10-QPeriod: Q3 FY2020

JOHNSON & JOHNSON Quarterly Report for Q3 Ended Sep 27, 2020

Filed October 23, 2020For Securities:JNJ

Summary

Johnson & Johnson reported a solid third quarter of 2020, with worldwide sales increasing by 1.7% to $21.1 billion. This growth was driven by operational performance across its diverse segments, particularly in the Pharmaceutical and Consumer Health divisions. The company also demonstrated effective cost management, leading to a significant increase in earnings before taxes, especially in the Pharmaceutical segment which saw a substantial rebound. Despite ongoing global economic uncertainties and the impact of COVID-19, which notably affected the Medical Devices segment, JNJ maintained a strong liquidity position with cash and cash equivalents totaling $19.0 billion. The company continued its commitment to shareholder returns through regular cash dividends and strategic investments in its pipeline, including the acquisition of Momenta Pharmaceuticals, Inc. post-quarter. While facing some headwinds, JNJ's diversified portfolio and robust financial management position it to navigate the challenging environment.

Financial Highlights

53 data points
Beta

Revenue

$21.08B

66.9% Gross Margin

Net Income

$3.55B

16.9% Net Margin

EPS (Diluted)

$1.33

Total Assets

$170.69B

Cash & Equivalents

$18.96B

Free Cash Flow

$7.65B

Financial Statements
Beta
Revenue$21.08B
Cost of Revenue$6.97B
Gross Profit$14.11B
SG&A Expenses$5.43B
Interest Expense$44.00M
Net Income$3.55B
EPS (Basic)$1.35
EPS (Diluted)$1.33
Shares Outstanding (Basic)2.63B
Shares Outstanding (Diluted)2.67B

Key Highlights

  • 1Worldwide sales increased by 1.7% to $21.1 billion in Q3 2020 compared to Q3 2019.
  • 2Pharmaceutical segment sales grew by 5.0% to $11.4 billion in Q3 2020, driven by strong performance in Oncology, Pulmonary Hypertension, and Immunology (excluding REMICADE®).
  • 3Consumer Health segment sales increased by 1.3% to $3.5 billion in Q3 2020, with notable growth in OTC products, driven partly by COVID-19 related stocking.
  • 4Medical Devices segment sales saw a slight decrease of 3.6% to $6.2 billion in Q3 2020, reflecting the impact of COVID-19 on elective procedures, though U.S. sales returned to growth.
  • 5Earnings before provision for taxes on income increased significantly to $4.4 billion in Q3 2020 from $1.6 billion in Q3 2019, largely due to lower litigation expenses, particularly related to opioid settlements.
  • 6The company maintained a strong liquidity position with $19.0 billion in cash and cash equivalents and $11.8 billion in marketable securities at the end of Q3 2020.
  • 7Post-quarter, Johnson & Johnson completed the acquisition of Momenta Pharmaceuticals, Inc. for approximately $6.5 billion, primarily to bolster its Pharmaceutical segment's pipeline.

Frequently Asked Questions

Johnson & Johnson reported a 1.7% increase in worldwide sales to $21.1 billion for the third quarter of 2020, compared to the same period in 2019. This growth was primarily driven by operational performance across its segments.

The substantial increase in earnings before taxes from $1.6 billion in Q3 2019 to $4.4 billion in Q3 2020 was largely due to a significant reduction in litigation expenses, particularly related to the opioid litigation settlement, and a strong performance from the Pharmaceutical segment.

The COVID-19 pandemic had a mixed impact. The Medical Devices segment experienced a decline due to reduced elective procedures, although U.S. sales showed signs of recovery. The Pharmaceutical and Consumer Health segments showed resilience and even growth in certain areas, with some product categories benefiting from increased demand for health and hygiene products. The company also noted increased R&D investment related to COVID-19 vaccine development.

Johnson & Johnson maintained a strong financial position, with $19.0 billion in cash and cash equivalents and $11.8 billion in marketable securities as of September 27, 2020. The company also secured significant funding through debt issuance and has access to credit facilities, indicating ample liquidity to meet its operational needs and strategic investments.