What was the primary driver of the significant increase in intangible assets and goodwill on the balance sheet?

The substantial increase in intangible assets and goodwill is primarily attributable to the acquisition of Actelion Ltd. for approximately $28.8 billion (net of cash acquired) and the acquisition of Abbott Medical Optics (AMO) for $4.4 billion. These acquisitions, completed in the second and first quarters of 2017, respectively, involved significant purchase price allocations to acquired intangible assets and goodwill.

How did the Actelion acquisition affect the company's financial performance in this quarter?

The Actelion acquisition, which closed in June 2017, contributed to sales growth and added to the Pulmonary Hypertension therapeutic area. However, it also resulted in higher amortization expenses and acquisition-related costs, which impacted the company's profitability and effective tax rate in the second quarter and first six months of fiscal 2017.

What is the outlook for REMICADE® sales given the increasing biosimilar competition?

REMICADE® sales experienced a significant decline in the second quarter, primarily due to biosimilar competition in markets outside the United States. The company noted that FDA approval and launch of infliximab biosimilars in the U.S. market by Pfizer and Merck will likely lead to further reductions in REMICADE® sales domestically. Johnson & Johnson continues to assert its patent rights related to REMICADE®.

How did the company's share repurchase program progress during the quarter?

The company completed its $10.0 billion share repurchase program during the second quarter of fiscal 2017. In the fiscal second quarter, JNJ repurchased a total of approximately 14.5 million shares, with the majority of these purchases being part of the completed repurchase program.

JNJ 10-Q Quarterly Report Q3 FY2017 — Revenue, Net Income, EPS

Summary

Johnson & Johnson (JNJ) reported its second-quarter fiscal 2017 results, demonstrating a modest increase in worldwide sales of 1.9% to $18.8 billion. This growth was primarily driven by operational improvements across its segments, partially offset by currency fluctuations. The company's strategic acquisitions, notably Actelion, are beginning to impact the financial statements, significantly increasing intangible assets and goodwill. While overall sales showed a slight uptick, net earnings saw a decrease to $3.8 billion from $4.0 billion in the prior year's second quarter, leading to a diluted EPS of $1.40. This was influenced by higher amortization costs related to recent acquisitions, an asset impairment charge, and a gain from royalty receivable monetization. The company continues to manage its diverse portfolio, with the Pharmaceutical segment showing resilience despite biosimilar pressures on REMICADE®, and the Medical Devices segment experiencing strong growth fueled by the AMO acquisition. Investors should note the substantial investment in acquisitions and ongoing restructuring efforts as key factors influencing profitability and future growth.

Financial Highlights

53 data points

Beta

Revenue

$18.84B

0.7% Gross Margin

Net Income

$3.83B

0.2% Net Margin

EPS (Diluted)

$1.40

Total Assets

$152.81B

Cash & Equivalents

$12.60B

Free Cash Flow

$5.08B

Financial Statements

Beta

Revenue	$18.84B
Cost of Revenue	$5.85B
Gross Profit	$12.99B
SG&A Expenses	$5.29B
Interest Expense	$227.00M
Net Income	$3.83B
EPS (Basic)	$1.42
EPS (Diluted)	$1.40
Shares Outstanding (Basic)	2.69B
Shares Outstanding (Diluted)	2.74B

Key Highlights

1Worldwide sales increased by 1.9% to $18.8 billion in the second quarter of fiscal 2017, driven by operational growth.
2Net earnings decreased to $3.8 billion ($1.40 diluted EPS) compared to $4.0 billion ($1.43 diluted EPS) in the prior year's second quarter.
3The acquisition of Actelion Ltd. for $28.8 billion (net of cash acquired) was completed in June 2017, significantly impacting the balance sheet with increased intangible assets and goodwill.
4Pharmaceutical segment sales remained relatively flat, impacted by biosimilar competition for REMICADE® and a positive adjustment to previous reserve estimates, though STELARA® and IMBRUVICA® showed strong growth.
5Medical Devices segment sales grew by 4.9%, largely boosted by the acquisition of Abbott Medical Optics (AMO) and strong performance in Vision Care.
6Operating cash flow remained robust at $8.7 billion for the first six months of 2017, but investing activities saw a significant outflow of $13.2 billion due to acquisitions.
7The company repurchased $10.0 billion of its common stock under a program that was completed in June 2017.

JOHNSON & JOHNSON Quarterly Report for Q3 Ended Jul 2, 2017

Summary

Financial Highlights

Key Highlights

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