Johnson & Johnson Lowers Revenue Forecast on Coronavirus Impact - The Wall Street Journal

Johnson & Johnson's sales of consumer products, which include baby shampoo, Tylenol medicine and... — Johnson & Johnson's sales of consumer products, which include baby shampoo, Tylenol medicine and upper-respiratory products, rose 9.2% in the first quarter.
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Peter Loftus

The Wall Street Journal

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The Wall Street Journal

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Updated April 14, 2020 11:07 am ET

Johnson & Johnson on Tuesday lowered its forecast for 2020 revenue due to the impact from Covid-19, but the company expressed optimism for a recovery later this year.

Profit at J&J, considered a bellwether for health-care stocks, shot up as the coronavirus health crisis drove demand for over-the-counter medicine. Yet a slowdown in elective-health procedures, such as hip replacements and spinal surgeries, hurt sales of the company’s medical devices.

The performance suggests the varying impact of the coronavirus on the health-care industry, with demand soaring for lifesaving procedures and gear as well as remedies that can relieve the fevers associated with infections at home, while dropping for nonemergency medicine.

J&J plans to quickly develop and manufacture a potential vaccine against the coronavirus, executives said during a call with analysts and investors.

The company plans to start human testing of a vaccine in September, with results expected in December and the potential to make it available on an emergency basis in early 2021, J&J Chief Scientific Officer Paul Stoffels said. It expects to eventually produce over one billion doses, he said.

The company plans to begin production imminently, J&J Chief Executive Alex Gorsky said on the call. He said the company would make the vaccine available on a “not-for-profit” basis for emergency pandemic use.

The company also raised its quarterly dividend by 6.3% to $1.01 a share.

J&J shares rose 4.1% to $145.54 in morning trading.

The New Brunswick, N.J., health-products maker cut its forecast of 2020 revenue citing the slowdown in patient visits to doctors’ offices and elective procedures, which have been put off as health authorities ask people to stay at home.

For 2020, J&J said it expects adjusted earnings of $7.50 a share to $7.90 a share, lower than its prior guidance of $8.95 a share to $9.10 a share. It sees sales of $77.5 billion to $80.5 billion, down 2% to 5.5% from the year-ago period. It had expected 4% to 5% growth in sales.

Yet J&J said it expected the worst impact on sales during the three months ending in late June, with a recovery beginning in the third quarter.

The company’s new forecast, however, assumes the pandemic peaks this month, J&J Chief Financial Officer Joseph Wolk said.

If the virus starts to spread again in the fall, it wouldn’t be with the same intensity as in the current crisis because the world will be better prepared to test and isolate confirmed cases, he said.

J&J also warned a downturn in the economy could lead to more uninsured patients in the U.S., which could affect doctors’ visits and procedures.

The company posted first-quarter net income of $5.8 billion, or $2.17 a share, compared with $3.75 billion, or $1.39 a share, in the comparable quarter last year.

Adjusted earnings were $2.30 a share, ahead of the $2.01 a share analysts polled by FactSet had expected.

World-wide sales rose 3.3% to $20.69 billion from the year-ago period, beating the $19.73 billion analysts had expected.

Sales in the U.S. rose 5.6% to $10.7 billion from the comparable quarter last year, and non-U.S. sales ticked up 1% to $9.99 billion.

Sales of consumer products, which include Tylenol medicine and upper-respiratory products such as Zyrtec, rose 9.2% to $3.63 billion. The company said that demand for Tylenol over-the-counter medicine rose as people sought to use the painkiller to reduce fever and relieve pain associated with Covid-19.

Mr. Gorsky said Tuesday J&J has increased production of Tylenol to meet the surge in demand.

Sales in the company’s pharmaceuticals division rose 8.7% to $11.13 billion, while those in its medical-devices business fell 8.2% to $5.93 billion as medical procedures got delayed during the pandemic.