Johnson & Johnson reported a slightly higher-than-expected profit on Tuesday, driven by strong sales of immune disease treatment Tremfya, but geopolitical issues, including the Middle East conflict, were a drag on its medical devices business.
Shares fell more than 2% before the bell.
The company posted third-quarter revenue of $25.4 billion, above analysts’ average estimate of $25.28 billion, according to LSEG data. Adjusted earnings of $2.59 per share also topped Wall Street expectations of $2.54.
Pharmaceutical sales jumped 7.7% to $16.76 billion. Medical technology division sales rose only 2.5% to $8.6 billion overall. Outside the U.S., the division’s sales were essentially flat.
J&J Chief Financial Officer Joe Wolk said in an interview that the Mideast conflict, austerity measures in Europe, and pricing in China continued to weigh on international results, “but maybe in a little bit more pronounced way.”
He said the Mideast conflict, which has led to soaring fuel costs at home and abroad, has yet to impact the company’s costs, but has hurt sales in the region.
“These are countries that still value and actually want premium healthcare systems, think Kuwait, UAE, Saudi Arabia. They pride themselves on having solid healthcare, very good healthcare,” Wolk said. “But their budgets now are being resourced and allocated towards defense.”
Sales of its Abiomed heart pump business also remained slow after a UK study earlier this year raised questions about using Impella pumps during certain high-risk coronary procedures.
The company had late last year said it intended to separate its orthopedics unit. J&J is leaning toward spinning out its hips-and-knees business, Wolk told the Wall Street Journal.
Tremfya sales rose 68% to $2.4 billion, beating analysts’ estimates of about $2.19 billion, while Stelara sales, which face generic competition, fell 54% to $716 million, still well above Wall Street expectations of $591 million. Tremfya has increasingly replaced lost Stelara revenue following recent approvals in inflammatory bowel diseases.
Sales of blood cancer treatment Darzalex rose about 16% to $4.24 billion, short of analyst expectations of $4.4 billion.
The company raised its full-year sales forecast to about $101.2 billion at the midpoint, from $101.1 billion previously. It increased its adjusted earnings forecast range with a new midpoint of $11.10 per share, up from $11.04.
J&J shares closed at $263.73 on Monday. They have risen 27% this year, outperforming both the broader market and most healthcare peers.
