Johnson & Johnson (JNJ) Q3 2023 Earnings Report

Johnson & Johnson on Tuesday reported Adjusted earnings and revenue beat Wall Street expectations and raised full-year guidance as sales rose in the company’s pharmaceutical and medical device businesses.

These are J&J’s first quarterly results since the end of the year separation from its consumer health spinoff Kenvue in August, the company’s largest restructuring in its 137-year history.

After this separation, J&J lowered its sales and profit forecast for the full year.

The drugmaker raised its revised outlook on Tuesday: J&J expects 2023 sales of $83.6 billion to $84 billion, compared with a previous forecast 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.

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

Here’s what J&J reported compared to Wall Street’s expectations, 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 versus expected $21.04 billion

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

The company, whose financial results are considered a benchmark for the entire healthcare sector, said its revenue rose 6.8% in the quarter compared to 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, in the same period last year.

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

J&J reported pharmaceutical sales of $13.89 billion, up more than 5% from a year ago. Excluding sales of its unpopular Covid vaccine, the pharmaceutical division had sales of $13.85 billion.

This division focuses on the development of drugs for various disease areas.

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

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

The company said the growth was partially offset by a decline in sales of its prostate cancer drug Zytiga and blood cancer drug Imbruvica, which are co-marketed AbbVie and will be the subject of the first round of Medicare drug price negotiations.

J&J’s Covid vaccine also weighed on sales growth in the pharmaceutical sector. This quarter was the second without U.S. sales of J&J’s Covid vaccine, bringing in $41 million in international sales.

Meanwhile, revenue at the company’s medical device business rose to nearly $7.46 billion, up 10% from the third quarter of 2022.

J&J said its December acquisition of Abiomed, a cardiovascular medical technology company, fueled the increase.

J&J said the growth was driven by electrophysiology products that evaluate the heart’s electrical system and help doctors understand the cause of cardiac arrhythmias. Wound closure products and devices for orthopedic trauma or severe injuries to the skeletal or muscular system as well as contact lenses contributed to this.

The third-quarter results come amid investor concerns over thousands of lawsuits alleging that J&J’s talc-based products were contaminated with the carcinogen asbestos, which has caused ovarian cancer and several deaths.

Those products, including J&J’s namesake baby powder, now fall under Kenvue. However, J&J assumes all talc-related liabilities arising in the United States and Canada.

In 2021, J&J shifted its talc liabilities to a new subsidiary, LTL Management, and immediately filed for Chapter 11 bankruptcy protection. 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 planned to appeal the decision.

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