Johnson & Johnson On Monday, it said it plans to reduce its stake by at least 80% in Kenvue, the consumer health company it founded as an independent company earlier this year, via a stock exchange offering.

J&J owns 89.6% of the common shares of Kenvue, which amounts to more than 1.72 billion shares.

The exchange offer, also known as a split, will allow J&J shareholders to swap all or a portion of their shares for Kenvue common stock at a 7% discount. It is expected to be tax deductible, J&J said in a statement.

The company indicated that the split is voluntary for investors and is scheduled to close on the third of August. 18, which is much earlier than expected.

J&J said it received a waiver denying the stock lock period associated with Kenvue’s initial public offering in May. This lockout agreement required J&J to wait 180 days to sell any of its stock.

“We believe now is the right time to distribute Kenvue shares, and we are confident that the split is the appropriate path forward to create value for our shareholders,” J&J CEO Joaquín Duato said in a statement.

Duato added that the split will increase J&J’s focus on its pharmaceutical and medical technology businesses — both of which helped the company beat second-quarter revenue and adjusted earnings last week.

J&J first announced its intention to launch a swap offering in its second-quarter earnings report Thursday, but the company provided few details on the plan. Kenvue shares tumbled after that announcement, despite second-quarter results that also beat Wall Street estimates.

When asked about J&J’s planned swap offering Thursday, Kenvue CEO Thibaut Mongon told CNBC’s “Squawk on the Street” that the company is “pleased with the way shareholders have been received for the IPO.”

“We see a great deal of alignment among our new investors in seeing Kenvue’s potential, but I can tell you we’re absolutely ready to leave as a completely independent company,” he said.

Most consumers have cut back on spending because inflation is squeezing their wallets, but they haven’t stopped paying for brand-name health and personal care products, said Kenvue CEO Thibaut Mongon.

Mongon told CNBC on Thursday that consumers are still willing to spend on the company’s branded products — even if they cut discretionary spending at retail stores and cut back on some essential items by changing their usual purchase size or switching brands at lower prices.

the Johnson & Johnson pop-up consumer Kenvue beat second-quarter revenue and adjusted earnings estimates on Thursday, helped by resilient demand for the company’s wealth from widely recognized brands like Band-Aid, Tylenol, Listerine, Neutrogena and Aveeno.

However, the company’s share price fell after J&J announced that it would launch an exchange bid to reduce its stake in Kenvue much earlier than expected.

Kenvo also noted that “private label” penetration into the consumer health products market was stable during the quarter. Private label refers to products that are manufactured and sold under a specific retailer’s name and are sold at a lower price and are intended to compete with branded products such as Kenvue.

These spending trends could bode well not only for Kenvue, but also for other companies in the consumer health, beauty, and beverage industries that may not see consumers turning to cheaper products as often despite higher prices.

“We are now living in a volatile environment with continued consumer uncertainty and continued inflationary pressures,” Mongon told CNBC. “But I think people are very focused on their health and well-being right now.”

“They want to make sure they are doing what it takes to improve their health,” he said. “They’re looking for reliable, scientifically backed, and effective solutions to take better care of their health, and that’s what we and our brands do. It’s what we’ve been doing for a long time.”

Kenvue expects continued strong demand in the coming quarters. The company expects 2023 sales to increase between 4.5% and 5.5% over last year.

RBC Capital analyst Nick Moody expressed confidence in Kenvue’s ability to “maintain its momentum,” highlighting consumer confidence in the company’s brands, health and personal care products in general.

He noted that trade reduction pressures have increased for some companies, based on their market share changes over the past few months. Meanwhile, Kenvue has gained market share, and will likely continue to do so despite the broader environment.

“If we were going to see a decline in trade with them, we would have started to see it already,” Modi said.

Like Kenvue, some beauty and beverage companies may not see the same kind of trade declines as some core consumer sectors during the current period of macroeconomic uncertainty, according to Modi.

He said beauty products such as makeup are increasingly seen as an “affordable luxury” even as inflation squeezes consumers’ budgets.

“They don’t want to feel bad about their situation and buy cheaper makeup,” Modi said.

companies like Hollandwhich sells cosmetics, skin and hair care, and other beauty products, has benefited from the flexibility of the beauty category.

Earlier this year, Ulta said its 2022 revenue exceeded $10 billion, while annual net income exceeded $1 billion — both company records. Ulta also reported first-quarter earnings that beat expectations in May, largely driven by demand for its beauty products.

