Executive Summary

Q1 2025 was solid on the top and bottom line versus Street: revenue $21.89B beat S&P Global consensus $21.56B* and adjusted EPS $2.77 beat $2.58*, despite an ~810 bps Innovative Medicine headwind from STELARA loss of exclusivity and Part D redesign .
Mix/tariffs/FX weighed on margins: gross margin fell to 66.4% (vs. 69.6% YoY; 68.4% in Q4), largely from STELARA erosion, transactional FX, and Shockwave step-up; management guided 2025 operating margin +300 bps YoY even including ~$400M tariff headwind .
Guidance: Operational sales raised on CAPLYTA and FX ($92.0B midpoint vs. $91.3B prior), reported sales midpoint to $91.4B; adjusted reported EPS maintained at $10.50–$10.70 (mid $10.60), while adjusted operational EPS range moved down to $10.50–$10.70 from $10.75–$10.95 (dilution/tariffs) .
Pipeline and portfolio execution were key positives (DARZALEX >$3B for third straight quarter; TREMFYA IBD momentum; RYBREVANT/LAZCLUZE OS data; OTTAVA trial start). Dividend raised 4.8% to $1.30 quarterly (63rd consecutive increase), a steady support for shareholder return .

What Went Well and What Went Wrong

What Went Well

Robust growth engines offsetting STELARA LOE: Innovative Medicine grew 4.2% operationally with 11 key brands up double digits; DARZALEX >20% YoY; CARVYKTI $369M; TREMFYA +20% operational including IBD launches .
- “We delivered 4.2% operational sales growth despite an approximate 810 basis points headwind from STELARA with 11 key brands growing double digits.” — CEO Joaquin Duato .
MedTech cardiovascular strength and pipeline execution: Abiomed +14%, Shockwave contribution $258M, OTTAVA clinical trial initiation; EP body-pulse U.S. cases resumed with >5,500 completed globally to date .
Balance sheet and capital returns: Free cash flow ≈$3.4B; dividend lifted 4.8% to $1.30/quarter; cash $38.8B vs. debt $52.3B (net debt $13.5B; pro forma ~$27.5B after Intra-Cellular close) .

What Went Wrong

Margin compression vs. expectations: Gross margin down ~320 bps YoY in Q1; CFO cited mix (STELARA), transactional FX, and Shockwave step-up; analysts were “maybe a little bit optimistic” on gross profit expectations .
Orthopedics softness: Orthopedics declined ~3.1% (one-timers hit ~480 bps), with competitive pressure in Spine/Sports; recovery expected as portfolio launches ramp through 2H25 .
Tariff overhang: 2025 guidance embeds ~$400M tariff impact (primarily China retaliatory tariff on U.S.-origin products shipped into China); mitigation options limited given pricing constraints .

Financial Results

Consolidated P&L Snapshot

Metric	Q3 2024	Q4 2024	Q1 2025
Revenue ($B)	$22.471	$22.520	$21.893
GAAP Diluted EPS ($)	$1.11	$1.41	$4.54
Adjusted Diluted EPS ($)	$2.42	$2.04	$2.77
Gross Profit Margin %	69.0%	68.4%	66.4%
Effective Tax Rate %	19.3%	11.7%	19.3%
YoY Revenue Growth %	5.2%	5.3%	2.4%

Notes: Adjusted EPS excludes intangible amortization and special items per company definition .

