Electrophysiology: Mapping the HeartNarrow moat

Johnson & Johnson (JNJ) — moat facet

J&J's heart-rhythm business is its best device franchise, and its growth has slowed from 12% to 4% in two years.

At the centre of J&J's cardiovascular franchise is electrophysiology: the catheters and mapping systems used to diagnose and treat heart rhythm disorders1. It sold $4,688 million in 2023, $5,267 million in 2024 and $5,634 million in 20252, making it the largest business inside the cardiovascular franchise and 17% of MedTech sales3.

Electrophysiology sales ($M)4,68820235,26720245,63420251,468Q2 20251,533Q2 2026J&J Form 10-K FY2025; Q2 2026 financial schedules
Still growing, at a slower rate each period.

The moat here is the installed base of mapping systems and the training of electrophysiologists on them. A hospital that has built its rhythm-disorder programme around one company's mapping software has reasons to keep buying that company's catheters. The filing credits 2025 growth to procedure growth, new product performance and commercial execution4. In the second quarter of 2026 the company announced FDA approval of the Dual Energy Thermocool Smarttouch SF platform5.

That lock-in has also brought legal trouble. Innovative Health, a reprocessor of used catheters, sued J&J's Biosense Webster over business practices and contractual terms it said restricted competition in mapping and ultrasound catheters; a jury found for Innovative Health in May 2025 and the court issued a permanent injunction in August 20256. Biosense Webster appealed both7. The Competitors page covers that case.

The growth rate is slowing. Electrophysiology grew 12.3% in 2024 and 7.0% in 20258, and 4.4% in the second quarter of 20269.

J&J is answering the new ablation technology with its own. In the first quarter of 2026 it announced approval of Varipulse Pro in Europe, with a new pulse sequence it says is now 5 times faster10, and in the second quarter the FDA approved the Dual Energy Thermocool Smarttouch SF platform11. The race in electrophysiology is now a race of new systems, which is the kind of contest in which an installed base helps but does not decide.

Electrophysiology is also one of J&J's more international businesses: in the second quarter of 2026 it sold $783 million in the United States and $749 million elsewhere12. That balance gives it more exposure to foreign pricing than the medicines business, and more to currency.

The moat here is narrow, still earning and under test. Electrophysiology's growth is the signal: below mid-single digits for a full year would mean the switching costs of the installed base are no longer holding customers as competition shifts to new ablation technologies.

Moat trajectory: Narrowing

Growth fell from 12.3% in 2024 to 4.4% in the latest quarter.

The number that tests this moat
Reported
Electrophysiology sales growth, latest quarter
+4.4%, $1,533M (Q2 2026)

The best device franchise's growth; a full year below mid-single digits would say the installed base no longer holds customers.

