J&
JOHNSON & JOHNSON (JNJ)·Q2 2025 Earnings Summary
Executive Summary
- Q2 2025 delivered a clean top- and bottom-line beat versus consensus, with reported sales of $23.74B (+5.8% YoY) and adjusted diluted EPS of $2.77; management raised FY25 sales and EPS guidance, aided by FX tailwinds and strong MedTech and oncology momentum .
- Guidance was raised across all key FY25 metrics: reported sales midpoint to $93.4B (+5.4%), operational sales midpoint to $92.9B (+4.8%), adjusted operational EPS midpoint to $10.68, and adjusted EPS midpoint to $10.85, reflecting both operational strength and favorable currency .
- Innovative Medicine grew through STELARA LOE with 13 double‑digit brands; MedTech accelerated sequentially, led by cardiovascular (Abiomed, Shockwave, EP) and Vision surgical; tariff headwind cut to ~$200M (from ~$400M) primarily in MedTech, supporting margin trajectory .
- Pipeline catalysts near term: FDA priority review for TAR‑200 (NMIBC), approval of IMAAVY (nipocalimab) in gMG, multiple oncology readouts (CARVYKTI long-term data, trispecific myeloma), and OTTAVA robotic surgery progress—key stock narrative drivers into H2 .
- Free cash flow >$6B YTD and net debt ~$32B post-ICTI close; management reiterated ~300 bps FY operating margin improvement and expects both segments to grow faster in H2, underpinning full-year EPS guidance .
What Went Well and What Went Wrong
What Went Well
- Oncology strength: DARZALEX WW sales +23% to $3.54B; CARVYKTI +>100% to $439M; ERLEADA +23% to $908M; RYBREVANT/LAZCLUZE launch traction with $179M and sequential growth +26.5% .
- Cardiovascular-led MedTech acceleration: WW electrophysiology +11.0% to $1.47B; Abiomed +18.2% to $448M; Shockwave contributed strong double-digit growth with new Javelin/E8 launches .
- Management tone/confidence: “We are pleased to raise our full-year sales guidance by $2 billion and EPS guidance by $0.25” (CFO) and “we delivered operational sales growth of 4.6%…our portfolio and pipeline position us for elevated growth in the second half” (CEO) .
What Went Wrong
- Immunology headwind from STELARA LOE: WW sales fell 42.7% YoY to $1.65B, driving mix and margin pressure; adjusted EPS down 1.8% YoY despite top-line beat .
- Gross margin deleverage: gross profit margin fell to 67.9% (from 69.4% YoY) on product mix (STELARA erosion) and acquisition amortization; Innovative Medicine margin declined to 42.7% .
- China VBP and competitive pressures impacted Surgery and Orthopedics; orthopedics declined sequentially in Q1 and remained soft relative to targets, though innovation ramp expected in H2 .
Financial Results
Year-over-Year (Q2 2025 vs Q2 2024)
Sequential Trend (Q4 2024 → Q1 2025 → Q2 2025)
Actuals vs S&P Global Wall Street Consensus (Q2 2025)
Values with asterisk (*) retrieved from S&P Global.
Segment Breakdown (Q2)
Selected KPIs (Q2 WW Sales)
Guidance Changes
Earnings Call Themes & Trends
Management Commentary
- CEO: “We delivered operational sales growth of 4.6%…our portfolio and pipeline position us for elevated growth in the second half of the year” .
- CFO: “We are increasing our reported adjusted EPS estimate by $0.25 to $10.85…with $0.08 of adjusted operational EPS” .
- MedTech head: “We were happy with our Q2 operational growth of 6.1%…cardiovascular 22% growth…EP 10% growth on a $5B base” .
- Innovative Medicine head: “Excluding STELARA, 90% of our business grew 15.5%…13 brands growing double digits” .
Q&A Highlights
- Guidance drivers: Both segments contributed; oncology and MedTech cardiovascular strongest; H2 acceleration expected in both .
- TAR‑200 launch: Priority review, large patient opportunity; designed “by urologists, for urologists”; potential significant disconnect vs street expectations .
- EP adoption: VARIPULSE >10,000 global cases; neurovascular events <0.5%; portfolio broadening with dual energy STSF and OMNYPULSE .
- Tariffs: FY25 impact cut to ~$200M; focus on U.S. manufacturing capacity over time; reinvest savings into pipeline and launches .
- Orthopedics: Near-term headwinds from comps/VBP; innovation ramp (VELYS, ATTUNE Revision, KINCISE 2.0, VOLT) to support improvement .
Estimates Context
- Q2 2025 beat: Revenue $23.743B vs $22.862B consensus (+3.9%); adjusted EPS $2.77 vs $2.684 consensus (+3.2%); EBITDA $8.806B vs $8.279B consensus (+6.4%)*. Management raised FY25 sales/EPS guidance, implying upward estimate revisions, particularly for H2 and cardiovascular/oncology franchises .
- Street targets: CFO highlighted ongoing disconnects (e.g., TAR‑200, oncology trajectory), suggesting potential estimate upgrades across select assets .
Values with asterisk (*) retrieved from S&P Global.
Key Takeaways for Investors
- Broad-based beat and guidance raise signal H2 acceleration; FX tailwind and tariff relief add cushion to delivery of EPS targets .
- MedTech cardiovascular is the growth engine (Abiomed, Shockwave, EP), with product flow (Javelin/E8, dual energy STSF) driving sustainable share gains .
- Innovative Medicine durable growth ex‑STELARA (TREMFYA in IBD, CARVYKTI, DARZALEX, RYBREVANT/LAZCLUZE) supports multi-year thesis despite LOE .
- Watch near-term catalysts: TAR‑200 approval/launch, subQ RYBREVANT U.S., TREMFYA SC induction in UC, OTTAVA milestones—each a potential stock driver in H2 .
- Margin path intact: ~300 bps operating margin improvement reiterated; gross margin mix headwinds manageable as new products scale .
- Cash generation robust, balance sheet capacity for continued investment; net debt normalizing post ICTI, supports pipeline and BD flexibility .
- Risk monitoring: STELARA erosion trajectory, China VBP impacts, EP competitive dynamics; management’s reinvestment and innovation cadence mitigate .
Additional Notes and Sources
- Q2 2025 8‑K press release and supplemental schedules: revenues, EPS, margins, segment/geography details, and updated FY25 guidance .
- Q2 2025 earnings call transcript: operational commentary, guidance, tariffs, cash/FCF, segment margins, product updates, and Q&A color .
- Prior quarters for trend: Q1 2025 8‑K/call (operational growth +4.2%, adjusted EPS $2.77, initial guidance and FX) ; Q4 2024 8‑K/call (baseline FY25 set, VARIPULSE status, STELARA LOE) .
- Q2 press releases referenced (examples): FDA approval for IMAAVY in gMG; FDA priority review for TAR‑200; oncology data for CARVYKTI, trispecifics; OTTAVA first cases .