Segment Breakdown (Reported)

Segment ($B)	Q3 2024	YoY %	Q4 2024	YoY %	Q1 2025	YoY %
Innovative Medicine	$14.580	4.9%	$14.332	4.4%	$13.873	2.3%
MedTech	$7.891	5.8%	$8.188	6.7%	$8.020	2.5%
Total	$22.471	5.2%	$22.520	5.3%	$21.893	2.4%

KPIs and Balance Sheet

KPI	Q1 2025
Free Cash Flow ($B)	≈$3.4
Cash & Marketable Securities ($B)	$38.8
Total Debt ($B)	$52.3
Net Debt ($B)	$13.5 (≈$27.5 pro forma post-close)
Dividend/Share (Quarterly)	$1.30 (up 4.8%)
Adjusted Effective Tax Rate (%)	16.3%

Guidance Changes

Metric	Period	Previous Guidance (Jan-2025)	Current Guidance (Apr-2025)	Change
Adjusted Operational Sales Growth (YoY)	FY 2025	2.0%–3.0% / mid 2.5%	2.0%–3.0% / mid 2.5%	Maintained
Operational Sales ($B) and Midpoint	FY 2025	$90.9–$91.7 / $91.3 (3.0% mid YoY)	$91.6–$92.4 / $92.0 (3.8% mid YoY)	Raised
Estimated Reported Sales ($B) and Midpoint	FY 2025	$89.2–$90.0 / $89.6 (1.0% mid YoY)	$91.0–$91.8 / $91.4 (3.1% mid YoY)	Raised
Adjusted Operational EPS (Diluted)	FY 2025	$10.75–$10.95 / $10.85 (8.7% mid YoY)	$10.50–$10.70 / $10.60 (6.2% mid YoY)	Lowered
Adjusted EPS (Reported, Diluted)	FY 2025	$10.50–$10.70 / $10.60 (6.2% mid YoY)	$10.50–$10.70 / $10.60 (6.2% mid YoY)	Maintained
Dividend	FY 2025	$1.24/qtr prior	$1.30/qtr (63rd consecutive increase)	Raised

Management also quantified ~$400M tariff impact embedded in 2025 and maintained +300 bps operating margin improvement guidance vs. 2024 despite dilution from Intra-Cellular Therapies .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3 & Q4 2024)	Current Period (Q1 2025)	Trend
STELARA LOE / Immunology transition	UC approval for TREMFYA; emphasized pipeline progress . 2025 guide contemplated STELARA erosion .	~810 bps headwind; TREMFYA +20% op; TREMFYA Crohn’s U.S. approval; mgmt frames TREMFYA as potential “gold standard” in IBD .	Transition on track; TREMFYA offset building.
Multiple Myeloma & Oncology	CARVYKTI and DARZALEX strength; data sets at ASH/ESMO .	DARZALEX >$3B, >20% growth; CARVYKTI $369M; RYBREVANT/LAZCLUZE OS >1 year benefit; EU subQ approval .	Strong, durable growth drivers.
MedTech cardio & EP	Shockwave integration, VELYS Spine, device launches .	Abiomed +14%, Shockwave $258M; EP resumed U.S. cases (>5,500 globally) .	Positive; EP competitive pressure persists but stabilizing.
Robotic surgery (OTTAVA)	IDE submitted (Q3/Q4) .	General surgery trial initiated; de novo submission path targeted .	Milestone reached.
Tariffs / Macro	Not a major focus in Q3/Q4 8-Ks.	~$400M 2025 tariff impact; limited pricing offsets; mgmt favors tax policy over tariffs; recession resilience noted .	New headwind embedded; monitored.
Legal/regulatory	Talc actions and reserve in 2024 .	$7B talc reserve reversal drives GAAP EPS; return to tort system .	Non-recurring GAAP boost; litigation path clarified.

Management Commentary

“We delivered 4.2% operational sales growth despite an approximate 810 basis points headwind from STELARA with 11 key brands growing double digits.” — Joaquin Duato, CEO .
“We are maintaining our adjusted reported earnings per share guidance…$10.50 to $10.70, partially aided by the reduced FX impact,” despite $0.25 dilution from Intra-Cellular and tariffs .
“Cost of products sold deleveraged by 320 basis points, driven by unfavorable transactional currency and product mix…as well as the fair value step-up…from the Shockwave acquisition.” — Jessica Moore, IR (moving to IM CFO) .
“The program [MedTech Surgery restructuring] is expected to be completed in 2027…~$900 million cost…improve our ability to accelerate growth and enhance profitability.” — CFO Joseph Wolk (also ).
“We recently…started OTTAVA clinical trials…an important milestone as we continue to strengthen our presence in robotic surgery.” — CEO .

