Johnson & Johnson had a surprisingly strong second quarter and bumped up its 2020 forecast even after COVID-19 contributed to a 40% drop in U.S. medical device sales.
Growing pharmaceutical sales, also in the U.S., helped the world's biggest health products maker counter damage from the pandemic, which forced patients to delay surgeries.
Worldwide medical device sales fell 34% in the quarter to $4.29 billion, but company leaders told analysts on Thursday morning that the segment's performance got better each month in the quarter.
"We are seeing signs of recovery and while the next few months and quarters contain uncertainty, the long-term underlying fundamentals remain solid," Chief Financial Officer Joseph Wolk said.
J&J's medical device segment is vulnerable to economic downturns because many of its products are for elective surgeries like hip and knee replacements that can be postponed. Plus the virus forced hospitals to halt scheduled surgeries, and fear of catching COVID-19 kept many patients away from hospitals.
Customers also bought fewer skin health and beauty products, and that hurt J&J's consumer health business, which saw worldwide revenue fall 7% to $3.3 billion in the quarter.
But the company's pharmaceutical sales grew nearly 6% in the U.S. and 2% globally. The immune disorder drug Stelara and cancer drugs Darzalex and Imbruvica helped that segment.
Overall net income fell 35% to $3.63 billion for the New Brunswick, New Jersey, based maker of baby shampoo and biologic drugs. Adjusted earnings totaled $1.67 per share. Total revenue also fell 11% to $18.34 billion.
Industry analysts expected J&J to take a bigger hit from the pandemic, having projected per-share earnings of $1.49, and $17.61 billion in revenue.
J&J on Thursday said it expects 2020 earnings of $7.75 to $7.95 per share. That comes a few months after the company surprised investors by cutting its profit forecast for the year by about 15% and slashing its sales forecast because of the pandemic.
The new forecast tops Wall Street expectations on the top end. But it still falls short of the earnings of $9 per share or more that J&J predicted at the start of the year.
Analyst surveyed by FactSet are projecting per-share earnings of $7.75 per share.
Company leaders said Thursday that they expect to start human testing next week on a potential COVID-19 vaccine. They plan to start a study July 22 in Belgium and then expand to the U.S. the next week.
They hope to start a late-stage clinical trial, the final phase before a drugmaker seeks regulatory approval, in late September.
There are nearly two dozen possible COVID-19 vaccines in various stages of testing around the world.
Shares of J&J fell slightly in late-morning trading while broader markets also were down.
