December 2, 2023

Johnson & Johnson CFO Joseph Wolk on second-quarter turnaround: We're very well positioned for the second half of 2023

Johnson & Johnson Thursday report Second-quarter revenue and adjusted earnings topped Wall Street expectations and raised full-year guidance as the company’s sales Medical Technology Business jumped up.

The Medical Technologies segment provides surgical, orthopedic, and vision equipment. The company is benefiting from a rebound in demand for non-emergency surgeries among older adults, who have postponed them during the pandemic.

Health insurers such as these have observed an increase in demand UnitedHealth Group and high health.

Johnson & Johnson is like this result Compared with Wall Street expectations, according to a Refinitiv survey of analysts:

  • EPS: Adjusted $2.80 vs. $2.62 expected
  • income: $25.53 billion vs. $24.62 billion expected

Shares of Johnson & Johnson rose about 2% in premarket trading Thursday. Shares of J&J are down more than 10% this year, giving the company a market value of about $412 billion.

J&J’s financial results, considered a bellwether for the broader health sector, said sales rose 6.3% in the quarter from a year earlier.

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

Excluding certain items, adjusted earnings per share for the period were $2.80.

Johnson & Johnson is now forecasting full-year sales of $98.8 billion to $99.8 billion, about $1 billion higher than the guidance it provided in April.

The company raised its 2023 adjusted earnings-per-share forecast to $10.70 to $10.80 a share, from $10.60 to $10.70 a share previously.

In this photo illustration, a stock trading chart for Johnson & Johnson is displayed on a smartphone screen.

Rafael Enrique | Sopa Images | Light Rocket | Getty Images

Sales of the company’s medical device business rose to $7.79 billion, a 12.9% increase from the second quarter of 2022.

J&J said the growth came from electrophysiology products, which assess the heart’s electrical system and help doctors understand the cause of abnormal heart rhythms. Wound closure products and devices for orthopedic trauma or severe injuries to the skeletal or muscular system also contributed.

Johnson & Johnson said its acquisition of cardiovascular medical technology company Abiomed in December also helped drive that growth.

J&J reported drug sales of $13.73 billion, up more than 3% year-over-year. Excluding sales of the unpopular COVID-19 vaccine, the pharmaceutical unit had revenue of $13.45 billion.

The business focuses on the development of medicines in different disease areas.

The growth was driven by sales of biologics Darzalex for multiple myeloma, Erleada for prostate cancer and blockbuster Stelara for a variety of immune-mediated inflammatory diseases, the company said.

Johnson & Johnson will lose patent protection for Stelara later this year.

Growth was partly offset by lower sales of arthritis drug Remicade, which faces competition from biosimilars, or lower-cost drugs with a nearly identical structure.

This quarter marked the first in which Johnson & Johnson’s unpopular COVID-19 vaccine was not sold in the United States. In April, the company said it did not expect domestic revenue to exceed what it reported in the first quarter as commitments to its government contracts were completed.

But the shoot still brought in $285 million in international revenue.

Johnson & Johnson’s (J&J) consumer health business was spun off into a separate company called Kenvue in early May, midway through the quarter.

Johnson & Johnson continues to own nearly 90 percent of Kenvue, which it plans to distribute to shareholders later this year.

J&J said the business posted sales of $4.01 billion in the quarter, up 5.4% from a year earlier.

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

Johnson & Johnson’s quarterly results came as investors fretted over thousands of lawsuits alleging the company’s talcum powder products were tainted with the carcinogen asbestos, causing ovarian cancer and multiple deaths.

These products, such as Johnson & Johnson’s eponymous baby powder, are now owned by Kenvue. However, Johnson & Johnson will assume all talc-related liability arising in the United States and Canada.

Johnson & Johnson subsidiary LTL Management filed for bankruptcy in New Jersey in April, proposing to pay nearly $9 billion to resolve more than 38,000 lawsuits and prevent new ones. This is the company’s second attempt to settle a talc claim in bankruptcy court after a federal appeals court rejected an earlier bid.

Most litigation has been halted during bankruptcy proceedings.

Johnson & Johnson continues to deny the allegations and claims its talc products do not cause cancer.