Categories Earnings, Health Care

Johnson & Johnson tumbles on rating downgrade, after opioid ruling

Johnson & Johnson (NYSE: JNJ) continued the slide Wednesday after suffering a big loss in the previous trading session as investor mood remained downbeat in the wake of the court slapping a massive fine on the company in an opioid-related case.

Adding to the drugmaker’s woes, Moody’s on Wednesday lowered its outlook to negative from stable, while maintaining the Aaa rating. The rating agency believes that the ongoing opioid litigation might cause further damage to the company.

 US painkiller market is estimated to grow to $5.9 billion

According to Moody’s, in addition to the current lawsuit, Johnson & Johnson also faces social risks from cases related to its talc products, which will have an increasing impact on the company’s credit profile over the next one-and-half years. “The negative outlook reflects the potential for material litigation-related cash outflows that constrain J&J’s otherwise strong free cash flow or reduce the strength of its capital structure,” said a statement from the agency.

Also read: Teva’s Q2 results beat market expectations

Earlier this week, an Oklahoma court imposed a $572-million fine after finding Johnson & Johnson and its subsidiaries guilty of contributing to the health crisis facing the state due to the misuse of opioid medications. Soon after the landmark ruling, the company’s stock entered into a downward spiral and has lost about 4% since then.

A statement from the company said it is planning to appeal the order to the Oklahoma Supreme Court. The state is currently dealing with several hundreds of lawsuits filed by social groups and institutions, accusing the leading pharmaceutical companies of pushing opioid drugs into the market, breaching the safety norms.

Also see: Johnson & Johnson Q2 2019 Earnings Call Transcript

Purdue Pharma, the worst affected drugmaker, was earlier asked to pay $270 million in fine, while Teva Pharmaceuticals (TEVA) was awarded an $85-million fine. It is alleged that more than 4,000 persons died in the Oklahoma state in the last decade due to opioid-related health issues.

Other than the relatively large penalty, what makes the case of Johnson & Johnson critical is the Judge calling it “a kingpin company” that acted irresponsibly, motivated by greed.

We’re on Apple News! Follow us to receive the latest stock market, earnings and financial news at your fingertips

Most Popular

United Parcel Service (UPS) seems on track to regain lost strength

Cargo giant United Parcel Service, Inc. (NYSE: UPS) ended fiscal 2023 on a weak note, reporting lower revenues and profit for the fourth quarter. The company experienced a slowdown post-pandemic

IPO Alert: What to look for when Boundless Bio goes public

Boundless Bio is preparing to debut on the Nasdaq stock market this week, and become the latest addition to the list of biotech firms that have launched IPOs this year.

Nike (NKE) bets on innovation and partnerships to return to high growth

Sneaker giant Nike, Inc. (NYSE: NKE) has been going through a rough patch for some time, with sales coming under pressure from weak demand and rising competition. Post-pandemic, the company

Add Comment
Loading...
Cancel
Viewing Highlight
Loading...
Highlight
Close
Top