrutiny than ever before. The company’s strategy has been to pivot away from low-growth "legacy" medtech segments and toward high-growth, high-margin categories like heart failure, interventional oncology, and robotics.
The current struggle with Abiomed represents a significant test of this strategy. J&J executives remain optimistic, forecasting that the second half of 2024 will show a gradual improvement in cardiovascular performance. They expect the business to eventually return to double-digit growth as the "behavioral impact" of the U.K. trial wanes and as the company expands its geographical footprint for the Impella device.
However, industry analysts note that the road to recovery for Abiomed may be steep. The increase in mortality rates observed in the CHIP-BCIS3 trial is a metric that hospital value committees and risk-averse surgeons do not ignore easily. Until J&J can provide countervailing data from PROTECT IV or other large-scale registries, the Impella may face restricted usage in certain high-risk protocols.
Despite these hurdles, Schmid remains steadfast in the company’s long-term vision. "Three out of our four businesses performed well, and we’re confidently addressing the fourth," he said during the call. "Nothing we see changes our conviction in the long-term growth thesis for both our cardiovascular business as well as J&J MedTech at large."
As J&J moves into the third quarter, investors will be closely watching for signs of stabilization in the U.S. heart pump market and the progress of the Varipulse PFA rollout. The company’s ability to navigate these clinical and competitive challenges will be a defining factor in its ability to meet its ambitious 2025 financial targets. For now, J&J finds itself in a period of recalibration, balancing the high-growth potential of its recent acquisitions against the rigorous demands of clinical validation and physician trust.
