10-QPeriod: Q2 FY2017

JOHNSON & JOHNSON Quarterly Report for Q2 Ended Apr 2, 2017

Filed May 8, 2017For Securities:JNJ

Summary

Johnson & Johnson reported total sales of $17.77 billion for the first quarter of 2017, a 1.6% increase year-over-year. This growth was driven by operational expansion of 2.0%, slightly offset by currency fluctuations. The company saw a modest increase in net earnings to $4.42 billion, or $1.61 per diluted share, compared to $4.46 billion, or $1.59 per diluted share, in the prior year's first quarter. The Medical Devices segment showed the strongest growth at 3.0%, while the Pharmaceutical segment grew 0.8% and Consumer segment grew 1.0%. The company completed the acquisition of Abbott Medical Optics (AMO) for $4.4 billion, significantly increasing intangible assets and goodwill, and announced a definitive agreement to acquire Actelion Ltd. for approximately $30 billion.

Financial Highlights

53 data points
Beta

Revenue

$17.77B

69.6% Gross Margin

Net Income

$4.42B

24.9% Net Margin

EPS (Diluted)

$1.61

Total Assets

$144.92B

Cash & Equivalents

$20.91B

Free Cash Flow

$2.35B

Financial Statements
Beta
Revenue$17.77B
Cost of Revenue$5.41B
Gross Profit$12.36B
SG&A Expenses$4.76B
Interest Expense$204.00M
Net Income$4.42B
EPS (Basic)$1.63
EPS (Diluted)$1.61
Shares Outstanding (Basic)2.71B
Shares Outstanding (Diluted)2.75B

Key Highlights

  • 1Total sales increased 1.6% to $17.77 billion, driven by operational growth.
  • 2Net earnings remained stable at $4.42 billion ($1.61/share diluted), with a slight increase in EPS.
  • 3Medical Devices segment sales grew 3.0%, driven by the acquisition of AMO and strong Vision Care performance.
  • 4Pharmaceutical segment sales grew 0.8%, with notable growth in Oncology, partially offset by REMICADE® biosimilar competition.
  • 5Consumer segment sales increased 1.0%, with strong performance in the Beauty franchise driven by recent acquisitions.
  • 6The company completed the acquisition of Abbott Medical Optics (AMO) for $4.4 billion, significantly boosting intangible assets and goodwill.
  • 7Johnson & Johnson announced a $30 billion acquisition of Actelion Ltd., expected to close in Q2 2017.

Frequently Asked Questions

The acquisition of Abbott Medical Optics (AMO) in the first quarter of 2017 for $4.4 billion resulted in a significant increase in intangible assets and goodwill. Intangible assets increased by $2.6 billion and goodwill increased by $2.0 billion on a preliminary purchase price allocation basis.

The expiration of REMICADE® patents in certain European countries has led to biosimilar competition, resulting in reduced sales. The U.S. market is also facing increasing biosimilar competition with FDA approvals for infliximab biosimilars, which will likely further reduce REMICADE® sales. The company continues to assert its patent rights.

The Medical Devices segment showed strong growth of 3.0% year-over-year, driven by the acquisition of AMO and robust performance in Vision Care. The company is also implementing restructuring actions in this segment expected to yield significant cost savings, which should support future profitability.

The company's debt increased to $32.4 billion from $23.3 billion year-over-year, primarily due to new borrowings to fund general corporate purposes, including the AMO acquisition and share repurchases. Cash and cash equivalents stood at $20.9 billion, with significant marketable securities, providing ample liquidity. The company also announced a large acquisition of Actelion Ltd., which it plans to finance using cash held by foreign subsidiaries.