10-QPeriod: Q3 FY2022

JOHNSON & JOHNSON Quarterly Report for Q3 Ended Jul 3, 2022

Filed July 29, 2022For Securities:JNJ

Summary

Johnson & Johnson reported strong revenue growth for the second quarter of 2022, driven by operational increases across its Pharmaceutical and MedTech segments, despite a negative impact from currency fluctuations. Total sales reached $24.0 billion, a 3.0% increase year-over-year, with international sales showing particular strength due to operational growth, even as currency headwinds persisted. Net earnings for the quarter were $4.8 billion, or $1.80 per diluted share, a decrease from the prior year primarily due to an intangible asset impairment charge related to the bermekimab drug development and increased litigation-related expenses. The company continues to navigate a challenging macroeconomic environment, including inflation and supply chain pressures, while also advancing its strategic plan to separate its Consumer Health business.

Financial Highlights

54 data points
Beta

Revenue

$20.21B

68.7% Gross Margin

Net Income

$4.81B

23.8% Net Margin

EPS (Diluted)

$1.80

Total Assets

$177.72B

Cash & Equivalents

$10.98B

Free Cash Flow

$4.72B

Financial Statements
Beta
Revenue$20.21B
Cost of Revenue$7.92B
Gross Profit$13.89B
SG&A Expenses$6.23B
Operating Income$4.26B
Interest Expense$38.00M
Net Income$4.81B
EPS (Basic)$1.83
EPS (Diluted)$1.80
Shares Outstanding (Basic)2.63B
Shares Outstanding (Diluted)2.67B

Key Highlights

  • 1Total sales increased by 3.0% to $24.0 billion in Q2 2022, driven by operational growth of 8.0%.
  • 2Pharmaceutical segment sales grew by 6.7% to $13.3 billion, with strong operational increases in Oncology and Infectious Diseases, partially offset by declines in Immunology and Cardiovascular/Metabolism.
  • 3MedTech segment sales saw a slight decrease of 1.1% to $6.9 billion, impacted by a 4.5% negative currency effect, though operational growth was 3.4%.
  • 4Consumer Health segment sales decreased by 1.3% to $3.8 billion, impacted by supply constraints and regional COVID-19 restrictions.
  • 5Net earnings decreased to $4.8 billion ($1.80 per diluted share) from $6.3 billion ($2.35 per diluted share) in the prior year, impacted by an intangible asset impairment charge and increased litigation expenses.
  • 6The company continues to plan for the separation of its Consumer Health business, targeting completion in 18-24 months.
  • 7Cash flow from operating activities remained strong at $9.6 billion for the first six months of 2022, though cash and cash equivalents decreased to $11.0 billion due to investing and financing activities.

Frequently Asked Questions

Sales growth was primarily driven by operational increases across the Pharmaceutical and MedTech segments. Despite a significant negative currency impact, the company saw robust operational performance in key areas like Oncology and Infectious Diseases within the Pharmaceutical segment.

Net earnings decreased primarily due to an intangible asset impairment charge of approximately $0.6 billion related to the termination of the bermekimab drug development for Atopic Dermatitis, as well as higher litigation-related expenses and changes in the fair value of securities.

Johnson & Johnson announced its intention to separate the Consumer Health business to create a new, publicly traded company. The company is targeting the completion of this separation in 18 to 24 months from the initial announcement and has begun incurring costs related to this strategic move.

Currency fluctuations had a negative impact of 5.0% on total sales in the second quarter of 2022, and 3.8% for the first six months. This reflects the company's significant international operations and the strengthening of the U.S. dollar against various foreign currencies.