Johnson & Johnson on Tuesday reported adjusted earnings and revenue that topped Wall Street’s expectations, and lifted its full-year guidance as sales in the corporate’s pharmaceutical and medical devices businesses surged.
It marks J&J’s first quarterly results because it accomplished the separation from its consumer health spinoff Kenvue in August, the corporate’s biggest shake-up in its 137-year history.
Upon that separation in August, J&J also lowered its full-year sales and profit guidance.
The drugmaker raised that revised outlook on Tuesday: J&J expects 2023 sales of $83.6 billion to $84 billion, compared with previous guidance of $83.2 billion to $84 billion in August. J&J also expects adjusted earnings per share of $10.07 to $10.13, up from a previous forecast of $10.00 to $10.10.
J&J also said it recorded a one-time, non-cash gain of $21 billion as a part of the split of Kenvue.
Here’s what J&J reported for the third quarter compared with what Wall Street was expecting, based on a survey of analysts by LSEG, formerly often called Refinitiv:
- Earnings per share: $2.66 adjusted vs. $2.52 expected
- Revenue: $21.35 billion vs. $21.04 billion expected
J&J’s stock rose lower than 1% in morning trading Tuesday. Shares of J&J have dropped nearly 11% for the 12 months, putting the corporate’s market value at roughly $379 billion.
The corporate, whose financial results are considered a bellwether for the broader health sector, said its sales throughout the quarter grew 6.8% over the identical period last 12 months.
The pharmaceutical giant reported net income of $4.31 billion, or $1.69 per share. That was flat compared with net income of $4.31 billion, or $1.62 per share, for a similar period a 12 months ago.
Excluding certain items, adjusted earnings per share were $2.66 for the period.
An entry sign to the Johnson & Johnson campus shows their logo in Irvine, California on August 28, 2019.
Mark Ralston | AFP | Getty Images
J&J reported $13.89 billion in pharmaceutical sales, which grew greater than 5% 12 months over 12 months. Excluding sales of its unpopular Covid vaccine, the pharmaceutical division raked in $13.85 billion.
Wall Street was expecting sales of $13.34 billion for your entire business segment, in response to StreetAccount. The business, also often called “Modern Medicine,” is targeted on developing drugs across different disease areas.
The corporate said the expansion was driven by sales of Darzalex, a biologic for the treatment of multiple myeloma, together with Erleada, a prostate cancer treatment, and other oncology treatments.
J&J’s blockbuster drug Stelara, which is used to treat quite a lot of immune-mediated inflammatory diseases, also contributed to that growth. J&J will lose patent protection on Stelara later this 12 months.
The corporate said growth was partially offset by a decline in sales of its prostate cancer drug Zytiga and blood cancer drug Imbruvica, which is co-marketed by AbbVie and shall be subject to the primary round of Medicare drug price negotiations.
J&J’s Covid vaccine also weighed on pharmaceutical sales growth. This quarter was the second with none U.S. sales from J&J’s Covid vaccine, which brought in $41 million in international revenue.
“Our success was never depending on the Covid vaccine,” J&J CFO Joseph Wolk said Tuesday on CNBC’s “Squawk Box.”
Meanwhile, sales for the corporate’s medical devices business rose to just about $7.46 billion, up 10% from the third quarter of 2022. That got here in under Wall Street’s expectations of $7.58 billion, in response to StreetAccount.
J&J said its acquisition of Abiomed, a cardiovascular medical technology company, in December fueled the year-over-year rise.
J&J said growth got here from electrophysiological products, which evaluate the center’s electrical system and help doctors understand the reason for abnormal heart rhythms.
Wound closure products and devices for orthopedic trauma, or serious injuries of the skeletal or muscular system, contributed, together with contact lenses.
The third-quarter results come amid investor anxiety over the hundreds of lawsuits claiming that J&J’s talc-based products were contaminated with the carcinogenic asbestos, which caused ovarian cancer and several other deaths.
Those products, including J&J’s namesake baby powder, now fall under Kenvue. But J&J will assume all talc-related liabilities that arise within the U.S. and Canada.
In 2021, J&J offloaded its talc liabilities right into a recent subsidiary, LTL Management, and immediately filed for Chapter 11 bankruptcy protection. But a federal bankruptcy judge in July rejected J&J’s second try and resolve those lawsuits in bankruptcy.
J&J previously said LTL Management intends to appeal the choice.
The quarterly results also come as J&J begins price talks with the federal Medicare program over its drug Xarelto, which is used to forestall blood clotting to cut back the chance of stroke.
President Joe Biden’s Inflation Reduction Act, which passed in 2022, empowered Medicare to barter drug prices for the primary time in this system’s six-decade history. J&J signed an agreement to take part in the worth talks last month, even after it sued the Biden administration to halt the method in July.
Wolk said during an earnings call Tuesday that J&J submitted all requested information in compliance with the federal government’s negotiation process.
But Wolk also reiterated the corporate’s opposition to the negotiations, “We proceed to consider the IRA’s price-setting provisions are damaging to innovation and can prevent the delivery of transformative therapies and cures to patients as we await adjudication of legal proceedings initiated by us and others.”