Shares of Johnson & Johnson (JNJ -1.64%) were sliding today as the diversified healthcare company edged past estimates in its fourth-quarter earnings report, but agreed to pay $700 million to settle lawsuits saying that its talc-based baby powder caused cancer.
J&J also announced a settlement with the state of Washington over opioid-related claims for $149.5 million and said it had now resolved all pending litigation over the opioid crisis.
As of 11:08 a.m. ET, the stock was down 2%.
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A good, but not good enough, quarter
Johnson & Johnson said that revenue in the quarter rose 7.3% to $21.4 billion, which topped estimates at $20.99 billion. Growth in the U.S. was particularly strong, with revenue up 11% to $12 billion, while international sales rose just 2.9% to $9.4 billion.
Following the spinoff of Kenvue, the company’s former consumer products division, J&J now has two operating segments: Innovative Medicine, its pharmaceutical division; and MedTech, which refers to medical devices. Revenue from Innovative Medicine rose 4.2% to $13.7 billion, while MedTech sales jumped 13.3% to $7.7 billion.
Adjusted earnings per share rose 12% to $2.29, ahead of estimates by a penny.
J&J made approval progress with a number of new treatments, announcing approvals for drugs like Balversa for bladder cancer, but it is expected to face more competition for its blockbuster Stelara drug as soon as the middle of this year in Europe. On a call with investors, CEO Joaquin Duato said the company was angling for acquisitions, adding that it was willing to “entertain many types of deals.”
Guidance is steady
For the year ahead, the company’s guidance mirrored what it offered in December. It expects operational sales to rise 5% to 6%, reaching $88.2 billion to $89 billion with reported sales increasing 4.5% to 5.5% to $87.8 billion to $88.6 billion, in line with estimates at $88 billion.
On the bottom line, J&J sees adjusted EPS of $10.55 to $10.75, up 6.4% to 8.4%, which compared to the consensus at $10.68.
Overall, the results were solid, but concerns about the legal settlements and competition for Stelara seem to be pushing the healthcare stock lower.
Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Kenvue. The Motley Fool recommends Johnson & Johnson and recommends the following options: long January 2026 $13 calls on Kenvue. The Motley Fool has a disclosure policy.
