Since 2016, the four companies involved in the latest opioid settlement — Johnson & Johnson, McKesson, AmerisourceBergen and Cardinal Health — have funneled a combined $100 billion to shareholders through stock buybacks and dividends.
Why it matters: If that's any indication, those companies won't have much trouble paying off a combined $26 billion settlement agreement.
By the numbers: J&J represents 80% of the stock buyback and dividend cash from the four companies over the past five years.
- J&J has much higher profit margins than the other three, which are drug distributors, because J&J sells pharmaceuticals and medical devices alongside its consumer products.
- The company's dividends in 2020 alone totaled $10.5 billion — more than double the $5 billion it'll have to pay out over nine years, per the proposed settlement.
The distributors have lower profit margins, but Wall Street doesn't expect the settlement to absorb large chunks of their cash flows.
- McKesson has to pay $7.9 billion over 18 years. The company, which just raised its dividend by 12% on Monday, has doled out almost $10 billion to shareholders in buybacks and dividends in the past five years.
- AmerisourceBergen and Cardinal Health will each pay $6.4 billion over 18 years. Those companies each averaged $1.1 billion in stock buybacks and dividends annually over the past five years.
What to watch: Whether the settlement sticks. The deal would effectively end these companies' opioid liabilities — but states still have 30 days to sign, and then local governments have four months to join.
- Washington state's attorney general has already said he won't accept the deal. It's "not a transformative amount of money, and is not sufficient to address the opioid crisis' devastation," AG Bob Ferguson said last week.