Johnson & Johnson (NYSE:JNJ) FY 2025 Conference December 03, 2025 11:15 AM ET Company ParticipantsMichael Bodner - Company Group Chair, Electrophysiology and NeurovascularJoanne Wuensch - Managing Director and Head of US Healthcare ResearchJoanne WuenschDineer, and I'm really ready to do that, but I am Joanne Wuensch. I am the medical technology analyst here at Citigroup, and thrilled to have with us Michael Bodner from Johnson & Johnson.Michael BodnerThank you.Joanne WuenschMichael, thank you for joining u ...

Financial Data and Key Metrics Changes - The medical technology market is described as strong and resilient, driven by an aging population and continued access to care globally [6] - The company has performed over 30,000 cases with its Varipulse product since its relaunch, indicating a rapid build-up of momentum [20][36] Business Line Data and Key Metrics Changes - The company focuses on three core areas in its medtech business: cardiovascular, surgery, and vision, with significant investments in the cardiovascular space [6] - The CARTO system is highlighted as a leading imaging system in electrophysiology, with over 5,000 systems distributed worldwide [9][10] Market Data and Key Metrics Changes - In the U.S., approximately 70% of atrial fibrillation procedures have transitioned to pulsed field ablation (PFA), while the international market is estimated to be less than that [29][31] - The company is launching Varipulse in multiple international markets, including China, Japan, and Europe, indicating a strong global presence [65] Company Strategy and Development Direction - The company is committed to a super cycle of innovation, with plans for two major mapping releases per year and a new generation of CARTO systems [76] - The company is developing new materials science that will change the physics of ablation procedures, indicating a focus on advanced technology [78][82] Management's Comments on Operating Environment and Future Outlook - Management emphasizes the importance of mapping systems in electrophysiology procedures, noting that mapping is utilized in over 99% of cases in the U.S. [18] - The management expresses confidence in the Varipulse product and its growing momentum, highlighting the safety and efficiency of the procedure [36] Other Important Information - The company is launching a new family of aspiration catheters called Cereglide for acute ischemic stroke, indicating a focus on addressing unmet needs in neurovascular [66] - The management has successfully integrated high-growth businesses like Abiomed and Shockwave, retaining key talent and fostering innovation [71] Q&A Session Summary Question: How do you think about J&J's electrophysiology franchises, strengths and weaknesses? - The company is a clear leader in electrophysiology, anchored by the CARTO system, which integrates mapping technologies and provides safety parameters for physicians [7][8] Question: What is the uptake of Varipulse since its relaunch? - Over 30,000 cases have been performed with Varipulse since its relaunch, with a significant increase in momentum observed [20][36] Question: What percentage of the market has transitioned to PFA? - In the U.S., about 70% of atrial fibrillation procedures have transitioned to PFA, while the international market is less than that [29][31] Question: What is the company's strategy for future product development? - The company plans to launch a new therapeutic catheter every year and is committed to continuous innovation in its product portfolio [57] Question: How does the company view its position in the market? - The company is the clear market leader in electrophysiology and is committed to maintaining this position through innovation and product development [76]

