Johnson & Johnson raises full-year outlook as drug sales offset medical device pressure

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Johnson & Johnson raises outlook

Highlights

Johnson & Johnson reports third-quarter revenue of $25.4 billion and adjusted earnings of $2.59 per share, both beating consensus estimates.
The company raises full-year sales guidance to $101.2 billion and lifts adjusted earnings midpoint projection to $11.10 per share for 2023.
Tremfya sales surge 68% to $2.4 billion, offsetting a 54% drop in Stelara, while international headwinds and Abiomed weakness persist.

Quarterly results and guidance update

As reported by Reuters, Johnson & Johnson says third-quarter revenue reaches $25.4 billion, above analysts' average estimate of $25.28 billion in LSEG data, while adjusted earnings come in at $2.59 per share compared with expectations of $2.54.

Pharmaceutical sales jump 7.7% in the quarter to $16.76 billion. Sales in the medical technology division rise 2.5% to $8.6 billion overall, while sales outside the U.S. in that business are essentially flat.

The company also raises its full-year forecast for reported sales to about $101.2 billion at the midpoint, from $101.1 billion previously. It lifts its adjusted earnings forecast range to a new midpoint of $11.10 per share, up from $11.04.

International headwinds and product mix shift

Chief Financial Officer Joe Wolk says in an interview that the Middle East conflict, austerity measures in Europe and pricing in China continue to weigh on international results, in a somewhat more pronounced way. He says the conflict has not yet affected company costs despite higher fuel prices, but it has hurt sales in the region.

Sales at Abiomed, the company's heart pump business, also remain slow after a UK study earlier this year raises questions about the use of Impella pumps during certain high-risk coronary procedures.

Tremfya sales rise 68% to $2.4 billion, beating analyst estimates of about $2.19 billion, while Stelara sales fall 54% to $716 million as the product faces generic competition, though that still exceeds Wall Street expectations of $591 million. J&J says Tremfya increasingly replaces lost Stelara revenue following recent approvals in inflammatory bowel diseases.

Sales of blood cancer treatment Darzalex rise about 16% to $4.24 billion, but miss analyst expectations of $4.4 billion. J&J shares close at $263.73 on Monday and are up 27% this year, outperforming the broader market and most healthcare peers.

In our earlier article on UnitedHealth Group’s third-quarter results, we covered the insurer’s stronger-than-expected performance and its decision to raise its full-year adjusted earnings outlook. We also noted that the company is focusing on margin recovery and cost control, including expanded value-based care and AI initiatives to help manage still-elevated medical and pharmacy costs.

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