Will Legal Problems Bankrupt Johnson & Johnson?

A flurry of legal challenges is always a good reason for investors to be wary of a company. Even if the business is not in danger today, things could get worse down the road.

Johnson & Johnson (NYSE: JNJ) falls into that category. Lawsuits related to its talc-based products and the company's role in the opioid crisis present some of the biggest risks to long-term investors. Although J&J may be able to manage those legal challenges today, that doesn't mean it always will. There's a real risk that as these fines pile up, they could end up bankrupting the company.

Last month, J&J learned that it would have to pay $2.1 billion to women who said they contracted ovarian cancer as a result of using the company's talc-based products. There are two things to concern investors here. The first is that this relates to a verdict from 2018 that involved just 22 women. The second is that the amount was reduced upon appeal -- the initial verdict was for J&J to pay a staggering $4.7 billion. The $2.1 billion charge is less than half of that total, partly because the Missouri court did not include some out-of-state plaintiffs.

Source Fool.com