Johnson & Johnson (JNJ) reported a beat on first quarter earnings Tuesday, even as concerns linger about how President Trump’s tariffs will impact its medical device business, as well as how a probe into pharmaceutical tariffs will impact its business.
J&J reported first quarter revenue of $21.9 billion, beating Wall Street estimates by 1.4%. Adjusted earnings per share came in at $2.69, beating Wall Street by 6.7%. Despite the beat, J&J’s stock traded down less than 1% Tuesday.
The company raised its 2025 sales guidance Tuesday by $700 million, putting the new target at 3.3% to 4.3% growth, or a midpoint of $92 billion. That is despite a decline in sales after the patent expiry of Stelara, the company’s blockbuster inflammatory condition treatment, this year.
On an earnings call Tuesday, executives said that China, Canada, and Mexico are where the company has the most exposure on tariffs.
As of 1:05:48 PM EDT. Market Open.
CFO Joe Wolk estimated about $400 million in tariff impact, saying it would primarily hit the medical devices business.
“It would include, to some small degree, some of the steel and aluminum tariffs that impact some of our products. It includes the China tariffs, as well as the China retaliatory tariffs — and that is probably the most substantial out of all the tariffs,” Wolk said.
He told Yahoo Finance that up to 70% of the tariff impact is from the products exported to China from the U.S.
The hit from tariffs is being taken on as cost of goods and will “sit on the balance sheet … in future periods,” Wolk said.
Asad Haider, Goldman Sachs Global Investment Research head of the healthcare business unit, told Yahoo Finance that the company reduced its research costs and also has a lot more leverage, due to its size, to whether the current tariff confusion.
“We don’t really know line items…it speaks a little bit to the leverage they have across the P&L to make these types of investments,” Haider said.
The industry is also bracing for the impact of the investigation into pharmaceutical tariffs, which the Trump administration announced Monday.
However, CEO Joaquin Duato said, “It is also important that companies in healthcare partner with the administration to look to mitigate some of the vulnerabilities that exist today in our healthcare supply chain so as to avoid any continuity of supply effect.”
J&J has also faced some of the same industry pressures as its peers in recent years, including the Inflation Reduction Act’s Medicare price negotiations. But it is also pressured by the ongoing talc litigation and recently faced a major setback in the courts, with a judge rejecting a potential $10 billion settlement.
