The stock trading graph of Johnson & Johnson is seen on a smartphone screen.
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Johnson & Johnson on Tuesday reported fourth-quarter earnings and revenue that narrowly edged out Wall Street’s expectations as sales in the corporate’s pharmaceutical and medical devices businesses surged.
J&J also provided full-year guidance for 2024, forecasting sales of $87.8 billion to $88.6 billion and adjusted earnings of $10.55 to $10.75 per share.
Here’s what J&J reported for the fourth quarter compared with what Wall Street was expecting, based on a survey of analysts by LSEG, formerly often known as Refinitiv:
- Earnings per share: $2.29 adjusted vs. $2.28 expected
- Revenue: $21.40 billion vs. $21.01 billion expected
Shares of J&J fell greater than 2% on Tuesday following the outcomes.
J&J, whose financial results are considered a bellwether for the broader health sector, booked $21.40 billion in total sales for the ultimate three months of 2023, up 7.3% from the identical quarter in 2022.
The pharmaceutical giant reported net income of $4.13 billion, or $1.70 per share throughout the quarter. That compares with net income of $3.23 billion, or $1.22 per share, for the year-ago period.
Excluding certain items, adjusted earnings per share were $2.29 for the fourth quarter of 2023.
The outcomes come six months after J&J accomplished its separation from its consumer health unit Kenvue, the corporate’s biggest shake-up in its nearly 140-year history.
During an earnings call Tuesday, J&J executives said earnings growth in the primary half of the yr will profit from a 191 million share reduction in Kenvue. The third quarter will see a “partial profit,” they added.
Meanwhile, J&J is zeroing in on its pharmaceutical and medical devices divisions to drive growth.
Segment results
J&J’s medical devices business generated sales of $7.67 billion, up 13.3% from the fourth quarter of 2022. Wall Street was expecting revenue of $7.50 billion, in line with StreetAccount.
J&J said its acquisition of Abiomed, a cardiovascular medical technology company, in December fueled the year-over-year rise.
The corporate said growth also got here from electrophysiological products, which evaluate the guts’s electrical system and help doctors understand the explanation 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.
Executives added throughout the company’s earnings call that J&J expects the medical devices business to have “relatively consistent” operational sales growth all year long.
The Recent York Stock Exchange welcomes Johnson & Johnson (NYSE: JNJ) to the rostrum. To honor the occasion, Joaquin Duato, Chairman and Chief Executive Officer, joined by Lynn Martin, NYSE President, rings The Opening Bell®.
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Meanwhile, J&J reported $13.72 billion in pharmaceutical sales, marking 4.2% year-over-year growth. Excluding sales of its unpopular Covid vaccine, the pharmaceutical division raked in $13.68 billion.
It was the third quarter with none U.S. sales from J&J’s Covid vaccine, which brought in $44 million in international revenue.
Wall Street was expecting sales of $13.44 billion for the business segment, in line with StreetAccount. The business, also often known as “Revolutionary Medicine,” is targeted on developing drugs across different disease areas.
J&J said growth within the division 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.
The corporate’s blockbuster drug Stelara, which is used to treat several chronic and potentially disabling conditions similar to Crohn’s disease, also contributed to growth.
J&J began to lose patent protections on Stelara late last yr, which opened up the door for cheaper biosimilar competitors to enter the market. But the corporate has bought itself more time: J&J has signed settlement agreements with Amgen and other drugmakers to delay the launch of some Stelara copycats to 2025.
J&J said growth within the pharmaceutical segment 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. Each Imbruvica and Stelara will probably be subject to the primary round of Medicare drug price negotiations under the Inflation Reduction Act.
J&J expects its pharmaceutical segment to book barely stronger sales in the primary half of the yr in comparison with the second, largely as a result of the entrance of Stelara biosimilars in Europe in mid-2024, executives said throughout the earnings call.
J&J has said it expects sales in its pharmaceutical unit to grow at a compounded annual rate of 5% to 7% between 2025 and 2030.
The corporate, which plans to launch not less than 20 latest therapies by 2030, has also said that over 10 of its products had the potential to generate greater than $5 billion in peak yr sales, including its newer cancer treatments Talvey and Tecvayli.
Medicare negotiations
J&J will soon begin price talks with the federal Medicare program over Stelara in addition to blood thinner Xarelto.
President Joe Biden’s Inflation Reduction Act, which passed in 2022, empowered Medicare to barter down 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 in October, even after it sued the Biden administration to halt the method in July.
The negotiated prices for the drugs will go into effect in 2026.
The fourth-quarter results also come amid investor concern over the 1000’s of lawsuits claiming that J&J’s talc-based products were contaminated with the carcinogenic asbestos and caused ovarian cancer and a number of 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 latest subsidiary, LTL Management, which immediately filed for Chapter 11 bankruptcy protection. But a federal bankruptcy judge in July rejected J&J’s second try to resolve those lawsuits in bankruptcy. J&J has said LTL Management intends to appeal the choice.