Johnson & Johnson JNJ announced that it has entered into a definitive agreement to acquire a privately held medical device company, V-Wave Ltd., for an initial upfront payment of $600 million.
V-Wave is engaged in developing innovative treatment options for treating heart failure.
With this acquisition, JNJ is looking to add V-Wave's novel implantable device, the Ventura Interatrial Shunt (IAS), a minimally invasive device to treat heart failure with reduced ejection fraction (HFrEF). The Ventura IAS has received a Breakthrough Device Designation from the FDA and can be the first device of its kind to address HFrEF.
Per the terms of the agreement, JNJ will make potential regulatory and commercial milestone payments of up to approximately $1.1 billion to V-Wave upon closing of the deal. JNJ expects the transaction to dilute adjusted earnings per share (EPS) by 24 cents in 2024 and 6 cents in 2025.
Upon closing of the deal, V-Wave will merge into Johnson & Johnson as part of its MedTech business unit. The transaction is expected to close before 2024-end, subject to customary closing conditions.
Shares of JNJ have risen 2.2% year to date compared with the industry’s growth of 24.7%.
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The acquisition looks like a good strategic fit for JNJ as this move is expected to strengthen Johnson & Johnson MedTech’s position in cardiovascular disease. This deal also offers significant growth potential for JNJ’s MedTech business, as almost 800,000 patients suffer from HFrEF every year in the United States.
Johnson & Johnson struck several deals to boost its portfolio and drive revenues. In May 2024, J&J acquired Shockwave Medical, which strengthened its position in the highest-growth, innovation-oriented segments of cardiovascular intervention.
In 2022, J&J bought Abiomed, strengthening MedTech’s presence in higher-growth cardiovascular markets. With this acquisition, the MedTech segment now has 12 platforms with more than $1 billion in annual sales.
In the first half of 2024, the MedTech business recorded sales worth $15.8 billion increasing 3.3% on a year-over-year basis and 5.4% on an operational basis. J&J expects Its MedTech segment to grow 6% in 2024.
Zacks Rank & Stocks to Consider
J&J currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the healthcare sector are Illumina, Inc. ILMN, Fulcrum Therapeutics, Inc. FULC and Bioventus Inc. BVS, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
In the past 60 days, the Zacks Consensus Estimate for Illumina’s 2024 earnings per share has moved up from $1.07 to $3.16. Earnings per share estimate for 2025 has improved from $2.93 to $4.49. Year to date, shares of ILMN have lost 4.8%.
ILMN’s earnings beat estimates in each of the trailing four quarters, the average surprise being 463.46%.
In the past 60 days, the consensus estimate for Fulcrum Therapeutics’ 2024 loss per share has narrowed from $1.24 to 48 cents. Loss per share estimate for 2025 has narrowed from $1.71 to $1.51. Year to date, shares of FULC have surged 39.6%.
FULC’s earnings beat estimates in each of the trailing four quarters, the average surprise being 393.18%.
In the past 60 days, estimates for Bioventus’ 2024 earnings per share have moved up from 27 cents to 40 cents. Earnings per share estimate for 2025 has improved from 43 cents to 45 cents. Year to date, shares of BVS have rallied 55.6%.
BVS’ earnings beat estimates in three of the trailing four quarters while missing the same on the remaining occasion, the average surprise being 102.86%.
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