By
Tolu Ajiboye
December 13th, 2023
Johnson & Johnson saw a better-than-expected in the third quarter according to its Q3 2022 report. However, JNJ may cut jobs soon.
American pharmaceutical giant Johnson & Johnson (NYSE: JNJ) released its Q3 2022 earnings report showing figures that beat analysts’ estimates. The multinational corporation published adjusted earnings of $2.55 per share and a total of $23.8 billion in sales. Analysts FactSet surveyed expected lower figures of $2.48 adjusted earnings per share and total revenue of about $23.4 billion.
Johnson & Johnson also reported net earnings of $4.5 billion, a 21.6% increase over the $3.7 billion realized in the same period last year. Diluted earnings per share were $1.68, rising 22.6% from $1.37 in Q3 2021.
Johnson & Johnson Q3 2022 Report Shows Rebound from Medical Services Downturn
Chief Financial Officer (CFO) Joe Wolk says that the staffing problems many hospitals experienced, which caused a plunge in medical device sales, have improved considerably. Johnson & Johnson’s medical devices division recorded an 8.1% increase in adjusted operational sales. The report shows total sales of $6.8 billion, higher than the $6.7 billion FactSet-surveyed analysts’ expected.
In the heat of the COVID pandemic, many companies saw plunges in their medical devices divisions. As the pandemic worsened, many hospitals suspended elective procedures and focused more on COVID cases. This crashed sales of medical devices as hospitals needed them less. Unfortunately, even when hospitals began performing elective surgeries, sales remained low. At the time, hospitals said they were short on nurses and other staff needed for procedures that required these devices. Now, Wolk believes that this situation has begun to resolve itself:
“I think staffing has been refortified. But I also think hospitals are now adapting.”
For instance, the company CFO also said that its electrophysiology business is responsible for some of the jump in sales recorded by the company. The business, focused on selling devices used for some heart surgeries, recorded an 18% sales increase for the quarter. Wolk noted that a new electrophysiology product – the Heliostar – helps hospitals with their staffing problem as it “reduces procedure time” and allows hospitals to perform more surgeries in a day.
JNJ to Downsize Regardless of Earnings
Johnson & Johnson could go through a layoff period as it fights pressure from inflation. The company said that it is still facing general inflationary setbacks despite “healthcare being more resilient”. Although he didn’t provide specifics, Wolf told Reuters that the company would be “right-sizing” itself as it makes further business moves.
“We are looking at making sure that our resources are deployed on those projects, those initiatives, those services that really add the most value for our business.
Reshaping Consumer Health Division
JNJ is looking to separate its Consumer Health Division to stand alone. Next year, Johnson & Johnson will follow GSK and Pfizer’s footsteps to float Kenvue, the upcoming standalone company. GSK and Pfizer spun off a consumer health business named Haleon. Unfortunately, the market does not seem very excited. Nevertheless, Wolf seems confident about Kenvue despite the apathetic reaction Haleon received. He says the Kenvue plan has “different dynamics” since both GSK and Pfizer plan to sell their Haleon stakes. Wolf specified that selling their stakes will cause market uncertainty.