Johnson & Johnson beat first-quarter expectations, as growth in cancer treatments and the health care giant's home market helped counter another revenue hit from the strong dollar.
The health care giant booked a $68 million loss on a one-time charge in the quarter related to its baby powder, and revenue grew more than 5% to $24.75 billion, which was better than anticipated.
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Sales in pharmaceuticals, the company’s largest business, grew 4% in the quarter. The bulk of that revenue came from immunology and cancer treatments. Those include long-standing top sellers like the blood cancer treatment Darzalex and Stelara, which treats psoriasis and other inflammatory disorders.
Aside from prescription drugs, Johnson & Johnson also sells medical devices, including products for knee and hip replacements. Sales in that segment grew more than 7% to $7.5 billion in the quarter.
Chief Financial Officer Joe Wolk said surgical procedures “seem to have hit much more of a steady cadence” in the quarter as they climb back toward levels seen before the COVID-19 pandemic.
The recent acquisition of cardiovascular technology company Abiomed also helped medical devices in the quarter.
J&J also has a consumer health business that sells well-known products like Band-Aids. Sales there grew about 7%. The company expects to spin that business off with an initial public offering by the end of this year.
Overall U.S. sales grew nearly 10% to $12.52 billion in the quarter, while international sales climbed nearly 2%. Not counting the impact of currency rates, international sales grew over 8%.
A strong U.S. dollar affects sales for companies with a lot of international business, and that has hit the top line of J&J and other drugmakers over the past few quarters. Companies with international business convert those sales into dollars when they report earnings. The stronger dollar decreases the value of those sales.
J&J's adjusted earnings totaled $2.68 per share in the first quarter. That topped Wall Street projections for per-share earnings of $2.50, according to a survey by FactSet.
The company also booked in the quarter a one-time charge tied to a proposal for settling lawsuits alleging that its baby powder containing talc causes cancer.
The company said earlier this month that it would set aside nearly $9 billion, more than quadrupling the amount that the company had previously reserved to pay for its potential liability.
J&J pulled the baby powder from U.S. and Canadian store shelves a few years ago and is removing it from worldwide markets this year. The company isn’t admitting any wrongdoing as part of the proposed settlement.
J&J also said Tuesday that its board approved a 5% increase in the company's quarterly dividend. That bumps the payout up 6 cents to $1.19 per share.
The New Brunswick, New Jersey, company also boosted the lower end of its forecasted range for 2023 by a dime. It now expects adjusted operational earnings between $10.50 and $10.60 per share.
Analysts expect earnings of $10.51 per share this year.
Shares of Johnson & Johnson fell 2%, to $162.37 after markets opened Tuesday. The Dow Jones Industrial Average, of which J&J is a component, slipped. ___ Follow Tom Murphy on Twitter: https://twitter.com/thpmurphy