Oddity Tech, a beauty and wellness company that uses artificial intelligence to develop cosmetics, also appeared to be harnessing the power of the beauty category when it made its public market debut on Wednesday. Shares of the direct consumer platform rose 35%.

Beverage companies are also well positioned, Modi said, noting that big brand names such as Coca-Cola are not at great risk of private label penetration.

Coca-Cola’s first-quarter earnings beat expectations for higher demand for its beverages. But price increases for its products, which were implemented to mitigate the impact of inflation, also helped support results.

Monjon said consumers are turning to brands and products they “know and trust” during tough economic times.

The behavior — and a growing focus on health and well-being — is fueling demand for Kenvue products, which have been “in homes for years, decades, sometimes generations,” he said.

Modi agreed, adding that the Covid-19 pandemic has greatly increased consumers’ attachment to brands, especially those that help people take care of their health.

For example, demand for Tylenol soared and outpaced other pain relievers during the pandemic as people scrambled to stock up on essential health products.

“During the time frame of Covid, you were looking to save your family or get your kids through a difficult period of time with certain medicines and products, and I think that kind of emotional connection and sharing helped sustain the brand,” Modi told CNBC.

“Consumers tend to trust these brands during the most traumatic moments in their lives, so I think that’s why we’re seeing brands like Kinview remain so resilient despite the overall pressure,” he said.

The pandemic has made consumers more able to “take their health into their own hands at home,” added Navan Tai, an analyst at BNP Paribas Ixan.

This shift is likely to benefit Kenvue and others in the consumer health field, she said, and is “an additional differentiation from other consumer categories.”

I’ve noted that Kenvue isn’t “totally immune” from decline and private-label competition. But she said product recommendations by healthcare professionals offer “some protection”.

Third-party surveys of some healthcare practitioners in the United States from 2020 to 2022 found that Tylenol was the top adult pain medication recommended by physicians nationwide, according to an April Kenvue IPO filing.

Those surveys also found that neutrogena was the leading sunscreen and acne treatment brand in the united states, while listerine was the top dentist-recommended mouthwash.

Mongon noted during the company’s earnings call that these recommendations “ultimately foster a lifetime of loyalty to our brands, loyalty that is passed down from generation to generation.”

Johnson & Johnson Kenvue priced its initial public offering at $22 a share on Wednesday, near the high end of its announced range, in an enlarged deal that should fetch about $3.8 billion.

At this IPO price, the new company would be valued at approximately $41 billion. That makes Kenvue’s debut one of the largest IPOs in the US in over a year.

The company expected to price 151 million shares between $20 and $23 a share, according to a preliminary prospectus it filed with the Securities and Exchange Commission last week.

Proceeds from the show and any profits from related debt financing transactions will go to J&J, but Kenvue will keep $1.17 billion in cash and cash equivalents.

Goldman Sachs, JPMorgan Chase, and Bank of America are acting as lead underwriters for the IPO.

The shares will begin trading on the New York Stock Exchange on Friday under the symbol “KVUE”.

The spin-off, the largest IPO since Rivian’s November 2021 IPO, may not turn around the once-moribund IPO market, which plunged in 2022. But it could be a sign of life for IPOs in the states United

The debut of Kenvue also marks the largest restructuring in J&J’s 135-year history. J&J announced the split in late 2021 as an effort to streamline operations and refocus on its pharmaceutical and medical device divisions.

Meanwhile, Kenvue is full of household names familiar to investors and the larger public, like Tylenol, Band-Aid, Listerine, Aveeno, Neutrogena, and J&J’s namesake baby powder and shampoo.

Here’s everything else you need to know about this week’s Kenvue IPO.

J&J will control 91.9% of Kenvue after the IPO — or 90.8% if the underwriters exercise their options to purchase additional shares, according to a prospectus filing.

J&J plans to distribute the remaining shares of common stock to its shareholders later this year.

Until then, Kenvue will qualify as a “regulated company” under the New York Stock Exchange’s corporate governance rules, the filing says. This would allow Kenvue to avoid some of the listing criteria, including the requirement that the company’s board of directors be made up of a majority of independent directors.

J&J will generally be able to control matters over which shareholders vote, such as the election of Kenvue board members, according to the lawsuit.

