NEW BRUNSWICK, N.J. - Johnson & Johnson (NYSE: JNJ) announced today a proposed Plan of Reorganization by its subsidiary, LLT Management LLC, aiming to settle all current and future ovarian cancer claims in the U.S. related to cosmetic talc litigation. The plan is designed to address 99.75% of the pending lawsuits, with the remainder involving mesothelioma and State consumer protection claims to be handled separately.
Erik Haas, Worldwide Vice President of Litigation at Johnson & Johnson, stated that this plan is the result of extensive negotiations with counsel representing the majority of talc claimants. The proposed settlement involves a payment of approximately $6.475 billion over 25 years to ovarian cancer claimants, which the company suggests is more favorable than potential trial outcomes, citing that it has prevailed in 95% of such cases tried to date.
The plan allows for a three-month period during which claimants can review and vote on the proposal. If 75% approve, a subsidiary of Johnson & Johnson may file a "consensual prepackaged" Chapter 11 bankruptcy to secure confirmation. This approach contrasts with previous reorganizations, putting the decision in the hands of claimants rather than plaintiff lawyers.
Moreover, on March 27, 2024, the Judge overseeing the multi-district litigation agreed to reevaluate the scientific validity of the plaintiffs' expert opinions, which could lead to the dismissal of the ovarian claims if deemed invalid.
Johnson & Johnson has recorded an incremental charge of approximately $2.7 billion in the first quarter of 2024 for these settlements, bringing the total reserve to about $11.0 billion. The company continues to defend the safety of its talc products and to pursue alternative resolution pathways, including litigation against non-settling claimants and claims against experts and law firms for alleged unethical conduct.
The company also reiterated its commitment to healthcare innovation and the impact of its products on global health. This press release includes forward-looking statements subject to risks, uncertainties, and potential changes in litigation outcomes. The information is based on a press release statement from Johnson & Johnson.
InvestingPro Insights
As Johnson & Johnson (NYSE: JNJ) navigates through the complexities of its talc litigation, investors and stakeholders are closely monitoring the company's financial health and market performance. According to InvestingPro real-time data, Johnson & Johnson has a robust market capitalization of $348.43 billion, reflecting the scale and stability of the company.
The P/E ratio stands at a notable 8.9, suggesting that the stock could be undervalued relative to earnings. Despite recent challenges, the company's dividend yield remains attractive at 3.43%, which is particularly compelling given that Johnson & Johnson has raised its dividend for 53 consecutive years, a testament to its financial resilience and commitment to returning value to shareholders.
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