Research Spending, Charges Cut Johnson & Johnson Profits

The company anticipates sharing details of its late-stage COVID-19 vaccine study soon.

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A big jump in prescription drug sales boosted fourth-quarter sales at Johnson & Johnson, but profits dove 57% due to higher research spending and one-time charges totaling $2.4 billion.

It still beat Wall Street expectations, and shares added $3.13 to $169 in premarket trading Tuesday.

J&J's report didn't give any updates on its coronavirus research. However, Chief Executive Officer Alex Gorsky said in a prepared statement that the company anticipates sharing details soon from its late-stage study of its experimental COVID-19 vaccine.

The vaccine could become the third to receive emergency use authorization in the U.S., likely in February, following Pfizer and BioNTech, who won the first Food and Drug Administration emergency clearance, and Moderna. Both of the vaccines, which use different technology than J&J, were granted emergency use authorization in December.

The world’s biggest maker of health care products had a net income of $1.74 billion, or 65 cents per share. That was down from $4.01 billion, or $1.50 per share, a year earlier.

Adjusted net income came to $4.97 billion, or $1.86 per share. That easily topped the $1.81 Wall Street was looking for, according to a survey of industry analysts by Zacks Investment Research.

Total revenue for the quarter totaled $22.48 billion, up 8.3% from $20.75 billion. Analysts had expected $21.62 billion.

Revenue in the U.S. totaled $11.81 billion, up just under 10%, while international revenue rose 7%, to $10.67 billion.

The New Brunswick, New Jersey, company said that the effects of the COVID-19 pandemic reduced sales for its prescription medicines and consumer health products, except for increased demand for oral care products such as Listerine. Despite a major revamp of its iconic baby care product line, sales in that segment fell 3%, to $407 million.

The pandemic, and the associated deferral of many medical procedures, also hurt the medical devices business, reducing sales of surgery, vision care and orthopedics products. J&J noted that the segment's full-year results reflect market recovery in the second half of last year, potentially a good sign for other device makers.

Prescription drug sales jumped 16.3%, to $12.27 billion, led by immune disorder drugs to Stelara and cancer drugs Darzelex, Imbruvica and Erleada.

Sales of consumer health products such as Tylenol and Listerine edged up 1.4% to $3.62 billion. Meanwhile, sales for the medical devices and diagnostics unit dipped nearly 1%, to $6.59 billion.

J&J gave its first financial forecast for 2021, saying it expects sales of $90.5 billion to $91.7 billion and adjusted earnings per share of $9.40 to $9.60. Both were up 10 % or more from 2020. Analysts were expecting 2021 revenue of $88.59 billion and adjusted earnings per share of $8.96.

For all of 2020, Johnson & Johnson reported revenue of $82.58 billion, up just 0.6% from 2019, and net income of $14.71 billion, which was 2.7% below 2019's net income.

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