J&J spinoff Kenvue CEO looks to innovation after IPO
Thibaut Mongon, CEO of Kenvue Inc. a Johnson & Johnson consumer-health business, speaks during an interview with CNBC during his company’s IPO at the New York Stock Exchange (NYSE), May 4, 2023.
Brendan McDermid | Reuters
Kenvue CEO Thibaut Mongon is betting on brand and product innovation to drive growth at the newly spun-out company after its solid debut on the public market Thursday.
“In the next quarter and frankly, in the years to come, we are going to continue to do what we do best, which is innovating to find new ways to serve consumers and help them take better care of their health,” Mongon told CNBC in an interview shortly after shares of Kenvue started trading on the New York Stock Exchange.
Shares of the company gained 22% Thursday to close at $26.90 per share. The stock hovered around that level in early trading Friday, giving the company a market value of roughly $50 billion.
Kenvue, spun out of Johnson&Johnsoncarries a packed portfolio of widely known brands, such as Band-Aid, Tylenol, Listerine, Neutrogena, Aveeno and J&J’s namesake baby powder.
Ten of Kenvue’s brands booked approximately $400 million or more in sales last 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.
The company’s plans for product innovation involve new science and technologies to develop new products that meet the specific needs of consumers in a way that hasn’t been done before, according to Mongon.
Kenvue has a team of around 1,500 research and development professionals who identify new ways to enhance a given product.
Mongon believes product innovation ultimately makes Kenvue’s brands “more relevant than ever” to consumers as they better target their needs.
“There is no limit for you to take care of your health in a better way and there is no limit for us to invent 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 product, Neutrogena Invisible, to blend into the skin without creating the unflattering chalky white residue most sunscreens leave behind, eliminating a consumer pain point for applying the protection.
As a result, Mongon said, that product could reach consumers who may not regularly use traditional sunscreen.
“That’s our contribution to the world. To provide these consumers with a solution: Strong sun protection but also great aesthetics,” Mongon said. “That should make more people use sunscreen on a regular basis, which we know is so important for the skin.”
The company has launched more than 100 new product innovations each year since 2020, according to the company’s prospectus. Product innovations launched during the last three years have accounted for around $1.5 billion of Kenvue’s net sales, the company said in its filing.
Mongon said the company will “keep pushing the envelope” to launch new products in the upcoming years.
Kenvue will use a “digital-first approach” to deliver more personalized experiences with the company’s brands, according to Mongon. That includes new e-commerce and direct-to-consumer services.
The brand Zyrtec, for example, has its own allergy forecast app called “AllergyCast.” Zyrtec is a drug designed to relieve allergy symptoms such as watery eyes, runny nose, sneezing and itching.
Mongon said Kenvue designed the app to help consumers manage their allergies, 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 will receive messages that allow you to understand and manage your symptoms better,” Mongon told CNBC. “That’s part of the innovation that we focus on at Kenvue.”
Kenvue also designed the “SmartCheck” digital ear scope under the brand Tylenol, a medicine that reduces fever and treats minor aches and pains.
SmartCheck is a personal ear scope device and app that turns a smartphone into an otoscope, which is used to look into ears. The app allows users to take a recording of a child’s potentially infected eardrum and send it to a healthcare provider or telehealth service for diagnosis.
But Kenvue noted in the preliminary prospectus that continuing to expand service and product offerings through “digital initiatives” may expose the company to additional risks, including potential technical failures, cybersecurity incidents and consumer privacy and data protection concerns.
M&A isn’t ruled out
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 M&A in the future.
He noted that Kenuve has a strong track record of identifying the right brands in the market that could complement the company’s portfolio in a positive way.
“If we see an opportunity that makes sense strategically and financially we will move thanks to the healthy balance sheets that we have,” Mongon said.
Kenvu recorded total assets of more than $27 billion as of Jan. 1, on a pro forma basis, excluding the impact of the costs associated with the public offering, and total liabilities of roughly $16 billion.
The company recorded total debt of around $9 billion as of the start of the year.
Kenvue raked in $14.95 billion in sales for 2022 and a net income of $1.46 billion on a pro forma basis, according to the preliminary prospectus.
Kenvue trades under the stock ticker “KVUE.”