Johnson & Johnson reported $25.4 billion in third-quarter revenue on Tuesday, while its chief financial officer said the Middle East conflict had hurt regional sales as governments redirected budgets toward defense. The company beat analysts’ estimates, but its medical-technology sales outside the United States were basically flat. Strong drug sales offset pressure on medical devices, while decisions over public budgets sit beyond the company’s control.
A stronger scorecard, uneven results
Revenue came in above analysts’ average estimate of $25.28 billion, according to LSEG data. Adjusted earnings reached $2.59 per share, topping Wall Street’s expectation of $2.54. Pharmaceutical sales rose 7.7% in the quarter to $16.76 billion, while the medical technology division increased sales 2.5% to $8.6 billion overall. Outside the United States, medical-technology sales were basically flat.
Tremfya, the company’s immune disease treatment, helped lift profit. Its sales climbed 68% to $2.4 billion, above analyst estimates of about $2.19 billion. Recent approvals for Tremfya in inflammatory bowel diseases have increasingly helped replace lost revenue from Stelara, whose sales fell 54% to $716 million amid generic competition. Stelara still beat Wall Street expectations of $591 million.
Sales of Darzalex, a blood cancer treatment, rose about 16% to $4.24 billion, below analyst expectations of $4.4 billion. At Abiomed, the heart pump business, sales remained slow after a UK study earlier this year raised questions about using Impella pumps during certain high-risk coronary procedures.
Budgets redirected, sales pressured
Joe Wolk, the company’s chief financial officer, said the Middle East conflict, austerity measures in Europe and pricing in China continued to weigh on international results, “but maybe in a little bit more pronounced way.” He said the conflict had hurt sales in the region but hadn’t yet affected the company’s costs. The report says the conflict has also led to soaring fuel costs at home and abroad.
“These are countries that still value and actually want premium healthcare systems, think Kuwait, UAE, Saudi Arabia. They pride themselves on having solid healthcare, very good healthcare,” Wolk said. “But their budgets now are being resourced and allocated towards defense.” His account makes the pressure plain: public budgets are shifting, and the company says regional sales are feeling the consequences. The report doesn’t describe a grassroots response or mutual-aid effort; it tracks the effects through company sales figures and its executive’s account.
Forecasts rise as investors watch
Johnson & Johnson raised its full-year reported-sales forecast to about $101.2 billion at the midpoint, from $101.1 billion previously. It also increased its adjusted-earnings forecast range, setting a new midpoint of $11.10 per share, up from $11.04.
The company’s shares closed at $263.73 on Monday. They’d risen 27% this year, outperforming the broader market and most healthcare peers. That market measure sits alongside pressure on international medical-device sales: investors weigh the company’s forecasts and returns while conflict, austerity and pricing shape the conditions in which those sales take place. The figures show who came out ahead in the quarter. They also show how unevenly pressures fall across the company’s businesses and markets.