J&J Profit Rises Amid Legal Woes -- WSJ

By Dave Sebastian and Peter Loftus 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (January 23, 2020).

Johnson & Johnson said its profit and sales rose for the fourth quarter, with increased pharmaceutical and consumer-product sales helping to offset a slight drop in medical-device sales.

J&J's fourth-quarter adjusted earnings topped Wall Street estimates, but its sales fell just short of expectations. J&J shares declined 1.1% to $147.63 in morning trading Wednesday.

Alex Gorsky, chief executive of the New Jersey-based health-products company, told analysts on a conference call the company's performance was strong in 2019, especially in light of challenges including "today's litigious environment" -- a reference to lawsuits against J&J over the safety and marketing of various products such as opioids and baby powder.

The company says it continues to work with a committee of U.S. state attorneys general to finalize last year's agreement in principle for J&J to pay about $4 billion to resolve its portion of the opioid litigation.

The quarterly performance of J&J, one of the world's biggest health-care companies with a range of products spanning the market, is considered a bellwether for the rest of the industry.

The company reported net income of $4.01 billion, or $1.50 a share, compared with $3.04 billion, or $1.12 a share, in the year-ago period. Excluding special items, Johnson & Johnson earned $1.88 a share.

Analysts polled by FactSet were expecting adjusted earnings of $1.87 a share.

U.S. sales rose 1.4% to $10.77 billion from the comparable quarter a year earlier, and international sales rose 2.1% to $9.97 billion. Foreign-exchange rates reduced international sales growth by 1.9 percentage points.

Sales in the company's pharmaceuticals division rose 3.5% to $10.55 billion. Strong sales growth for anti-inflammatory drug Stelara and cancer drug Darzalex helped offset sales declines for cancer drug Zytiga and anti-inflammatory drug Remicade due to generic competition.

Sales in its medical-devices business fell 0.5% to $6.63 billion. Some product segments, such as contact lenses and artificial hips, had sales growth, but a decline in surgery products weighed on the medical-device unit. Mr. Gorsky said he was disappointed in the performance of some of its surgical segment, and the company is developing plans to address that.

Sales of consumer products, which include Neutrogena beauty products and Tylenol medicine, rose 0.9% to $3.57 billion. Over-the-counter medicine sales rose, but baby care products, which include Johnson's Baby Powder, posted a sales decline.

For 2020, the company said it sees operational sales, excluding the impact of currency exchange rates, of $85.8 billion to $86.6 billion. The company expects adjusted operational sales to grow 5% to 6% from a year earlier.

Johnson & Johnson predicted adjusted per-share earnings of $8.95 to $9.10 for 2020.

J&J also is targeting a 20% reduction in its carbon emissions this year, and to procure 35% of its electricity from renewable resources, Mr. Gorsky said.

J&J has had a series of costly legal setbacks. In August, an Oklahoma judge ordered the company to pay $572 million for contributing to the state's opioid-addiction crisis. Overall, J&J is facing lawsuits from about 100,000 plaintiffs over the safety and marketing of products including Johnson's Baby Powder, opioids and medical devices. The company has said it has properly disclosed the risks and benefits of its products, and that it has marketed them appropriately.

Write to Dave Sebastian at [e-mail] and Peter Loftus at [e-mail]

(END) Dow Jones Newswires

January 23, 2020 02:47 ET (07:47 GMT)

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