JNJ | Q3 2024

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Overview

• Non-GAAP EPS of $2.42 beats by $0.21.

• Revenue of $22.5B (+5.4% Y/Y) beats by $330M.

Takeaways

Johnson & Johnson (JNJ) delivered solid results in Q3 2024, showcasing strong growth in key areas despite a few challenges.

CEO Joaquin Duato opened the call by reporting 6.3% operational sales growth, with the Innovative Medicine division posting sales of over $14 billion for the second consecutive quarter. DARZALEX led the way, becoming the first JNJ product to hit $3 billion in quarterly sales.

The company’s recent acquisitions of Shockwave and Abiomed boosted its MedTech business, making JNJ a leader in major cardiovascular intervention markets. This drove double-digit growth in their cardiovascular portfolio, adding to the overall success.

Duato expressed confidence in the company’s future, highlighting that JNJ has now increased its adjusted operational EPS guidance for three quarters in a row, thanks to $18 billion in high-growth mergers and acquisitions this year.

On the financial front, JNJ reported net earnings of $2.7 billion, with diluted EPS at $1.11—down from $1.69 last year. Excluding special items, adjusted EPS came in at $2.42, still a 9% drop.

The company’s NM26 bispecific antibody acquisition added a significant expense, impacting earnings by around 1,900 basis points.

Key portfolio performers like Darzalex, Erleada, and Tremfya saw double-digit growth, while Stelara experienced a 5.7% decline due to biosimilar competition and market share loss. JNJ expects more biosimilar competition for Stelara in the U.S. starting in January 2025.

In MedTech, worldwide sales reached $7.9 billion, up 6.4%. Cardiovascular growth was particularly strong, with Abiomed up 16.3%. Contact lenses grew 4.7%, driven by ACUVUE OASYS, and surgical vision grew 1.9% thanks to TECNIS products.

However, the surgery segment declined 0.7% due to competitive pressures and divestitures.

JNJ invested nearly $5 billion in R&D this quarter (22% of sales), including a $1.25 billion payment for global rights to NM26. Despite ongoing issues in the Asia-Pacific region, particularly China, JNJ remains optimistic, adjusting MedTech growth expectations slightly lower to 5%.

Chief Financial Officer Joe Wolk noted that JNJ's strong balance sheet, with $20 billion in cash and $36 billion in debt, allows the company to continue investing in growth while also rewarding shareholders.

The company increased its full-year sales guidance, now expecting 5.7% to 6.2% growth, and raised EPS guidance to a midpoint of $9.93.