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JOHNSON & JOHNSON (JNJ)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 delivered $23.99B revenue (+6.8% YoY) and adjusted EPS of $2.80, both above Wall Street consensus; reported diluted EPS was $2.12, with strength across Innovative Medicine and MedTech .
  • Guidance raised: 2025 reported sales midpoint to $93.7B (+5.7% YoY) and adjusted operational sales growth to 3.8%; adjusted EPS midpoint reaffirmed at $10.85 despite a higher tax rate .
  • Strategic catalyst: intent to separate Orthopaedics (DePuy Synthes) within 18–24 months to sharpen MedTech focus; management expects top-line and margin uplift post‑separation .
  • Key product drivers: DARZALEX (+21.7% WW), CARVYKTI ($524M, +81.4%), TREMFYA (+41.3% WW), SPRAVATO (+61.5% WW), and cardiovascular MedTech (Shockwave +20.9%, Abiomed +15.6%) .
  • Free cash flow YTD of ~$14.2B and strong balance sheet (cash ~$19B, debt ~$46B; net debt ~$27B) support sustained investment and returns, including a Q4 dividend of $1.30 per share .

What Went Well and What Went Wrong

What Went Well

  • Robust oncology and neuroscience growth: DARZALEX (+21.7% WW), CARVYKTI (+81.4%), RYBREVANT/LAZCLUZE momentum (WW $198M), and SPRAVATO (+61.5% WW) .
  • TREMFYA acceleration in IBD: +41.3% WW in Q3; new data show durable remission through 96 weeks, reinforcing long‑term differentiation .
  • MedTech execution: cardiovascular up ~12% operationally with Shockwave +20.9% and Abiomed +15.6%; Surgical Vision +13.8% on new products .
  • CEO tone: “new era of accelerated growth” and confidence growing through STELARA LOE driven by 11 double‑digit brands .

What Went Wrong

  • STELARA headwind: WW sales down 41.3% YoY; ~1,070 bps drag on Innovative Medicine operational growth in Q3 .
  • Effective tax rate spiked to 31.2% (vs. 19.3% LY) largely due to one‑time remeasurement linked to the “One Big Beautiful Bill Act” .
  • MedTech margins compressed (enterprise commentary: segment margin declined to ~21%) given macro cost factors and product mix; management flagged China VBP and energy competition as headwinds .

Financial Results

Headline P&L vs Prior Year and Prior Quarter

MetricQ3 2024Q2 2025Q3 2025
Revenue ($USD Billions)$22.47 $23.74 $23.99
EPS (Diluted, GAAP)$1.11 $2.29 $2.12
Adjusted EPS (Diluted)$2.42 $2.77 $2.80
Gross Profit ($USD Billions)$15.51 $16.12 $16.69
Gross Margin (%)69.0% 67.9% 69.6%
R&D (% of Sales)22.0% 14.8% 15.3%
SG&A (% of Sales)24.3% 24.8% 24.7%
EBT Margin (%)14.9% 27.3% 31.2%
Effective Tax Rate (%)19.3% 14.7% 31.2%

Actuals vs S&P Global Consensus

MetricQ1 2025Q2 2025Q3 2025
Revenue ($USD Billions) Actual$21.89 $23.74 $23.99
Revenue Consensus ($USD Billions)$21.56*$22.86*$23.76*
Adjusted EPS (Diluted) Actual ($)$2.77 $2.77 $2.80
EPS Consensus ($)$2.58*$2.68*$2.76*

Values retrieved from S&P Global*.
Significant beats: Q3 Revenue and Adjusted EPS both exceeded consensus; Q1 and Q2 were also above EPS and revenue consensus*.

Segment Breakdown (Q3)

SegmentQ3 2024 Revenue ($USD Millions)Q3 2025 Revenue ($USD Millions)Reported GrowthOperational Growth
Innovative Medicine$14,580 $15,563 +6.8% +5.3%
MedTech$7,891 $8,430 +6.8% +5.6%
Worldwide$22,471 $23,993 +6.8% +5.4%

Selected Product/Franchise Highlights (Q3 WW)

ProductQ3 2024 ($MM)Q3 2025 ($MM)Growth
DARZALEX$3,016 $3,672 +21.7%
CARVYKTI$286 $524 +83.5%
ERLEADA$790 $936 +18.4%
RYBREVANT/LAZCLUZE$89 $198 N/M
TREMFYA$1,007 $1,424 +41.3%
SPRAVATO$284 $459 +61.5%
STELARA$2,676 $1,570 −41.3%

KPIs and Balance Sheet

  • Free Cash Flow YTD 2025: ~$14.2B .
  • Cash and Marketable Securities: ~$19B; Total Debt: ~$46B; Net Debt: ~$27B .
  • Quarterly dividend declared: $1.30 payable Dec 9, 2025 .

