Johnson & Johnson Surpasses Expectations, Boosts Outlook
Johnson & Johnson (JNJ) delivered a strong third-quarter performance, exceeding analyst expectations for both sales and adjusted profit. The healthcare giant’s positive momentum fueled a boost in its full-year guidance, signaling a robust outlook for the remainder of 2023.
The pharmaceutical and medical device company reported sales of $22.47 billion for the quarter ended September, marking a 5.2% year-over-year (YoY) increase. This growth was driven by a strong performance in the medical devices unit, which saw sales climb 5.8% to $7.9 billion. However, the MedTech segment faced headwinds from economic slowdowns in China and Japan, along with a physician’s strike in Korea.
J&J’s cancer drugs continued to shine, with sales soaring nearly 19% globally. Darzalex, the company’s multiple myeloma treatment, generated over $3 billion in sales, reflecting a 20.7% YoY increase. This growth was attributed to regulatory approvals for additional uses and the increased adoption of the subcutaneous version of Darzalex, which significantly reduces treatment time. Carvykti, another cancer cell therapy, contributed $286 million in sales.
While the company celebrated successes in its oncology portfolio, Stelara, its blockbuster psoriasis drug, experienced a revenue decline of 6.6% to $2.68 billion. Sales are expected to fall further next year as J&J faces competition from six biosimilar competitors in the U.S.
Net income took a hit, plummeting 38% to $2.69 billion due to one-time expenses, including acquisitions and legal costs. However, adjusted earnings, which exclude these one-time charges, declined 9% YoY to $2.42 per share, still surpassing the LSEG consensus estimate of $2.21 per share.
A Brighter Future: Raised Guidance and Long-Term Confidence
The New Jersey-based healthcare conglomerate expressed optimism for the future by raising its full-year outlook. Previously, J&J projected full-year sales between $89.2 billion and $89.6 billion. The company now anticipates a range between $89.4 billion and $89.8 billion. Including one-time charges related to mergers and acquisitions, J&J expects full-year earnings to be between $9.86 and $9.96 per share. This revised estimate reflects improved performance outlook, although it’s partially offset by a charge from the recent acquisition of V-Wave, a privately-held medical technology company.
Despite the loss of exclusivity for Stelara, J&J remains confident in its ability to achieve pharmaceutical sales exceeding its $57 billion target by 2025. While talc litigation concerns continue to cast a shadow on the company’s long-term prospects, the recent earnings report suggests a healthy current business and financial performance.
Walgreens Struggles Continue, Leading to Store Closures
In contrast to J&J’s positive news, Walgreens Boots Alliance (WBA), the struggling pharmacy chain operator, announced plans to close 1,200 stores. Under the leadership of Tim Wentworth, WBA has embarked on a turnaround journey amidst a challenging environment marked by sluggish consumer spending and low drug reimbursement rates. The company is facing significant pressure to streamline operations and adapt to the evolving retail landscape. These closures are part of a broader strategy to improve profitability and navigate these difficult market conditions.
Navigating the Healthcare Landscape
The contrasting performances of J&J and WBA highlight the dynamic nature of the healthcare industry. While some companies thrive, others face significant challenges. J&J’s success underscores the growing demand for innovative pharmaceutical solutions and the importance of adapting to evolving market dynamics. Meanwhile, WBA’s struggles emphasize the need for adaptability and cost-efficiency in the face of evolving consumer preferences and economic headwinds. The industry is expected to continue evolving in the coming years, presenting both opportunities and challenges for companies operating in this space.