J&J 3Q results were reported this morning:
Moderate-to-strong growth reported: LifeScan reported 3Q sales this morning of $462 million, up 10%. Although double-digit growth from such a high base is strong by any measure, the growth was the lowest in eight quarters, since the second quarter of 2003 (that startling quarter where growth was actually negative and where we first learned 20% growth wasn't sustainable continuously).
-- US sales increased 13% to $255 million, from $225 million.
-- Int’l sales increased 6% to $207 million from $195 million.
Tough 16% comparison: Overall, this was a weaker quarter for LifeScan, mostly because of considerably lower international sales. That said, international comparisons were pretty tough this quarter, since a year ago, international sales had risen 32%. Domestic sales had risen just 5% a year ago, so that comparison was relatively easy.
Management attributed the lower international growth (compared to international growth of 19% - 32% the last five quarters) this period to a "sharp reduction in channel inventory".
LifeScan proclaimed 34.8% strip share in the US.
Continuous discussions appear to be ongoing: Management went out of its way to highlight that J&J continues to explore opportunities in continuous monitoring and indicated it was exploring both external and implanted devices. Signalling, of sorts? This is fairly unusual for LifeScan, which typically doesn’t discuss business development objectives on such calls. The strategy sounded more “buy” than “build” although no details were given.
J&J cited Ultra 2, Ultra Mini, and Horizon as products that had added strong growth of late. The last two are international products that have done very well in underserved markets.
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