Johnson & Johnson (NYSE:JNJ) announced on Wednesday that it will allocate $6.5 billion to settle nearly all U.S. lawsuits alleging its talc-based products caused ovarian cancer.
The settlement will be facilitated through a third bankruptcy filing by its subsidiary, LTL Management, and the funds will be paid over 25 years.
JNJ shares rose 2.4% in premarket trading.
The process will initiate a three-month voting period during which claimants will decide whether to agree to a settlement covering all current and future ovarian cancer claims. Approximately 99% of the talc-related lawsuits against J&J and its subsidiaries are linked to ovarian cancer.
J&J also mentioned that the remaining unsettled lawsuits, which are not part of this settlement, involve claims of a rare cancer called mesothelioma.
These will be handled separately, and J&J noted that it has resolved 95% of the mesothelioma lawsuits filed against it to date.
Amid these legal proceedings, J&J has revised its first-quarter reported GAAP net earnings downward to $3.3 billion from $5.4 billion.
The company took a charge of approximately $2.7 billion in Q1 to increase its reserve for claims to about $11 billion. This amount represents a nominal value of $13.7 billion, which will be payable over the next 25 years.