Johnson & Johnson reported better-than-expected third-quarter results on Tuesday, but has adjusted its full-year earnings outlook due to costs associated with its recent acquisition of heart technology company V-Wave. The healthcare products conglomerate is now forecasting adjusted earnings between $9.88 and $9.98 per share for 2024, a revision down from the previous guidance of $9.97 to $10.07.
Revenue estimates have also shifted, expected to be between $88.4 billion and $88.8 billion, compared to earlier projections of $88 billion to $88.4 billion. Current consensus on Capital IQ stands at a normalized EPS of $9.83 with revenue of $88.46 billion. This revised guidance reflects the effects of the pharmaceutical giant's acquisition of V-Wave, which was part of a deal valued at up to $1.7 billion completed last week.
Following this news, the stock experienced a decline of 1.8% in Tuesday trade. "With the addition of the V-Wave transaction, we now anticipate our 2024 adjusted pretax operating margin to decline by approximately 200 basis points," Chief Financial Officer Joseph Wolk mentioned during the earnings call.
He continued to emphasize that the company is focused on advancing and accelerating its pipeline, indicating an expectation of elevated investment levels in the fourth quarter. In terms of third-quarter performance, adjusted EPS fell 9% year over year to $2.42, although it exceeded the Street's expectations of $2.21.
This performance was affected by an acquired in-process research and development expense of $1.25 billion, as Jessica Moore, the company's head of investor relations, discussed during the call. Sales saw an increase, rising to $22.47 billion from $21.35 billion the previous year, surpassing analysts' estimates of $22.17 billion.
The Medtech segment demonstrated a strong performance, with revenue advancing by 5.8% year over year to $7.89 billion. This growth was primarily driven by operational sales growth of 6.4%, which was largely attributed to advancements in electrophysiology products, wound closure products used in general surgery, contact lenses in vision, and the impact of Abiomed, a cardiovascular medical technology provider acquired in 2022.
Moreover, the innovative medicine segment reported a 4.9% growth in sales, reaching $14.58 billion. Operational revenue for this segment improved by 6.3%, spurred by notable products such as the blood cancer therapy Darzalex, and the prostate cancer medication Erleada. In the US market, revenue increased to $12.91 billion from nearly $12 billion the previous year, while international sales also saw a rise, moving up 2.2% to $9.56 billion.
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