10-QPeriod: Q2 FY2023

JOHNSON & JOHNSON Quarterly Report for Q2 Ended Apr 2, 2023

Filed April 28, 2023For Securities:JNJ

Summary

Johnson & Johnson (JNJ) reported a net loss of $68 million ($0.03 per share) for the first quarter of 2023, a significant shift from the $5.15 billion net earnings ($1.93 per share) in the prior year. This was primarily driven by a substantial charge of $6.9 billion related to the talc settlement proposal, which significantly impacted the "Other (income) expense, net" line item. Despite the net loss, the company's operational performance remained robust. Worldwide sales grew by 5.6% to $24.7 billion, with operational growth of 9.0% driven by strong performances across all segments: Consumer Health (7.4%), Pharmaceutical (4.2%), and MedTech (7.3%). The MedTech segment saw a notable boost from the acquisition of Abiomed. The company also maintained a strong liquidity position with $26.9 billion in cash, cash equivalents, and restricted cash.

Financial Highlights

54 data points
Beta

Revenue

$20.89B

68.0% Gross Margin

Net Income

-$68.00M

-0.3% Net Margin

EPS (Diluted)

$-0.03

Total Assets

$195.97B

Cash & Equivalents

$26.86B

Free Cash Flow

$2.39B

Financial Statements
Beta
Revenue$20.89B
Cost of Revenue$6.69B
Gross Profit$14.21B
SG&A Expenses$4.91B
Operating Income-$491.00M
Interest Expense$212.00M
Net Income-$68.00M
EPS (Basic)$-0.03
EPS (Diluted)$-0.03
Shares Outstanding (Basic)2.61B
Shares Outstanding (Diluted)2.61B

Key Highlights

  • 1Worldwide sales increased 5.6% to $24.7 billion, with operational growth of 9.0%.
  • 2Net loss of $68 million reported, compared to a net profit of $5.15 billion in the prior year, largely due to a $6.9 billion charge related to the talc settlement proposal.
  • 3Consumer Health segment sales grew 7.4% to $3.9 billion, driven by strong performance in OTC and Skin Health/Beauty franchises.
  • 4Pharmaceutical segment sales increased 4.2% to $13.4 billion, with notable growth in Oncology and Infectious Diseases, partially offset by declines in Immunology and Cardiovascular/Metabolism.
  • 5MedTech segment sales rose 7.3% to $7.5 billion, significantly boosted by the inclusion of Abiomed following its acquisition in December 2022.
  • 6The company's balance sheet remains strong with $26.9 billion in cash, cash equivalents, and restricted cash.
  • 7The planned separation of the Consumer Health business (Kenvue) is progressing, with an IPO planned.
  • 8The company announced a new share repurchase program authorization of $5.0 billion, which was completed in the first quarter of 2023.

Frequently Asked Questions

The net loss of $68 million was primarily caused by a substantial charge of $6.9 billion related to the talc settlement proposal. This charge significantly impacted the 'Other (income) expense, net' line item.

All three segments showed sales growth. Consumer Health grew by 7.4%, Pharmaceutical by 4.2%, and MedTech by 7.3%. The MedTech segment's growth was particularly strong, benefiting from the acquisition of Abiomed.

Johnson & Johnson is progressing with the separation of its Consumer Health business into a new publicly traded company, Kenvue. The company announced an IPO is planned for Kenvue's shares, with JNJ retaining a significant stake post-IPO.

The company ended the quarter with $26.9 billion in cash, cash equivalents, and restricted cash, indicating a strong liquidity position. The debt position increased, partly due to the Kenvue debt offering related to the business separation, but the company anticipates sufficient resources to meet its obligations, including settlements for opioid and talc litigation.