The FINANCIAL — Johnson & Johnson on January 23 announced sales of $20.2 billion for the fourth quarter of 2017, an increase of 11.5% as compared to the fourth quarter of 2016.
Operational sales results increased 9.4% and the positive impact of currency was 2.1%. Domestic sales increased 9.8%. International sales increased 13.5%, reflecting operational growth of 9.0% and a positive currency impact of 4.5%. Excluding the net impact of acquisitions and divestitures, on an operational basis, worldwide sales for the fourth quarter of 2017 increased 4.2%, domestic sales increased 4.1% and international sales increased 4.3%.
Worldwide sales for the full-year 2017 were $76.5 billion, an increase of 6.3% versus 2016. Operational results increased 6.0% and the positive impact of currency was 0.3%. Domestic sales increased 5.4%. International sales increased 7.4%, reflecting operational growth of 6.6% and a positive currency impact of 0.8%. Excluding the net impact of acquisitions and divestitures, on an operational basis, worldwide sales for the full-year 2017 increased 2.4%, domestic sales increased 1.6% and international sales increased 3.3%.
Net loss and diluted loss per share for the fourth quarter of 2017 were $10.7 billion and $3.99, respectively. Fourth-quarter 2017 net loss included after-tax intangible amortization expense of approximately $0.9 billion and a net charge for after-tax special items of approximately $14.6 billion. Included in these special items is a provisional amount of approximately $13.6 billion associated with the recent enactment of tax legislation. Fourth-quarter 2016 net earnings included after-tax intangible amortization expense of approximately $0.3 billion and a net charge for after-tax special items of approximately $0.3 billion. Excluding after-tax intangible amortization expense and special items, adjusted net earnings for the current quarter were $4.8 billion and adjusted diluted earnings per share were $1.74, representing increases of 9.5% and 10.1%, respectively, as compared to the same period in 2016. On an operational basis, adjusted diluted earnings per share increased 5.7%, according to Johnson & Johnson.
Net earnings and diluted earnings per share for the full-year 2017 were $1.3 billion and $0.47, respectively. Full-year net earnings included after-tax intangible amortization expense of approximately $2.5 billion and a charge for after-tax special items of approximately $16.2 billion. Included in these special items is a provisional amount of approximately $13.6 billion associated with the recent enactment of tax legislation. Full-year 2016 net earnings included after-tax intangible amortization expense of approximately $0.9 billion and a charge for after-tax special items of approximately $1.3 billion. Excluding after-tax intangible amortization expense and special items, adjusted net earnings for the full-year of 2017 were $20.0 billion and adjusted diluted earnings per share were $7.30, representing increases of 6.8% and 8.5%, respectively, as compared to the same period in 2016. On an operational basis, adjusted diluted earnings per share also increased 7.6%. A reconciliation of non-GAAP financial measures is included as an accompanying schedule.
“Johnson & Johnson delivered strong adjusted earnings per share growth of 8.5% and total shareholder return of greater than 24% in 2017, driven by the robust performance of our Pharmaceutical business, while continuing to make investments in acquisitions, innovation and strategic partnerships to accelerate growth in each of our businesses,” said Alex Gorsky, Chairman and Chief Executive Officer. “As we enter 2018 and look beyond, we are experiencing an incredible pace of change in health care. Johnson & Johnson is uniquely positioned to lead during this dynamic era and deliver innovative solutions for patients and consumers that drive sustainable, long-term growth. We are pleased with the passage of recent legislation modernizing the U.S. tax system, which enables Johnson & Johnson to invest in innovation at higher levels to help address the most challenging unmet medical needs facing health care today.”
Mr. Gorsky continued, “I want to thank all of our talented colleagues for their commitment, passion and dedication to transforming the lives of patients and consumers worldwide.”
The Company announced its 2018 full-year guidance for sales of $80.6 billion to $81.4 billion reflecting expected operational growth in the range of 3.5% to 4.5%. The Company also announced adjusted earnings guidance for full-year 2018 of $8.00 to $8.20 per share reflecting expected operational growth in the range of 6.8% to 9.6%. Adjusted earnings guidance excludes the impact of after-tax intangible amortization expense and special items.
Segment Sales Performance
Worldwide Consumer sales of $13.6 billion for the full-year 2017 represented an increase of 2.2% versus the prior year, consisting of an operational increase of 1.3% and a positive impact from currency of 0.9%. Domestic sales increased 2.7%; international sales increased 1.9%, which reflected an operational increase of 0.4% and a positive currency impact of 1.5%. Excluding the net impact of acquisitions and divestitures, on an operational basis, worldwide sales decreased 0.5%, domestic sales decreased 0.7% and international sales decreased 0.3%.
Worldwide operational results, excluding the net impact of acquisitions and divestitures, were negatively impacted by declines in the Baby Care and Oral Care businesses, mostly offset by growth in over-the-counter products, including TYLENOL analgesics and upper respiratory products, and NEUTROGENA® beauty products.
