Tuesday, January 23, 2024

Like everyone else on the planet, Calcbench has been relieved to see the covid-19 pandemic recede into the background of daily life. Now, however, Johnson & Johnson’s latest earnings report gives us a glimpse of what that fade means for corporate earnings.

J&J ($JNJ) filed its earnings report on Tuesday morning. As we skimmed through the company’s segment disclosures, we noticed an odd detail. J&J had established a new “Innovative Medicine” operating segment, but reported that segment’s numbers “excluding covid-19 vaccines.” 

We’re pretty open-minded about adjustments to earnings around here, but really? Has the decline in covid vaccination business declined so much, so swiftly, that an adjustment is warranted? Come to think of it, how much did covid vaccinations support J&J earnings, anyway? 

It’s all there in the filings — if you know where to look. 

Let’s start with that Innovative Medicine operating segment. Johnson & Johnson defined that segment last summer when the company spun off its consumer health business into Kenvue ($KVUE) in third-quarter 2023. Today’s Innovative Medicine segment had previously been the Pharmaceutical segment, and in the 10-Q J&J now reports the U.S., international, and worldwide revenue for its blockbuster drugs. Pretty cool, actually. See Figure 1, below, for a small sample of what J&J discloses.

Further down that segment report, one sees that J&J reported only $41 million in worldwide revenue for its covid-19 vaccine in Q3 2023 — and all of that revenue came from international sales; J&J reported zero revenue from the United States. Even more jarring, that $41 million in sales was down 91.5 percent from $489 million in the year-earlier period.

OK, those Q3 2023 numbers do establish that J&J’s covid vaccine revenue has been plummeting. Now let’s look at those Q4 numbers filed today.

Covid-19 Revenue and Cost

First, we can see from the Q4 earnings release that the Innovative Medicine segment reported a total of $13.722 billion for the quarter, up 4.2 percent from the year-earlier period in 2022. See Figure 2, below.

Immediately below those line items, we have Innovative Medicine “excluding covid-19 vaccination.” That totalled $13.678 billion for the quarter, which is $44 million less than the $13.722 billion reported in the previous line item.

So that’s how much covid-19 revenue J&J had for Q4 2023: $44 million, compared to (if you do that same math again for Q4 2022 numbers) $689 million in the year-earlier period. That’s a drop of 93 percent. Ouch.

Meanwhile, we also have covid-19 related costs for J&J. The company reports those in the earnings release too, as part of its reconciliation table to square adjusted earnings ($5.56 billion) back to GAAP-approved net earnings ($4.13 billion). See Figure 3, below. The covid costs are highlighted in gray.

As you can see, the company reported a $10 million adjustment related to covid this quarter, down from an $821 million adjustment one year ago. Those costs, the company says in a footnote, stem from “external manufacturing network exit costs and required clinical trial expenses, associated with the company's completion of its COVID-19 vaccine contractual commitments.”

So, clearly, J&J is winding down covid-19 vaccination as a substantial part of its operations. And for those who want to see a history of J&J’s covid revenue since the company first started reporting it at the beginning of 2021, see the rather astonishing Figure 4, below.

More on Calcbench and Pharma Revenue

If following the pharma sector is your thing in financial analysis, don’t forget that large pharma companies report their sales of blockbuster drugs. Calcbench first looked at this corner of financial disclosure in 2018 and then provided a fresh look in 2021. You can use our Segments reporting database to research sales of specific drugs. 

And for Calcbench premium customers, we even have a pharma industry earnings analysis template that uses our Excel Add-in to pull the latest revenue on blockbuster drug sales automatically. 

If you want to learn more (about pharma or any other templates, tools, and other tricks of the trade we have), just email us at info@calcbench.com

FREE Calcbench Premium
Two Week Trial

Research financial & accounting data like never before. Get features designed for better insights. Try our enhanced Excel Add-in. Sign up now to try the Premium Suite.