In their recent quarterly report, healthcare giant Johnson & Johnson exceeded Wall Street’s forecasts with first-quarter adjusted earnings buoyed notably by a surge in sales from its medical devices division. While the company’s total revenue for the quarter remained mostly on par with initial estimates, the medtech segment showed significant momentum owing to the increased demand for nonurgent surgeries among older adults. These procedures had been previously delayed due to the Covid pandemic, causing a spurt in demand observed by healthcare providers such as Humana, UnitedHealth Group and Elevance Health.
In terms of Q1 earnings, Johnson & Johnson reported an adjusted earning per share of $2.71, surpassing the expected $2.64. Revenue, on the other hand, was $21.38 billion, just shy of the projected $21.4 billion figure. The company is often seen as an indicator for the broader health sector’s financial health.
Across the first quarter of 2024, Johnson & Johnson clocked total sales worth $21.38 billion, marking a 2% upward shift from Q1 2023. The company’s net income for the same period was $5.35 billion, equating to $2.20 per share. This was a significant improvement from the net loss of $491 million, or 19 cents per share, experienced during the same period in 2023. The previous losses were attributed to costs associated with its talc baby powder liabilities and the spinoff of its consumer health unit Kenvue.
More so, the company has refined its annual guidance with an expectation of sales figures in the range of $88 billion to $88.4 billion. This comes in comparison to a previous forecast of $87.8 billion to $88.6 billion. Adjusted earnings are estimated to be $10.57 to $10.72 per share.
In a show of confidence, Johnson & Johnson announced a 4.2% increase in its quarterly dividend to $1.24 per share. This dividend has a payable date of June 4 and represents 62 consecutive years of dividend increases for the company.
Johnsons & Johnson’s recent acquisition of heart device firm Shockwave Medical for $13.1 billion supplements its cardiovascular unit aims. Alongside two other similar purchases over the past two years – Abiomed for $16.6 billion and private company Laminar for $400 million – this highlights the company’s goal to bolster its medical devices business following the separation from consumer healthcare unit Kenvue last year. The result is a Q1 sales figure of $7.82 billion for Johnson & Johnson’s medical devices business.
The pharmaceutical venture of Johnson & Johnson also charted about 1% year-over-year growth with sales totaling $13.56 billion. This was mainly driven by the sales of Darzalex (multiple myeloma treatment) and Erlaeda (prostate cancer treatment). However, sales of Stelara, a treatment for several chronic and potentially disabling conditions such as Crohn’s disease, remained flat as patent protections began to wear off.
In spite of prosperous earnings, Johnson & Johnson continues to grapple with a multitude of lawsuits alleging the contamination of its talc-based products with the carcinogen asbestos, resulting in ovarian cancer and multiple deaths. In efforts to resolve these, the company has reached a tentative agreement to settle an investigation concerning the safety of its talc-based products by over 40 states with a payment of $700 million. Despite this, a few claims are still set to go to trial this year.