“Johnson & Johnson will continue to control the direction of our business, and concentrated ownership of our common stock may prevent you and other shareholders from influencing important decisions,” Kenvey said in the filing.

In the filing, the company said Kenvue is profitable and expects modest growth over the next few years.

Annual sales growth through 2025 is expected to be around 3% to 4% globally, according to the filing.

Kenvue reported sales of $14.95 billion for 2022 and net income of $1.46 billion on a pro forma basis. For the first quarter, which ended April 2, Kenvue estimated that it had sales of $3.85 billion and net income of about $330 million. First quarter results are preliminary.

Ten Kenvue brands generated nearly $400 million or more in sales last year.

Overall, Kenvue said 2022 sales were “well balanced” across the company’s three business divisions.

The company’s self-care unit, which includes eye care, cough and cold products, and vitamins, had net sales of $6 billion for 2022, accounting for 40% of total revenue.

Skin health and beauty products accounted for $4.4 billion in net sales last year, or 29% of all revenue. Among these products are shampoos, conditioners, hair loss treatments, and skin care.

Products in the Essential Health division, including baby products, mouthwashes, dentifrices, health protection and wound care, saw net sales of $4.6 billion, accounting for 31% of total revenue.

The company said in the filing that each of the three divisions was profitable on an adjusted operating income basis.

Kenvue noted that its global footprint is “geographically well balanced,” with nearly half of its 2022 net sales coming from outside North America.

According to the filing, the company’s net debt will be $7.75 billion.

Kenvue rounded up several J&J executives to harm the company, according to the report.

Thibaut Mongon, J&J’s executive vice president and global head of consumer health, will be CEO of the new public company. He will also sit at the board.

Paul Roh, J&J’s Chief Financial Officer of Consumer Health and former CEO of PepsiCo, will serve as CFO, and Meredith Stephens, J&J’s global vice president of the company’s consumer health supply chain division, will serve as COO.

Kenvue’s Chief People Officer, Chief Corporate Affairs Officer, Chief Technology and Data Officer, Chief Scientific Officer and group heads for various regions around the world are also from J&J.

The executives will lead a team of more than 22,000 employees in 165 countries and 25 in-house manufacturing sites, according to the preliminary prospectus.

Kenvue’s global headquarters will be in Summit, New Jersey.

J&J faces thousands of claims that baby talcum powder and other talcum products caused cancer. Some of these products fall under the company’s consumer health business.

But Kenvue will only have liabilities for those that arise outside the United States and Canada, according to its initial public offering filing as of January.

“As stated unequivocally and unequivocally, Johnson & Johnson has agreed to retain all talc liabilities — and to reimburse Kenvue for any and all costs — arising from litigation in the United States and Canada,” Eric Haas, vice president of litigation for Johnson & Johnson, said in a statement. statement last week.

But Kenvey said in the filing that “this compensation may not be sufficient” to protect the new company from the full amount of the liabilities.

J&J will continue to fight talc claims in bankruptcy court.

A federal bankruptcy judge in April paused nearly 40,000 lawsuits through mid-June. This decision was part of J&J’s second attempt to settle talc claims in bankruptcy proceedings.

The temporary suspension will give J&J time to try to get court approval for the proposed $8.9 billion settlement with the plaintiffs in the talc cases.

CNBC channel Leslie Baker Contribute to this report.

merck It reported Thursday that first-quarter revenue fell 9 percent from the same period last year largely due to a sharp decline in sales of the antiviral Covid treatment molnopivir.

Sales of molnopiravir fell to $392 million during the period, down 88% from $3.2 billion reported in the first quarter of 2022. Merck said the decline is primarily a result of lower sales in the United States, United Kingdom, Japan and Australia.

The company reported total revenue of $14.5 billion for the quarter, down nearly $1.5 billion from the same period last year. But excluding the Covid drug, Merck said its revenue grew 11%.

Here’s what Merck reported compared to Wall Street’s expectations, based on a survey of analysts conducted by Refinitiv:

• Earnings per share: $1.40 adjusted, compared to an expected $1.32
• he won: $14.49 billion, compared to an expected $13.78 billion

The pharmaceutical giant reported net income of $2.82 billion, or $1.11 per share. That compares to net income of $4.31 billion, or $1.70 per share, for the same period last year. Excluding certain items, Merck’s adjusted earnings per share were $1.40 for the period.

