Johnson & Johnson’s earnings beat estimates with boost from medical-technology sales

Johnson & Johnson posted stronger-than-expected earnings for the fourth quarter early Tuesday and offered guidance that topped consensus estimates, but the news failed to prop up the stock, which fell 1.9%.

The company
JNJ,
which spun off its consumer-health operations into the separately listed Kenvue Inc.
KVUE
last year to focus on innovative medicines and medical technology, posted net earnings of $4.132 billion, or $1.70 a share, for the fourth quarter, up from $3.227 billion, or $1.22 a share, in the year-earlier period.

Adjusted per-share earnings came to $2.29, just ahead of the $2.28 FactSet consensus.

Sales rose to $21.395 billion from $19.939 billion a year ago, also ahead of the $21.022 billion FactSet consensus.

By segment, sales at the company’s innovative-medicine business, which includes its COVID-19 vaccines, rose 4.8% to $13.722 billion, while sales at the medical-technology segment rose 13.3% to $7.673 billion.

Growth in innovative medicine was driven by cancer drugs Darzalex and Carvykti as well as psoriasis treatment Stelara, which was one of the 10 drugs selected in late August for the first round of Medicare drug-price negotiations under the Inflation Reduction Act.

That was partially offset by weakness in cancer drugs Zytiga and Imbruvica and immunology treatment Remicade.

In the medical-technology segment, growth was driven by electrophysiology products in interventional solutions, contact lenses in vision, wound-closure products in general surgery, and biosurgery in advanced surgery. The acquisition of Abiomed in 2022 contributed 4.7% of that segment’s growth.

Abiomed makes medical technology that supports circulation and oxygenation. It was acquired by Johnson & Johnson in a deal valued at $16.6 billion. 

Johnson & Johnson said it’s now expecting 2024 adjusted earnings per share of $10.55 to $10.75 and sales of $87.8 billion to $88.6 billion. The FactSet consensus is for EPS of $10.68 and sales of $87.9 billion.

Separately, Chief Financial Officer Joseph Wolk told the Wall Street Journal that the company has tentatively agreed to pay about $700 million to settle a probe brought by more than 40 states into the marketing of talcum-based baby powder, which has been the subject of lawsuits by plaintiffs who claim that the powder caused cancer.

The agreement in principle with attorney general offices in most U.S. states is an “important step” for the New Brunswick, N.J.-based company as it tries to “reasonably put the matter behind us,” Wolk told the paper.

That settlement would address only a portion of the litigation, which involves more than 52,000 plaintiffs. Last year, Johnson & Johnson sought to settle the suits by paying at least $8.9 billion in a bankruptcy plan that would be filed by a subsidiary. The plan was rejected by a bankruptcy judge.

The stock dipped 0.4% premarket. It has gained 3.8% in the last 12 months, while the S&P 500
SPX
has gained 20.7% in the same period.

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