Core Insights - Medtronic has raised its fiscal year 2026 profit outlook following strong revenue growth in its cardiovascular portfolio, achieving global revenues of nearly $9 billion in Q2 2026, a 6.6% increase from Q2 FY25 [1][2] - The company now expects revenue growth for FY26 to be 5.5%, an increase from the previous expectation of 5% [1] - Medtronic's share price rose by 4.69% to $108.8 following the Q2 results announcement, with a market capitalization of approximately $129 billion [2] Revenue Breakdown - The cardiovascular portfolio was the primary driver of Q2 revenues, generating around $3.44 billion, reflecting a 10.8% increase compared to Q2 FY25 [3] - The pulsed-field ablation (PFA) franchise within the cardiac ablation solutions business unit has been a significant contributor to this growth [3][4] Product Performance - Medtronic's PFA franchise includes the PulseSelect PFA system and the Sphere‑9 Dual Energy Catheter, both of which received FDA approval in late 2023 and 2024 [4] - The PFA market has grown to over $500 million, with the technology gaining traction due to its improved safety profile compared to traditional methods [5] Competitive Landscape - Medtronic's PFA franchise experienced a remarkable growth rate of 71%, significantly up from nearly 50% in the previous quarter, with over 300% growth in the US and strong performance in international markets [6] - Competitor Boston Scientific has also seen substantial growth in its cardiovascular portfolio, with Q3 2025 revenues exceeding $3.3 billion, a 22.4% increase from the previous year [6] Other Business Segments - Medtronic's neuroscience portfolio grew to around $2.5 billion, a 4.5% increase year-over-year, while the medical surgery portfolio also saw a 2.1% rise to approximately $2.5 billion [7] - The diabetes business generated revenues of $757 million, marking a 10.3% increase compared to Q2 FY25 [7]

Financial Data and Key Metrics Changes - Revenue for Q3 2025 totaled $7.5 million, with system revenue of $1.9 million and recurring revenue of $5.6 million, compared to $4.4 million and $4.8 million in the prior year [15] - Gross margin for Q3 2025 was 55% of revenue, with recurring revenue gross margin at 67% and system gross margin at 19% [15] - Operating loss for Q3 2025 was $6.6 million, compared to $6.3 million in the previous year, while adjusted operating loss was $2.5 million, down from $3.1 million [16] Business Line Data and Key Metrics Changes - Recurring revenue growth was driven by a full quarter's contribution from MAPIT catheters and initial sales of the Magic ablation catheter and Magic Sweep high-density mapping catheter [15] - The company has seen over $300,000 in revenue from the Magic Sweep catheter in its first two months of launch [8] Market Data and Key Metrics Changes - The company received hospital orders for two Genesis robots from European hospitals, indicating a healthy pipeline and continued interest, particularly in Europe [4] - The launch of Genesis X is expected to enhance system opportunities and is anticipated to outpace Genesis orders following its full launch [5][24] Company Strategy and Development Direction - The company aims to scale robotic system sales and build a high-margin recurring revenue business with its catheter portfolio, supporting a razor-razor blade business model [3] - The company is focusing on expanding its catheter portfolio, which is crucial for driving revenue and enhancing the value of its robotic systems [48] Management's Comments on Operating Environment and Future Outlook - Management expects revenue for the current quarter to exceed $9 million, with over 20% annual revenue growth for the full year 2025 [18] - The company anticipates sustained growth in both system and recurring revenue through 2026, with quarterly revenue expected to surpass an average of $10 million [18] Other Important Information - The company has a robust pipeline of innovation efforts, including multiple products in late stages of regulatory review and development projects [9] - The company had cash and cash equivalents of $10.5 million as of September 30, with no debt [17] Q&A Session Summary Question: Update on Genesis X sales pipeline and order mix - Management views Genesis X as additive to Genesis, with continued demand for Genesis systems expected alongside Genesis X orders [21][22] Question: Pricing strategy for Genesis X and revenue expectations - Genesis X will be sold at a premium price compared to Genesis, with expectations for initial non-EP applications in the coming year [26][27] Question: Timeline for full launch of Genesis X and Magic catheter approval - Full launch of Genesis X is expected in early 2026, contingent on manufacturing ramp-up and FDA approval for the Magic catheter [33] Question: Revenue mix expectations for 2026 - The company expects system revenue to be between 30%-50% of overall revenue, with recurring revenues scaling as catheter approvals progress [35] Question: FDA interactions regarding Magic catheter - Management reported a comprehensive review by the FDA with no significant issues, and they feel positive about their responses to FDA inquiries [39] Question: Changes in Q4 revenue guidance - The company adjusted Q4 guidance due to timing of approvals and market conditions, but remains optimistic about the ramp-up of new devices [41]