Q&A Highlights

Tariffs: ~$400M 2025 impact (largest from China retaliatory tariffs on U.S.-origin products shipped to China); inventory accounting will phase P&L impact; limited pricing levers .
Gross margins: Down ~300+ bps YoY on STELARA mix, transactional FX, Shockwave step-up; management expects improvement of one-third to one-half of this delta going forward (inclusive of tariffs) .
STELARA erosion: Tracking to HUMIRA-like 2-year curve with added Part D impact; ex-STELARA, ~90% of IM business growing >12% .
Orthopedics: Underlying performance slightly below market; one-timers hit ~480 bps; confidence in 2H ramp with new products (VELYS, TriAlta Spine, etc.) .
Macro: Health care demand resilient; elective procedures may delay but not abandon in recession scenarios .

Estimates Context

Actuals vs S&P Global consensus (beats in bold):

Metric	Q3 2024	Q4 2024	Q1 2025
Revenue Actual ($B)	$22.471	$22.520	$21.893
Revenue Consensus ($B)	$22.171*	$22.436*	$21.562*
EPS Adjusted Actual ($)	$2.42	$2.04	$2.77
EPS Consensus ($)	$2.206*	$2.012*	$2.580*
Result	Revenue: Beat; EPS: Beat	Revenue: Beat; EPS: Beat	Revenue: Beat; EPS: Beat

Values with asterisks retrieved from S&P Global.

Where estimates may adjust: Continued TREMFYA IBD ramp, DARZALEX durability, and Shockwave normalization past the May anniversary could support modest revenue/EPS upward revisions, offset by Orthopedics competitive dynamics and tariff flow-through .

Key Takeaways for Investors

The transitions are working: double-digit growth drivers (DARZALEX, CARVYKTI, TREMFYA, RYBREVANT/LAZCLUZE) are offsetting STELARA LOE and Part D headwinds faster than modeled, evidenced by broad-based beats .
2025 outlook quality improved on sales (CAPLYTA, FX) while EPS is defended despite new costs (tariffs, ITCI dilution) — a constructive setup if Orthopedics stabilizes and tariffs don’t escalate .
Margin trajectory likely improves into 2H as mix normalizes (less STELARA), acquisition step-ups lap, and cost programs progress; monitor quarterly gross margin prints against CFO’s improvement cadence .
MedTech remains a portfolio of haves/have-nots: Cardiovascular and Vision robust; Orthopedics under pressure near term but with catalysts (TriAlta Spine, VELYS, anterior hips) .
Pipeline/Regulatory momentum is an underappreciated catalyst (OTTAVA clinical start; TREMFYA IBD expansion; RYBREVANT/LAZCLUZE OS data; icotrokinra filing plans) supporting mid-term growth visibility .
Capital returns remain reliable (63rd dividend increase) with balance sheet flexibility even post-ITCI; pro forma net leverage remains manageable .
Near-term trading: Favorable beat/maintained EPS guide plus dividend raise and pipeline news flow are supportive; watch tariff headlines, Orthopedics share trends, and quarterly gross margin progression for any de-risking or re-rating catalysts .

Appendix: Additional Details from the Q1 2025 Press Release

Q1 regional sales: U.S. $12.305B (+5.9%); International $9.588B (−1.8% reported; +2.1% operational) .
Segment operational growth: Innovative Medicine +4.2%, MedTech +4.1%; adjusted operational growth ex-A&D: IM +4.4%, MedTech +1.3% .
Notable Q1 announcements: TREMFYA Crohn’s approval; subcutaneous RYBREVANT EU approval; OTTAVA first cases completed (MedTech) .

Non-GAAP definitions and reconciliations referenced per exhibits .

JOHNSON & JOHNSON (JNJ)·Q1 2025 Earnings Summary