Rahway, based in New Jersey, now expects 2023 sales of $57.7 billion to $58.9 billion, slightly above the $57.2 to $58.7 billion guidance provided in early February. The raised guidance includes nearly $1 billion in sales of molnopiravir.

The company also raised its full-year adjusted earnings forecast to $6.88 to $7.00 per share, from a previous forecast of $6.80 to $6.95 per share.

The company noted that the outlook does not reflect any financial impact from Merck’s proposed acquisition of biotech company Prometheus Biosciences earlier this month. Merck said the deal is expected to close in the third quarter of 2023.

Merck’s treatment molnupiravir first hit the market after the Food and Drug Administration authorized the pill for some adults in December 2021. Once hailed as a game-changing treatment for Covid-19, Merck signed several contracts to supply millions of courses of the drug to the US government. and other countries.

But Merck and pharmaceutical companies like PfizerAnd accident And Johnson & Johnson He was bracing for a decline in Covid-related sales this year as the world emerges from the pandemic and relies less on blockbuster vaccines and treatments.

Molnupiravir impacted sales of Merck’s Pharmaceuticals, which fell 10% to $12.7 billion compared to the first quarter of 2022. Excluding molnupiravir, drug sales grew 14%.

Merck said diabetes treatments also led to lower sales. Sales of sitagliptin and a related diabetes treatment decreased 29% to $880 million during the quarter, primarily due to general competition in several international markets and lower demand and pricing in the United States.

But Merck’s drug unit saw sales of its flagship antibody treatment Keytruda soar, which increased 20% to $5.8 billion during the quarter. Keytruda is used against several types of cancer, including certain types of breast cancer and skin cancer.

Gardasil, Merck’s vaccine that prevents cancer from HPV, also grew 35% to $2 billion. The company said the growth reflected strong demand outside the United States, particularly in China.

Merck will hold an earnings conference call at 9:00 AM ET.

Johnson & JohnsonThe consumer health business is worth $40 billion ahead of its initial public offering later this year, according to a report from The Wall Street Journal.

People familiar with the matter told the magazine that soon-to-be Kinview aims to raise $3.5 billion or more in the bid.

“The stock sale will be by far the biggest of what has yet been a quiet year for IPOs,” the paper noted.

Sources told The Journal that Kinview plans to meet with potential investors as early as Monday.

When asked about the newspaper report, J&J spokesperson Tessia Williams told CNBC, “Unfortunately, I don’t have any information to provide.”

J&J previously said it expected to complete the separation from Kenvue by mid-to-late 2023.

The consumer goods giant also said it would retain majority ownership in Kenvue, with plans to dilute the rest of its stake later in the year.

Kenvue stock will be traded on the New York Stock Exchange under the ticker KVUE.

J&J revealed its plan to spin off its consumer health business in late 2021. This division makes Band-Aid bandages, skin care products under the Neutrogena and Aveeno brands, the pain relief drug Tylenol, and J&J’s baby powder.

J&J still faces thousands of claims that baby powder and other talcum products caused cancer.

A federal bankruptcy judge last week stopped nearly 40,000 lawsuits as of mid-June. This decision was part of J&J’s second attempt to settle talc claims in bankruptcy proceedings.

The temporary suspension will give J&J time to try to get court approval for the proposed $8.9 billion settlement with the plaintiffs in the talc cases.

Kenvue will assume responsibilities related to those originating outside the United States and Canada, according to the IPO filing.

Hasbro: “I actually don’t even like gaming companies right now…let’s wait now.”

Viatris Corporation: “I don’t like these guys. I think so [Johnson & Johnson] You’re going to separate from the consumer products company, and that would be very good.”

IAC . company: “This stock is too low. … Do I know this stock should bounce again? Yes. Do I know what level? No. But I think you’re fine.”

Nike Company: “I don’t think buying a Nike here is that bad.”

Disclaimer: Cramer’s Charitable Trust owns stock in Johnson & Johnson.

Sirens Company: “In a market like this, it could be $13, or $12. If you can stand that level of pain, you can totally buy it, because it’s a good company.”

Matterport Company: “It’s a $3 stock. So you think, ‘Well, how much can you lose?'” “I have bad news. The answer is $3.”

Disclaimer: Cramer’s Charitable Trust owns stock in Johnson & Johnson.