Source: Johnson & Johnson Q2 2026 financial schedules ↗
⚠ Threats to the moat
⚠ THREAT 01
Pulsed Field Ablation
A new way of ablating heart tissue is the moment J&J's installed base of mapping systems protects it least.
References
  1. ReportedAt the centre of J&J's cardiovascular franchise is electrophysiology: the catheters and mapping systems used to diagnose and treat heart rhythm disorders.
    Johnson & Johnson Form 10-K for fiscal 2025 (year ended 28 December 2025) - Item 7 MD&A: MedTech segment and franchise sales analysis. — FY2025 · publ. 11 February 2026 · source ↗
  2. ReportedIt sold $4,688 million in 2023, $5,267 million in 2024 and $5,634 million in 2025, making it the largest business inside the cardiovascular franchise and 17% of MedTech sales.
    Johnson & Johnson Form 10-K for fiscal 2025 (year ended 28 December 2025) - Item 7 MD&A: MedTech segment and franchise sales analysis. — FY2025 · publ. 11 February 2026 · source ↗
  3. Moat Explorer calcIt sold $4,688 million in 2023, $5,267 million in 2024 and $5,634 million in 2025, making it the largest business inside the cardiovascular franchise and 17% of MedTech sales.
    Moat Explorer calculation from Johnson & Johnson's reported figures ($ millions unless stated). Darzalex royalty: 2,400 / 14,351 = 16.7%. Stelara 2023-2025: 10,858 - 6,078 = 4,780 lost; Tremfya 5,155 - 3,147 = 2,008 gained, 2,008 / 4,780 = 42%. Growth 2023-2025: Darzalex 14,351 - 9,744 = 4,607; Carvykti 1,887 - 500 = 1,387; Erleada 3,574 - 2,387 = 1,187; Spravato 1,696 - 689 = 1,007; five products 4,607 + 2,008 + 1,387 + 1,187 + 1,007 = 10,196. Myeloma medicines Q2 2026: 4,207 + 657 + 260 + 174 = 5,298; 5,298 / 25,310 = 20.9%. Simponi and Opsumit 2025: 2,668 + 2,325 = 4,993. Abiomed: 3,700 / 1,751 = 2.1 times; 1,751 x 1.171^5 = 3,850 by 2030. Shockwave: 12,600 / 1,146 = 11.0 times. Caplyta: 361 x 4 = 1,444 a year; 14,500 / 1,444 = 10.0 times. Acquisitions: 15,146 + 17,541 = 32,687. Goodwill and intangibles: 48,772 + 50,403 = 99,175; 99,175 / 199,210 = 49.8%. Free cash flow 2025: 24,530 - 4,832 = 19,698. Cash uses 2025: 12,381 + 5,953 + 17,541 = 35,875. Capex 4,832 / 94,193 = 5.1%. Surgery: 10,137 / 10,037 - 1 = 1.0%. Electrophysiology: 5,634 / 33,792 = 16.7%. MedTech share of sales: 33,792 / 94,193 = 35.9%; Innovative Medicine 60,401 / 94,193 = 64.1%. Segment income 2025: 22,266 + 4,113 = 26,379; Innovative Medicine 22,266 / 26,379 = 84.4%; MedTech 4,113 / 26,379 = 15.6%. Gross margin 63,937 / 94,193 = 67.9%. MedTech rebates: 6,446 / 33,792 = 19.1%; 5,955 / 31,857 = 18.7%. Return on identifiable assets: Innovative Medicine 22,266 / 78,057 = 28.5%; MedTech 4,113 / 86,482 = 4.8%. Cost of products sold / segment sales 2025: Innovative Medicine 15,646 / 60,401 = 25.9%; MedTech 14,549 / 33,792 = 43.1%. Q2 2026 segment margins: Innovative Medicine 6,249 / 16,384 = 38.1%; MedTech 1,177 / 8,926 = 13.2%. Growth 2023-2025: sales 94,193 / 85,159 - 1 = 10.6%; operating cash flow 24,530 / 22,791 - 1 = 7.6%; dividends 12,381 / 11,770 - 1 = 5.2%. Dividends per share 5.14 / 2.95 - 1 = 74%. Payout 2025: 12,381 / 26,804 = 46%; 12,381 / 26,215 = 47%; 12,381 / 19,698 = 63%. Diluted shares 2,429.4 / 2,812.9 - 1 = -13.6%; Kenvue exchange 190.96 / 2,674.0 = 7.1%. Firefly and Sail initial payments: 1,000 + 785 = 1,785. Consumer sales 2015-2022: (14,953 / 13,507)^(1/7) - 1 = 1.5% a year. Wholesalers: 21.8 + 15.5 + 11.1 = 48.4 (2025); 20.5 + 15.6 + 12.3 = 48.4 (2024); 18.2 + 15.1 + 14.2 = 47.5 (2023); largest 21.8 - 18.2 = 3.6 points. Innovative Medicine rebates: 56,819 / 60,401 = 94.1% (2025); 47,523 / 54,759 = 86.8% (2023); 56,819 / 47,523 - 1 = 19.6%; net sales 60,401 / 54,759 - 1 = 10.3%. Top three products: 15.0 + 6.5 + 5.5 = 27.0% of revenue. United States share: 53,752 / 94,193 = 57.1% (2025); 14,533 / 25,310 = 57.4% (Q2 2026). MedTech excluding orthopaedics: (33,792 - 9,258) / (31,857 - 9,158) - 1 = 8.1%. Talc: 5,500 / 76,000 claims = about $72,000 per claim; 5.5 - 3.7 = 1.8 billion. Valuation: 348.19 / 24.242 = 14.4 times (end-2024 market value over 2024 adjusted net earnings); 652.05 / 348.19 - 1 = 87%; 270.57 / 11.04 = 24.5 times; 11.04 / 10.79 - 1 = 2.3%; 277.91 / 270.57 - 1 = 2.7%. Innovative Medicine history: (60,401 / 31,430)^(1/10) - 1 = 6.8% a year; Pharmaceutical pre-tax margins 11,734 / 31,430 = 37.3% (2015), 12,827 / 33,464 = 38.3% (2016), 8,816 / 42,198 = 20.9% (2019); restated growth 52,563 / 51,680 - 1 = 1.7% (2022), 54,759 / 52,563 - 1 = 4.2% (2023), 56,964 / 54,759 - 1 = 4.0% (2024). Additional: 2015 mix 31,430 / 70,074 = 45%; dividend 5.36 / 11.04 = 49%; buybacks 4,253 / 5,953 = 71%; vision 5,468 / 33,792 = 16%; Innovative Medicine international 60,401 - 36,344 = 24,057 against 54,759 - 31,169 = 23,590 (2.0%); United States 36,344 / 31,169 - 1 = 16.6%; myeloma four-product growth 2023-2025 4,607 + 1,387 + (670 - 395) + (463 - 63) = 6,669 of oncology growth 25,380 - 17,661 = 7,719, 86%; Darzalex international 1,772 / 4,207 = 42%; equity gap 99,175 - 81,544 = 17,631; Abiomed 440 x 4 = 1,760; amortisation MedTech 0.5 / 1.3 = 38%; MedTech H1 2026 segment income 2,416 / 2,625 - 1 = -8.0%, SM&A 5,975 / 5,518 - 1 = 8.3%, R&D 1,492 / 1,324 - 1 = 12.7%, cost of products sold 7,438 / 6,964 - 1 = 6.8%, margins 2,416 / 17,562 = 13.8% and 2,625 / 16,561 = 15.9%; Innovative Medicine H1 2026 11,566 / 10,762 - 1 = 7.5%, 11,566 / 31,810 = 36.4%; dividends / operating cash flow 12,381 / 24,530 = 50%; receivables 17,178 - 14,842 = 2,336, inventories 14,191 - 12,444 = 1,747; Q2 2026 dividend 3,227 x 4 = 12,908, one cent x 4 x 2,408M shares = $96M; diluted shares 2,663.9 / 2,812.9 - 1 = -5.3%; MedTech United States 17,408 / 33,792 = 52%; international sales 94,193 - 53,752 = 40,441; oncology share of Innovative Medicine 25,380 / 60,401 = 42.0%; Darzalex sales increase 14,351 - 11,670 = 2,681, royalty increase 2,400 - 2,000 = 400, 400 / 2,681 = 15%; newer myeloma medicines Q2 2026 657 + 260 + 174 = 1,091, 1,091 / 4,207 = 26%; Shockwave international 67 / 335 = 20%; amortisation 2,492 x 2 = 4,984 a year, 4,984 / 26,215 = 19%; US long-lived assets 89,392 - 70,670 = 18,722; surgery international Q2 2026 1,559 / 2,653 = 59%; net interest 1,056 - 971 = 85; dividends per share 5.14 / 4.70 - 1 = 9.4%; MedTech rebates 6,446 / 5,955 - 1 = 8.2%; trailing sales 94,193 - 45,636 + 49,372 = 97,929; net earnings 26,804 - 16,536 + 10,769 = 21,037. MedTech history: (33,792 / 25,137)^(1/10) - 1 = 3.0% a year; Medical Devices 6,826 / 25,137 = 27.2% (2015), 5,392 / 26,592 = 20.3% (2017); restated 4,208 / 27,060 = 15.6% (2021), 4,447 / 27,427 = 16.2% (2022); growth 27,427 / 27,060 - 1 = 1.4% (2022), 30,400 / 27,427 - 1 = 10.8% (2023), 31,857 / 30,400 - 1 = 4.8% (2024) - segment margins, rebates, concentration and geography. — 2015-2026 · publ. September 2026 · source ↗
