Lower sales overseas and higher costs for research and litigation pushed Johnson & Johnson's first-quarter profit down 14%, but the health care giant beat profit and revenue expectations, pushing up its shares.
The maker of Tylenol and psoriasis drug Stelara on Tuesday said unfavorable currency exchange rates reduced revenue by nearly 4%, leaving total sales flat at $20.03 billion, though that edged out analysts' muted projections.
Sales of prescription medicines were the bright spot as usual, rising 4% and now accounting for over half of the New Brunswick, New Jersey, company's total revenue.
The segment just got a boost from two U.S. Food and Drug Administration approvals, in March for nasal spray treatment Spravato for treatment-resistant depression and last week for bladder cancer drug Balversa.
"The good far outweighs any possible questions or concerns investors could have," particularly since total drug sales increased despite cheaper competition to key drugs, Danielle Antalffy of SVB Leerink wrote to investors. "These quarterly results should increase investor confidence."
Longtime top seller Remicade, for rheumatoid arthritis and other immune disorders, posted a 21% sales drop, to $1.1 billion. Zytiga, which had been J&J's third-highest seller, saw sales fall 20% from a year ago, to $679 million.
Earlier this month, J&J completed a key acquisition, paying $3.4 billion for Auris Health, which makes robotic technology used in lung treatments and diagnostic procedures. Johnson & Johnson said the deal will expand its digital surgery portfolio across multiple surgical specialties. J&J also struck a partnership with MeiraGTx to develop gene therapies for eye diseases.
The world's biggest maker of health care products posted net income of $3.75 billion, or $1.39 per share, down from $4.37 billion, or $1.60 per share, a year earlier.
Adjusted for research and development expenses and costs from ongoing litigation over its baby powder allegedly causing cancer in some people, earnings were $2.10 per share, 7 cents better than Wall Street expected, according to a survey by Zacks Investment Research.
Revenue was $20.02 billion, with $10.24 billion of that coming from prescription drugs. Sales were led by Stelara, up 32.4% to $1.41 billion. Higher sales of cancer drugs Imbruvica and Darzalex, HIV drug Prezista and schizophrenia treatment Invega Sustenna also lifted the results, and J&J noted that a new study of diabetes drug Invokana showed it delayed the need for kidney dialysis. That should boost future sales.
Addressing the public furor over soaring prices for brand-name medicines, Chief Financial Officer Joseph Wolk told analysts on a conference call that J&J's higher sales continue to be driven by greater use of its products, not price increases.
Sales of consumer health products dipped 2.4% to $3.32 billion. Edward Jones analyst Ashtyn Evans wrote to investors that the 14% decline in sales of baby products is disappointing, "given the company just launched multiple new products to better compete with private labels."
Medical device sales fell 4.6% to $6.46 billion. J&J noted it recently launched new AcuVue Oasis contact lenses that darken in bright sunlight, an industry first.
The company reaffirmed its January forecast for 2019 sales totaling $80.4 billion to $81.2 billion, but raised the low end of its earnings-per-share forecast 3 cents, giving a new range of $8.53 to $8.63.
In morning trading, J&J shares jumped $3.93, or 2.9%, to $140.45.
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