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How Johnson & Johnson Beat Expectations in Q1

By Keith Speights - Apr 20, 2021 at 9:42AM

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The healthcare giant saw a marked recovery from the negative impacts of the COVID-19 pandemic.

Johnson & Johnson (JNJ 0.09%) has been in the news quite a bit recently. And not for good reasons. The healthcare giant's COVID-19 vaccine is still on pause in the U.S. due to concerns about rare blood clotting issues. A key facility where the vaccine is manufactured has been temporarily shut down while the U.S. Food and Drug Administration (FDA) conducts an inspection.

However, the company recently saw some good news for a change. Johnson & Johnson announced its first-quarter results before the market opened on Tuesday. Here are the highlights from J&J's Q1 update. 

COVID-19 vaccine vials.

Image source: Getty Images.

By the numbers

Johnson & Johnson reported revenue in the first quarter of $22.3 billion, an 8% year-over-year jump. This topped the average analysts' revenue estimate of $22.01 billion.

The company announced Q1 net income of $6.2 billion, or $2.32 per share, based on generally accepted accounting principles (GAAP). J&J's GAAP earnings totaled $5.8 billion, or $2.17 per share, in the prior-year period. 

There was a similar improvement on a non-GAAP basis. Johnson & Johnson posted adjusted net income in the first quarter of $6.9 billion, or $2.59 per share. In the prior-year period, the company's adjusted earnings came in at $6.2 billion, or $2.30 per share. J&J also handily beat the consensus analysts' adjusted earnings estimate of $2.34 per share.

Behind the numbers

The best story for Johnson & Johnson in the first quarter came from its medical devices segment. This business was significantly impacted by COVID-19 in 2020. However, sales for the segment jumped 10.9% to nearly $6.6 billion as the medical device market recovered from the pandemic.

J&J's biggest segment also delivered a solid performance in the first quarter. Pharmaceutical segment revenue rose 9.6% to $12.2 billion. Sales increased 7.4% on an operational basis excluding the net impact of acquisitions and divestitures.

This growth was driven by several drugs with especially fast-rising sales. Multiple myeloma drug Darzalex topped the list with Q1 sales soaring 45.6% year over year to nearly $1.4 billion. Autoimmune disease drugs Stelara and Tremfya also were big winners, with sales jumping 18.1% to $2.1 billion and 41% to $418 million, respectively.

Johnson & Johnson also reported sales for its COVID-19 vaccine for the first time in the first quarter. Even though the vaccine didn't win U.S. Emergency Use Authorization until late February, it still raked in $100 million during the quarter.

The company's consumer health segment generated revenue of $3.5 billion, down 2.3% year over year. However, this year-over-year comparison was especially challenging because of the boost in sales of over-the-counter products in the first quarter of 2020 as the COVID-19 pandemic began.

Looking ahead

Despite the solid Q1 performance, the healthcare stock slipped a little in early trading on Tuesday. Why? Johnson & Johnson's full-year guidance was a little lower than what analysts expected.

The company now projects sales of $90.6 billion to $91.6 billion for full-year 2021. This range is narrower than the company's guidance provided in January of sales between $90.5 billion and $91.7 billion. J&J expects adjusted full-year earnings per share (EPS) will come in between $9.42 and $9.57. In January, its outlook projected adjusted earnings per share of $9.40 to $9.60.

An advisory committee is scheduled to meet on Friday of this week to review data about the rare blood clotting issues linked to J&J's COVID-19 vaccine. It's possible that the company will receive more good news with a recommendation for the resumption of the administration of the vaccine.

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