Johnson & Johnson’s fourth quarter earnings were down 25%

Johnson & Johnson’s fourth quarter earnings were down 25%

Johnson & Johnson reported a 25% drop in earnings and sales for the fourth quarter as demand for its Covid-19 vaccine fell, providing a cautious forecast for sales growth as the company undergoes a transformation big.

The New Brunswick, NJ, health care products company said Tuesday that quarterly revenue fell 4.4% to $23.71 billion on fewer vaccine sales and a stronger dollar, below analyst estimates of $23.9 billion, according to FactSet.

Earnings came in at $1.33 a share, down from $1.77 a share a year earlier, as J&J incurred costs related to its Covid vaccine and plans to spin off its consumer health business into a standalone company. Stripping out one-time items, adjusted earnings were $2.35 per share, beating analyst expectations of $2.23 per share.

Johnson & Johnson Vice President and Chairman Worldwide Pharmaceuticals Joaquin Duato (CD), Actelion CEO and founder Jean-Paul Clozel and Johnson & Johnson Chief Scientific Officer Pharmaceuticals Paul Stoffels posing for photographers at Acte

J&J, whose financial results are considered a bellwether for many health sectors, said it expects sales to rise about 5% to between $96.9 billion and $97.9 billion in 2023.

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The company continues to experience pressure on sales due to staffing shortages at hospitals, which have limited growth in procedures using J&J products, and inflation has added to J&J’s costs. The company expects sales and earnings growth to be stronger in the second half of the year than in the first half.

Ticker Security last Change Change %
JNJ JOHNSON & JOHNSON 168.31 -0.43 -0.25%
MRNA MODERNA INC. 196.94 +2.96 +1.53%
PFE PFIZER INC. 44.98 -0.13 -0.29%

“We are assuming that much of the inflationary impact that we had in 2022 will be carried forward,” J&J Chief Financial Officer Joseph Wolk said on a conference call with analysts on Tuesday.

The company has scaled back production of its Covid-19 vaccine amid falling demand. While J&J’s shot was among the first to be offered in 2021, it was not as widely used as versions from Moderna Inc., Pfizer Inc.’s shots. or BioNTech SE, and manufacturing issues have limited the availability of the shot and the risk of a rare but serious one. a blood clotting condition that causes some people to use it. J&J has not introduced an updated Covid-19 booster shot.

Pfizer vaccine

Vials labeled “Coronavirus COVID-19 Vaccine” and a syringe are seen in front of the Pfizer logo in this illustration taken Feb. 9, 2021. (Reuters/Dado Ruvic/Reuters)

Global sales of J&J’s Covid-19 vaccine fell 57% to $689 million for the fourth quarter. Vaccine sales came from outside the US only, with none reported for the US in the most recent quarter.

At the same time, J&J incurred $821 million in vaccine-related costs, including exiting its manufacturing contracts with other companies.

Mr. Wolk said in an interview that the vaccine is mainly used in Africa, and the company will continue to supply doses under pre-purchase contracts through 2023.

In this Wednesday, March 3, 2021, file photo, a pharmacist holds a vial of the Johnson & Johnson COVID-19 vaccine at a hospital in Bay Shore, N.Y. Janssen Pharmaceuticals is a division of Johnson & Johnson. (AP Photo/Mark Lennihan) (AP)

J&J’s largest unit, pharmaceuticals, posted fourth-quarter sales of $13.16 billion, down 7.4% from a year earlier. Sales gains for cancer drugs were more than offset by declining sales of the Covid-19 vaccine and other drugs including treatments for autoimmune diseases.

The company’s medical device unit had sales of $6.78 billion, down 1.2% from a year earlier. Sales declines for surgical products offset gains in certain products used in heart procedures.

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J&J’s consumer health sales rose 1% to $3.77 billion for the quarter, as sales of over-the-counter medicines including Tylenol rose during a tough cold and flu season.

J&J is spinning off its consumer health business into a new company called Kenvue, which will house some of the company’s best-known consumer brands, such as Band-Aid bandages and Tylenol medications.

Tylenol

Boxes of Johnson & Johnson Tylenol aspirin for sale at a pharmacy in Salt Lake City, Utah, U.S., Thursday, Feb. 25, 2021. Photographer: George Frey/Bloomberg via Getty Images (George Frey/Bloomberg via Getty Images/Getty Images)

The plan to spin off the consumer business is one of the biggest changes in J&J’s history, and will leave the rest of the company focused on pharmaceuticals and medical devices.

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Earlier this month, J&J filed documents with securities regulators to prepare for a possible initial public offering of up to about 20% of Kenvue’s shares. If J&J chooses to go ahead with an IPO, it could happen within the next two quarters, and the company plans to fully spin off Kenvue sometime during 2023, Mr. Wolk said.

J&J shares fell 0.5% to $167.31 in morning trading.

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