Johnson & Johnson (J&J) reported adjusted earnings and revenue on Tuesday that exceeded Wall Street’s expectations, leading the company to raise its full-year guidance. This comes after J&J completed its separation from consumer health spinoff Kenvue in August, marking the largest shake-up in the company’s history.
After the split, J&J initially lowered its full-year sales and profit guidance, but has now revised its outlook. The company now expects 2023 sales of $83.6 billion to $84 billion, compared to the previous guidance of $83.2 billion to $84 billion. Additionally, J&J now anticipates adjusted earnings per share of $10.07 to $10.13, up from the previous forecast of $10.00 to $10.10.
Investors are closely monitoring J&J’s performance as a standalone pharmaceutical and medical devices company. The company’s stock rose more than 1% in premarket trading following the announcement. However, overall, J&J shares have experienced an 11% decline this year, resulting in a market value of around $379 billion.
J&J’s quarterly results revealed a 6.8% sales growth compared to the same period last year. The pharmaceutical segment accounted for $13.89 billion in sales, with a year-over-year growth of over 5%. Excluding Covid vaccine sales, the pharmaceutical division brought in $13.85 billion. Notably, J&J highlighted strong sales performances from Darzalex, a multiple myeloma treatment, Erleada, a prostate cancer treatment, and other oncology treatments. The blockbuster drug Stelara, which treats immune-mediated inflammatory diseases, also contributed to the division’s growth, but will lose patent protection later this year. However, J&J experienced a decline in sales of Zytiga, a prostate cancer drug, and Imbruvica, a blood cancer drug co-marketed with AbbVie.
The medical devices business reported sales of nearly $7.46 billion, a 10% increase from the third quarter of 2022. The growth was fueled by J&J’s acquisition of cardiovascular medical technology company Abiomed. The company attributed the rise to electrophysiological products, wound closure products, orthopedic trauma devices, and contact lenses.
Despite the positive financial results, J&J continues to face challenges related to ongoing litigation. Numerous lawsuits allege that J&J’s talc-based products, including its baby powder, were contaminated with the carcinogen asbestos, leading to ovarian cancer and fatalities. While these products now fall under Kenvue, J&J remains responsible for any talc-related liabilities in the US and Canada. In 2021, J&J transferred these liabilities to a subsidiary called LTL Management and filed for Chapter 11 bankruptcy. However, a federal bankruptcy judge rejected J&J’s attempt to resolve these lawsuits in bankruptcy in July. J&J plans to appeal the decision.
J&J’s third-quarter results are significant for investors as they indicate the company’s performance as an independent entity. The company will provide further insights during its conference call with investors at 8:30 am ET.
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