J&J Agrees in Principle to Deal in Opioid Litigation; Adjusts Earnings

By Emily Forster -

October 31, 2019

Johnson & Johnson (J&J) has reached an agreement in principle for $4 billion with certain state attorneys general over opioid litigation and has reduced its previously-reported third-quarter earnings to reflect the possible deal.

“Johnson & Johnson and its US-based Janssen Pharmaceutical Companies confirm an agreement in principle to settle opioid litigation as publicly announced and outlined by a committee of State Attorneys General on October 21, 2019,” the company said in an October 23, 2019 US Securities and Exchange Commission filing. “The Company would contribute $4 billion, subject to various conditions and an agreement being finalized. The agreement in principle is intended to provide certainty for involved parties and critical assistance for families and communities in need. This agreement in principle is not an admission of liability or wrong-doing and would resolve opioid lawsuits filed and future claims by states, cities and counties. The Company cannot predict if or when the agreement will be finalized.”

As a result of the agreement in principle, J&J is reducing its GAAP net earnings for the fiscal third quarter. “This agreement in principle is a recognized subsequent event and previously reported GAAP net earnings for the fiscal third quarter and nine months ended September 29, 2019 is reduced from $4.8 billion to $1.8 billion and $14.2 billion to $11.1 billion, respectively,” said the company in its SEC filing. As a result, the company’s previously reported earnings per share (EPS) for the fiscal third quarter and nine months ended September 29, 2019 is reduced from $1.81 to $0.66 and $5.28 to $4.13, respectively. The company said that there is no impact to previously reported adjusted earnings, adjusted EPS and adjusted operational EPS for each of the periods reported.

Earlier this month (October 2019), the state attorneys general of North Carolina, Texas, Tennessee, and Pennsylvania reached an agreement in principle with J&J, Teva Pharmaceutical, and pharmaceutical distributors, Cardinal Health, McKesson, and AmersourceBergen over opioid litigation. The deal for all companies includes $22 billion in cash, $26 billion in products and services, and injunctive relief.

Source: Johnson & Johnson