Image source: Johnson & Johnson.

Healthcare giant Johnson & Johnson (JNJ -0.81%) has been a household name for decades, with mainstays like Band-Aid and Tylenol helping to drive consumer awareness of the company's extensive product list. Yet the consumer segment is now Johnson & Johnson's smallest in terms of sales, and the conglomerate's efforts to expand in the pharmaceutical and medical device arena have been vital to the company's overall success. Coming into Tuesday's second-quarter financial report, J&J investors were somewhat concerned that the company wouldn't be able to keep its bottom line moving upward. However, its results quashed those concerns and showed signs of life in some of the most challenging areas for J&J recently.

Let's look more closely at how Johnson & Johnson did and what the future looks like for the healthcare giant.

J&J keeps looking stronger

Johnson & Johnson's second-quarter financials indicated that growth appears to be accelerating for the company. Revenue rose nearly 4% to $18.48 billion, and that was more than half a billion dollars higher than most investors following the stock had expected. One-time items pulled GAAP earnings downward, but after accounting for those extraordinary items, adjusted earnings of $1.74 per share were up from the year-ago quarter and topped the consensus forecast among investors by $0.06 per share.

One contributing factor to the improvement in Johnson & Johnson's results is that the U.S. dollar's strength has started to wane. Adverse currency effects still cost J&J some of its revenue, but the downward hit was only 1.4 percentage points, which was less than half of the impact from the first quarter of 2016. The conglomerate's international business suffered 2.7 percentage points of downward pressure on revenue, concentrated largely on the consumer business and on the Western Hemisphere, excluding the U.S., but the general trend pointed toward less of a drag on J&J's business coming from the dollar going forward.

Strength in J&J's pharmaceutical division once again overwhelmed what its other segments were able to produce. Pharma sales jumped almost 9% during the quarter, while the medical device unit only managed a tepid 0.8% increase. Consumer sales actually fell 1.8% for the quarter, although the division's domestic operations rebounded by reversing first-quarter declines with a solid gain of more than 2%.

From a geographical standpoint, the U.S. business carried the weight for Johnson & Johnson, with international revenue just barely rising in dollar terms. Europe was the weakest in terms of top-line performance, while the Western Hemisphere outside the U.S. managed to overcome double-digit percentage currency pressures to produce the best overall gains.

Details on Johnson & Johnson's biggest growth drivers showed some minor changes but were generally consistent with past quarters. Skin-care and oral-care products were strong for the consumer segment, while the company pointed to psoriasis and arthritis fighter Stelara and anti-inflammatories Simponi and Remicade as key treatments in producing pharma-division growth. Rising demand for joint reconstruction products, endocutters, and Acuvue contact lenses helped keep the medical device segment solid.

What's next for Johnson & Johnson?

CEO Alex Gorsky was pleased with the results. "We continue to see good momentum through the first half of 2016," Gorsky said, and he noted that pharma gains came from "the continued success of new products" and the achievement of "significant clinical milestones advancing our robust pipeline." A focus on building market leadership in key consumer segments while launching new medical-device lines should promote future growth.

As a result, Johnson & Johnson increased its guidance for the year. The healthcare giant increased its revenue projections by $300 million to a range of $71.5 billion to $72.2 billion. An increase of between a nickel and a dime per share produced new adjusted earnings guidance of $6.63 to $6.73 per share.

Looking ahead, J&J hopes some key approvals will produce greater sales. The company's Invokamet treatment for type 2 diabetes received an additional indication from the U.S. Food and Drug Administration, and an expanded label for Imbruvica to include survival and combination data for leukemia and lymphoma patients could lead more physicians to prescribe the drugs. Similar moves from the European Commission with respect to myeloma treatment Darzalex, schizophrenia drug Trevicta, and arthritis drug Simponi, along with Imbruvica, could also help international results.

Investors celebrated Johnson & Johnson's results, sending the stock up more than 2% in pre-market trading after the announcement. Given how well the company has been able to ride the success of its pharmaceutical unit, Johnson & Johnson will have even greater potential for gains if it can succeed in its efforts to squeeze more from medical devices and consumer products going forward.