10-QPeriod: Q2 FY2020

JOHNSON & JOHNSON Quarterly Report for Q2 Ended Jun 28, 2020

Filed July 24, 2020For Securities:JNJ

Summary

Johnson & Johnson reported second quarter 2020 results with total sales of $18.3 billion, a decrease of 10.8% year-over-year, impacted by an operational decline of 9.0% and a negative currency impact of 1.8%. The decrease was largely driven by a significant slowdown in the Medical Devices segment, which saw a 33.9% drop in sales, primarily attributed to the ongoing COVID-19 pandemic's impact on elective procedures and non-essential medical services. The Pharmaceutical segment demonstrated resilience, with sales increasing by 2.1% operationally, driven by strong performance in Oncology and Immunology, despite some headwinds from COVID-19. Net earnings for the quarter were $3.6 billion, down from $5.6 billion in the prior year's second quarter, resulting in diluted earnings per share of $1.36, a decrease from $2.08. The company's balance sheet remains strong, with total assets of $158.4 billion and total shareholders' equity of $63.0 billion as of June 28, 2020. Despite the challenging top-line performance in certain segments, Johnson & Johnson continued to return capital to shareholders through dividends and share repurchases.

Financial Highlights

53 data points
Beta

Revenue

$18.34B

64.1% Gross Margin

Net Income

$3.63B

19.8% Net Margin

EPS (Diluted)

$1.36

Total Assets

$158.38B

Cash & Equivalents

$11.17B

Free Cash Flow

$2.79B

Financial Statements
Beta
Revenue$18.34B
Cost of Revenue$6.58B
Gross Profit$11.76B
SG&A Expenses$4.99B
Interest Expense$45.00M
Net Income$3.63B
EPS (Basic)$1.38
EPS (Diluted)$1.36
Shares Outstanding (Basic)2.63B
Shares Outstanding (Diluted)2.67B

Key Highlights

  • 1Total sales for Q2 2020 decreased by 10.8% to $18.3 billion, reflecting a challenging operating environment, primarily due to the COVID-19 pandemic.
  • 2The Medical Devices segment experienced a significant sales decline of 33.9%, largely impacted by the deferral of elective medical procedures.
  • 3The Pharmaceutical segment showed resilience with a 2.1% increase in sales, driven by key growth drivers like STELARA®, DARZALEX®, and IMBRUVICA®.
  • 4Net earnings decreased to $3.6 billion in Q2 2020 from $5.6 billion in Q2 2019, with diluted EPS falling to $1.36 from $2.08.
  • 5Despite the sales decline, the company maintained a strong balance sheet with $11.2 billion in cash and cash equivalents and $7.96 billion in marketable securities as of June 28, 2020.
  • 6Operating cash flow for the first six months was $6.8 billion, demonstrating the company's ability to generate cash despite the challenging economic climate.
  • 7Johnson & Johnson continued its commitment to shareholders by declaring and paying regular quarterly cash dividends.

Frequently Asked Questions

The primary driver of the sales decline was the significant negative impact of the COVID-19 pandemic on the Medical Devices segment, which led to a substantial decrease in sales due to the deferral of elective medical procedures and reduced hospital visits.

The Pharmaceutical segment demonstrated resilience with sales growth, driven by strong performance in key products like STELARA® and DARZALEX®. The Consumer Health segment saw a moderate decline, while the Medical Devices segment experienced a significant downturn due to the pandemic. The company also noted efforts in vaccine production arrangements.

Johnson & Johnson maintained a strong financial position with substantial cash reserves and a healthy balance sheet. While the company faced sales headwinds in Q2 2020, it continues to generate operating cash flow and expects to manage through the ongoing economic uncertainties related to COVID-19, leveraging its diversified business model and robust business continuity plans.

Johnson & Johnson is involved in numerous legal proceedings, including significant product liability litigation related to talc, hip implants, pelvic mesh, and opioid marketing. The company has accrued for probable and estimable losses and continues to monitor these matters. The report also mentions ongoing government investigations and patent litigations related to pharmaceutical products.