The CEO of Kenvue, a J&J spin-off, looks at innovation after the IPO

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Thibaut Mongon, CEO of Kenvue Inc., a Johnson & Johnson consumer health business, speaks during an interview with CNBC during his company’s IPO on 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 the growth of the fledgling company after its solid public market debut on Thursday.

“In the coming quarter and frankly, for 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 stock began trading on the New York Stock Exchange.

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Shares of the company gained 22% Thursday to close at $26.90 a share. The stock hovered around that level in early trading on Friday, giving the company a market value of about $50 billion.

Kenvue, which originated from Johnson & Johnson, offers a rich 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 had sales of about $400 million or more 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 brand portfolio has “ample opportunity” to grow.

The company’s plans for product innovation involve new science and technology to develop new products that meet specific consumer needs in a way that has never been done before, according to Mongon.

Kenvue has a team of approximately 1,500 R&D professionals who identify new ways to improve a given product.

Mongon believes that product innovation ultimately makes Kenvue’s brands “more relevant than ever” to consumers, as they better address 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.

For example, Mongon pointed to a sunscreen launched under the brand name Neutrogena. The company designed the product, Neutrogena Invisible, to blend into the skin without creating the unflattering chalky white residue that most sunscreens leave behind, eliminating a consumer pain point for applying protection.

As a result, Mongon said, that product could reach consumers who may not use traditional sunscreen regularly.

“This is our contribution to the world. To provide these consumers with a solution: strong sun protection but also great aesthetics,” said Mongon. “This should prompt more people to use sunscreen regularly, which we know is so important for skin.”

The company has launched more than 100 new product innovations each year since 2020, according to the company’s prospectus. Product innovations launched over the past three years have 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 launch new products in the coming years.

Brand innovation

Kenvue will use a “digital-first approach” to deliver more personalized experiences with 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 prediction 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 by allowing them to track pollen levels and their allergy symptoms. The app can ultimately predict the severity of a given consumer’s allergies based on their location, weather conditions, and history of symptoms.

“You will receive messages that will allow you to better understand and manage your symptoms,” Mongon told CNBC. “It’s part of the innovation we focus on at Kenvue.”

Kenvue also designed the “SmartCheck” digital ear sight under the brand name Tylenol, a medicine that reduces fever and cures minor aches and pains.

SmartCheck is a personal hearing device and app that turns a smartphone into an otoscope, which is used to look into your ears. The app allows users to record a child’s potentially infected eardrum and send it to a healthcare professional or telehealth service for diagnosis.

But Kenvue noted in the preliminary prospectus that continuing to expand service and product offerings through “digital initiatives” could expose the company to additional risks, including potential technical failures, cybersecurity incidents, and privacy and data protection issues. of consumers.

M&A is 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 solid 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 strategic and financial sense, we will move forward with the healthy balance sheets we have,” said Mongon.

Kenvu reported total assets of more than $27 billion as of January 1, on a pro forma basis, excluding the impact of costs associated with the public offering, and total liabilities of approximately $16 billion.

The company reported total debt of about $9 billion at the start of the year.

Kenvue brought in $14.95 billion in sales for 2022 and net income of $1.46 billion on a pro forma basis, according to the preliminary prospectus.

Kenvue trades under the stock ticker “KVUE”.

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