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Johnson and Johnson On Tuesday it reported fourth-quarter earnings and revenue that narrowly beat Wall Street expectations as sales rose in the company's pharmaceutical and medical device businesses.
J&J also provided full-year 2024 guidance, 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 to what Wall Street expected, according to a survey of analysts by LSEG, formerly known as Refinitiv:
- Earnings per share: $2.29 adjusted vs. $2.28 expected
- Revenue: $21.40 billion vs. $21.01 billion expected
J&J, whose financial results are considered a benchmark for the healthcare sector in general, recorded $21.4 billion in total sales for the last three months of 2023, 7.3% more than in the same quarter of 2022.
The pharmaceutical giant posted net income of $4.13 billion, or $1.70 per share, during the quarter. That compares with net income of $3.23 billion, or $1.22 per share, for the same period a year earlier.
Excluding certain items, adjusted earnings per share were $2.29 for the fourth quarter of 2023.
The results come six months after J&J completed its separation from its consumer health unit. Kenvue, the company's largest restructuring in its almost 140-year history. J&J is now focusing on its pharmaceutical and medical device divisions to drive growth.
Segment results
J&J's medical device business generated sales of $7.67 billion, up 13.3% from the fourth quarter of 2022. Wall Street expected revenue of $7.5 billion, according to StreetAccount.
J&J said its acquisition of Abiomed, a cardiovascular medical technology company, in December drove the year-over-year increase.
The company said growth also came from electrophysiology products, which evaluate the heart's electrical system and help doctors understand the cause of abnormal heart rhythms.
Products and devices for closing wounds due to orthopedic trauma, or serious injuries to the skeletal or muscular system, in addition to contact lenses, were contributed.
J&J is benefiting from an uptick in demand for non-urgent surgeries among older adults, who put off such procedures during the Covid pandemic. The company expects high demand to “maintain” into 2024, Chief Financial Officer Joseph Wolk said Tuesday on CNBC's “Squawk Box.”
Meanwhile, J&J reported $13.72 billion in pharmaceutical sales, up 4.2% year-over-year. Excluding sales of its unpopular Covid vaccine, the pharmaceutical division grossed $13.68 billion.
It was the third quarter without US sales for J&J's Covid vaccine, which generated $44 million in international revenue.
Wall Street expected sales of $13.44 billion for the business segment, according to StreetAccount. The business, also known as “Innovative Medicine”, focuses on the development of medicines for different disease areas.
J&J said the division's growth was driven by sales of Darzalex, a biologic for the treatment of multiple myeloma, along with Erleada, a treatment for prostate cancer, and other oncology treatments.
J&J's blockbuster drug Stelara, which is used to treat several chronic and potentially disabling diseases such as Crohn's disease, also contributed to the growth. J&J began losing patent protection for Stelara late last year, opening the door for cheaper biosimilar competitors to enter the market. But the company has bought itself more time: J&J has signed agreements with Amgen and other drugmakers to delay the launch of some Stelara imitations until 2025.
J&J said growth in the pharmaceutical segment was partially offset by a decline in sales of its prostate cancer drug Zytiga and its blood cancer drug Imbruvica, which is jointly marketed by AbbVie. Both Imbruvica and Stelara will be subject to the first round of Medicare drug price negotiations under the Inflation Reduction Act.
Medicare negotiations
J&J will soon begin talks with the federal Medicare program about pricing for Stelara and the blood thinner Xarelto.
President Joe Biden's Inflation Reduction Act, passed in 2022, authorized Medicare to negotiate drug price reductions for the first time in the program's six-decade history. J&J signed an agreement to participate in pricing talks in October, even after it sued the Biden administration to stop the process in July.
Negotiated drug prices will come into effect in 2026.
The fourth-quarter results also come amid investor concern over thousands of lawsuits claiming J&J's talc-based products were contaminated with carcinogenic asbestos and caused ovarian cancer and several deaths.
Those products, including J&J's namesake baby powder, are now included in Kenvue. But J&J will assume all talc-related liabilities arising in the United States and Canada.
In 2021, J&J transferred its talc liabilities to a new subsidiary, LTL Management, which immediately filed for Chapter 11 bankruptcy protection. But a federal bankruptcy judge in July rejected J&J's second attempt to resolve those claims through bankruptcy. J&J has said LTL Management intends to appeal the decision.
J&J will host a conference call with investors at 8:30 a.m. ET.
This story is developing. Please check for updates.
