10-QPeriod: Q2 FY2016

JOHNSON & JOHNSON Quarterly Report for Q2 Ended Apr 3, 2016

Filed May 10, 2016For Securities:JNJ

Summary

Johnson & Johnson reported first-quarter 2016 sales of $17.5 billion, a slight increase of 0.6% year-over-year, driven by operational growth of 3.9% which was partially offset by a 3.3% negative currency impact. Net earnings for the quarter were $4.3 billion, resulting in diluted earnings per share of $1.54, a modest increase from $1.53 in the prior year's comparable period. The Pharmaceutical segment demonstrated strong performance with a 5.9% sales increase, notably driven by the Immunology and Oncology therapeutic areas. The Medical Devices segment experienced a slight sales decrease of 2.4%, while the Consumer segment saw a 5.8% decline in sales, impacted by divestitures and operational challenges. The company's balance sheet remains robust with total assets of $136.2 billion and total shareholders' equity of $72.6 billion. Cash flow from operations was $1.8 billion. Johnson & Johnson continued its commitment to returning capital to shareholders through dividends and share repurchases, paying out $2.1 billion in dividends and repurchasing $2.4 billion in stock during the quarter. The company also provided an update on ongoing litigation, with management confident that the ultimate outcome of legal proceedings, net of accrued liabilities, will not materially adversely affect the company's financial position, though it could impact results of operations and cash flows in any given period.

Financial Highlights

53 data points
Beta

Revenue

$17.48B

69.5% Gross Margin

Net Income

$4.46B

25.5% Net Margin

EPS (Diluted)

$1.59

Total Assets

$136.23B

Cash & Equivalents

$13.86B

Free Cash Flow

$1.55B

Financial Statements
Beta
Revenue$17.48B
Cost of Revenue$5.33B
Gross Profit$12.15B
SG&A Expenses$4.69B
Interest Expense$160.00M
Net Income$4.46B
EPS (Basic)$1.62
EPS (Diluted)$1.59
Shares Outstanding (Basic)2.76B
Shares Outstanding (Diluted)2.80B

Key Highlights

  • 1Total sales for Q1 2016 reached $17.5 billion, a 0.6% increase year-over-year, with operational growth of 3.9% partially offset by a 3.3% negative currency impact.
  • 2Net earnings were $4.3 billion, with diluted EPS of $1.54, a slight increase from $1.53 in the prior year.
  • 3The Pharmaceutical segment showed strong growth, with sales up 5.9% to $8.2 billion, led by Immunology (up 18.1%) and Oncology (up 22.2%) therapeutic areas.
  • 4Medical Devices sales decreased by 2.4% to $6.1 billion, impacted by divestitures and some market pressures, though Orthopaedics and Surgery showed modest operational growth.
  • 5Consumer segment sales declined 5.8% to $3.2 billion, affected by divestitures and operational challenges, particularly in international markets.
  • 6The company returned $4.5 billion to shareholders through dividends ($2.1 billion) and share repurchases ($2.4 billion) in the quarter.
  • 7Operating cash flow was $1.8 billion, supporting dividends, share repurchases, and investments.

Frequently Asked Questions

Johnson & Johnson reported worldwide sales of $17.5 billion for the first quarter of 2016, representing a 0.6% increase compared to the same period in the prior year. This growth was driven by an operational increase of 3.9%, which was partially offset by a negative impact of 3.3% from currency fluctuations.

The Pharmaceutical segment was a strong performer, with sales increasing by 5.9% to $8.2 billion, largely due to growth in Immunology and Oncology. The Medical Devices segment saw a slight decrease in sales by 2.4% to $6.1 billion. The Consumer segment experienced a more significant decline of 5.8% in sales, reaching $3.2 billion, impacted by divestitures and international market challenges.

As of April 3, 2016, Johnson & Johnson had $13.9 billion in cash and cash equivalents and $26.0 billion in marketable securities. Total debt at the end of the quarter was $23.3 billion. The company generated $1.8 billion in cash flow from operations, which funded its dividend payments and share repurchase programs.

The FDA approved a biosimilar version of REMICADE® for sale in the United States in April 2016. While this approval poses a risk of competitor launch and potential reduction in U.S. REMICADE® sales, the company does not expect a material adverse effect on its results of operations and cash flows in 2016. The timing of a potential launch is subject to patent enforcement and regulatory compliance.