On Tuesday, Johnson & Johnson (NYSE: JNJ) released a rather mixed first-quarter report. Adjusted profit exceeded expectations due to a sharp increase in sales in the medical equipment business, but revenue was roughly in line with expectations. The first-quarter results were released on the heels of JNJ expanding into the cardiovascular space with his $13.1 billion acquisition of cardiac equipment company Shockwave Medical, Inc. (NASDAQ: SWAV).
First quarter highlights
For the period ended March, the healthcare company's revenue was $21.38 billion, roughly in line with LSEG's estimate of $21.4 billion. In his first three months of this year, revenue increased by more than 2% year over year. JNJ reported net income of $5.35 billion, or $2.20 per share, and adjusted earnings of $2.71, beating LSEG's estimate of $2.64. This is a significant difference from last year's comparative quarter, when JNJ posted a net loss due to charges related to its controversial talcum baby powder debt that led to the spinoff of its consumer health division. The quarter's success was driven by strong performance in the medical devices business, where sales increased more than 4% year-over-year to $7.82. JNJ attributed the year-over-year increase to the Abiomed acquisition.
On a less positive note, JNJ reported weak sales of vision care products and surgical equipment. Although Vision Products segment sales were reported to be down 3.3% to $1.26 billion, JNJ is confident of a significant improvement going forward.
JNJ is also focusing on cancer prevention.
Meanwhile, pharmaceutical sales were $13.56 billion, an increase of about 1% from the previous year. But the sector has slumped due to unpopular coronavirus vaccines, and without a vaccine, drug sales would have increased by about 7%. This growth is driven by the company's cancer drugs, namely Darzalex, a treatment for multiple myeloma, and Erleada, a prostate cancer treatment, as well as Calvi, a cell therapy approved for certain blood cancers. This is largely due to other tumor drugs such as Kuti. Analysts expect Dazalex to have sales of more than $11 billion this year, followed by Kalvikti's sales of $1.15 billion.
Over the past two years, JNJ has made significant efforts in its cardiovascular space to strengthen its medical devices business as it separates it from its consumer division. Because before Shockwave Medical, he had already acquired Abiomed and Laminar. During the reported quarter, the Medical Devices segment reported sales of $7.82 billion due to strong demand for Abiomed heart pumps and devices used in wound closure surgeries, while analysts expected sales of $7.88 billion. Was.
But the latest quarter also shows the company is strengthening its position in the fight against cancer, with Pfizer Inc., which is also focused on oncology to combat declining sales of COVID-19 products, NYSE:PFE) and Moderna Inc. (NASDAQ:MRNA). Both Pfizer and Moderna are making big bets on cancer drugs to rebuild their businesses. Pfizer has acquired specialist cancer drug maker Seagen, which it expects to develop at least eight blockbuster drugs by the end of 2020. Pfizer is fighting four major types of cancer. Genitourinary cancer, thoracic cancer, hematological tumor cancer. Meanwhile, Moderna collaborated with Merck to develop a personalized cancer vaccine. Last year, Moderna reported promising mid-term results from a combination therapy for melanoma. Last week, Moderna reported that the treatment also showed positive results in early-stage trials in patients suffering from some types of head and neck cancer. Unsurprisingly, Moderna stock soared to a three-month high following this news last Tuesday.
Targeted full-year guidance
JNJ forecast full-year sales between $88 billion and $88.4 billion, down from the previous range of $87.8 billion to $88.6 billion. For adjusted earnings, JNJ offered a range of $10.57 to $10.72 per share, also lowering its prior expectations of between $10.55 and $10.75. However, given that the Shockwave Medical acquisition is expected to close in the middle of this year, this will undoubtedly change JNJ's full-year outlook.
JNJ is often seen as reflecting trends in the healthcare industry. With the latest results, the pharmaceutical giant signaled its determination to help the sector finally win the battle against cancer.
Disclaimer: This content is for informational purposes only. It is not intended as investment advice.
This article was contributed by an unpaid external contributor. This does not represent Benzinga's reporting and has not been edited for content or accuracy.
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This article shows that Johnson & Johnson is focused on strengthening its business with a spinoff of its consumer health division.
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