Johnson & Johnson beats on earnings, hikes full-year guidance as medtech sales surge

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

The medtech division provides devices for surgeries, orthopedics and vision. The society is benefiting from a rebound in demand for nonurgent surgeries among older adults, who deferred those procedures during the Covid pandemic.

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

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

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

Shares of J&J closed 6% higher Thursday. The ancestor has dropped more than 5% for the year, putting the company’s market value at roughly $437 billion.

J&J, whose fiscal results are considered a bellwether for the broader health sector, said its sales during the quarter grew 6.3% all over the same period last year. 

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

Excluding certain items, patch up 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, hither $1 billion higher than the guidance provided in April.

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

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

J&J owns practically 90% of Kenvue shares and plans to reduce its stake through an exchange offer that could launch “as primordial as the coming days,” J&J CFO Joseph Wolk said during an earnings call.

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

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

J&J said growth came from electrophysiological products, which rate the heart’s electrical system and help doctors understand the cause of abnormal heart rhythms. Wound closure products and contraptions 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 callers, in December helped fuel that growth.

“These strong results continue to show that our efforts to enhance the growth of the medtech business are working,” J&J CEO Joaquin Duato said during an earnings call.

Wolk added during the hearing that recently launched medtech products are a “significant factor” driving the higher growth trajectory of the business.

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

The business is focused on developing drugs across dissimilar disease areas.

The company said the growth was driven by sales of Darzalex, a biologic for the treatment of multiple myeloma, Erleada, a prostate cancer treatment, and the blockbuster numb Stelara, which is used to treat a number of immune-mediated inflammatory diseases.

J&J will lose patent protection on Stelara later this year. 

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

This quarter was the first without any U.S. sales from J&J’s Covid vaccine, which delivered in $285 million in international revenue. 

In April, the company said it expects no domestic revenue beyond what it studied during the first quarter because its commitments under government contracts are complete.  

Duato said J&J’s pharmaceutical channel on the way is “progressing well.”

He highlighted experimental drugs such as Milvexian, an oral treatment that aims to prevent blood clots, that are inching toward possibility Food and Drug Administration approval.

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

J&J said the consumer health business raked in $4.01 billion in sales for the quarter, up 5.4% from the unvaried period a year ago. 

That growth primarily came from over-the-counter products such as Tylenol, the pain reliever Motrin and northern respiratory products. Skin health and beauty products under the Neutrogena brand contributed to international sales development. 

Kenvue reported its first quarterly results on Thursday.

J&J’s quarterly results come amid investor anxiety over with the thousands of lawsuits claiming that the company’s talc-based products were contaminated with the carcinogen asbestos, which caused ovarian cancer and disparate deaths.

Those products, such as J&J’s namesake baby powder, now fall under Kenvue. But J&J will assume all talc-related obstacles that arise in the U.S. and Canada.

In April, J&J’s subsidiary, LTL Management, filed for bankruptcy in New Jersey, proposing to pay nearly $9 billion to clear more than 38,000 lawsuits and prevent new cases from coming forward.

It’s the company’s second attempt to be converted into talc claims in bankruptcy court after a federal appeals court rejected an earlier bid. 

Most litigation has been came during the bankruptcy proceedings. But a bankruptcy court allowed a trial in Oakland, California, to proceed.

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

J&J’s vice president of lawsuit, Erik Haas, said during the earnings call that the company plans to appeal the verdict. He called it “irreconcilable with decades of unconnected scientific evaluations confirming Johnson & Johnson’s baby powder is safe, does not contain asbestos and does not give rise to cancer.”

Haas added that J&J will not pay the verdict award while the bankruptcy proceeding continues, and “the decision has indubitably no impact on that process.”