01.22.19

Johnson & Johnson Reports 2018 Fourth-Quarter Results

Source: Johnson & Johnson

Johnson & Johnson announced sales of $20.4 billion for the fourth quarter of 2018, an increase of 1.0% as compared with the fourth quarter of 2017. Operational sales results increased 3.3%, and the negative impact of currency was 2.3%. Domestic sales increased 1.5%. International sales increased 0.4%, reflecting operational growth of 5.1% and a negative currency impact of 4.7%. Excluding the net impact of acquisitions and divestitures, on an operational basis, worldwide sales for the fourth quarter of 2018 increased 5.3%, domestic sales increased 2.6%, and international sales increased 8.3%.

Worldwide sales for the full-year 2018 were $81.6 billion, an increase of 6.7% versus 2017. Operational results increased 6.3%, and the positive impact of currency was 0.4%. Domestic sales increased 5.1%. International sales increased 8.5%, reflecting operational growth of 7.7% and a positive currency impact of 0.8%. Excluding the net impact of acquisitions and divestitures, on an operational basis, worldwide sales for the full-year 2018 increased 5.5%, domestic sales increased 3.4%, and international sales increased 7.8%.

Net earnings and diluted earnings per share for the fourth quarter of 2018 were $3.0 billion and $1.12, respectively. Fourth-quarter 2018 net earnings included after-tax intangible amortization expense of approximately $1.0 billion and a net charge for after-tax special items of approximately $1.4 billion. Fourth-quarter 2017 net earnings included after-tax intangible amortization expense of approximately $0.9 billion and a net charge for after-tax special items of approximately $14.6 billion. Included in these special items was the provisional amount of approximately $13.6 billion associated with the enactment of tax legislation. Excluding after-tax intangible amortization expense and special items, adjusted net earnings for the current quarter were $5.4 billion and adjusted diluted earnings per share were $1.97, representing increases of 12.5% and 13.2%, respectively, as compared to the same period in 2017. On an operational basis, adjusted diluted earnings per share increased 16.1%. A reconciliation of non-GAAP financial measures is included as an accompanying schedule.

Net earnings and diluted earnings per share for the full-year 2018 were $15.3 billion and $5.61, respectively.  Full-year net earnings included after-tax intangible amortization expense of approximately $3.9 billion and a net charge for after-tax special items of approximately $3.1 billion. Full-year 2017 net earnings included after-tax intangible amortization expense of approximately $2.5 billion and a charge for after-tax special items of approximately $16.2 billion. Included in these special items was a provisional amount of approximately $13.6 billion associated with the enactment of tax legislation. Excluding after-tax intangible amortization expense and special items, adjusted net earnings for the full-year of 2018 were $22.3 billion and adjusted diluted earnings per share were $8.18, representing increases of 11.4% and 12.1%, respectively, as compared with the same period in 2017. On an operational basis, adjusted diluted earnings per share also increased 10.4%. A reconciliation of non-GAAP financial measures is included as an accompanying schedule.

“Johnson & Johnson delivered another year of strong operational sales growth of 6.3% and achieved our 35th consecutive year of adjusted operational earnings growth at 9.8% in 2018. This can be attributed to accelerated underlying sales performance across each of our businesses, where we also leveraged our scale across the enterprise to improve margins,” said Alex Gorsky, Chairman and CEO. “Looking ahead, the strength of our broad-based business and disciplined approach to portfolio management positions us to continue to fuel investments in innovation that enable us to capitalize on strategic opportunities and deliver strong performance over the long term.” 

Mr. Gorsky continued, “Our performance is the result of our talented Johnson & Johnson colleagues and their extraordinary dedication to help advance health and well-being for patients and customers around the world.”

In December, the company announced a share repurchase program of up to $5.0 billion of the company’s common stock. Repurchases may be made at management’s discretion from time to time on the open market or through privately negotiated transactions. The repurchase program has no time limit and may be suspended for periods or discontinued at any time.

Johnson & Johnson announced its 2019 full-year guidance for sales of $80.4 billion to $81.2 billion reflecting expected operational growth in the range of 0.0% to 1.0% and expected adjusted operational growth in the range of 2.0% to 3.0%. The company also announced adjusted earnings guidance for full-year 2019 of $8.50 to $8.65 per share reflecting expected operational growth in the range of 5.7% to 7.6%. Adjusted earnings guidance excludes the impact of after-tax intangible amortization expense and special items.

