Johnson & Johnson (NYSE:JNJ) reported second-quarter 2024 earnings of $2.82 per share, exceeding the Consensus Estimate of $2.71. This marks a 10.2% increase from the same period last year. Excluding intangible amortization and other special items, adjusted earnings came in at $1.93 per share, reflecting a 5.9% decline year-over-year. J&J’s sales for the quarter reached $22.45 billion, surpassing the Consensus Estimate of $22.38 billion and reflecting a 4.3% increase from the previous year. The operational sales increase was 6.6%, with a negative currency impact of 2.3%. Organically, excluding acquisitions, divestitures, and currency effects, operational sales rose 6.5%. Excluding COVID-19 vaccine sales, organic sales grew by 7.1%.
Domestic sales climbed 7.8% to $12.57 billion. On an adjusted operational basis, domestic sales increased by 7.6%. International sales reported a slight increase of 0.2% to $9.88 billion, with an operational decrease of 5.1% and a negative currency impact of 4.9%. On an adjusted operational basis, international sales grew by 5.3%.
Segment Details
In August 2023, J&J fully separated its Consumer Health business into a newly listed company, Kenvue (KVUE). With this separation, J&J now focuses on the Pharmaceutical and MedTech sectors.
Innovative Medicines Segment:
Sales increased by 5.5% year-over-year to $14.49 billion, with a 7.8% operational increase and a 2.3% negative currency impact. Adjusted operational sales, excluding acquisitions, divestitures, and currency effects, rose 8%. Excluding COVID-19 vaccine sales, organic sales grew by 8.8%.
Key products driving growth included Darzalex, Stelara, Tremfya, Uptravi, and Erleada. New drugs like Carvykti, Tecvayli, and Spravato also contributed. However, lower sales of Imbruvica, COVID-19 vaccine, and competition from generics/biosimilars for drugs like Zytiga and Remicade partially offset this growth.
Key Product Sales:
Darzalex: $2.88 billion (+18.4% YoY)
Stelara: $2.89 billion (+3.1% YoY)
Imbruvica: $770 million (-8.5% YoY)
Erleada: $736 million (+29.8% YoY)
Tremfya: $906 million (+28.3% YoY)
Carvykti: $186 million (+59.8% YoY)
Tecvayli: $135 million (+42.9% YoY)
Spravato: $271 million (+60.2% YoY)
Uptravi: $426 million (+6.6% YoY)
Xarelto: $587 million (-7.9% YoY)
Invega Sustenna/Xeplion/Invega Trinza/Trevicta: $1.05 billion (+2.2% YoY)
Simponi/Simponi Aria: $537 million (+1.6% YoY)
Prezista: $438 million (-11% YoY)
Zytiga: $165 million (-27.7% YoY)
Remicade: $393 million (-14.9% YoY)
MedTech Segment:
Sales reached $7.96 billion, a 2.2% increase from the previous year, with an operational increase of 4.4% offset by a 2.2% negative currency impact. Adjusted operational sales, excluding acquisitions and divestitures, rose 4%. Sales in this segment missed the Zacks Consensus Estimate of $8.22 billion.
2024 Outlook
J&J maintained its total revenue guidance for 2024 in the range of $88.0 billion to $88.4 billion, indicating growth of 4.7% to 5.2%. Operational sales growth is expected to be between 6.1% and 6.6%, up from the previous range of 5.5% to 6%.
However, the adjusted earnings per share (EPS) guidance was revised down from $10.57-$10.72 to $9.97-$10.07 due to financing costs from recent acquisitions of Shockwave Medical and Proteologix. This represents growth of 0.5% to 1.5%, down from the previously expected 6.6% to 8.1%.
On an operational, constant-currency basis, adjusted EPS is expected to increase by 0.8% to 1.8%, compared to the previous expectation of 6.9% to 8.4%.
Our Take
J&J’s second-quarter performance was strong, with both earnings and sales surpassing estimates. The Innovative Medicines unit performed exceptionally well, with several key drugs exceeding expectations. However, Darzalex sales fell short. The MedTech segment also missed sales estimates. J&J lowered its earnings growth expectations for 2024, attributing this to the impact of recent acquisitions.
Despite these challenges, J&J’s Innovative Medicines unit is performing above market levels, driven by key products and new launches. The MedTech unit is benefiting from a recovery in surgical procedures and new products. However, the company faces significant legal expenses from lawsuits related to its talc products and the upcoming patent expiration of Stelara in 2025, which could impact future sales.
J&J’s shares were down slightly in pre-market trading on Wednesday. So far this year, J&J’s shares have declined by 3.7%, compared to a 23.6% increase in the industry.
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