    Method: Arithmetic on figures reported in J&J's Forms 10-K, 10-Q, results releases and market data; operands shown in the source line.
  4. ReportedThe filing credits 2025 growth to procedure growth, new product performance and commercial execution.
    Johnson & Johnson Form 10-K for fiscal 2025 (year ended 28 December 2025) - Item 7 MD&A: consolidated sales, volume and price, geography, the three wholesalers, rebate accruals, costs, R&D and liquidity. — FY2025 · publ. 11 February 2026 · source ↗
  5. ReportedIn the second quarter of 2026 the company announced FDA approval of the Dual Energy Thermocool Smarttouch SF platform.
    Johnson & Johnson second-quarter 2026 results release, Form 8-K exhibit 99.1. — Q2 2026 · publ. 15 July 2026 · source ↗
  6. ReportedInnovative Health, a reprocessor of used catheters, sued J&J's Biosense Webster over business practices and contractual terms it said restricted competition in mapping and ultrasound catheters; a jury found for Innovative Health in May 2025 and the court issued a permanent injunction in August 2025.
    Johnson & Johnson Form 10-K for fiscal 2025 (year ended 28 December 2025) - Item 1A risk factors, Note 19 legal proceedings (talc, Innovative Health, Auris, Tracleer) and the Inflation Reduction Act. — FY2025 · publ. 11 February 2026 · source ↗
  7. ReportedBiosense Webster appealed both.
    Johnson & Johnson Form 10-K for fiscal 2025 (year ended 28 December 2025) - Item 7 MD&A: consolidated sales, volume and price, geography, the three wholesalers, rebate accruals, costs, R&D and liquidity. — FY2025 · publ. 11 February 2026 · source ↗
  8. ReportedElectrophysiology grew 12.3% in 2024 and 7.0% in 2025, and 4.4% in the second quarter of 2026.
    Johnson & Johnson Form 10-K for fiscal 2025 (year ended 28 December 2025) - Item 7 MD&A: MedTech segment and franchise sales analysis. — FY2025 · publ. 11 February 2026 · source ↗
  9. ReportedElectrophysiology grew 12.3% in 2024 and 7.0% in 2025, and 4.4% in the second quarter of 2026.
    Johnson & Johnson second-quarter 2026 supplementary sales data, statement of earnings and non-GAAP reconciliation, Form 8-K exhibit 99.2 - MedTech segment and franchise sales by region. — Q2 2026 · publ. 15 July 2026 · source ↗
  10. ReportedIn the first quarter of 2026 it announced approval of Varipulse Pro in Europe, with a new pulse sequence it says is now 5 times faster, and in the second quarter the FDA approved the Dual Energy Thermocool Smarttouch SF platform.
    Johnson & Johnson first-quarter 2026 results release, Form 8-K exhibit 99.1. — Q1 2026 · publ. 14 April 2026 · source ↗
  11. ReportedIn the first quarter of 2026 it announced approval of Varipulse Pro in Europe, with a new pulse sequence it says is now 5 times faster, and in the second quarter the FDA approved the Dual Energy Thermocool Smarttouch SF platform.
    Johnson & Johnson second-quarter 2026 results release, Form 8-K exhibit 99.1. — Q2 2026 · publ. 15 July 2026 · source ↗
  12. ReportedElectrophysiology is also one of J&J's more international businesses: in the second quarter of 2026 it sold $783 million in the United States and $749 million elsewhere.
    Johnson & Johnson second-quarter 2026 supplementary sales data, statement of earnings and non-GAAP reconciliation, Form 8-K exhibit 99.2 - MedTech segment and franchise sales by region. — Q2 2026 · publ. 15 July 2026 · source ↗
Sources
Generated September 24, 2026