FILE - This Sept. 13, 2016, file photo, shows a selection of Johnson & Johnson brand first aid products arranged for a photo in Surfside, Fla. Johnson & Johnson reports earnings Tuesday, Oct. 16, 2018. (AP Photo/Wilfredo Lee, File)

Prescription drugs, lower taxes, power J&J 3Q beat

October 16, 2018 - 7:07 am

A jump in prescription drug sales and a sharply reduced tax bill boosted Johnson & Johnson's third-quarter sales and profit, which beat Wall Street expectations.

The world's biggest maker of health care products on Tuesday also slightly raised its profit forecast for the year.

The New Brunswick, N.J., maker of baby products, biotech drugs and medical devices reported net income of $3.93 billion, or $1.44 per share. That was up 4.5 percent from net income of $3.76 billion, or $1.37 per share, a year earlier.

Earnings, excluding $1.7 billion in one-time gains and costs, came to $2.05 per share, or 2 cents better than expected, according to a survey by Zacks Investment Research.

Revenue was $20.35 billion, up 3.6 percent, which also exceeded analyst forecasts for $19.91 billion.

J&J's prescription drug business posted sales of $10.35 billion, up 6.7 percent, mainly due to higher sales of its cancer drugs, including Darzalex, Imbruvica and Zytiga.

During the quarter, Imbruvica won U.S. regulatory approval for a new use, treating a rare cancer called Waldenström's macroglobulinemia, and the Food and Drug Administration also approved a three-drug combination pill for treating HIV, Symtuza. J&J also applied for U.S. and European Union approval of its closely watched experimental drug esketamine for treatment-resistant depression. The nasal-spray drug works much more quickly than typical antidepressants and likely will be a big seller if approved.

Sales of consumer health products such as Tylenol and Band-Aids edged up 1.8 percent to $3.42 billion.

The medical devices and diagnostics business, which is being restructured, reported a 0.2 percent sales dip to $6.59 billion. Sales were driven by Acuvue contact lenses, surgical implements and wound-closure products.

U.S. and international sales both rose about 3.5 percent, to $10.66 billion and $9.68 billion, respectively. J&J noted that unfavorable currency exchange rates reduced revenue by 1.9 percent.

J&J's effective tax rate plunged to 11.1 percent, barely half the 21.4 percent rate in the year-ago quarter, reducing its tax bill by $537 million to $489 million.

"We are pleased with our strong third-quarter performance, which reflects continued above-market growth in our pharmaceutical business, accelerating sales momentum in our consumer business and consistent progress in our medical devices business," J&J CEO Alex Gorsky said in a statement.

The company said it now expects full-year earnings in the range of $8.13 to $8.18 per share, with revenue in the range of $81 billion to $81.4 billion. In July, J&J forecast 2018 earnings per share of $8.07 to $8.18 and revenue of $80.5 billion to $81.3 billion.

J&J shares are down 4 percent this year.

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Follow Linda A. Johnson at https://twitter.com/LindaJ_onPharma

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Portions of this story were generated by Automated Insights (http://automatedinsights.com/ap) using data from Zacks Investment Research. Access a Zacks stock report on JNJ at https://www.zacks.com/ap/JNJ

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