Segment Sales Performance

Worldwide Consumer sales of $13.9 billion for the full-year 2018 represented an increase of 1.8% versus the prior year, consisting of an operational increase of 2.2% and a negative impact from currency of 0.4%. Domestic sales increased 3.5%; international sales increased 0.7%, which reflected an operational increase of 1.4% and a negative currency impact of 0.7%. Excluding the net impact of acquisitions and divestitures, on an operational basis, worldwide sales increased 3.2%, domestic sales increased 3.1% and international sales increased 3.3%.

Worldwide operational results, excluding the net impact of acquisitions and divestitures, were driven by growth in over-the-counter products, including Tylenol and Motrin analgesics and digestive health products; Neutrogena and OGX beauty products; and Listerine oral care products. Subsequent to the quarter, the Company announced the completion of the acquisition of Ci:z Holdings Co., Ltd., which markets the DR.CI:Labo, Labo Labo, and Genomer line of skincare products.

Worldwide pharmaceutical sales of $40.7 billion for the full-year 2018 represented an increase of 12.4% versus the prior year with an operational increase of 11.8% and a positive impact from currency of 0.6%. Domestic sales increased 8.4%; international sales increased 18.0%, which reflected an operational increase of 16.5% and a positive currency impact of 1.5%. Sales included the impact of Actelion Ltd which contributed 3.4%, to worldwide operational sales growth. Excluding the net impact of acquisitions and divestitures, on an operational basis, worldwide sales increased 8.4%, domestic sales increased 4.9% and international sales increased 13.5%. 

Worldwide operational results, excluding the net impact of acquisitions and divestitures, were driven by Stelara (ustekinumab) and Simponi/Simponi Aria (golimumab), biologics for the treatment of  a number of immune-mediated inflammatory diseases, Zytiga (abiraterone acetate), an oral, once-daily medication for use in combination with prednisone for the treatment of metastatic, castration-resistant prostate cancer, Darzalex (daratumumab), for the treatment of patients with multiple myeloma, Imbruvica (ibrutinib), an oral, once-daily therapy approved for use in treating certain B-cell malignancies, a type of blood or lymph node cancer, Tremfya (guselkumab), for the treatment of adults living with moderate to severe plaque psoriasis, Invega Sustenna/Xeplion/Invega Trinza/Trevicta (paliperidone palmitate), a long-acting, injectable atypical antipsychotics for the treatment of schizophrenia in adults, partially offset by declines in Remicade (infliximab), a biologic approved for the treatment of a number of immune-mediated inflammatory diseases, due to biosimilar entrants.

During the quarter, the FDA approved an additional indication for Invokana (canagliflozin) to reduce the risk of major adverse cardiovascular events, including heart attack, stroke or death due to a cardiovascular cause in adults with type 2 diabetes who have established cardiovascular disease. In addition, the European Commission approved apalutamide, a next generation oral androgen receptor inhibitor for the treatment of adult patients with non-metastatic castration-resistant prostate cancer who are at high risk of developing metastatic disease.

A supplemental biologics license application was submitted to the FDA and a type II variation application was submitted to European Medicines Agency (EMA) seeking approval of Stelara (ustekinumab) for the treatment of adults with moderately to severely active ulcerative colitis. A supplemental New Drug Application was submitted to the FDA seeking to broaden the use of Xarelto (rivaroxaban) for the prevention of venous thromboembolism, or blood clots, in medically ill patients. Two type II variation applications were submitted to EMA for the expanded use of Imbruvica (ibrutinib) in combination with obinutuzumab in previously untreated adults with chronic lymphocytic leukemia and in combination with rituximab for the treatment of previously untreated and relapsed/refractory adults with Waldenström’s macroglobulinemia.

Additionally, the company entered into a worldwide collaboration and license agreement with argenx BVBA and argenx SE to develop and commercialize cusatuzumab (ARGX-110), an investigational therapeutic antibody that targets CD70, an immune checkpoint implicated in numerous cancers, including hematological malignancies.

Worldwide medical devices sales of $27.0 billion for the full-year 2018 represented an increase of 1.5% versus the prior year consisting of an operational increase of 1.1% and a positive currency impact of 0.4%. Domestic sales increased 0.1%; international sales increased 2.8%, which reflected an operational increase of 1.9% and a positive currency impact of 0.9%. Sales included the impact of the divestiture of its Lifescan business which negatively impacted worldwide operational sales growth by 1.4%. Excluding the net impact of acquisitions and divestitures, on an operational basis, worldwide sales increased 2.6%, domestic sales increased 1.0% and international sales increased 4.0%.

Worldwide operational results, excluding the net impact of acquisitions and divestitures, were driven by electrophysiology products in the interventional solutions business; Acuvue contact lenses and surgical products in the vision business; wound closure products in the general surgery business; along with endocutters and biosurgicals in the advanced surgery business.

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