JNJ Stock Advances After Hours On $5.5B Proposal To Resolve Talc Litigation

• Erik Haas, J&J’s worldwide vice president of litigation, said in a statement that the company believed it would ultimately prevail if the cases continued. 
• The executive agreement said that the deal would allow it to put the litigation behind it and focus on its healthcare business.
• Under the proposed resolution, J&J would make per-claim payments and has committed $5.5 billion in total.

Johnson & Johnson (JNJ) said on Monday it had reached an agreement with plaintiffs' lawyers on a proposed resolution of the remaining U.S. lawsuits alleging its talc products caused ovarian cancer, committing $5.5 billion to settle around 76,000 claims.

The healthcare company said the agreement covers the remaining ovarian talc litigation in federal multidistrict litigation proceedings and related state court cases. The proposed settlement is contingent on several conditions, including participation by plaintiff firms representing at least 95% of the outstanding claims.

Shares of the company edged up 3% after-hours, after closing up 1% during the regular trading session.

Decision Follows Court Ruling On Causation

J&J said the deal follows a recent ruling by the federal multidistrict litigation court concerning claimants' ability to prove that the company's talc products caused a particular person's ovarian cancer. According to the company, the court on July 22 ordered plaintiffs to show why the remaining claims should not be dismissed for failure to establish specific causation.

Erik Haas, J&J’s worldwide vice president of litigation, said in a statement that the company believed it would ultimately prevail if the cases continued but that the agreement would allow it to put the litigation behind it and focus on its healthcare business.

"The Court’s order placed plaintiffs in an untenable position of having to present specific causation evidence to maintain their claims that does not exist," Haas said.

Under the proposed resolution, J&J would make per-claim payments and has committed $5.5 billion in total. The company said the first payment, of no more than $3 billion, would be made in 2027, with no additional payments due before 2028.

Since around 2009, tens of thousands of women have sued, alleging long-term genital use of Johnson’s Baby Powder caused ovarian cancer, often claiming asbestos contamination. The company has long maintained that its talc products are safe and do not cause cancer. It said research and studies by independent medical experts support the safety of cosmetic talc. J&J stopped selling talc-based baby powder in the United States in 2020 and globally in 2023, switching to cornstarch-based alternatives, and separated its consumer health business, Kenvue, in August 2023.

How Did JNJ Retail Traders React?

On Stocktwits, retail sentiment around JNJ stock stayed within the ‘bullish’ territory over the past 24 hours, while message volume stayed at ‘low’ levels.

JNJ stock has gained 29% year-to-date. 

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