By Josh Nathan-Kazis

Johnson & Johnson unveiled financial results that beat Wall Street expectations as the company braces for one of its top-selling medicines, Stelara, to go off patent in the coming weeks.

Fourth-quarter sales, disclosed early Wednesday, were $22.5 billion, slightly ahead of the FactSet $22.4 billion consensus estimate. Adjusted earnings for the quarter were $2.04 per share, ahead of the $1.99 consensus call.

Johnson & Johnson also laid out its expectations for 2025. It said it expects to report sales in a range with a midpoint of $89.6 billion, and that operational sales, a non-GAAP measure that excludes the impact of currency conversions, will be in a range with a midpoint of $91.3 billion. Analysts were expecting sales of $91 billion.

The company said it expects operational adjusted earnings in 2025 of between $10.75 and $10.95 per share, and reported adjusted earnings of between $10.50 and $10.80.

Shares were down 1.5% in early trading. Mizuho healthcare equity strategist Jared Holz wrote in an email to investors that the share weakness was likely related to worries over market share for Johnson & Johnson's cardiovascular medical devices.

Cardiovascular sales within the company's medical devices division were $2.1 billion in the fourth quarter, roughly in line with consensus estimates.

The company's Crohn's disease injection Stelara, which had $10.4 billion in worldwide sales in 2024, will begin to face competition from biosimilars in the coming weeks. The company still expects both top and bottom-line growth this year.

Johnson & Johnson Chief Financial Officer Joe Wolk told Barron's that many analysts were failing to account for the strengthening of the U.S. dollar. "The analysts, less than half of them, accounted for the very swift move of the strengthening U.S. dollar, and so that's impacting our results," Wolk said.

Like other pharmaceutical executives, Wolk said he is optimistic about the incoming Trump administration, despite the highly unorthodox picks the president has made to lead his healthcare agencies. "I'm very optimistic that a pro-business, pro-innovation administration will be very good for Johnson & Johnson," Wolk said.

Asked about Robert F. Kennedy Jr., the vaccine-safety skeptic whom President Trump has nominated as secretary of Health and Human Services, Wolk said that he is "certainly open to working with us." He noted that Johnson & Johnson doesn't have a significant vaccine business.

"We're not really in vaccines much anymore, so it's not a priority business for us," Wolk said. "And then with respect to other things that he's addressed, it's really around preventing disease."

Johnson & Johnson shares are down 8.8% over the past 12 months. The stock has struggled to gain traction, and investors remain concerned about litigation the company faces over its baby powders. Wolk said that he is hopeful that litigation could be in its final stages. A key hearing is scheduled for mid-February.

"All signs are pointing to, hopefully this can be responsibly resolved, as we hope," he said.

Last week, the company announced the $14.6 billion acquisition of Intra-Cellular Therapies, which sells a schizophrenia treatment and is testing other medicines to treat neurological conditions. Wolk said the company is excited about the deal but isn't planning more large-scale M&A.

"You never say never, but we like where we've positioned ourselves with respect to using our free cash flow generation, our balance sheet, to do the acquisitions we've done, and it's not as if we're craving to do another," he said.

Sales for the company's drug division were $14.3 billion for the quarter, up 6.3% on an adjusted operational basis from the same quarter last year. Sales for the company's medical device division were $8.2 billion, up 4.6% on an adjusted operational basis.

Earlier this month, the company announced it would temporarily pause the U.S. rollout of a heart device called Varipulse after it investigated four reports of "neurovascular events" in patients. Wolk noted that the device hadn't been officially launched in the U.S., but was going through an "external evaluation" here, and that the product is working well overseas. "We hope to be back in the market, in a market leadership position in electrophysiology, very soon," he said.

Write to Josh Nathan-Kazis at josh.nathan-kazis@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

January 22, 2025 09:09 ET (14:09 GMT)

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