TLDR:
- Johnson & Johnson reported better-than-expected Q3 sales and adjusted profit
- Revenue increased 5.2% to $22.47 billion, driven by pharmaceutical and medical device sales
- Net income fell 38% due to one-time expenses like legal costs
- J&J raised its full-year sales outlook but lowered profit projections
- Strong performance of cancer drug Darzalex and depression treatment Spravato helped offset declines in other areas
Johnson & Johnson (JNJ) reported better-than-expected third-quarter results on Tuesday, with revenue and adjusted profit surpassing analyst estimates.
The pharmaceutical and medical device giant posted $22.47 billion in revenue, representing a 5.2% increase year-over-year. This growth was primarily driven by strong performances in its prescription drug and medical device segments.
The company’s pharmaceutical business saw a 4.9% increase in sales, bolstered by the success of cancer drug Darzalex and depression treatment Spravato. Darzalex sales rose an impressive 22.9% to $3.02 billion, while the company’s cancer cell therapy, Carvykti, generated sales of $286 million, up 87.6% compared to the previous year.
Despite the overall positive revenue growth, Johnson & Johnson faced some challenges. Net income fell 38% to $2.69 billion, falling short of expectations due to significant one-time expenses. These included legal costs, intangible asset amortization expenses, and acquisition-related charges totaling over $3 billion.
The medical device segment also showed growth, with sales rising 5.8%. This increase was attributed to strong performances in contact lens and general surgery products.
However, Chief Financial Officer Joseph Wolk noted that excluding recent acquisitions, medical device sales were slightly lower than expected due to economic headwinds in Asia, particularly in Japan and China.
In light of these mixed results, Johnson & Johnson adjusted its full-year outlook for 2024. The company raised its sales projections to a range of $88.4 billion to $88.8 billion, up from the previous estimate of $88 billion to $88.4 billion.
However, it lowered its adjusted earnings per share (EPS) forecast to $9.88-$9.98 per share, down from $9.97-$10.07, to account for the impact of its recently completed acquisition of V-Wave, a company developing treatments for heart failure.
CEO Joaquin Duato expressed confidence in the company’s near- and long-term growth prospects, citing recent drug approvals and development milestones. However, investors remain cautious due to ongoing concerns about future sales declines from the loss of patent exclusivity for Stelara, a major treatment for psoriasis and gut disorders.
Johnson & Johnson is also facing uncertainty regarding the resolution of long-running litigation over the safety of its former talcum-powder products. This legal issue continues to be a point of concern for investors and may impact the company’s financial outlook in the coming quarters.
Despite these challenges, J&J’s shares responded positively to the earnings report, rising 2% in late-morning trading on Tuesday. The stock has seen modest gains of about 5% year-to-date, although it has underperformed compared to broader pharmaceutical indexes.
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