CEO of J&J spin-off Kenvue focuses on post-IPO innovation
Thibaut Mongon, CEO of Kenvue Inc., a Johnson & Johnson consumer health company, speaks during an interview with CNBC during his company’s initial public offering on the New York Stock Exchange (NYSE), May 4, 2023.
Brendan McDermid | Reuters
Kenvue CEO Thibaut Mongon is banking on brand and product innovation to fuel the growth of the newly spun-off company following its solid public market debut on Thursday.
“Over the next quarter, and quite frankly, years to come, we will continue to do what we do best, which is innovate to find new ways to serve consumers and help them take better care of their health.” ‘ Mongon told CNBC in an interview shortly after Kenvue’s shares went public on the New York Stock Exchange.
Shares of the company gained 22% on Thursday to close at $26.90 a share. The stock hovered around this level in early trading Friday, giving the company a market value of around $50 billion.
Kenvue, spun out Johnson&Johnsoncarries a packed portfolio of well-known brands such as Band-Aid, Tylenol, Listerine, Neutrogena, Aveeno and J&J’s namesake baby powder.
Ten of Kenvue’s brands have generated at least $400 million in sales over the past year, according to a preliminary prospectus the company filed with the Securities and Exchange Commission last week.
But Mongon told CNBC that Kenvue’s portfolio of brands has “ample opportunity” to grow.
According to Mongon, the company’s plans for product innovation include new science and technology to create new products that meet specific consumer needs in ways never seen before.
Kenvue has a team of around 1,500 research and development professionals who find new ways to improve a given product.
Mongon believes product innovation will ultimately make Kenvue’s brands “more relevant than ever” to consumers as they better serve their needs.
“There’s no limit to you taking better care of your health, and there’s no limit to us inventing products and solutions to help you do that,” Mongon told CNBC.
As an example, Mongon pointed to a sunscreen launched under the Neutrogena brand. The company designed the Neutrogena Invisible product to blend into the skin without leaving the unflattering chalk-white residue that most sunscreens leave behind, eliminating a consumer problem applying the protection.
As a result, Mongon said, this product could reach consumers who may not regularly use traditional sunscreen.
“This is our contribution to the world. Offering a solution to these consumers: strong sun protection but also great aesthetics,” said Mongon. “This should lead to more people regularly using sunscreen, which we know is so important for skin.”
According to the company prospectus, the company has launched more than 100 new product innovations every year since 2020. Product innovations introduced over the past three years accounted for approximately $1.5 billion of Kenvue’s net sales, the company said in its filing.
Mongon said the company will “continue to push the envelope” to bring new products to market in the years to come.
Kenvue will use a “digital-first approach” to provide more personalized experiences across the company’s brands, according to Mongon. This includes new e-commerce and direct-to-consumer services.
The Zyrtec brand, for example, has its own allergy forecasting app called AllergyCast. Zyrtec is a medication used to relieve allergy symptoms such as watery eyes, runny nose, sneezing and itching.
According to Mongon, Kenvue developed the app to help consumers manage their allergies by allowing them to track pollen levels and their allergy symptoms. The app can ultimately predict how severe a given consumer’s allergies will be based on their location, weather conditions, and symptom history.
“You receive messages that allow you to better understand and manage your symptoms,” Mongon told CNBC. “It’s part of the innovation we’re focused on at Kenvue.”
Kenvue also designed the “SmartCheck” digital earscope under the Tylenol brand, a drug that reduces fever and treats minor pain.
SmartCheck is a personal earscope device and app that turns a smartphone into an otoscope to look inside your ears. The app allows users to take a recording of a child’s potentially infected eardrum and send it to a healthcare provider or telemedicine service for diagnosis.
However, Kenvue noted in the preliminary prospectus that further expanding its service and product offerings through “digital initiatives” could expose the company to additional risks, including potential technical failures, cybersecurity incidents, and consumer privacy and data protection concerns.
M&A are not excluded
When asked about the potential for mergers and acquisitions, Mongon said Kenvue is primarily focused on organic growth.
But he said the company isn’t completely ruling out mergers and acquisitions in the future.
He noted that Kenuve has a strong track record of identifying the right brands in the marketplace that could positively complement the company’s portfolio.
“If we see an opportunity that makes strategic and financial sense, we will move thanks to the healthy balance sheets we have,” Mongon said.
As of January 1, Kenvu had total assets of more than $27 billion and total liabilities of approximately $16 billion on a pro forma basis, excluding the impact of costs associated with the public offering.
The company reported total debt of around $9 billion at the start of the year.
According to the preliminary prospectus, Kenvue reported 2022 sales of $14.95 billion and net income of $1.46 billion on a pro forma basis.
Kenvue trades under the stock ticker KVUE.
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