JNJ Johnson and Johnson

By Anne Steele and Jonathan D. Rockoff 

Johnson & Johnson raised its guidance for the year as the health-care giant beat earnings expectations in the first quarter despite foreign exchange rates depressing revenue growth.

The New Brunswick, N.J., company now expects earnings for the year of $6.53 to $6.68 a share, up from previous guidance for $6.43 to $6.58 a share. J&J anticipates revenue of $71.2 billion to $71.9 billion, compared with previous guidance for $70.8 billion to $71.5 billion.

"Our pharmaceuticals business continues to deliver impressive levels of growth, we have steady improvement in our consumer business, and we are seeing momentum in our medical-devices businesses, all of which are fueling our optimism for the full year ahead," Chief Executive Alex Gorsky said in a statement.

J&J's pharmaceutical business, the company's largest, grew 5.9% to $8.18 billion, lifted by a 12.9% increase in U.S. pharmaceutical sales. Strong sales of the diabetes drug Invokana, blood-cancer drug Imbruvica, blood-thinner Xarelto and multiple myeloma drug Darzalex, offset lower sales of the hepatitis C drug Olysio, which has been outflanked by newer drugs.

Other J&J businesses didn't perform as well as its pharmaceuticals business, however.

In the first quarter, sales of J&J consumer health products fell 5.8% to $3.2 billion, largely due to Venezuela's devaluation of its currency. The consumer business has been recovering from supply-chain problems that led to recalls. Executives said they believe the unit has turned a corner.

Chief Financial Officer Dominic Caruso dismissed speculation J&J would consider selling its consumer business. "Our broadly-based business is the right approach. It certainly has served us well and we expect it will continue to serve us well as health-care evolves," he told analysts during a conference call.

J&J's medical device sales fell 2.4% to $6.11 billion, which represents about 35% of the company's revenue.

The medical-device business used to be J&J's largest, but it has stumbled amid pricing pressures, increased competition and market changes. In response, J&J has exited certain areas, rejiggered how it sells devices and focused on high-growth categories like robotics and staplers. In January, J&J announced plans to cut about 3,000 jobs in its medical-devices division, or about 2.5% of the company's total workforce.

J&J ended the quarter with $17 billion in net cash. Mr. Caruso indicated the company would look to deploy the capital toward acquisitions, but said J&J was willing to wait for "the right deal at the right time with the right party at the right valuation."

Mr. Caruso singled out biotech and medical device companies as having inflated valuations.

For the company overall, earnings in the first quarter fell to $4.29 billion, or $1.54 a share, from $4.32 billion, or $1.53 a share, in the same period last year. Excluding certain items, J&J had earnings of $1.68 a share in the latest quarter. Revenue edged up 0.6% to $17.48 billion. Unfavorable currency rates shaved 3.3% off the latest quarter's total.

Analysts had projected earnings of $1.65 a share on $17.48 billion in revenue, according to Thomson Reuters.

With about half of its sales overseas, J&J's results have been pressured lately by a strengthening U.S. dollar and weakness in some emerging markets.

Write to Anne Steele at Anne.Steele@wsj.com and Jonathan D. Rockoff at Jonathan.Rockoff@wsj.com

(END) Dow Jones Newswires

April 19, 2016 12:15 ET (16:15 GMT)

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