Johnson & Johnson beats on earnings and hikes outlook as medtech, pharmaceutical sales surge


Johnson & Johnson CFO Joseph Wolk on Q3 results: Very well-positioned into 2024 and beyond

Johnson & Johnson on Tuesday reported adjusted earnings and revenue that topped Wall Street’s expectations, and lifted its full-year guidance as sales in the company’s pharmaceutical and medical devices businesses surged.

It marks J&J’s first quarterly results since it completed the separation from its consumer health spinoff Kenvue in August, the company’s biggest shake-up in its 137-year history.

Upon that split, J&J lowered its full-year sales and profit guidance.

The drugmaker raised that revised outlook on Tuesday: J&J expects 2023 sales of $83.6 billion to $84 billion, compared to a previous guidance of $83.2 billion to $84 billion in August. J&J also expects adjusted earnings per share of $10.07 to $10.13, up from a previous forecast of $10.00 to $10.10.

“We had a strong quarter in 2023, and it’s shaping up to be a strong full-year projection,” J&J CFO Joseph Wolk said Tuesday on CNBC’s “Squawk Box.”

Investors are now focused on how J&J will perform as a standalone pharmaceutical and medical devices company.

Here’s what J&J reported compared with what Wall Street was expecting, based on a survey of analysts by LSEG, formerly known as Refinitiv:

  • Earnings per share: $2.66 adjusted vs. $2.52 expected
  • Revenue: $21.35 billion vs. $21.04 billion expected

J&J’s stock rose more than 1% in premarket trading Tuesday. Shares of J&J have dropped nearly 11% for the year, putting the company’s market value at roughly $379 billion.

The company, whose financial results are considered a bellwether for the broader health sector, said its sales during the quarter grew 6.8% over the same period last year.

The pharmaceutical giant reported net income of $4.31 billion, or $1.69 per share. That was flat compared with net income of $4.31 billion, or $1.62 per share, for the same period a year ago.

Excluding certain items, adjusted earnings per share were $2.66 for the period.

An entry sign to the Johnson & Johnson campus shows their logo in Irvine, California on August 28, 2019.

Mark Ralston | AFP | Getty Images

J&J reported $13.89 billion in pharmaceutical sales, which grew more than 5% year over year. Excluding sales of its unpopular Covid vaccine, the pharmaceutical division raked in $13.85 billion.

That business division is focused on developing drugs across different disease areas.

The company said the growth was driven by sales of Darzalex, a biologic for the treatment of multiple myeloma, along with Erleada, a prostate cancer treatment, and other oncology treatments.

J&J’s blockbuster drug Stelara, which is used to treat a number of immune-mediated inflammatory diseases, also contributed to that growth. J&J will lose patent protection on Stelara later this year.

The company said growth 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 and will be subject to the first round of Medicare drug price negotiations.

J&J’s Covid vaccine also weighed on pharmaceutical sales growth. This quarter was the second without any U.S. sales from J&J’s Covid vaccine, which brought in $41 million in international revenue.

“Our success was never dependent on the Covid vaccine,” Wolk told CNBC.

Meanwhile, sales for the company’s medical devices business rose to nearly $7.46 billion, up 10% from the third quarter of 2022.

J&J said its acquisition of Abiomed, a cardiovascular medical technology company, in December fueled that rise.

J&J said growth came from electrophysiological products, which evaluate the heart’s electrical system and help doctors understand the cause of abnormal heart rhythms. Wound closure products and devices for orthopedic trauma, or serious injuries of the skeletal or muscular system, contributed, along with contact lenses.

The third-quarter results come amid investor anxiety over the thousands of lawsuits claiming that J&J’s talc-based products were contaminated with the carcinogen asbestos, which caused ovarian cancer and several 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 in the U.S. and Canada.

In 2021, J&J offloaded its talc liabilities into a new subsidiary, LTL Management, and immediately filed for Chapter 11 bankruptcy protections. But a federal bankruptcy judge in July rejected J&J’s second attempt to resolve those lawsuits in bankruptcy.

J&J previously said LTL Management intends to appeal the decision.

J&J will hold a conference call with investors at 8:30 am ET.