10-QPeriod: Q3 FY2023

JOHNSON & JOHNSON Quarterly Report for Q3 Ended Jul 2, 2023

Filed July 31, 2023For Securities:JNJ

Summary

Johnson & Johnson reported strong financial results for the second quarter of 2023, with worldwide sales increasing by 6.3% to $25.5 billion. This growth was driven by robust operational performance across all segments, particularly in MedTech and Pharmaceutical, which saw increases of 14.7% and 3.8% operationally, respectively. The company's net earnings rose to $5.14 billion, or $1.96 per diluted share, up from $4.81 billion, or $1.80 per diluted share, in the prior year's quarter. This performance demonstrates J&J's continued ability to navigate a complex global economic environment, supported by strategic pricing, innovation, and effective cost management. The company also made significant progress in its strategic separation of the Consumer Health business, Kenvue, through its successful IPO, positioning J&J to focus on its core healthcare businesses. The six-month period also showed positive momentum, with sales growing 6.0% to $50.3 billion and net earnings of $5.08 billion. While the six-month earnings were impacted by a significant charge related to the talc settlement proposal, the underlying operational performance remains strong. The company's diversified business segments, strong product pipeline, and strategic initiatives like the Kenvue separation are key drivers for future growth and shareholder value.

Financial Highlights

55 data points
Beta

Revenue

$21.52B

70.0% Gross Margin

Net Income

$5.14B

23.9% Net Margin

EPS (Diluted)

$1.96

Total Assets

$191.69B

Cash & Equivalents

$21.18B

Free Cash Flow

$3.06B

Financial Statements
Beta
Revenue$21.52B
Cost of Revenue$6.46B
Gross Profit$15.06B
SG&A Expenses$5.40B
Operating Income$4.88B
Interest Expense$346.00M
Net Income$5.14B
EPS (Basic)$1.98
EPS (Diluted)$1.96
Shares Outstanding (Basic)2.60B
Shares Outstanding (Diluted)2.63B

Key Highlights

  • 1Worldwide sales increased by 6.3% to $25.5 billion for the second quarter of 2023.
  • 2Net earnings for the second quarter of 2023 were $5.14 billion, an increase from $4.81 billion in the prior year.
  • 3Diluted earnings per share increased to $1.96 in Q2 2023 from $1.80 in Q2 2022.
  • 4The MedTech segment showed strong operational growth of 14.7%, boosted by the Abiomed acquisition.
  • 5The Pharmaceutical segment delivered operational sales growth of 3.8%, driven by key products like Stelara and Darzalex.
  • 6Johnson & Johnson's Consumer Health business, Kenvue, completed its IPO, with J&J retaining a significant stake and continuing to consolidate its results, with plans for a future split-off.
  • 7The company paid down debt and continued its share repurchase program, returning value to shareholders.

Frequently Asked Questions

Johnson & Johnson demonstrated a healthy financial position in Q2 2023. Sales and net earnings showed year-over-year growth. Operational performance was strong across key segments, and the company has a solid cash position, while also managing its debt effectively and continuing to return capital to shareholders through dividends and share repurchases.

The initial public offering (IPO) of Kenvue was completed in May 2023. Johnson & Johnson continues to consolidate Kenvue's financial results as it retains a majority stake, but has plans for a future split-off. This separation allows J&J to focus on its core Pharmaceutical and MedTech businesses while unlocking value from the Consumer Health segment.

Growth is driven by a diversified portfolio across Pharmaceutical, MedTech, and Consumer Health segments. Key drivers include strong performance from immunology drugs like Stelara and Tremfya, oncology drugs like Darzalex and Erleada, innovation in MedTech, particularly with the integration of Abiomed, and strategic pricing and product launches across all segments. The company also benefits from strong brand recognition in its Consumer Health products.

Johnson & Johnson faces significant litigation primarily related to talc products and opioids. The company has established substantial reserves for these matters. The talc litigation is complex, involving multiple bankruptcy filings and appeals. The opioid settlements are largely progressing as planned, with a significant portion already paid. The company continues to defend itself in these matters, with potential financial impacts disclosed as contingent liabilities.