Worldwide Pharmaceutical sales of $36.3 billion for the full-year 2017 represented an increase of 8.3% versus the prior year with an operational increase of 8.0% and a positive impact from currency of 0.3%. Domestic sales increased 6.7%; international sales increased 10.8%, which reflected an operational increase of 10.1% and a positive currency impact of 0.7%. Sales included the impact of the acquisition of Actelion Ltd. which was completed in June 2017 and contributed 4.2% to worldwide operational sales growth. Excluding the net impact of acquisitions and divestitures, on an operational basis, worldwide sales increased 4.2%, domestic sales increased 3.1% and international sales increased 5.8%. Worldwide operational sales growth was negatively impacted by approximately 1.8 points due to a positive adjustment of U.S. rebate accruals in the first half of 2016, which did not repeat in the first half of 2017.
Worldwide operational results, excluding the net impact of acquisitions and divestitures, were driven by new products and the strength of core products. Strong growth in new products include DARZALEX (daratumumab), for the treatment of patients with multiple myeloma, IMBRUVICA® (ibrutinib), an oral, once-daily therapy approved for use in treating certain B-cell malignancies, a type of blood or lymph node cancer and TREMFYA® (guselkumab), for the treatment of adults living with moderate to severe plaque psoriasis.
Additional contributors to operational sales growth included STELARA (ustekinumab), a biologic for the treatment of a number of immune-mediated inflammatory diseases, INVEGA SUSTENNA/XEPLION/TRINZA (paliperidone palmitate), long-acting, injectable atypical antipsychotics for the treatment of schizophrenia in adults, ZYTIGA (abiraterone acetate), an oral, once-daily medication for use in combination with prednisone for the treatment of metastatic, castration-resistant prostate cancer, and XARELTO (rivaroxaban), an oral anticoagulant, partially offset by declines in REMICADE (infliximab), a biologic approved for the treatment of a number of immune-mediated inflammatory diseases, due to biosimilar entrants.
During the quarter, the U.S. Food and Drug Administration (FDA) approved JULUCA (rilpivirine and dolutegravir), the first, complete, single-pill, two-drug regimen for the treatment of human immunodeficiency virus type 1 (HIV-1) infection; a 10 mg once-daily dose of XARELTO (rivaroxaban) for reducing the continued risk for recurrent venous thromboembolism after completing at least six months of initial anticoagulation therapy; and SIMPONI ARIA (golimumab) for the treatment of adults with active psoriatic arthritis or active ankylosing spondylitis. The European Commission approved TREMFYA (guselkumab) for the treatment of adults with moderate to severe plaque psoriasis and granted approval to broaden the existing marketing authorization for ZYTIGA (abiraterone acetate) plus prednisone / prednisolone to include the treatment of newly-diagnosed high-risk metastatic hormone-sensitive prostate cancer.
Regulatory applications for approval were submitted to the FDA and European Medicines Agency to expand the current indication of DARZALEX (daratumumab) for use in combination with bortezomib, melphalan and prednisone, as a treatment for newly diagnosed patients with multiple myeloma ineligible for autologous stem cell transplantation. In addition, a supplemental New Drug Application was submitted to the FDA for two new XARELTO (rivaroxaban) vascular indications: reducing the risk of major cardiovascular (CV) events such as CV death, heart attack or stroke in patients with chronic coronary and/or peripheral artery disease (CAD/PAD), and for reducing the risk of acute limb ischemia in patients with PAD.
Also in the quarter, a worldwide collaboration and license agreement was executed with Legend Biotech, a subsidiary of GenScript Biotech Corporation, to develop, manufacture and commercialize a chimeric antigen receptor (CAR) T-cell therapy, LCAR-B38M, targeting BCMA for the treatment of multiple myeloma.
Worldwide Medical Devices sales of $26.6 billion for the full-year 2017 represented an increase of 5.9% versus the prior year consisting of an operational increase of 5.7% and a positive currency impact of 0.2%. Domestic sales increased 4.5%; international sales increased 7.1%, which reflected an operational increase of 6.7% and a positive currency impact of 0.4%. Sales included the impact of the acquisition of Abbott Medical Optics which contributed 4.5%, to worldwide operational sales growth. Excluding the net impact of acquisitions and divestitures, on an operational basis, worldwide sales increased 1.5%, domestic sales were flat and international sales increased 3.0%.
Worldwide operational results, excluding the net impact of acquisitions and divestitures, were driven by electrophysiology products in the Cardiovascular business; endocutters and biosurgicals in the Advanced Surgery business; ACUVUE® contact lenses in the Vision Care business; and wound closure products in the General Surgery business, partially offset by declines in the Diabetes Care business and spine products in the Orthopaedics business.
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