Johnson & Johnson reported third-quarter adjusted earnings of $2.59 per share, exceeding the anticipated $2.53. Despite this, the company's shares dropped over 5% on Tuesday. The pharmaceutical division, which accounts for approximately 66% of quarterly revenue, generated $16.76 billion, marking a 7.7% increase. The drug Tremfya saw a 68.3% rise to nearly $2.4 billion, while the cancer treatment Darzalex reached $4.24 billion, missing the expected $4.4 billion.
The medical technology unit reported sales of $8.64 billion, failing to meet the LSEG estimate of $8.71 billion. Growth in this segment was limited to 2.5%. While U.S. device sales grew by 4.8%, international sales remained flat. CFO Joe Wolk attributed this to pricing pressures in China, European austerity, and budget shifts in Gulf nations. Additionally, the company's heart pump unit, Abiomed, is currently subject to a U.K. study regarding the efficacy of its devices in high-risk procedures.
Looking ahead, Johnson & Johnson intends to spin off its orthopedics unit, DePuy Synthes, by mid-2027. This follows the previous separation of its consumer health business, Kenvue. CFO Joe Wolk noted that the company favors a spin-off over a direct sale due to current depressed valuations in the medical technology sector. Management plans to provide further details regarding the spin-off and the company's 2027 financial guidance during an investor event scheduled for December 8.
