J&J: No legal reserves needed amid wave of lawsuits

Company says it expects to win many of the cases on appeal.

Johnson & Johnson won’t set aside any legal reserves for the more than 100,000 lawsuits it faces across its portfolio of drugs, consumer products and medical devices, saying it expects to fight and win many of the claims.

The company has spent $832 million on litigation expenses this year, and outside estimates of damages from lawsuits over opioids, psychiatric drugs, talc powder and medical devices range in the tens of billions of dollars. While several large verdicts have attracted headlines, J&J Chief Financial Officer Joseph Wolk said the company expects to fight and win many of the thousands of cases.

“Right now if you think about

some of the cases that are out there, they are likely subject to our prevailing on appeal,” Wolk said. “There’s nothing to book, nothing to accrue. It wouldn’t even meet the accounting standards.”

Setting aside legal reserves is an accounting matter, and companies don’t typically include them until they believe they can be reasonably estimated.

The lawsuits have overshadowed the company’s otherwise robust business results. J&J reported third-quarter earnings Tuesday and raised its full-year profit forecast after beating analysts’ estimates, thanks to growing sales in its drug unit and what it touted as strong results in medical devices. But the shares are still well off their 52-week high in December.

“Investors are starting to come around. They’re starting to get an appreciation, a better certainty around the level of risk that actually is within the stock,” Wolk said.

The New Brunswick, New Jersey-based company’s stock was up 1.3% this year, as of Monday’s close.

Third-quarter adjusted earnings were $2.12 a share, the company said in a statement, topping the $2.01 average of analysts’ estimates.

Profit was up from a year before, with net earnings of $4.83 billion in the third quarter, versus $3.93 billion a year prior.