Oct 13, 9:23 AM EDT

J&J tops 3Q profit expectations, misses revenue forecasts, authorizes $10B share buyback

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Health care giant Johnson & Johnson posted a 29 percent drop in third-quarter earnings, hammered by plunging sales of its hepatitis C medicine and unfavorable currency exchange rates that reduced the value of overseas sales. Its year-ago results had also included a big gain from selling a diagnostics business.

For the second quarter in a row, the bright spot for the New Brunswick, New Jersey-based company was the U.S. performance of its consumer health business, which has finally recovered after a long and embarrassing spate of recalls dating to 2009.

The maker of Tylenol, medical devices and Xarelto, for preventing heart attacks and stroke, on Tuesday reported third-quarter net income of $3.36 billion, or $1.20 per share, compared with $4.75 billion, or $1.66 per share, a year ago.

Adjusted net income, excluding the impact of its sale of its Ortho-Clinical Diagnostics business and higher charges for litigation and writedowns in the value of assets, was $4.17 billion, or $1.49 per share. That topped the expectations of analysts surveyed by Zacks Investment Research, who expected adjusted earnings of $1.44 per share, on average.

But Wall Street didn't like the results, and J&J shares dropped $1.73, or 1.8 percent, to $94.26 in premarket trading shortly before the stock market opened.

The world's biggest maker of health care products increased its 2015 profit forecast to $6.15 to $6.20 per share, excluding one-time items. That was up from the company's July forecast of $6.10 to $6.20 per share. Analysts surveyed by FactSet expected earnings of $6.16 per share.

It also said its board of directors has approved a $10 billion stock buyback plan, but noted it will be financed through the issuance of debt.

J&J posted revenue of $17.1 billion in the quarter, which also missed analysts' forecasts for $17.41 billion. The strong dollar reduced revenue by 8.2 percent, the company said.

Pharmaceutical sales declined 7.4 percent to $7.7 billion, hurt by sales of hepatitis C drug Olysio plunging 90 percent to just $79 million. The drug was once seen as a likely blockbuster, but newer hepatitis C pills Sovaldi, Harvoni and Viekira Pak have since cornered the market.

Sales of consumer health products such as Motrin and Tylenol rose 8.9 percent in the U.S., but fell 7.7 percent worldwide, to a total of $3.3 billion.

Sales of medical devices dropped 7.3 percent to $6.1 billion.

Johnson & Johnson shares have fallen 8 percent since the beginning of the year, while the Standard & Poor's 500 index has dropped 2 percent. The stock has dropped 5 percent in the last 12 months.


Elements of this story were generated by Automated Insights (http://automatedinsights.com/ap) using data from Zacks Investment Research. Access a Zacks stock report on JNJ at http://www.zacks.com/ap/JNJ


Keywords: Johnson & Johnson, Earnings Report, Priority Earnings

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