Kimberly-Clark Agrees to Pay Approximately $40 Million for Surgical Gown Designs
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Aug 29 2025
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Should l Buy KMB?
Source: Benzinga
Kimberly-Clark Corporation Settlement
Criminal Charge Details: Kimberly-Clark Corporation will pay $40.4 million to settle a criminal charge for selling adulterated MicroCool surgical gowns. The Justice Department revealed that the company admitted to fraudulent testing and mislabeling, falsely claiming the gowns met AAMI Level 4 protection standards.
Legal Proceedings: A criminal information filed in the Northern District of Texas accused Kimberly-Clark of introducing adulterated medical devices into interstate commerce with intent to defraud. Investigators discovered that an employee manipulated tests to bypass a required FDA premarket notification after a design change.
Financial Penalties: Under a deferred prosecution agreement, Kimberly-Clark will incur a $24.5 million penalty, forfeit $3.9 million in profits, and provide up to $12 million in compensation to victims. The investigation pertains to sales from 2013 to 2014, amounting to approximately $49 million in mislabeled gowns sold both domestically and internationally.
Product Safety Concerns
Testing Failures: Authorities indicated that the gowns did not pass tests for bloodborne pathogen and fluid resistance, particularly in the sleeves. Fortunately, no patient harm was reported as a result of these failures.
Production Cessation: Kimberly-Clark halted surgical gown production in 2014 after spinning off its healthcare division, which became Halyard Health, now known as Avanos Medical.
Related Corporate Developments
- Avanos Medical Update: In a related development, Avanos Medical sold its Hyaluronic Acid product line to Channel-Markers Medical in July, although the terms of the deal were not disclosed.
Stock Market Reaction
- Stock Performance: Following the news, KMB stock saw a slight increase of 0.64%, reaching $129.55 at the last check on Friday.
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Analyst Views on KMB
Wall Street analysts forecast KMB stock price to rise
14 Analyst Rating
5 Buy
8 Hold
1 Sell
Moderate Buy
Current: 108.260
Low
95.00
Averages
127.71
High
162.00
Current: 108.260
Low
95.00
Averages
127.71
High
162.00
About KMB
Kimberly-Clark Corporation is a global company focused on delivering products and solutions that provide better care. The Company's segments include North America and International Personal Care. The North America segment consists of products encompassing each of its five global daily-need categories across consumer and professional channels including disposable diapers, training and youth pants, swim pants, baby wipes, feminine and incontinence care products, reusable underwear, facial and bathroom tissue, paper towels, napkins, wipers, tissue, towels, soaps and sanitizers and other related products. International Personal Care segment consists of three core categories: Baby & Child Care, Adult Care and Feminine Care, including disposable diapers, training and youth pants, swim pants, baby wipes, feminine and incontinence care products, reusable underwear and other related products. Its portfolio of brands includes Huggies, Kleenex, Scott, Kotex, Cottonelle, Depend, and Pull-Ups.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Strong Financial Foundation: Chevron expects to achieve free cash flow breakeven at $50 per barrel of Brent, demonstrating its solid financial health and ability to navigate market fluctuations, ensuring long-term returns for shareholders.
- Kimberly-Clark's Acquisition Strategy: Kimberly-Clark is acquiring Kenvue at a price below $100, aiming for completion by 2026; despite facing growth stagnation and cost pressures, the company is optimistic about achieving billions in annual cost synergies post-acquisition.
- Sustained Dividend Growth: On January 27, Kimberly-Clark announced an increase in its quarterly dividend from $1.26 to $1.28 per share, which, while modest, marks its 54th consecutive year of dividend increases, reinforcing its status as a Dividend King and appealing to income-seeking investors.
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- Kimberly-Clark's Acquisition Strategy: Kimberly-Clark announced the acquisition of Kenvue, expected to close by the end of 2026; despite initial challenges, the company is optimistic about achieving billions in annual cost synergies, which will drive future earnings growth.
- Sustainability of Kimberly-Clark's Dividends: Kimberly-Clark anticipates generating $1.7 billion in free cash flow in 2025, fully supporting its $1.66 billion in dividend payments, showcasing financial stability amid industry slowdowns.
- Investment Value Assessment: Kimberly-Clark's stock is currently priced below $100, marking a 12-year low; despite facing growth stagnation and cost pressures, its 5.2% dividend yield and a forward P/E ratio of 13.1 make it an undervalued quality stock.
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- Kimberly-Clark's Acquisition Plan: Kimberly-Clark anticipates achieving $2.1 billion in annual cost synergies from its acquisition of Kenvue, and while short-term performance is lackluster, this strategy may provide better growth prospects in the long run, attracting value investors' interest.
- Dividend Appeal: Procter & Gamble and Kimberly-Clark offer dividend yields of 2.9% and 5%, respectively, with both companies having a long history of increasing dividends, providing stable cash flow for income-seeking investors despite market pressures.
See More
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- Sales Strategy Shift: Procter & Gamble is focusing on increasing sales volumes rather than raising prices, despite a 14.5% stock decline in 2025; under new CEO leadership, the company aims to improve performance through volume growth, although it may face margin compression in the short term.
- Poor Financial Performance: P&G's Q2 report indicated a 1% decline in sales volume and flat organic sales growth, with 2026 EPS growth projected at only 1% to 6%, highlighting significant challenges in a weak demand environment.
- Kimberly-Clark's Acquisition Plans: Kimberly-Clark plans to diversify through the acquisition of Kenvue, expecting EPS growth within two years post-acquisition and $2.1 billion in annual cost synergies within three years, despite low near-term performance expectations.
- Dividend Appeal: Both P&G and Kimberly-Clark are attractive high-dividend stocks, with P&G yielding 2.9% and Kimberly-Clark at 5%, both having consistently increased dividends over the years, appealing to investors seeking passive income.
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