Johnson & Johnson falls despite 42% profit spike amid talc, opioid litigation fears

Johnson & Johnson‘s profit jumped 42% in the second quarter, with all three of the sprawling health-care company’s businesses performing better than Wall Street expected.

Here’s what the company reported compared with Wall Street estimates, based on a survey of analysts by Refinitiv:

  • Earnings per share: $2.58, adjusted, vs. $2.46 expected
  • Revenue: $20.56 billion vs. $20.29 billion expected

J&J makes everything from Acuvue contacts to cancer drugs like Zytiga to Aveeno lotion.

The company reported second-quarter net income of $5.61 billion, or $2.08 per share, a 42% increase from the $3.95 billion, or $1.45 per share, it posted a year earlier. Excluding an intangible amortization expense and special items, J&J earned $2.58 per share, beating the $2.46 per share expected by analysts surveyed by Refinitiv.

Net sales dipped to $20.56 billion, a 1.3% decrease from the year-ago quarter, yet still came in above analysts’ expectations of $20.29 billion. J&J’s pharmaceutical business, which accounts for half of the company’s revenue and includes psoriasis drugs like Stelara and Tremfya, posted revenue of $3.54 billion, better than the $3.52 billion analysts expected, according to estimates compiled by StreetAccount.

J&J’s consumer unit, which makes Aveeno body care and J&J’s namesake baby products, reported revenue of $3.54 billion, topping the $3.52 billion analysts expected. Its medical device business, which includes Acuvue contacts and Ethicon surgical products, reported revenue of $6.49 billion. Analysts had expected $6.43 billion.

“We delivered solid second-quarter underlying sales growth and strong earnings growth that enables us to make investments in innovation to accelerate performance in each of our businesses,” J&J CEO Alex Gorsky said in a statement.

J&J boosted its full-year sales forecast to between $80.8 billion and $81.6 billion, up from the previously guided $80.4 billion to $81.2 billion. The company did not raise its earnings forecast, reiterating the previously guided estimate of adjusted earnings in the range of $8.53 to $8.63 per share.

Shares of J&J rose 0.4% in premarket trading.

The company is trying to balance declining sales from some of its top drugs, like Zytiga, while introducing new ones, like Spravato. Prostate cancer treatment Zytiga lost patent protection last fall and now faces competition from a handful of generic drugs. Meantime, J&J won approval from the U.S. Food and Drug Administration in the spring for Spravato, a ketamine-like nasal spray for treatment-resistant depression.

J&J also faces thousands of lawsuits claiming its talc-based baby powder caused ovarian cancer and mesothelioma, threatening the company’s family-friendly image. The company has fought the charges and insists its baby powder is safe.

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