Johnson & Johnson (JNJ) Q2 earnings report 2023

Johnson & Johnson on Thursday reported second-quarter revenue and adjusted earnings that topped Wall Street’s expectations, and lifted its full-year guidance as sales from the corporate’s medtech business jumped.

The medtech division provides devices for surgeries, orthopedics and vision. The corporate is benefitting from a rebound in demand for non-urgent surgeries amongst older adults, who deferred those procedures throughout the pandemic.

That increased demand has been observed by health insurers like UnitedHealth Group and Elevance Health.

Here’s how J&J results compared with Wall Street expectations, based on a survey of analysts by Refinitiv:

• Earnings per share: $2.80 adjusted, vs. $2.62 expected
• Revenue: $25.53 billion, vs. $24.63 billion expected

Shares of J&J rose greater than 5% in morning trading Thursday. The stock has dropped greater than 5% for the 12 months, putting the corporate’s market value at roughly $436 billion. 

J&J, whose financial results are considered a bellwether for the broader health sector, said its sales throughout the quarter grew 6.3% over the identical period last 12 months. 

The pharmaceutical giant reported a net income of $5.14 billion, or $1.96 per share. That compares with a net income of $4.8 billion, or $1.80 per share, for the same period a 12 months ago.

Excluding certain items, adjusted earnings per share were $2.80 for the period.

J&J is now forecasting full-year sales of $98.80 billion to $99.80 billion, about $1 billion higher than the guidance provided in April.

The corporate raised its 2023 adjusted earnings outlook to $10.70 to $10.80 per share, from a previous forecast of $10.60 to $10.70 per share.

The complete-year guidance includes results from J&J’s consumer health business, which spun out as an independent company under the name Kenvue in early May. 

J&J owns nearly 90% of Kenvue shares and plans to cut back its stake through an exchange offer that would launch “as early as the approaching days,” J&J CFO Joseph Wolk said during an earnings call.

That process will allow J&J shareholders to exchange all or a portion of their shares for Kenvue’s common stock.

Sales for the corporate’s medical devices business rose to $7.79 billion, up 12.9% from the second quarter of 2022.

J&J said growth got here from electrophysiological products, which evaluate the center’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, also contributed.

J&J said its acquisition of Abiomed, a cardiovascular medical technology company, in December helped fuel that growth.

“These strong results proceed to indicate that our efforts were in a position to improve the expansion of the medtech business are working,” J&J CEO Joaquin Duato said during an earnings call.

Wolk added throughout the call that recently launched medtech products are a “significant factor” driving the upper growth trajectory of the business.

J&J reported $13.73 billion in pharmaceutical sales, which grew greater than 3% 12 months over 12 months. Excluding sales of its unpopular Covid vaccine, the pharmaceutical division raked in $13.45 billion. 

The business 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, Erleada, a prostate cancer treatment, and the blockbuster drug Stelara, which is used to treat a variety of immune-mediated inflammatory diseases.

J&J will lose patent protection on Stelara later this 12 months. 

Growth was partially offset by the decline in sales of arthritis drug Remicade, which faces competition from biosimilars, or lower-cost medicines almost equivalent in structure.

This quarter was the primary with none U.S. sales from J&J’s Covid vaccine, which brought in $285 million in international revenue. 

In April, the corporate said it expects no domestic revenue beyond what it reported throughout the first quarter because its commitments under government contracts are complete.  

He highlighted experimental drugs comparable to Milvexian, an oral treatment that goals to stop blood clots, which can be inching toward potential Food and Drug Administration approval.

Duato said the strong pharmaceutical results and potential upcoming drug launches make J&J “very confident” it might meet the division’s 2025 annual sales goal of $57 million.

J&J said the buyer health business raked in $4.01 billion in sales for the quarter, up 5.4% from the identical period a 12 months ago. 

That growth primarily got here from over-the-counter products comparable to Tylenol, the pain reliever Motrin and upper respiratory products. Skin health and sweetness products under the Neutrogena brand contributed to international sales growth. 

Kenvue reported its first quarterly results on Thursday.

On Tuesday, a jury decided that J&J must pay $18.8 million to a person who said he developed cancer from exposure to its baby powder.

J&J vp of litigation Erik Haas said throughout the earnings call that the corporate plans to appeal the decision. He called it “irreconcilable with many years of independent scientific evaluations confirming Johnson & Johnson’s baby powder is protected, doesn’t contain asbestos and doesn’t cause cancer.”

Haas added that J&J won’t pay the decision award while the bankruptcy proceeding continues, and “the choice has absolutely no impact on that process.”