Johnson & Johnson Lifts Outlook Again As Q3 Results Beat View

(RTTNews) - Healthcare giant Johnson & Johnson (JNJ) on Tuesday reported a 59 percent increase in profit for the third quarter, reflecting strong sales growth in the pharmaceutical segment and a one-time gain.

Both revenue and adjusted earnings per share for the quarter beat analysts' estimates. Looking ahead, the company raised its fiscal 2014 earnings outlook for the third time this year.

Alex Gorsky, chairman and chief executive officer of Johnson & Johnson, said, "Our strong third-quarter performance reflects the continued success of our new products and the strength of our core business. We are making deliberate portfolio choices, positioning us well for achieving our near-term priorities and our long-term growth drivers."

The New Brunswick, New Jersey-based company's net earnings for the third quarter were $4.75 billion or $1.66 per share, up from $2.98 billion or $1.04 per share in the year-ago period.

The latest-quarter results included a net gain for after-tax special items of about $0.5 billion, driven by an after-tax net gain of about $1.1 billion from the divestiture of Ortho-Clinical Diagnostics. This gain was partially offset by other special items, primarily related to an increase in the litigation accrual, a charge to account for an additional year of the non-tax deductible Branded Prescription Drug Fee, integration costs related to the acquisition of Synthes, Inc. and program costs associated with the DePuy ASRTM Hip.

The prior-year quarter's results included a charge for after-tax special items of about $0.9 billion.

Excluding these items, adjusted net earnings for the latest quarter were $4.29 billion or $1.50 per share, compared to $3.92 billion or $1.36 per share in the prior year.

On average, 16 analysts polled by Thomson Reuters expected the company to report earnings of $1.44 per share for the quarter. Analysts' estimates typically exclude special items.

Net sales for the quarter increased 5.1 percent to $18.47 billion from $17.58 billion in the same period last year. Analysts' revenue consensus was $18.38 billion for the quarter.

Operational results increased 5.8 percent, while the negative impact of currency was 0.7 percent, the company said.

In the quarter, domestic sales increased 11.6 percent from last year to $8.84 billion. However, international sales decreased 0.3 percent to $9.63 billion, reflecting operational growth of 1 percent and a negative currency impact of 1.3 percent.

Worldwide Consumer sales for the quarter edged down 0.6 percent to $3.59 billion, consisting of an operational increase of 0.3 percent and a negative impact from currency of 0.9 percent. Domestic sales declined 4.2 percent, hurt by the divestiture of the sanitary protection business. International sales increased 1.3 percent.

Pharmaceutical sales grew 18.1 percent to $8.31 billion, driven by domestic sales growth of 33.1 percent and international sales increase of 2.8 percent.

The strong sales results of new products include chronic hepatitis C drug Olysio/Sovriad, metastatic, castration-resistant prostate cancer drug Zytiga, oral anticoagulant Xarelto and type 2 diabetes drug Invokana.

Meanwhile, sales results were negatively impacted by loss of exclusivity for Aciphex, a proton pump inhibitor for gastrointestinal disorders.

Worldwide Medical Devices and Diagnostics sales for the quarter declined 5.2 percent to $6.57 billion, representing an operational decrease of 4.6 percent and negative currency impact of 0.6 percent.

Looking ahead to fiscal 2014, Johnson & Johnson now expects earnings in a range of $5.92 - $5.97 per share, up from the prior range of $5.85 - $5.92 per share, excluding the impact of special items. Analysts project full-year earnings per share of $5.93.

JNJ closed Monday's trading at $99.12. In Tuesday's pre-market activity, the stock is up $1.57 or 1.58 percent to $100.69.