Johnson & Johnson narrowly tops quarterly estimates as pharmaceutical, medtech sales jump
In this article JNJ Follow your favorite stocks CREATE FREE ACCOUNT

The stock trading graph of Johnson & Johnson is seen on a smartphone screen. Rafael Henrique | SOPA Images | LightRocket | Getty Images

Johnson & Johnson on Tuesday reported fourth-quarter earnings and revenue that narrowly edged out Wall Street's expectations as sales in the company's pharmaceutical and medical devices businesses surged. J&J also provided full-year guidance for 2024, forecasting sales of $87.8 billion to $88.6 billion and adjusted earnings of $10.55 to $10.75 per share. Here's what J&J reported for the fourth quarter compared with what Wall Street was expecting, based on a survey of analysts by LSEG, formerly known as Refinitiv: Earnings per share: $2.29 adjusted vs. $2.28 expected

$2.29 adjusted vs. $2.28 expected Revenue: $21.40 billion vs. $21.01 billion expected Shares of J&J closed more than 1% lower on Tuesday following the results. J&J, whose financial results are considered a bellwether for the broader health sector, booked $21.40 billion in total sales for the final three months of 2023, up 7.3% from the same quarter in 2022. The pharmaceutical giant reported net income of $4.13 billion, or $1.70 per share during the quarter. That compares with net income of $3.23 billion, or $1.22 per share, for the year-ago period. Excluding certain items, adjusted earnings per share were $2.29 for the fourth quarter of 2023. The results come six months after J&J completed its separation from its consumer health unit Kenvue , the company's biggest shake-up in its nearly 140-year history. During an earnings call Tuesday, J&J executives said earnings growth in the first half of the year will benefit from a 191 million share reduction in Kenvue. The third quarter will see a "partial benefit," they added. Meanwhile, J&J is zeroing in on its pharmaceutical and medical devices divisions to drive growth.

Segment results

J&J's medical devices business generated sales of $7.67 billion, up 13.3% from the fourth quarter of 2022. Wall Street was expecting revenue of $7.50 billion, according to StreetAccount. J&J said its acquisition of Abiomed, a cardiovascular medical technology company, in December fueled the year-over-year rise. The company said growth also 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. J&J is benefiting from a rebound in demand for nonurgent surgeries among older adults, who deferred those procedures during the Covid pandemic. The company expects that high demand to "follow through" in 2024, CFO Joseph Wolk said Tuesday on CNBC's "Squawk Box." Executives added during the company's earnings call that J&J expects the medical devices business to have "relatively consistent" operational sales growth throughout the year.

The New York Stock Exchange welcomes Johnson & Johnson (NYSE: JNJ) to the podium. To honor the occasion, Joaquin Duato, Chairman and Chief Executive Officer, joined by Lynn Martin, NYSE President, rings The Opening Bell®. NYSE

Meanwhile, J&J reported $13.72 billion in pharmaceutical sales, marking 4.2% year-over-year growth. Excluding sales of its unpopular Covid vaccine, the pharmaceutical division raked in $13.68 billion. It was the third quarter without any U.S. sales from J&J's Covid vaccine, which brought in $44 million in international revenue. Wall Street was expecting sales of $13.44 billion for the business segment, according to StreetAccount. The business, also known as "Innovative Medicine," is focused on developing drugs across different disease areas. J&J said growth in the division 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.

The company's blockbuster drug Stelara, which is used to treat several chronic and potentially disabling conditions such as Crohn's disease, also contributed to growth. J&J began to lose patent protections on Stelara late last year, which opened up the door for cheaper biosimilar competitors to enter the market. But the company has bought itself more time: J&J has signed settlement agreements with Amgen and other drugmakers to delay the launch of some Stelara copycats to 2025. J&J said growth in the pharmaceutical segment 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 . Both Imbruvica and Stelara will be subject to the first round of Medicare drug price negotiations under the Inflation Reduction Act. J&J expects its pharmaceutical segment to book slightly stronger sales in the first half of the year compared to the second, largely due to the entrance of Stelara biosimilars in Europe in mid-2024, executives said during the earnings call. J&J has said it expects sales in its pharmaceutical unit to grow at a compounded annual rate of 5% to 7% between 2025 and 2030. The company, which plans to launch at least 20 new therapies by 2030, has also said that over 10 of its products had the potential to generate more than $5 billion in peak year sales, including its newer cancer treatments Talvey and Tecvayli.

Medicare negotiations