01—Abstract
Summary
Summary of the 10-K filed February 27, 2017. Cited figures are marked; the original filing is the authoritative source.
Johnson & Johnson's (JNJ) 2016 10-K filing shows a company with strong and diversified healthcare operations across three segments: Consumer, Pharmaceutical, and Medical Devices.
The company reported total sales of $71.9 billiona, a 2.6% increase year-over-year, driven by operational growth across its segments, particularly in Pharmaceuticals. The Pharmaceutical segment saw robust growth in its immunology portfolio with key drugs like STELARA® and SIMPONI® showing significant increases, while Oncology also performed well with strong uptake of IMBRUVICA® and DARZALEX®. The Medical Devices segment remained relatively flat in sales, impacted by divestitures and competitive pressures, though Vision Care showed positive growth.
The Consumer segment experienced a slight sales decline, impacted by the Venezuela operations and divestitures, but saw strong performance in its Beauty and OTC product lines. The company continues to invest heavily in research and development ($9.1 billionb in 2016) to fuel future innovation and offset patent expirations. However, a key risk highlighted is the impending biosimilar competition for its major product, REMICADE®, which is expected to impact U.S. sales significantly.
Financially, JNJ demonstrated solid performance with net earnings of $16.5 billionc. The company maintained a strong cash flow from operations ($18.8 billion) and actively returned capital to shareholders through dividends ($8.6 billion) and share repurchases ($9.0 billion).
Despite some segment-specific challenges and ongoing legal proceedings, the company's diversified business model and commitment to innovation appear to position it for continued resilience. Investors should monitor the impact of REMICADE® biosimilar competition and the company's ability to successfully launch new products to mitigate this risk.
02—Key points
Key Highlights
- Total sales increased by 2.6% to $71.9 billion in 2016, driven by operational growth, partially offset by currency impacts.
- The Pharmaceutical segment reported sales of $33.5 billion, up 6.5%, with strong performance in Immunology (REMICADE®, STELARA®, SIMPONI®) and Oncology (IMBRUVICA®, DARZALEX®).
- The Consumer segment reported sales of $13.3 billion, a decrease of 1.5%, impacted by currency, divestitures, and operations in Venezuela, though Beauty and OTC franchises showed growth.
- The Medical Devices segment reported sales of $25.1 billion, a slight decrease of 0.1%, affected by divestitures and pricing pressures, but Vision Care saw 6.8% growth.
- Research and Development (R&D) expenses were $9.1 billion in 2016, representing 12.7% of sales, underscoring a commitment to innovation.
- The company repurchased $9.0 billion of its common stock during 2016 and increased its dividend for the 54th consecutive year.
- Significant risk identified is the introduction of biosimilar competition for REMICADE® in the U.S. market, expected to reduce sales.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2017filed February 27, 2017Financial Statements
FY2017 against FY2016
| Line item | FY2017FY2016 | Change |
|---|---|---|
| Revenue | $76.45B$70.07B | +9.1% |
| Cost of Revenue | $25.44B$21.54B | +18.1% |
| Gross Profit | $51.01B$48.54B | +5.1% |
| SG&A Expenses | $21.52B$21.20B | +1.5% |
| Interest Expense | $934.00M$552.00M | +69.2% |
| Net Income | $1.30B$15.41B | −91.6% |
| EPS (Basic) | $0.48$5.56 | −91.4% |
| EPS (Diluted) | $0.47$5.48 | −91.4% |
| Shares Outstanding (Basic) | 2.69B2.77B | −2.9% |
| Shares Outstanding (Diluted) | 2.75B2.81B | −2.4% |
05—Questions
Frequently Asked Questions
What was Johnson & Johnson's overall sales performance in 2016?
Johnson & Johnson reported total sales of $71.9 billion in 2016, representing a 2.6% increase compared to 2015. This growth was driven by operational sales increases, which were partially offset by negative currency impacts.
Which business segment performed the strongest in 2016?
The Pharmaceutical segment demonstrated the strongest performance in 2016, with sales increasing by 6.5% to $33.5 billion. This growth was primarily attributed to strong performance in the Immunology and Oncology therapeutic areas.
What is the primary risk factor highlighted in the filing for 2016?
The most significant risk highlighted is the introduction of biosimilar competition for its key drug REMICADE® in the U.S. market, which began in late 2016 and is expected to result in a reduction of REMICADE® sales.
How did Johnson & Johnson return capital to shareholders in 2016?
Johnson & Johnson returned capital to shareholders through dividends paid totaling $8.6 billion and share repurchases totaling $9.0 billion during 2016.
06—Continue