An entry sign to the Johnson & Johnson campus shows their logo in Irvine, California on August 28, 2019.
Mark Ralston | AFP | Getty Images
Johnson & Johnson on Tuesday reported first-quarter adjusted earnings that topped Wall Street’s expectations as sales in its medical devices business surged.
Meanwhile, the corporate’s total revenue for the period was largely according to estimates.
J&J’s medtech division provides devices for surgeries, orthopedics and vision. The corporate is benefiting from a rebound in demand for nonurgent surgeries amongst older adults, who deferred those procedures during the Covid pandemic. That increased demand has been observed by health insurers like Humana, UnitedHealth Group and Elevance Health.
J&J CFO Joseph Wolk told CNBC’s “Squawk Box” on Tuesday that buyers could also be pulling back in other areas but “don’t need to compromise with regards to their health, their mobility, their ability to live a satisfying life.” He added that the corporate has seen elevated procedure levels after the pandemic, and “we’ve not seen any backtracking of that.”
Still, shares of the corporate fell greater than 1% in early trading on Tuesday.
Here’s what J&J reported for the first quarter compared with what Wall Street was expecting, based on a survey of analysts by LSEG:
- Earnings per share: $2.71 adjusted vs. $2.64 expected
- Revenue: $21.38 billion vs. $21.4 billion expected
J&J’s financial results are considered a bellwether for the broader health sector.
The corporate posted $21.38 billion in total sales for the primary three months of 2024, up greater than 2% from the identical quarter in 2023.Â
The pharmaceutical giant booked net income of $5.35 billion, or $2.20 per share in the course of the quarter. That compares with a net lack of $491 million, or 19 cents per share, for the year-earlier period. On the time, J&J recorded costs tied to its talc baby powder liabilities and the spinoff of its consumer health unit Kenvue.Â
Excluding certain items for the primary quarter of 2024, adjusted earnings per share were $2.71.
J&J also narrowed its full-year guidance for the 12 months. The corporate now expects sales of $88 billion to $88.4 billion. That compares with a previous forecast of $87.8 billion to $88.6 billion.Â
J&J expects adjusted earnings of $10.57 to $10.72 per share. That compares to a previous guidance of $10.55 to $10.75 per share.
Individually on Tuesday, J&J said it’s going to increase its quarterly dividend to $1.24 per share, up 4.2% from $1.19 per share. That marks the corporate’s 62nd 12 months of consecutive dividend increases, it said. The dividend is payable on June 4.
Medical device unit
The outcomes come weeks after J&J’s whopping $13.1 billion acquisition of heart device firm Shockwave Medical — a part of its push into the cardiovascular space. Each corporations have said the deal will make J&J a frontrunner in 4 quickly growing cardiovascular technology categories.Â
J&J expects the transaction to shut in the midst of the 12 months, which can impact the corporate’s full-year guidance, executives said during an earnings call on Tuesday.
J&J has scooped up two other heart device corporations during the last two years, spending $16.6 billion to purchase Abiomed and $400 million to accumulate private company Laminar.Â
Those deals also aim to strengthen J&J’s medical devices business after the corporate’s separation from its consumer health unit Kenvue last 12 months.
J&J’s medical devices business generated sales of $7.82 billion in the course of the first quarter, up greater than 4% 12 months over 12 months. Wall Street was expecting revenue of $7.87 billion, based on estimates compiled by StreetAccount.
J&J said its acquisition of Abiomed fueled the year-over-year rise. The expansion also got here from electrophysiological products, which evaluate the center’s electrical system and help doctors understand the explanation for abnormal heart rhythms, based on J&J.Â
Wound closure products and devices for orthopedic trauma, or serious injuries of the skeletal or muscular system, also contributed.Â
But sales of the unit’s vision products, including contact lenses, fell 3.3% to $1.26 billion within the quarter. Wall Street was expecting vision sales of $1.33 billion.Â
Through the call, J&J executives said that was primarily driven by a “contraction” of U.S. distributor inventory involved lenses. But they added that the corporate expects single-digit growth in vision this 12 months and is confident that there might be “tremendous improvement within the performance of that business” moving forward.
Other segments
Meanwhile, J&J reported $13.56 billion in pharmaceutical sales, marking around 1% year-over-year growth. Excluding sales of its unpopular Covid vaccine, revenue within the pharmaceutical division grew almost 7%.
It was the fourth quarter with none U.S. sales from J&J’s Covid vaccine, which brought in $25 million in international revenue.
Analysts were expecting sales of $13.5 billion for the business segment, based on StreetAccount. The business, also often called “Revolutionary Medicine,” is concentrated on developing drugs across different disease areas.
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The corporate said the expansion was driven by sales of Darzalex, a biologic for the treatment of multiple myeloma, and Erleada, a prostate cancer treatment. J&J’s Carvykti, a cell therapy approved for a certain blood cancer, and other oncology treatments also contributed to the rise.
But first-quarter sales of the corporate’s blockbuster drug Stelara, which is used to treat several chronic and potentially disabling conditions equivalent to Crohn’s disease, were relatively flat from the identical period a 12 months ago.
Stelara brought in $2.45 billion in sales for the quarter. Wall Street was expecting revenue of $2.61 billion.
J&J began to lose patent protections on Stelara late last 12 months, which opened up the door for cheaper biosimilar competitors to enter the market. But the corporate has signed settlement agreements with Amgen and other drugmakers to delay the launch of some Stelara copycats to 2025.
Talc liabilities
J&J’s first-quarter results come amid investor anxiety over the tens of 1000’s of lawsuits claiming that the corporate’s talc-based products were contaminated with the carcinogen asbestos and caused ovarian cancer and several other deaths.
Those products, which include 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.
Notably, a federal judge ruled in March that J&J can contest scientific evidence that links its talc products to ovarian cancer, which could potentially disrupt a federal court case that consolidates 53,000 lawsuits.
Wolk on Tuesday called that ruling a “very significant development” and said the evidence being brought against J&J is “junk science.” But he noted that it’s difficult to supply a timeline for when the corporate will reach a broad resolution for the continuing litigation.
In January, J&J said it has reached a tentative settlement to resolve an investigation by greater than 40 states into claims the corporate misled patients in regards to the safety of its talc-based products. The corporate can pay $700 million to settle the probe, Wolk told The Wall Street Journal on the time.
Last 12 months, J&J put aside about $400 million to resolve U.S. state consumer protection claims.
Notably, the settlement doesn’t resolve the lawsuits, a few of that are slated to go to trial this 12 months.Â