Johnson & Johnson Raises Outlook, Beats Profit Estimates -- Update
October 15 2019 - 5:25PM
Dow Jones News
By Patrick Thomas and Peter Loftus
Johnson & Johnson raised its financial forecast for the rest
of 2019, despite grappling with a heavy case load of litigation, as
it reported quarterly results that were above Wall Street
estimates, boosted by gains in its consumer and pharmaceuticals
divisions.
J&J is facing lawsuits in the U.S. from more than 100,000
plaintiffs over product safety and marketing practices for a range
of products including baby powder and opioids. The company, which
says its products are safe, has lost some high-profile trials,
including an $8 billion award of punitive damages last week over
the safety of its antipsychotic Risperdal.
The lawsuits and costly verdicts have hurt J&J's share price
and reputation, while raising expectations that its ultimate tab to
resolve all of the lawsuits could be hefty.
While reporting the quarter's results Tuesday, J&J
executives said business is strong, and they were confident they
could manage the litigation. "We know how to navigate these matters
and we're going to stay focused on the task at hand," Chief
Financial Officer Joseph Wolk told analysts on a conference
call.
Mr. Wolk said he was confident the large Risperdal award
wouldn't stand and noted J&J has won trials, including last
week when juries sided with J&J in cases alleging use of its
baby powder caused cancer.
On Tuesday, a Missouri state appeals court reversed a $110
million jury award in 2017 to a Virginia woman who claimed her use
of J&J's talcum powder caused ovarian cancer. The appeals court
cited lack of jurisdiction. Attorneys for the woman plan to appeal
the ruling.
He also said the company was open to settling lawsuits by state
and local governments alleging J&J contributed to the
opioid-addiction crisis. J&J recently settled with two Ohio
counties, though Mr. Wolk said J&J was unable to find a
"reasonable settlement approach" in Oklahoma, where a judge ordered
the company to pay $572 million to the state after a trial.
J&J shares rose 1.6% on the New York Stock Exchange Tuesday
as investors cheered the company's better-than-expected quarterly
performance.
The New Brunswick, N.J., health-products company reported a
profit of $4.83 billion, or $1.81 a share, compared with $3.93
billion, or $1.44 a share, a year ago.
Excluding special items, J&J earned $2.12 a share. Analysts
surveyed by FactSet were expecting earnings of $1.79 a share, or
$2.01 a share on an adjusted basis.
World-wide sales rose to $20.73 billion from $20.35 billion a
year earlier. Analysts had expected $20.08 billion of revenue in
the quarter.
Sales in its pharmaceuticals division grew by about 5% to $10.88
billion. Sales of Stelara, a treatment for Crohn's disease and
psoriasis, rose 30% to $1.7 billion, helping to offset an 18%
decline in sales of arthritis drug Remicade caused by competition
from lower-priced copies.
Sales in its medical-devices business fell 3% to $6.38 billion,
but analysts said the result was better than expected. Sales of
consumer products, which include products such as Band-Aid bandages
and Tylenol medicine, increased nearly 2% to $3.47 billion. Sales
of baby-care products, which include the company's signature baby
powder and shampoo, declined nearly 12% to $417 million.
The company now expects reported sales for the year to be
between $81.8 billion and $82.3 billion, up from its previous
outlook of $80.8 billion to $81.6 billion.
J&J raised its adjusted per-share earnings guidance to
between $8.62 and $8.67 from between $8.53 and $8.63.
Write to Patrick Thomas at Patrick.Thomas@wsj.com and Peter
Loftus at peter.loftus@wsj.com
(END) Dow Jones Newswires
October 15, 2019 18:10 ET (22:10 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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