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Johnson & Johnson's Earnings Surpass Expectations, but Revenue Falls Short

Johnson & Johnson (NYSE:JNJ) released its fourth-quarter earnings on Jan. 22 before market opening. The world's biggest maker of health care products edged past Wall Street's earnings estimates courtesy of robust sales of its cancer drugs Darzalex and Imbruvica. However, revenue fell short of estimations.

Snapshot of the quarter

The New Brunswick, New Jersey-based company recorded adjusted earnings of $1.88 per share in the fourth quarter, down 4.6% year-over-year. Revenue came in at $20.74 billion, up 1.7%. Analysts had predicted earnings of $1.87 per share on $20.8 billion in revenue.

CEO Alex Gorsky commented, "We delivered strong underlying sales and earnings growth in 2019, driven by the strength of our Pharmaceutical business, accelerating performance in our Medical Devices business and improved profitability in our Consumer business."

Segment performance for 2019

Operational sales of consumer health care products, excluding the impact of acquisitions and divestitures, rose 1.4% for full-year 2019 to $13.9 billion. The company cited strong sales of Neutrogena beauty products, as well as over-the-counter products such as Tylenol and MOTRIN analgesics.

The pharmaceutical unit, which accounts for more than 50% of the company's revenue, witnessed operational sales growth of 5.8% year-over-year to $42.2 billion in 2019, without considering the impact of acquisitions and divestitures. The company attributed the growth to strong sales of anti-inflammatory treatment Stelara as well as Imbruvica, an oral, once-daily therapy approved for use in treating certain B-cell malignancies.

Medical device operational sales, barring the acquisitions and divestitures, soared 3.9% to $25.9 billion owing to growth of electrophysiology products in the Interventional Solutions business and ACUVUE contact lenses in the Vision business. The division also witnessed strong sales of international energy products in the Advanced Surgery business.

Legal expenses

The company faced legal costs of $264 million during the quarter as compared to $1.29 billion in the prior-year quarter relating to lawsuits surrounding its talc and opoids products.

The company's share price has moved up by over 2% so far this year, despite the legal headwinds.


For 2020, the company projects earnings per share to be between $8.95 and $9.10. Revenue is expected to be around $85.4 billion to $86.2 billion. Gorsky said:

"As we enter into 2020 and this next decade, our strategic investments focused on advancing our pipelines and driving innovation across our entire product portfolio, position us well to deliver long-term sustainable growth and value to our shareholders."

Disclosure: I do not hold any positions in the stocks mentioned.

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This article first appeared on GuruFocus.