Dive Brief:

• Johnson & Johnson's worldwide medical device revenue fell 4.6% to $6.5 billion in the first quarter of 2019, the company reported Tuesday morning.
• The company cited the impact of the approximately $2.1 billion divestiture of the LifeScan diabetes care business, finalized in late 2018, and the $3.4 billion buy of Auris Health, which closed two weeks ago as factors.
• Net impact of acquisitions and divestitures aside, J&J said it saw 4.3% adjusted medical device unit growth bolstered largely by its Acuvue contact lenses line and atrial fibrillation ablation and diagnostic catheters, as well as uptake of its Attune knee replacement system and strong sales of wound closure products.

Dive Insight:

Within J&J's medical devices unit, the $3.4 billion acquisition of Auris Health was the leading storyline for the first quarter.

Picking up the Auris' Monarch digital surgery platform, initially being targeted for lung cancer procedures, raised questions among analysts about J&J's plans for its existing Verb Surgical partnership with Verily, and robot-assisted orthopaedic surgery platform Orthotaxy, acquired last year.

Medical Devices EVP Ashley McEvoy declined on an investor call to update regulatory or launch timelines for either the Auris or Verb programs, but called the Auris acquisition "highly complementary" to the Verb development program. CEO Alex Gorsky said on the company's January earnings call J&J was on track to enter the digital surgery market in 2020.

As part of the acquisition, J&J also took on Auris chief executive Frederic Moll, better known for founding original robotic surgery competitor Intuitive Surgical. McEvoy said Moll has consulted on both Auris and Verb systems since recently being folded into the company.

At 17.9% operational growth, the Interventional Solutions unit saw the most significant segment-level swing, which J&J attributed to 18.5% growth in electrophysiology devices, particularly ablation catheters used in increasingly popular atrial fibrillation procedures.

Johnson & Johnson touted above-market growth of 5% in its Vision unit, citing worldwide growth in its daily disposable lenses and the U.S. launch of new light-sensitive lens technology.

In its advanced surgery business, J&J saw 5% growth in endocutter sales and growth in Asia-Pacific market share. As for specialty surgery devices, the company reported growth driven by its aesthetics subsidiary Mentor, despite increased scrutiny by FDA on adverse events related to the company's breast implants.

The 10% growth in uptake of the Attune knee replacement system year over year was not enough to counter a 1.9% drop in international knee sales, which the company partly attributed to negative pricing pressures in the U.S. and weak sales across European, Middle Eastern and African markets. Analysts at RBC Capital Markets noted J&J likely continues to lose market share to Stryker.

Executives said impact of the recently completed $2.8 billion divestiture of Advanced Sterilization Products, formerly housed under Ethicon, will not be seen until the second quarter.

Medical devices' so-so performance balanced softness in J&J's consumer products unit and a strong quarter in the company's leading pharmaceuticals segment, for overall company-wide 0.1% growth to $20.0 billion in quarterly revenue. J&J stock was up close to 3% in early trading Tuesday.