CNBC’s Jim Cramer on Wednesday told investors to consider adding stocks of well-established consumer packaged goods companies to their portfolios.

“No one is defending what actually works: the old consumer packaged goods names we all know,” he said.

Cramer highlighted the latest quarterly results of three companies as examples of why investors should have such stocks on their shopping lists:

“I bet we get something similar from him Bristol MyersAnd the coca cola And the Eli Lilly [when they report earnings]” He said.

Kramer also reiterated two points he’s made throughout this year: investing in boring companies with strong balance sheets and avoiding money-losing companies likely to struggle in a recessionary environment.

“The stocks that historically have held up best in downturns have lost in cabinet reshuffle—high-quality companies, good capital with good balance sheets, big buybacks, and meaningful dividends.” He said.

Disclaimer: Cramer’s Charitable Trust owns shares in Procter & Gamble, Johnson & Johnson, and Eli Lilly.

Ammo Inc: “I know it’s a field a little far in terms of where you are versus what it is, but Dick is my favorite in that group.”

Inmode Ltd: “It’s a good company, but people hate medical device companies. … I think they’re overly hated. That’s why I love [Johnson & Johnson]. “

Coty Inc: “When we’re in that area, you know we go with ELF…that’s the stock you need to be in.”

Silvergate Capital Corp.: “I’m no longer a huge cryptocurrency guy. I’ve been in it for as long as she was right. Now that I’m wrong, I’m not there.

Disclosure: Cramer Charitable Fund owns stock in Johnson & Johnson.

A spokesperson for the agency said Wednesday that the Food and Drug Administration needs to review changes to Novavax’s manufacturing process before it can allow the biotech company to deliver a Covid-19 vaccine in the United States.

The US Food and Drug Administration’s panel of independent vaccine experts on Tuesday voted overwhelmingly to recommend the Novavax vaccine for use in the US, after a day-long meeting in which they reviewed data on vaccine safety and effectiveness in preventing Covid.

During the pandemic, the Food and Drug Administration moved quickly to allow Covid shots after the committee gave its approval. The Pfizer, Moderna and Johnson & Johnson vaccines received FDA clearance the day after the committee recommended their use in the FDA’s approval of Novavax, which could take longer.

The US Food and Drug Administration, in a statement to CNBC, said Novavax notified the agency of changes in the manufacturing process on June 3, days before the committee was scheduled to review the vaccine’s safety and efficacy data.

“The FDA will carefully review this information and any additional information the company provides as part of its ongoing evaluation and before authorizing emergency use of the vaccine,” FDA spokeswoman Abby Capobianco told CNBC.

The Food and Drug Administration is not obligated to follow the recommendations of the commission with its mandate, although the agency usually does. Cabobianco said the FDA will take the committee’s recommendation into account when deciding whether to license the Novavax vaccine.

Novavax, in a statement, said it has shared updated information with the Food and Drug Administration regarding improvements in the manufacturing process. The biotech company will not provide any further details.

FDA authorization will allow Novavax to begin shipping doses to the United States from its manufacturing partner, Serum Institute of India. However, the Centers for Disease Control and Prevention will still need to sign off on the vaccine before pharmacies and other health care providers begin administering the vaccines.

Novavax was one of the original participants in the US race to develop a Covid vaccine in 2020, and has secured $1.8 billion from Operation Warp Speed. However, the small Maryland biotech company has struggled to build a manufacturing base from scratch, and its clinical data came in much later than Pfizer or Moderna, which released their photos by leaps and bounds.

Novavax asked the U.S. Food and Drug Administration to approve a two-dose vaccine in late January. Dr. Doran Fink, a senior official in the FDA’s Division of Vaccines, told CDC advisors in April that the Novavax app review was “incredibly complex” because it includes clinical and manufacturing data.

While the vaccine is still pending approval in the United States, Novavax has begun spreading its shots around the world. The biotech company’s footage has been authorized in more than 40 countries, including Australia, Canada and the European Union. Dr. Peter Marks, who leads the FDA’s vaccine division, said the United States has high regulatory standards when it comes to vaccines and does not base its decisions on licenses in other countries.

“We take manufacturing very seriously,” Marks told the Food and Drug Administration committee on Tuesday. “We don’t compare ourselves to other countries when it comes to manufacturing, we consider ourselves to have very high standards, which is why we are often considered the gold standard for our manufacturing, especially in the field of vaccines.”