JNJ Johnson and Johnson

By Anne Steele and Jonathan D. Rockoff 

Johnson & Johnson on Tuesday raised its guidance for the year again as the health-care giant topped expectations in the latest quarter, helped by growth in its pharmaceutical business.

The New Brunswick, N.J., company now expects earnings for the year of $6.63 to $6.73 a share, up from previous guidance for $6.53 to $6.68 a share. It also raised its revenue forecast to a range from $71.5 billion to $72.2 billion, up from $71.2 billion to $71.9 billion. In April the company beat earnings expectations for the first quarter and raised its revenue and earnings guidance for the year.

Chief Executive Alex Gorsky expressed optimism about J&J's outlook, saying longstanding efforts to reshape the company's struggling medical-device and consumer-health businesses were bearing fruit. He said J&J was positioned to surpass the world-wide health-care market's current 3% to 5% annual growth rate.

But J&J faces the threat of lower-priced competition emerging for some top-selling prescription drugs. And 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.

Chief Financial Officer Dominic Caurso said during a conference call that J&J, which gets about 3% of its sales from the United Kingdom, is watching events in the country following its recent vote to leave the European Union.

J&J's pharmaceutical business, the company's largest, continued to propel the company. Prescription-drug sales grew 8.9% to $8.65 billion.

Executives attributed the growth to sales from new products, including blood-cancer drug Imbruvica, blood thinner Xarelto, multiple myeloma drug Darzalex, Type 2 diabetes treatments Invokana and Invokamet, and prostate-cancer drug Zytiga.

Mr. Caruso said J&J doesn't expect biosimilar competition this year for top-selling drugs Remicade and Procrit.

Other J&J businesses, however, didn't perform as well. In the second quarter, sales of J&J consumer health products slipped 1.8% to $3.42 billion, largely due to Venezuela's devaluation of its currency.

To bolster the consumer business, J&J has been doing deals, most recently a $3.3 billion purchase of privately held hair-product maker Vogue International LLC.

Meanwhile, J&J's medical device sales edged up just 0.8% to $6.41 billion.

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.

In all for the quarter ended June, earnings fell to $3.99 billion, or $1.43 a share, from $4.52 billion, or $1.61 a share, in the same period last year. Excluding certain items, adjusted earnings rose to $1.74 a share. Revenue ticked up 3.9% to $18.5 billion. Unfavorable currency rates shaved 1.4% off the latest quarter's total.

Analysts had projected earnings of $1.68 a share on $17.97 billion in revenue, according to Thomson Reuters.

Shares, up 20% this year, rose 1.3% on the New York Stock Exchange in trading Tuesday morning.

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

(END) Dow Jones Newswires

July 20, 2016 02:50 ET (06:50 GMT)

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