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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)

MetricQ2 2024Q2 2025
Revenue ($USD Billions)$22.447 $23.743
GAAP Diluted EPS ($)$1.93 $2.29
Adjusted Diluted EPS ($)$2.82 $2.77
Gross Profit Margin %69.4% 67.9%
Net Income Margin %20.9% 23.3%
Effective Tax Rate %18.5% 14.7%

Sequential Trend (Q4 2024 → Q1 2025 → Q2 2025)

MetricQ4 2024Q1 2025Q2 2025
Revenue ($USD Billions)$22.520 $21.893 $23.743
GAAP Diluted EPS ($)$1.41 $4.54 (includes talc reserve reversal) $2.29
Adjusted Diluted EPS ($)$2.04 $2.77 $2.77

Actuals vs S&P Global Wall Street Consensus (Q2 2025)

MetricConsensusActualSurprise
Revenue ($USD Billions)$22.862*$23.743 +$0.881B, +3.9% (Beat)
Adjusted Diluted EPS ($)$2.684*$2.77 +$0.086, +3.2% (Beat)
EBITDA ($USD Billions)$8.279*$8.806*+$0.527B, +6.4% (Beat)

Values with asterisk (*) retrieved from S&P Global.

Segment Breakdown (Q2)

Segment ($USD Billions)Q2 2024Q2 2025Reported YoYOperational YoY
Innovative Medicine$14.490 $15.202 +4.9% +3.8%
MedTech$7.957 $8.541 +7.3% +6.1%
Total$22.447 $23.743 +5.8% +4.6%

Selected KPIs (Q2 WW Sales)

Product/Category ($USD Millions)Q2 2024Q2 2025Reported YoY
DARZALEX$2,878 $3,539 +23.0%
CARVYKTI$186 $439 >100%
ERLEADA$736 $908 +23.4%
RYBREVANT/LAZCLUZE$69 $179 >100%
TREMFYA$906 $1,186 +31.0%
STELARA$2,885 $1,653 −42.7%
SPRAVATO$271 $414 +53.3%
Electrophysiology$1,323 $1,468 +11.0%
Abiomed$379 $448 +18.2%
Shockwave$77 $292 n.m.
Vision (Total)$1,285 $1,369 +6.5%

Guidance Changes

MetricPeriodPrevious (Apr-2025)Current (Jul-2025)Change
Adjusted Operational Sales Change vs PY (Midpoint)FY 20252.5% 3.5% Raised
Operational Sales ($) / MidpointFY 2025$91.6–$92.4B / $92.0B $92.7–$93.1B / $92.9B Raised
Reported Sales ($) / MidpointFY 2025$91.0–$91.8B / $91.4B $93.2–$93.6B / $93.4B Raised
Adjusted Operational EPS (Diluted) / MidpointFY 2025$10.50–$10.70 / $10.60 $10.63–$10.73 / $10.68 Raised
Adjusted EPS (Diluted) / MidpointFY 2025$10.50–$10.70 / $10.60 $10.80–$10.90 / $10.85 Raised
Tariffs Impact ($)FY 2025~$400M (Q1 commentary) ~$200M (Q2 update) Lowered
Operating Margin Improvement (bps)FY 2025~300 bps reiterated ~300 bps reiterated Maintained

Earnings Call Themes & Trends

TopicQ4 2024 (prev)Q1 2025 (prev)Q2 2025 (current)Trend
Guidance & FXFY25 set; FX headwind scenario FX turning favorable; reported sales midpoint 3.1% FX tailwind adds ~$1.1B; reported growth 5.1–5.6% Improving
Tariffs/MacroVARIPULSE pause; China VBP headwinds ~$400M tariff impact Tariff impact cut to ~$200M; reinvest differential Easing
STELARA LOELOE entering U.S.; margin headwind −810 bps Innovative headwind −1,170 bps Innovative headwind; still growing ex‑STELARA Managed
Oncology strategyMultiple myeloma/EGFR lung momentum RYBREVANT+LAZCLUZE OS benefit; CARVYKTI growth Oncology WW op growth +22.3%; DARZALEX/CARVYKTI strength Accelerating
MedTech EP/RoboticsEP leadership; OTTAVA IDE approved VARIPULSE resumed; OTTAVA trial begins EP growth ~10%; dual energy STSF EU; OTTAVA first cases Positive
NeuroscienceSPRAVATO approval monotherapy ICTI (CAPLYTA) deal announced CAPLYTA added; MDD approval expected Expanding
Legal/TalcBankruptcy plan/next steps Reserve reversal $7B; return to tort system Daubert hearing expected this fall Advancing

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 .