Johnson & Johnson to pay $6.5 billion to settle talc ovarian cancer lawsuit, cut first-quarter earnings per share

Johnson & Johnson (NYSE: ) announced on Wednesday that it would spend $6.5 billion to settle nearly all U.S. lawsuits alleging that its talc products cause ovarian cancer.

Its subsidiary, LTL Management, will file for a third bankruptcy to facilitate the settlement, with funds to be paid out over 25 years.

JNJ shares rose 2.4% in premarket trading.

The process will kick off a three-month voting period during which claimants will decide whether to agree to a settlement covering all current and future ovarian cancer claims. About 99% of talc-related lawsuits against Johnson & Johnson and its subsidiaries involve ovarian cancer.

J&J also noted that remaining unresolved litigation, which is not part of the settlement, involves claims involving a rare cancer called mesothelioma.

These will be handled individually, and J&J noted that it has settled 95% of mesothelioma lawsuits to date.

Amid the legal proceedings, Johnson & Johnson lowered its first-quarter reported GAAP net income to $3.3 billion from $5.4 billion.

The company spent about $2.7 billion in the first quarter, boosting claims reserves to about $11 billion. The amount has a nominal value of US$13.7 billion and will be paid over the next 25 years.

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