J&J issues cautious 2023 forecast, shares fall

By Bhanvi Satija and Manas Mishra

(Reuters) - Johnson & Johnson (NYSE:JNJ) on Tuesday cautioned investors over the lingering impact of inflation-driven costs this year as the healthcare conglomerate issued a conservative full-year profit forecast, and its shares fell more than 2%.

J&J also said it expected a steep decline in sales of its blockbuster Crohn's disease drug Stelara once it loses U.S. patent protection in late 2023.

Shares were 2.4% lower at $161.71, making it the biggest decliner on the Dow Jones Industrial Average index, which was off about 0.4%.

J&J, the first large drugmaker and medical device manufacturer to report earnings, raised the midpoint of its full-year profit forecast by 10 cents despite beating first-quarter estimates by 18 cents.

The company was "responsibly optimistic" about 2023, Chief Financial Officer Joseph Wolk said on a conference call, pointing to fierce competition for cancer drug Imbruvica and inflation as some of the challenges it was facing.

"Inflation is always a concern and we think that it's going to linger for the next couple of quarters," Edward Jones analyst John Boylan said. "It may take a while perhaps on the device side to work through some of the higher input costs, but we think that the healing process is in place."

A recovery in medical procedures after being weighed down by hospital staffing shortages helped the medical device unit post sales of $7.48 billion, topping analysts' estimates of $7.31 billion.

The company reported overall sales of $24.7 billion for the quarter, but posted a net loss of $68 million due to a $6.9 billion charge related to a second bankruptcy filing by its LTL Management unit as it attempts to settle more than 38,000 lawsuits claiming its talc products cause cancer. The company has said the products are safe and do not cause cancer.

J&J said the ongoing spinoff of its consumer health unit would not be impacted by the bankruptcy filing.

First-quarter sales at its pharmaceuticals unit was boosted by better-than-expected revenue from its COVID-19 vaccine and by Stelara, with sales of $2.44 billion that beat Wall Street expectations of $2.41 billion.

GRAPHIC - Sales of J&J's blockbuster Stelara

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Prostate cancer treatment Erleada with sales of $542 million also exceeded estimates of $500 million, while sales of multiple myeloma treatment Darzalex were in line at $2.26 billion.

Sales of $747 million for the COVID vaccine that failed to gain much traction in the U.S. blew past diminished analysts' estimates of $50 million.

Consumer health sales rose 7.4% to $3.85 billion, surpassing estimates of $3.62 billion, powered by price hikes to offset the impact from inflation.

On an adjusted basis, the company posted first-quarter earnings of $2.68 per share, beating estimates of $2.50 according to Refinitiv data.