Johnson & Johnson surpasses quarterly profit estimates due to significant increase in medical device sales

Johnson & Johnson (J&J) has surpassed quarterly profit estimates, driven by a significant increase in sales in its medical devices business. The company’s first-quarter adjusted earnings per share were $2.71, beating Wall Street’s expectations of $2.64. Revenue for the period was largely in line with estimates at $21.38 billion, slightly below the expected $21.4 billion.

J&J’s medtech division, which provides devices for surgeries, orthopedics, and vision, has experienced a rebound in demand for nonurgent surgeries among older adults. These individuals had deferred procedures during the Covid-19 pandemic. Health insurers such as Humana, UnitedHealth Group, and Elevance Health have also observed this increased demand.

The company’s financial results are considered a bellwether for the broader health sector. J&J reported a total sales figure of $21.38 billion for the first quarter of 2024, representing a growth of over 2% compared to the same quarter in 2023. Net income for the period was $5.35 billion, or $2.20 per share, compared to a net loss of $491 million, or 19 cents per share, in the year-earlier period.

J&J’s full-year guidance has been narrowed to sales of $88 billion to $88.4 billion and adjusted earnings of $10.57 to $10.72 per share. The company also announced an increase in its quarterly dividend to $1.24 per share, marking its 62nd year of consecutive dividend increases.

In terms of its medical device unit, J&J’s sales reached $7.82 billion during the first quarter, up more than 4% year over year. The company attributed this growth to its acquisition of Abiomed and the increased demand for electrophysiological products, wound closure products, orthopedic trauma devices, and contact lenses.

In its pharmaceutical segment, J&J reported $13.56 billion in sales, representing around 1% year-over-year growth. Excluding sales of its Covid vaccine, revenue in the pharmaceutical division grew almost 7%. The company highlighted the success of its biologic drug Darzalex for the treatment of multiple myeloma and its prostate cancer treatment Erleada.

However, sales of J&J’s blockbuster drug Stelara, used to treat chronic conditions such as Crohn’s disease, were relatively flat compared to the same period last year. The company has faced competition from cheaper biosimilar competitors after losing patent protections on Stelara. J&J has signed settlement agreements with drugmakers to delay the launch of some Stelara copycats until 2025.

J&J’s first-quarter results are overshadowed by ongoing lawsuits claiming that its talc-based products, including its baby powder, were contaminated with asbestos and caused ovarian cancer and deaths. The company has reached a tentative settlement to resolve an investigation by more than 40 states into these claims, with a payment of $700 million. However, the settlement does not resolve the individual lawsuits, some of which are scheduled to go to trial this year.

Overall, J&J’s strong quarterly performance in its medical devices business and pharmaceutical segment, along with its narrowed full-year guidance, signals a positive outlook for the company. Despite ongoing legal challenges related to its talc-based products, J&J remains a leader in the healthcare industry, demonstrating resilience and innovation in a rapidly evolving market.