Still, the New Brunswick, N.J.-based healthcare conglomerate raised its outlook for the rest of the year based on the impact of its pending $30 billion acquisition of Swiss biotech firm Actelion (VTX:ATLN).
J&J posted overall profits of $4.42 billion, or $1.61 per share, on sales of $17.77 billion for the 3 months ended March 31, for flat growth on the bottom line and a 1.6% sales bump compared with Q1 2016. Adjusted to exclude 1-time items, earnings per share were 7¢ ahead of The Street at $1.83 apiece, but sales fell short of the consensus $18.03 billion outlook.
“Johnson & Johnson’s 1st-quarter results are in line with our expectations and we are confident we will achieve the full-year financial guidance we established at the beginning of the year. The pending acquisition of Actelion demonstrates our ongoing commitment to bringing innovation to patients with significant unmet needs, and provides a unique opportunity for us to expand our portfolio with leading, differentiated in-market medicines and promising late-stage products,” chairman & CEO Alex Gorsky said in prepared remarks.
Johnson & Johnson said it now expects to report adjusted EPS of $7.12 to $7.27 this year, up from prior guidance of $6.93 to $7.08. Full-year sales are now pegged at $76.1 billion to $76.8 billion, compared with $74.1 billion to $74.8 billion previously.
JNJ shares ticked down -0.5% to $125.10 apiece today in pre-market trading.
Medical device sales grow 3%
Overall sales for J&J’s medical device business grew 3.0% to $6.29 billion, fueled by a 24.7% gain to $798 million in its vision segment. Sales for its largest unit, orthopedics, were $2.33 billion, down -0.7%; J&J’s next-largest medical device business, surgical, were up 1.9% to $2.27 billion.
Diabetes sale were off -7.0% at $399 million, with cardiovascular sales rising 1.4% to $449 million, Johnson & Johnson said.
Leerink Partners analyst Danielle Antalffy, writing this morning in a note to investors, said the medtech division “delivered a notable quarter of outperformance,” topping the consensus by about $60 million and her own forecast by approximately $15 million.
“But this solid growth comes up against a particularly tough 1Q16 comp, and we believe this performance by JNJ’s device business – generally regarded as a medtech bellwether – should bode well for the broader medtech universe. To us, this supports our view of an overall healthy utilization backdrop, with potential to improve even further as we move into 2017,” Antalffy wrote. “We believe this performance is basically in line with, and maybe even slightly better than, investor expectations for the group overall.”
“The expected benefit from the Actelion acquisition this year came in lower than our estimates,” added Edward Jones analyst Ashtyn Evans. “Additionally, the company’s total growth came in lower than we expected, which is disappointing.”
“We remain on track for achieving our full-year guidance,” CFO Dominic Caruso said during a conference call with analysts.
“You always worry that these things don’t bounce back as quickly as you would like,” Guggenheim Securities analyst Tony Butler said , adding that J&J has become dependent on acquisitions for growth.
The company said it was continuing to mull its options for certain diabetes businesses, including possible partnerships or divestitures (not including its diabetes drugs).
Material from Reuters was used in this report.