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The Big Winner for Johnson & Johnson in Q1

By Keith Speights and Brian Orelli, PhD - May 4, 2021 at 6:10AM

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Hint: It wasn't the company's COVID-19 vaccine.

Healthcare giant Johnson & Johnson (JNJ 0.08%) reported its first-quarter results on April 20, 2021. In this Motley Fool Live video, recorded on April 21, Motley Fool contributors Keith Speights and Brian Orelli discuss how J&J performed and which of the company's segments was the biggest winner in Q1.

Keith Speights: The big results for this week were from the biggest healthcare company on the planet, Johnson & Johnson. J&J announced their Q1 results. Brian, what do you think are the highlights from this update that investors should really pay attention to?

Brian Orelli: Sales were up 7.9 percent. Some of that was due to the stronger dollar. Operationally, sales were up 5.5 percent. Consumer Health was down year over year. That's not too surprising since there was a lot of stocking up in the year-ago quarter as the pandemic started happening, so that was understandable. Pharmaceuticals were up 9.6 percent and medical devices were up 10.9 percent. Adjusted earnings per share were up 12.6 percent, so Johnson & Johnson is doing as it always does and growing earnings faster than revenue, which is we'd like to see that continuing. 

COVID-19 vaccine ... there were sort of minimal -- I was expecting more on vaccine news, but I think maybe they're trying not to get ahead of the CDC meeting on Friday. And then on the manufacturing issue, the plant was still closed down at that point and the FDA report hadn't come out yet, and so I think that they didn't really want to say much on that, either. On guidance, they upped the operational sales guidance. I'm now expecting it to grow 8.2 percent to 9.4 percent and then they tightened their adjusted earnings per share, now expected to be up 17.3 percent to 19.2 percent. Overall, I think a pretty good quarter for Johnson & Johnson as it just continues to grow as the biggest healthcare company.

Speights: Yeah. For anyone interested, Johnson & Johnson reported COVID-19 vaccine sales of $100 million, but that was only for around one month. Their vaccine was I guess was authorized in late February, so you're only looking at a month or just barely over one month on the market. Of course, this was all before the pause was put into place because of the rare blood-clotting issues, but that just shows, I mean, the vaccine is really just a blip for J&J right now. It's not a big factor in their financial performance at all.

Orelli: Yeah. They're spending a lot of money to make the vaccine. Although it's going to show up in the revenue line, it doesn't going to show up in the cost line. On the bottom line, it's probably not going to show up very much at all.

Speights: Right. Yeah. They're selling the vaccine at cost during the pandemic, so they're not really making a profit from it. Probably the bigger impact from COVID-19 for J&J is medical device unit. I think it returned to growth in large part because of easing concerns about COVID-19. Medical device sales really punched in 2020 because of the pandemic.

Orelli: Yeah. Nobody wants to go into the hospital if they don't have to during the pandemic.

Speights: Exactly, but overall really pretty solid results from J&J this time around.

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