J&J 4Q sales rise despite pandemic, but charges cut profits
A big jump in prescription drug sales boosted fourth-quarter revenue at Johnson & Johnson, despite the coronavirus pandemic cutting into sales of products from contact lenses to surgical equipment and other medical devices used in procedures at hospitals swamped with COVID-19 patients.
Profits dove 57% due to higher research spending, plus litigation and other one-time charges totaling $2.4 billion, but the results still cruised past Wall Street expectations. J&J shares added $5.18, or 3.1%, to hit $171.16 in early afternoon trading Tuesday.
Johnson & Johnson didn’t give any updates on its coronavirus vaccine research, but executives on a conference call to discuss the quarterly results repeatedly told analysts that J&J expects to share results from its late-stage study of its experimental COVID-19 vaccine — the first requiring only one dose — “by early next week.”
The vaccine could become the third to receive emergency use authorization in the U.S., likely in February, following partners Pfizer and BioNTech, who won the first Food and Drug Administration emergency clearance, and Moderna. Both those vaccines, which use different technology than J&J’s, were granted emergency use authorization in December.
Meanwhile, Johnson & Johnson also is testing a two-dose vaccine as a backup and should have results on that in 2021′s second half.
The world’s biggest maker of health care products reported net income of $1.74 billion, or 65 cents per share, down from $4.01 billion, or $1.50 per share, a year earlier.
Adjusted net income came to $4.97 billion, or $1.86 per share, easily topping the $1.81 Wall Street analysts expected.
Quarterly revenue totaled $22.48 billion, up 8.3% from $20.75 billion. Analysts had expected $21.62 billion.
“We think we’re positioned very well as we embark on 2021,” Chief Executive Officer Alex Gorsky told the analysts.
The New Brunswick, New Jersey, company said that the effects of the COVID-19 pandemic reduced sales for prescription medicines and consumer health products, except for increased demand for oral care products, mainly Listerine.
The pandemic, and the associated deferral of many medical procedures, reduced sales of surgery, vision care and orthopedics products. J&J noted its medical devices business results reflected market recovery in 2020′s second half, potentially a good sign for other device makers.
Edward Jones analyst Ashton Evans called the quarter “solid,” despite COVID-19 impacts.
“If successful, JNJ’s vaccine supply this year will greatly help worldwide vaccination efforts, particularly given its relatively simpler storage requirements,” she wrote to investors.
J&J’s single-shot vaccine can be stored at standard refrigeration temperatures, while the Pfizer and Moderna two-dose vaccines must be kept frozen at very cold temperatures.
Prescription drug sales jumped 16.3%, to $12.27 billion, led by immune disorder drug Stelara and cancer drugs Darzelex, Imbruvica and Erleada. Last week, the FDA approved the first long-acting injectable HIV medicine, Cabenuva, which includes the active ingredient in J&J’s drug Edurant, plus a new HIV drug developed by partner Viiv, cabotegravir. Cabenuva only requires shots once a month.
Sales of consumer health products such as Tylenol edged up 1.4% to $3.62 billion. Meanwhile, sales for the medical devices and diagnostics unit dipped nearly 1%, to $6.59 billion.
J&J gave its first financial forecast for 2021, saying it expects sales of $90.5 billion to $91.7 billion and adjusted earnings per share of $9.40 to $9.60. Both were up 10 % or more from 2020 and beat analysts’ 2021 forecasts for revenue of $88.59 billion and adjusted earnings per share of $8.96.
The company didn’t include any impact from the potential vaccine approval in its 2021 forecast, but said it’s on track to meet all its order contracts in the U.S. and elsewhere this year.
J&J now has 16 products or platforms that bring in annual revenue of at least $1 billion — what’s considered blockbuster status — and another dozen products or platforms that have annual revenue topping $2 billion.
For all of 2020, Johnson & Johnson reported revenue of $82.58 billion, up just 0.6% from 2019, and net income of $14.71 billion, which was 2.7% below 2019′s net income.
Follow Linda A. Johnson at https://twitter.com/LindaJ_onPharma
A portion of this story was generated by Automated Insights (http://automatedinsights.com/ap) using data from Zacks Investment Research. Access a Zacks stock report on JNJ at https://www.zacks.com/ap/JNJ
This story has been corrected to show that the CEO is Alex Gorsky, not Gorski.