Executive Summary
In Q3 2024, Johnson & Johnson (JNJ) reported a respectable revenue of $22.5 billion, reflecting a 6.3% operational growth. The company's performance showcases the robustness of its diverse business segments, particularly in Innovative Medicine and MedTech, amid ongoing legal challenges and industry headwinds in Asia Pacific. Management's focus on innovative product offerings and strategic acquisitions appears to position JNJ for continued growth despite anticipated challenges, such as increased competition in its immunology portfolio and market dynamics in its MedTech operations. This report details the financial metrics, management insights, and the future outlook for investors.
Key Performance Indicators
Key Insights
1. **Revenue Performance:** Q3 2024 revenue of $22.5 billion, a YoY increase of 6.3%. 7.6% growth in the USA and 4.6% internationally.
2. **Net Income and EPS:** Net income stands at $2.7 billion, with diluted EPS at $1.11, reflecting a decrease from $1.69 YoY. Adjusted EPS, excluding special items, is $2.42.
3. **Profitability Ratios:** Gross profit margin is approximately 69.8%, while the operating income margin is 23.4%. Adjusted pre-tax operating margin decreased from 37.6% to 32.4% due to ...
Financial Highlights
1. Revenue Performance: Q3 2024 revenue of $22.5 billion, a YoY increase of 6.3%. 7.6% growth in the USA and 4.6% internationally.
2. Net Income and EPS: Net income stands at $2.7 billion, with diluted EPS at $1.11, reflecting a decrease from $1.69 YoY. Adjusted EPS, excluding special items, is $2.42.
3. Profitability Ratios: Gross profit margin is approximately 69.8%, while the operating income margin is 23.4%. Adjusted pre-tax operating margin decreased from 37.6% to 32.4% due to the acquisition-related expenses.
4. R&D Investment: Nearly $5 billion invested (22% of sales) signifies commitment to innovation, vital for long-term prospects.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
22.47B |
5.03% |
0.00% |
| Gross Profit |
15.69B |
6.24% |
-1.15% |
| Operating Income |
5.26B |
14.56% |
0.32% |
| Net Income |
2.69B |
-33.47% |
0.00% |
| EPS |
1.11 |
-33.33% |
0.90% |
Management Commentary
- Innovative Medicine Performance: CEO Joaquin Duato noted a second consecutive quarter with Innovative Medicine sales over $14 billion, driven by double-digit growth in key products such as DARZALEX and CARVYKTI.
- Acquisitions for Growth: JNJ's recent acquisitions (including Shockwave and Abiomed) contribute positively, particularly in Cardiovascular, where the portfolio achieved double-digit growth.
- Talc Litigation Update: CFO Joe Wolk highlighted advancements in resolving the talc litigation, suggesting company commitment to closure and stability moving forward.
"Our high innovation, high growth strategy is working and our progress this quarter speaks to the strength of our commercial and innovation capabilities." - Joaquin Duato, CEO
â Joaquin Duato
"We are making meaningful progress to bring a responsible, final and comprehensive resolution to these claims (talc litigation)." - Joe Wolk, CFO.
â Joe Wolk
Forward Guidance
Management has increased 2024 operational sales guidance to 5.7% - 6.2%. Future potential growth stems from innovative therapies and recent FDA approvals, specifically in oncology and immunology sectors. JNJ is also positioning itself for 2025 with anticipated new product launches expected to enhance revenue streams significantly. Investors should monitor the continued rollout of biosimilars and competitive responses in the immunology market.