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 nearly 5 percent in early trading Thursday. The company’s shares are down more than 5% this year, giving it a market value of about $433 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.

The full-year guidance includes results from J&J’s consumer health business, which was spun off into a separate company under the Kenvue name in early May.

Johnson & Johnson owns nearly 90% of Kenvue and plans to reduce its stake through an exchange offer “as early as the next few days,” J&J Chief Financial Officer Joseph Wolk said on an earnings call.

This process will allow Johnson & Johnson shareholders to exchange all or a portion of their shares for common shares of Kenvue.

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 helped drive that growth.

“These strong results continue to demonstrate that our efforts to improve growth in our medtech business are working,” Johnson & Johnson Chief Executive Officer Joaquin Duato said on the earnings call.

Volker added on the conference call that the recent launch of medical technology products is a “significant factor” in driving the business’s higher growth trajectory.

Pharmaceutical business

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.

The quarter marked the first without U.S. sales of J&J’s Covid vaccine, which brought in $285 million in international revenue.

In April, the company said Domestic revenue is not expected to exceed the level reported in the first quarter as commitments under government contracts are completed.

Duato said J&J’s drug pipeline is “progressing well.”

He highlights experimental drugs such as Mirvisianan oral therapy aimed at preventing blood clots, is gaining approval from the U.S. Food and Drug Administration.

Strong pharma performance and upcoming drugs make J&J “very confident” it can meet the unit’s $57 billion annual sales target by 2025, Duato said.

Kenvue results, talc lawsuit

Johnson & Johnson said its consumer health business had 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.

Kenvue reported its releases first-quarter results on Thursday.

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. But the bankruptcy court allowed the trial to take place in Oakland, California.

On Tuesday, the jury decided Johnson must $18.8 million paid A man has claimed to have developed cancer from exposure to baby powder.

Eric Haas, J&J’s vice president of litigation, said on an earnings call that the company plans to appeal the verdict. He called it “incompatible with decades of independent scientific assessments that have confirmed that Johnson’s Baby Powder is safe, asbestos-free and does not cause cancer”.

Haas added that J&J will not pay the judgment while the bankruptcy proceedings continue and that “the decision has absolutely no impact on that process.”

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