J&J(US:JNJ)2024-10-15 11:37Sales Performance Analysis The company reports solid sales growth driven by the U.S. market and strong performance in both core business segments Sales by Geographic Area Worldwide sales grew across both periods, led by strong performance in the U.S. market and offset by international currency headwinds Q3 2024 Sales by Geographic Area (in Millions) | Region | 2024 Sales | 2023 Sales | Total Change | Operational Change | | :--- | :--- | :--- | :--- | :--- | | U.S. | $12,909 | $11,996 | 7.6% | 7.6% | | International | $9,562 | $9,355 | 2.2% | 4.6% | | Worldwide | $22,471 | $21,351 | 5.2% | 6.3% | Nine Months 2024 Sales by Geographic Area (in Millions) | Region | 2024 Sales | 2023 Sales | Total Change | Operational Change | | :--- | :--- | :--- | :--- | :--- | | U.S. | $37,098 | $34,435 | 7.7% | 7.7% | | International | $29,203 | $29,329 | (0.4)% | 3.1% | | Worldwide | $66,301 | $63,764 | 4.0% | 5.6% | - Excluding the COVID-19 vaccine, worldwide sales growth was stronger, at 5.4% for Q3 and 5.4% for the nine-month period, with operational growth of 6.5% and 7.1% respectively24 Sales by Business Segment Both Innovative Medicine and MedTech segments delivered strong operational growth, with underlying performance masked by declining COVID-19 vaccine sales Q3 2024 Sales by Business Segment (in Millions) | Segment | 2024 Sales | 2023 Sales | Total Change | Operational Change | | :--- | :--- | :--- | :--- | :--- | | Innovative Medicine | $14,580 | $13,893 | 4.9% | 6.3% | | MedTech | $7,891 | $7,458 | 5.8% | 6.4% | | Worldwide | $22,471 | $21,351 | 5.2% | 6.3% | Nine Months 2024 Sales by Business Segment (in Millions) | Segment | 2024 Sales | 2023 Sales | Total Change | Operational Change | | :--- | :--- | :--- | :--- | :--- | | Innovative Medicine | $42,632 | $41,037 | 3.9% | 5.5% | | MedTech | $23,669 | $22,727 | 4.1% | 5.7% | | Worldwide | $66,301 | $63,764 | 4.0% | 5.6% | - Excluding COVID-19 vaccine sales, the Innovative Medicine segment's worldwide sales grew 5.2% (6.6% operational) in Q3 and 6.2% (7.9% operational) for the nine-month period56 Condensed Consolidated Statement of Earnings Sales growth was offset by increased expenses, leading to mixed results between GAAP and Adjusted Net Earnings Third Quarter 2024 Earnings Q3 sales grew, but a surge in R&D expenses led to a significant decline in both GAAP and Adjusted Net Earnings Q3 2024 Statement of Earnings Highlights (in Millions, except per share) | Metric | 2024 | 2023 | % Change | | :--- | :--- | :--- | :--- | | Sales to customers | $22,471 | $21,351 | 5.2% | | Gross Profit | $15,508 | $14,745 | 5.2% | | R&D Expense | $4,952 | $3,447 | 43.7% | | Net Earnings from Continuing Operations (GAAP) | $2,694 | $4,309 | (37.5)% | | Diluted EPS from Continuing Operations (GAAP) | $1.11 | $1.69 | (34.3)% | | Adjusted Net Earnings from Continuing Operations (Non-GAAP) | $5,876 | $6,777 | (13.3)% | | Adjusted Diluted EPS from Continuing Operations (Non-GAAP) | $2.42 | $2.66 | (9.0)% | Nine Months 2024 Earnings Year-to-date sales growth drove higher GAAP earnings, while Adjusted Net Earnings saw a slight decline Nine Months 2024 Statement of Earnings Highlights (in Millions, except per share) | Metric | 2024 | 2023 | % Change | | :--- | :--- | :--- | :--- | | Sales to customers | $66,301 | $63,764 | 4.0% | | Gross Profit | $45,958 | $44,009 | 4.4% | | R&D Expense | $11,934 | $10,605 | 12.5% | | Net Earnings from Continuing Operations (GAAP) | $10,635 | $9,194 | 15.7% | | Diluted EPS from Continuing Operations (GAAP) | $4.38 | $3.53 | 24.1% | | Adjusted Net Earnings from Continuing Operations (Non-GAAP) | $19,296 | $19,847 | (2.8)% | | Adjusted Diluted EPS from Continuing Operations (Non-GAAP) | $7.94 | $7.62 | 4.2% | Reconciliation of Non-GAAP Financial Measures This section details adjustments for special items to bridge GAAP earnings to non-GAAP operational performance Reconciliation of Net Earnings (Q3 & Nine Months) Significant adjustments for litigation and amortization were key in reconciling GAAP to non-GAAP net earnings Q3 2024 Reconciliation of Net Earnings (in Millions) | Description | Amount | | :--- | :--- | | Net Earnings from Continuing Operations (GAAP) | $2,694 | | Pre-tax Adjustments (Litigation, Amortization, etc.) | $3,921 | | Tax Impact on Adjustments | ($757) | | Adjusted Net Earnings from Continuing Operations (Non-GAAP) | $5,876 | Nine Months 2024 Reconciliation of Net Earnings (in Millions) | Description | Amount | | :--- | :--- | | Net Earnings from Continuing Operations (GAAP) | $10,635 | | Pre-tax Adjustments (Litigation, Amortization, etc.) | $10,581 | | Tax Impact on Adjustments | ($2,097) | | Adjusted Net Earnings from Continuing Operations (Non-GAAP) | $19,296 | - Restructuring activities include exiting certain R&D programs in Innovative Medicine and streamlining the Orthopaedics franchise in MedTech1618 Reconciliation of Adjusted Operational Sales Growth (Q3 & Nine Months) Excluding currency, A&D, and vaccine impacts reveals stronger underlying operational sales growth Q3 2024 Adjusted Operational Sales Growth Reconciliation | Segment | Reported Growth | Operational Growth | Adjusted Operational Growth (Ex A&D, COVID-19) | | :--- | :--- | :--- | :--- | | Innovative Medicine | 4.9% | 6.3% | 6.7% | | MedTech | 5.8% | 6.4% | 3.7% | | Total | 5.2% | 6.3% | 5.6% | Nine Months 2024 Adjusted Operational Sales Growth Reconciliation | Segment | Reported Growth | Operational Growth | Adjusted Operational Growth (Ex A&D, COVID-19) | | :--- | :--- | :--- | :--- | | Innovative Medicine | 3.9% | 5.5% | 8.0% | | MedTech | 4.1% | 5.7% | 4.7% | | Total | 4.0% | 5.6% | 6.8% | Detailed Segment Sales Analysis A detailed review of the Innovative Medicine and MedTech segments highlights key product drivers and franchise performance Innovative Medicine Segment Growth was driven by Oncology and Pulmonary Hypertension, offsetting declines in Immunology and COVID-19 vaccine sales Third Quarter 2024 Performance Q3 growth was led by standout performance in the Oncology portfolio, particularly from DARZALEX and CARVYKTI Q3 2024 Key Product Sales (Worldwide, in Millions) | Product | 2024 Sales | % Change (Reported) | | :--- | :--- | :--- | | DARZALEX | $3,016 | 20.7% | | STELARA | $2,864 | (6.6)% | | TREMFYA | $891 | 13.0% | | ERLEADA | $790 | 25.4% | | CARVYKTI | $286 | 87.7% | - Oncology was the largest therapeutic area by sales in Q3, reaching $5.38 billion, a significant increase from $4.53 billion in the prior year26 Nine Months 2024 Performance Year-to-date growth was fueled by Oncology, mitigating the impact of biosimilar competition and a steep vaccine sales drop Nine Months 2024 Key Product Sales (Worldwide, in Millions) | Product | 2024 Sales | % Change (Reported) | | :--- | :--- | :--- | | DARZALEX | $8,586 | 19.3% | | STELARA | $8,105 | (1.2)% | | TREMFYA | $2,237 | 21.6% | | ERLEADA | $2,215 | 27.3% | | CARVYKTI | $629 | 84.3% | - The decline in COVID-19 vaccine sales had a significant impact, with revenue dropping from over $1 billion in the first nine months of 2023 to just $198 million in 202440 MedTech Segment Solid growth was driven by the Cardiovascular portfolio, boosted by Electrophysiology performance and the acquisition of Shockwave Third Quarter 2024 Performance Q3 sales surged due to strong Cardiovascular results, including a significant contribution from the newly acquired Shockwave Q3 2024 MedTech Sales by Franchise (Worldwide, in Millions) | Franchise | 2024 Sales | % Change (Reported) | | :--- | :--- | :--- | | Cardiovascular | $1,966 | 26.2% | | Orthopaedics | $2,191 | 1.2% | | Surgery | $2,434 | (1.8)% | | Vision | $1,300 | 3.5% | - The acquisition of Shockwave on May 31, 2024, is a significant new contributor to the Cardiovascular franchise2836 Nine Months 2024 Performance Year-to-date growth was led by the Cardiovascular franchise, with solid contributions from Orthopaedics Nine Months 2024 MedTech Sales by Franchise (Worldwide, in Millions) | Franchise | 2024 Sales | % Change (Reported) | | :--- | :--- | :--- | | Cardiovascular | $5,645 | 20.6% | | Orthopaedics | $6,843 | 2.5% | | Surgery | $7,338 | (2.2)% | | Vision | $3,843 | (0.5)% | Supplemental Sales Information This section isolates the impact of COVID-19 vaccine sales to clarify the underlying growth of the company's core business Impact of COVID-19 Vaccine Sales Excluding the steep decline in COVID-19 vaccine revenue reveals stronger underlying operational sales growth for the company Q3 2024 Sales Excluding COVID-19 Vaccine (in Millions) | Metric | Including Vaccine | Excluding Vaccine | | :--- | :--- | :--- | | Worldwide Sales | $22,471 | $22,470 | | Total Growth | 5.2% | 5.4% | | Operational Growth | 6.3% | 6.5% | Nine Months 2024 Sales Excluding COVID-19 Vaccine (in Millions) | Metric | Including Vaccine | Excluding Vaccine | | :--- | :--- | :--- | | Worldwide Sales | $66,301 | $66,103 | | Total Growth | 4.0% | 5.4% | | Operational Growth | 5.6% | 7.1% |