Johnson & Johnson (JNJ) earnings Q1 2024

Johnson & Johnson The group on Tuesday published an adjusted profit for the first quarter above Wall Street expectations, thanks to the sharp increase in sales of its medical devices business.

At the same time, the company’s total revenue for the period was largely in line with estimates.

J&J’s medtech division provides devices for surgery, orthopedics and vision. The company is benefiting from a rebound in demand for elective surgeries among older adults, who have postponed such procedures during the Covid pandemic. This increased demand has been observed by health insurers like Human, UnitedHealth Group and Élevance Santé.

Here’s what J&J reported for the first quarter compared to what Wall Street expected, based on a survey of analysts by LSEG:

• Earnings per share: $2.71 adjusted vs. $2.64 expected
• Income: $21.38 billion versus $21.4 billion expected

J&J’s financial results are considered a bellwether for the healthcare industry as a whole.

The company reported total revenue of $21.38 billion for the first three months of 2024, up more than 2% from the same quarter of 2023.

The pharmaceutical giant reported net income of $5.35 billion, or $2.20 per share, during the quarter. That compares with a net loss of $491 million, or 19 cents per share, for the year-ago period. At the time, J&J recorded costs related to its talc baby powder liabilities and the spinoff of its consumer health unit. Kenvue.

Excluding certain items in the first quarter of 2024, adjusted earnings per share were $2.71.

J&J also cut its full-year guidance. The company now expects revenue between $88 billion and $88.4 billion. That compares to a previous forecast of $87.8 billion to $88.6 billion.

J&J expects adjusted earnings in the range of $10.57 to $10.72 per share. This compares to a previous forecast of $10.55 to $10.75 per share.

Separately, J&J announced Tuesday that it would increase its quarterly dividend to $1.24 per share, up 4.2% from $1.19 per share. This is the company’s 62nd consecutive year of dividend increases, it said. The dividend is payable on June 4.

The results come weeks after J&J acquired the cardiac device company for $13.1 billion. Medical shockwave – part of its thrust in the cardiovascular space. The two companies said the deal would make J&J a leader in four rapidly growing cardiovascular technology categories.

J&J has acquired two other cardiac device companies in the past two years, spending $16.6 billion to buy Abiomed and $400 million to acquire privately held Laminar.

The deals also aim to strengthen J&J’s medical devices business following the company’s separation from its consumer health unit. Kenvue Last year.

J&J’s medical devices business generated revenue of $7.82 billion in the first quarter, up more than 4% year-over-year. Wall Street expected revenue of $7.87 billion, according to estimates compiled by StreetAccount.

J&J said its acquisition of Abiomed fueled the year-over-year rise. This growth also comes from electrophysiology products, which evaluate the heart’s electrical system and help doctors understand the cause of abnormal heart rhythms, according to J&J.

Wound closure products and devices for orthopedic trauma or serious injuries to the skeletal or muscular system were brought, as well as contact lenses.

Meanwhile, J&J reported $13.56 billion in pharmaceutical sales, representing about 1% year-over-year growth. Excluding sales of its unpopular Covid vaccine, the pharmaceutical division’s turnover increased by almost 7%.

This marked the fourth quarter without any U.S. sales of J&J’s Covid vaccine, which generated $25 million in international revenue.

Analysts expected revenue of $13.5 billion for this business segment, according to StreetAccount. The company, also known as “Innovative Medicine”, focuses on drug development in different disease areas.

The company said growth was driven by sales of Darzalex, a biologic for the treatment of multiple myeloma, and Erleada, a treatment for prostate cancer. J&J’s Carvykti, a cell therapy approved for a certain blood cancer, and other oncology treatments also contributed to the rise.

But first-quarter sales of Stelara, the company’s blockbuster drug used to treat several chronic and potentially disabling conditions such as Crohn’s disease, remained relatively flat compared to the same period last year.

Stelara generated $2.45 billion in revenue for the quarter. Wall Street expected revenue of $2.61 billion.

J&J began losing patent protection on Stelara late last year, which opened the door for cheaper biosimilar competitors to enter the market. But the company signed settlement agreements with Amgen and other drugmakers to delay the launch of some Stelara copycats until 2025.

J&J’s first-quarter results come amid investor concern over tens of thousands of lawsuits claiming the company’s talc products were contaminated with cancer-causing asbestos and caused ovarian cancer and several deaths.

These products, which include J&J’s namesake baby powder, are now under Kenvue. But J&J will assume all talc-related liabilities in the United States and Canada.

In January, J&J announced it had reached a tentative agreement to resolve an investigation by more than 40 states into allegations that the company misled patients about the safety of its talc products. The company will pay $700 million to settle the investigation, its financial director Joseph Wolk told the Wall Street Journal at the time.

Last year, J&J set aside about $400 million to resolve U.S. state consumer protection claims.

Notably, the settlement does not resolve the lawsuits, some of which are expected to go to trial this year.

J&J will hold an earnings conference call with investors on Tuesday at 8:30 a.m. ET.