8-KEarnings & ResultsRegulation FDExhibits & Filings

JOHNSON & JOHNSON 8-K Report, Financial Results (Oct 23, 2019)

Filed October 23, 2019For Securities:JNJ

Summary

Johnson & Johnson (JNJ) filed an 8-K on October 23, 2019, detailing a significant development in its opioid litigation. The company announced an agreement in principle to settle opioid lawsuits with a U.S. committee of State Attorneys General for $4 billion. This settlement, if finalized, aims to resolve claims from states, cities, and counties and provide assistance to affected communities. While this agreement is not an admission of liability, it has a material impact on reported GAAP net earnings and EPS for the third quarter and year-to-date periods of 2019. Specifically, the GAAP net earnings for the third quarter ended September 29, 2019, were reduced from $4.8 billion to $1.8 billion, and EPS decreased from $1.81 to $0.66. For the nine months ended September 29, 2019, GAAP net earnings were lowered from $14.2 billion to $11.1 billion, with EPS falling from $5.28 to $4.13. Importantly, these adjustments do not affect the company's Adjusted Earnings, Adjusted EPS, or Adjusted Operational EPS, indicating that the underlying operational performance remains strong.

Key Highlights

  • 1Johnson & Johnson reached an agreement in principle to settle opioid litigation for $4 billion.
  • 2The settlement is with a committee of State Attorneys General and aims to resolve claims from states, cities, and counties.
  • 3The agreement in principle is a recognized subsequent event impacting reported GAAP financial results.
  • 4Reported GAAP net earnings for Q3 2019 were reduced by $3.0 billion (from $4.8B to $1.8B) due to the settlement.
  • 5Reported GAAP EPS for Q3 2019 decreased significantly from $1.81 to $0.66.
  • 6Adjusted Earnings, Adjusted EPS, and Adjusted Operational EPS remain unaffected by this settlement.
  • 7The company emphasizes the agreement is not an admission of liability or wrongdoing.

Frequently Asked Questions

The agreement in principle to settle opioid litigation has reduced Johnson & Johnson's reported GAAP net earnings and EPS for the third quarter and nine months ended September 29, 2019. Specifically, Q3 GAAP net earnings decreased from $4.8 billion to $1.8 billion, and Q3 GAAP EPS fell from $1.81 to $0.66. For the nine months, GAAP net earnings were reduced from $14.2 billion to $11.1 billion, and GAAP EPS decreased from $5.28 to $4.13.

No, the filing explicitly states that the agreement in principle has no impact on Johnson & Johnson's previously reported Adjusted Earnings, Adjusted EPS, and Adjusted Operational EPS for the periods in question. This suggests that the company's underlying business operations and profitability, as measured by these non-GAAP metrics, remain unaffected by the settlement.

Johnson & Johnson has agreed to contribute $4 billion to settle the opioid litigation, subject to various conditions and the finalization of the agreement.

The filing states it is an 'agreement in principle' intended to resolve opioid lawsuits filed and future claims by states, cities, and counties. However, it also notes that the company cannot predict if or when the agreement will be finalized, and it is not an admission of liability or wrongdoing.