Guidance Changes

MetricPeriodPrevious Guidance (July 2025)Current Guidance (Oct 2025)Change
Adjusted Operational Sales Growth vs PY (Midpoint)FY 20253.5% 3.8% Raised
Operational Sales ($B) Range / MidpointFY 2025$92.7–$93.1 / $92.9 $93.0–$93.4 / $93.2 Raised
Estimated Reported Sales ($B) Range / MidpointFY 2025$93.2–$93.6 / $93.4 $93.5–$93.9 / $93.7 Raised
Adjusted Operational EPS (Diluted) Range / MidpointFY 2025$10.63–$10.73 / $10.68 $10.63–$10.73 / $10.68 Maintained
Adjusted EPS (Diluted) Range / MidpointFY 2025$10.80–$10.90 / $10.85 $10.80–$10.90 / $10.85 Maintained
Net Interest ExpenseFY 2025Prior view$0–$50M Improved
Effective Tax RateFY 2025Prior view17.5%–18% Higher (policy impact)
Operating MarginFY 2025~+300 bps ~+300 bps (reiterated) Maintained
DividendQ4 2025—$1.30 per share Announced

Earnings Call Themes & Trends

TopicQ1 2025 (Prior-2)Q2 2025 (Prior-1)Q3 2025 (Current)Trend
Orthopaedics strategyTransformation program referenced; margin focus Ortho declined; transformation and China VBP pressures Intent to separate Orthopaedics; targeted 18–24 months Portfolio sharpening; margin uplift expected
IBD/Immunology pipelineTREMFYA in CD approval; icotrokinra PoC Strong momentum; dual therapies in IBD (co‑antibody) TREMFYA +40% WW; filing in PsA; icotrokinra filed in psoriasis Accelerating launches and labels
Oncology catalystsRYBREVANT/LAZCLUZE OS data Multiple myeloma breadth; CARVYKTI momentum NEJM survival data; CARVYKTI $5B peak potential Strengthening multi‑asset growth
Robotic surgery (OTTAVA)Trial initiation Continued progress; platform updates forthcoming de novo submission targeted early 2026 Execution toward launch
Cardiovascular MedTechAbiomed performance EP mapping growth; Impella adoption Shockwave +20.9%; Abiomed +15.6%; VARIPULSE 99.7% acute eff. Sustained double‑digit platforms
Tax/Policy—Lower ETR QoQ ETR spike in Q3; FY ETR 17.5–18% outlook Transitory spike; normalized FY guidance
Talc litigationBankruptcy ruling context; plan to litigate —Daubert motions expected by Q1 2026 Legal clarity timeline

Management Commentary

  • CEO: “Johnson & Johnson is in a new era of accelerated growth… delivering double‑digit growth across 11 brands… and accelerating MedTech focus with the planned Orthopaedics separation” .
  • CFO: “We do not need large M&A to deliver at the upper end of our long‑term targets… Net debt improved to ~$27B; FY 2025 adjusted EPS $10.80–$10.90 reaffirmed” .
  • Innovative Medicine Chair: “Ex‑STELARA, 90% of our business grew 16%; TREMFYA is capturing ~50% of IL‑23 UC new starts pre‑SC induction approval” .
  • MedTech Chair: “Electrophysiology growth doubled in the U.S.; Vision had a standout quarter; OTTAVA launch will bolster performance” .

Q&A Highlights

  • Orthopaedics separation rationale/timing: focus on high‑growth areas; 18–24 months; expected uplift in MedTech growth and margins; no broader separations planned .
  • Margin impact post‑spin: nearer‑term uplift could be closer to 100 bps, moderating as other businesses scale .
  • Policy/tax: constructive dialogue with administration; FY ETR 17.5–18% amid enacted changes .
  • INLEXZO launch: early insertions; J‑code expected April 2026; broad Phase 3 program to expand addressable NMIBC and muscle‑invasive settings .
  • 2026 outlook: management sees revenue growth >5% vs current 4.6% consensus and potential EPS upside to ~$11.44 (≈+$0.05 vs $11.39) .

Estimates Context

  • Q3 2025: Revenue $23.99B vs consensus $23.76B*; Adjusted EPS $2.80 vs $2.76*.
  • Q2 2025: Revenue $23.74B vs $22.86B*; Adjusted EPS $2.77 vs $2.68*.
  • Q1 2025: Revenue $21.89B vs $21.56B*; Adjusted EPS $2.77 vs $2.58*.
    Values retrieved from S&P Global*.
    Implication: Consensus likely revises upward for TREMFYA, CARVYKTI, and cardiovascular platforms; FY revenue/adjusted EPS trajectories supported by guidance and pipeline .

Key Takeaways for Investors

  • Beat-and-raise quarter with strong breadth across franchises; consensus likely shifts up for FY revenue and 2026 trajectory given management commentary .
  • Orthopaedics separation is a structural catalyst to improve MedTech growth/margins and refocus capital toward cardiovascular, surgery, and vision .
  • TREMFYA and CARVYKTI are multi‑year growth engines; durable IBD data and MM breadth support sustained double‑digit growth .
  • Temporary tax headwinds obscured GAAP EPS; adjusted EPS beat and FY reaffirmation underscore underlying earnings power .
  • Balance sheet strength and FCF support continued R&D, tuck‑ins, and dividends; Q4 $1.30 dividend declared .
  • Near‑term trading: positive setup on spin news, guidance raise, and product momentum; watch policy/tax developments and China VBP impacts noted in MedTech .
  • Medium‑term thesis: elevated growth through LOEs via diversified innovations across Oncology, Immunology, Neuroscience, and Cardiovascular, plus OTTAVA optionality .