Johnson & Johnson Fourth-Quarter Earnings Down 25%

Earnings came in at $1.33 a share, down from $1.77 a share a year earlier, as J&J also incurred costs related to its Covid vaccine and plans to separate its consumer-health business into an independent company. Stripping out one-time items, adjusted earnings were $2.35 a share, topping analyst expectations of $2.23 a share.

J&J, whose financial results are considered a bellwether for many health sectors, said it expects sales to rise about 5% to between $96.9 billion and $97.9 billion in 2023.

The company continues to see pressure on sales from staffing shortages at hospitals, which have limited growth in procedures using J&J products, while inflation has boosted J&J’s expenses. The company expects sales and earnings growth to be stronger in the second half of the year than in the first half.

“We’re assuming a lot of carryover of the inflationary impact that we had in 2022,” J&J Chief Financial Officer

Joseph Wolk

said on a conference call with analysts Tuesday.

The company has scaled back production of its Covid-19 vaccine amid slumping demand. While J&J’s shot was among the first to become available in 2021, it wasn’t as widely used as versions from

Moderna Inc.,

Pfizer Inc.

or

BioNTech SE

shots, with manufacturing issues limiting the shot’s availability and the risk of a rare but serious blood-clotting condition dissuading some people from using it. J&J hasn’t introduced an updated Covid-19 booster shot.

Global sales of J&J’s Covid-19 vaccine dropped 57% to $689 million for the fourth quarter. Vaccine sales came only from outside the U.S., with none reported for the U.S. in the latest quarter.

At the same time, J&J incurred $821 million in costs related to the vaccine, including exiting its manufacturing contracts with other companies.

Mr. Wolk said in an interview that the vaccine is primarily in use in Africa, and the company will continue to provide doses under advance purchase contracts throughout 2023.

J&J’s biggest unit, pharmaceuticals, posted fourth-quarter sales of $13.16 billion, down 7.4% from a year earlier. Sales gains for cancer drugs were more than offset by a decline in sales of the Covid-19 vaccine and other drugs including treatments for autoimmune diseases.

The company’s medical-device unit had sales of $6.78 billion, down 1.2% from a year earlier. Sales declines for surgery products offset gains in certain products used in heart procedures.

J&J’s consumer health sales rose 1% to $3.77 billion for the quarter, as sales of over-the-counter medicines including Tylenol rose during a tough cold and flu season.

J&J is in the process of spinning off its consumer-health business into a new company called Kenvue, which will house some of the company’s most well-known consumer brands such as Band-Aid bandages and Tylenol medicines.

The plan to separate the consumer business is one of the biggest shifts in J&J’s history, and will leave the remaining company focused on pharmaceuticals and medical devices.

Earlier this month, J&J filed documents with securities regulators to prepare for a potential initial public offering of up to about 20% of Kenvue’s shares. If J&J chooses to go forward with an IPO, it could take place within the next two quarters, and the company would plan to completely separate Kenvue sometime during 2023, Mr. Wolk said.

J&J shares fell 0.5% to $167.31 in morning trading.

Write to Peter Loftus at [email protected] and Dean Seal at [email protected]

Earnings came in at $1.33 a share, down from $1.77 a share a year earlier, as J&J also incurred costs related to its Covid vaccine and plans to separate its consumer-health business into an independent company. Stripping out one-time items, adjusted earnings were $2.35 a share, topping analyst expectations of $2.23 a share.

J&J, whose financial results are considered a bellwether for many health sectors, said it expects sales to rise about 5% to between $96.9 billion and $97.9 billion in 2023.

The company continues to see pressure on sales from staffing shortages at hospitals, which have limited growth in procedures using J&J products, while inflation has boosted J&J’s expenses. The company expects sales and earnings growth to be stronger in the second half of the year than in the first half.

“We’re assuming a lot of carryover of the inflationary impact that we had in 2022,” J&J Chief Financial Officer

Joseph Wolk

said on a conference call with analysts Tuesday.

The company has scaled back production of its Covid-19 vaccine amid slumping demand. While J&J’s shot was among the first to become available in 2021, it wasn’t as widely used as versions from

Moderna Inc.,

Pfizer Inc.

or

BioNTech SE

shots, with manufacturing issues limiting the shot’s availability and the risk of a rare but serious blood-clotting condition dissuading some people from using it. J&J hasn’t introduced an updated Covid-19 booster shot.

Global sales of J&J’s Covid-19 vaccine dropped 57% to $689 million for the fourth quarter. Vaccine sales came only from outside the U.S., with none reported for the U.S. in the latest quarter.

At the same time, J&J incurred $821 million in costs related to the vaccine, including exiting its manufacturing contracts with other companies.

Mr. Wolk said in an interview that the vaccine is primarily in use in Africa, and the company will continue to provide doses under advance purchase contracts throughout 2023.

J&J’s biggest unit, pharmaceuticals, posted fourth-quarter sales of $13.16 billion, down 7.4% from a year earlier. Sales gains for cancer drugs were more than offset by a decline in sales of the Covid-19 vaccine and other drugs including treatments for autoimmune diseases.

The company’s medical-device unit had sales of $6.78 billion, down 1.2% from a year earlier. Sales declines for surgery products offset gains in certain products used in heart procedures.

J&J’s consumer health sales rose 1% to $3.77 billion for the quarter, as sales of over-the-counter medicines including Tylenol rose during a tough cold and flu season.

J&J is in the process of spinning off its consumer-health business into a new company called Kenvue, which will house some of the company’s most well-known consumer brands such as Band-Aid bandages and Tylenol medicines.

The plan to separate the consumer business is one of the biggest shifts in J&J’s history, and will leave the remaining company focused on pharmaceuticals and medical devices.

Earlier this month, J&J filed documents with securities regulators to prepare for a potential initial public offering of up to about 20% of Kenvue’s shares. If J&J chooses to go forward with an IPO, it could take place within the next two quarters, and the company would plan to completely separate Kenvue sometime during 2023, Mr. Wolk said.

J&J shares fell 0.5% to $167.31 in morning trading.

Write to Peter Loftus at [email protected] and Dean Seal at [email protected]