J&J Earns $13.2B from Kenvue Spinout, Lowers Guidance

J&J Office in Spain_iStock, BrasilNut1

Pictured: Johnson & Johnson's office in Spain/iStock, BrasilNut1

Johnson & Johnson released updated 2023 financial guidance on Wednesday, detailing the impact of its consumer health spinout and announced changes to its outlook for the rest of the year.

At midpoint, J&J is looking at $10 to $10.10 in adjusted reported earnings per share (EPS), representing 12.5% growth from 2022. The company also anticipates a 7% to 8% increase in reported sales this year, as well as 7.5% to 8.5% growth in operational sales. These projections exclude figures from J&J’s COVID-19 vaccine.

Overall, J&J expects revenue of between $83.2 billion and $84 billion in 2023, down from its previously announced range of $98.8 billion to $99.8 billion.

These outlook adjustments come as the New Jersey pharma wraps up the spinout of its consumer health company Kenvue, announced in July 2023 when the company launched an offer allowing its shareholders to exchange their shares of J&J stock for shares of Kenvue’s common stock.

Kenvue completed its initial public offering and debuted on the New York Stock Exchange in May 2023.

J&J closed the exchange offer last week, reporting that it had accepted nearly 191 million shares of J&J common stock in exchange for more than 1.5 billion shares of Kenvue common stock. Following the formal separation, J&J now only retains 9.5% of Kenvue’s common stock.

Wednesday, J&J reported that the exchange offer made the company $13.2 billion in cash.

Kenvue’s separation comes amid J&J’s strategic pivot to its higher-value businesses. In its second-quarter 2023 earnings report, the company named oncology and immunology portfolio as its main drivers of growth, while also announcing a shift away from infectious diseases—for which it was dropping seven programs in hepatitis B, hepatitis D, HIV and influenza.

J&J’s oncology business, in particular, will likely see even greater growth following two FDA approvals earlier this month, one in multiple myeloma and another in BRCA-positive prostate cancer.

Meanwhile, reports circulated last week that the company was ending infectious disease and vaccine research at its facility in the Netherlands, though a spokesperson said that J&J—through its Janssen wholly-owned subsidiary—will continue to ensure supply for its HIV products.

“In Infectious Diseases & Vaccines (ID&V), we will continue to provide access to our marketed HIV products and advance our late-stage ExPEC vaccine program for prevention of invasive E. coli bacterial infections,” a J&J spokesperson said in a statement.

Tristan Manalac is an independent science writer based in Metro Manila, Philippines. He can be reached at tristan@tristanmanalac.com or tristan.manalac@biospace.com.

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