J&J(US:JNJ)2025-07-24 20:04Part I - Financial Information Item 1. Financial Statements Presents unaudited consolidated financial statements for Q2 and H1 FY2025, covering balance sheets, earnings, and cash flows Consolidated Balance Sheet Highlights (as of June 29, 2025) | Account | June 29, 2025 ($M) | Dec 29, 2024 ($M) | Change | | :--- | :--- | :--- | :--- | | Total Assets | $193,389 | $180,104 | +7.4% | | Total Current Assets | $54,498 | $55,893 | -2.5% | | Goodwill | $48,117 | $44,200 | +8.9% | | Intangible assets, net | $49,835 | $37,618 | +32.5% | | Total Liabilities | $114,916 | $108,614 | +5.8% | | Total Current Liabilities | $54,180 | $50,321 | +7.7% | | Long-term debt | $39,235 | $30,651 | +28.0% | | Total Shareholders' Equity | $78,473 | $71,490 | +9.8% | - The significant increase in Intangible Assets and Goodwill is primarily due to recent acquisitions. The rise in Long-term debt reflects financing for these transactions20 Q2 2025 vs Q2 2024 Performance | Metric | Q2 2025 ($M) | Q2 2024 ($M) | YoY Change | | :--- | :--- | :--- | :--- | | Sales to customers | $23,743 | $22,447 | +5.8% | | Gross Profit | $16,115 | $15,578 | +3.4% | | Net Earnings | $5,537 | $4,686 | +18.2% | | Diluted EPS | $2.29 | $1.93 | +18.7% | Six Months 2025 vs Six Months 2024 Performance | Metric | Six Months 2025 ($M) | Six Months 2024 ($M) | YoY Change | | :--- | :--- | :--- | :--- | | Sales to customers | $45,636 | $43,830 | +4.1% | | Gross Profit | $30,651 | $30,450 | +0.7% | | Net Earnings | $16,536 | $7,941 | +108.2% | | Diluted EPS | $6.82 | $3.27 | +108.6% | - The substantial increase in net earnings for the six-month period was primarily driven by a significant net income of $7.2 billion in 'Other (income) expense, net', largely due to the reversal of a previously accrued reserve for the Talc settlement proposal2271 Cash Flow Summary (Six Months Ended) | Cash Flow Activity | June 29, 2025 ($M) | June 30, 2024 ($M) | | :--- | :--- | :--- | | Net cash from operating activities | $8,052 | $9,290 | | Net cash used by investing activities | $(18,561) | $(14,151) | | Net cash from financing activities | $4,757 | $8,090 | | (Decrease) / Increase in cash | $(5,528) | $3,019 | - Cash used in investing activities increased significantly due to acquisitions of $14.5 billion, net of cash acquired. Cash from financing activities included $9.1 billion in proceeds from long-term debt, largely to fund these acquisitions32 Notes to Consolidated Financial Statements Provides detailed disclosures on accounting policies, acquisitions, legal proceedings, and restructuring activities - Acquisitions: The company completed the acquisition of Intra-Cellular Therapies for $14.5 billion in April 2025 and Shockwave Medical for $12.6 billion in May 2024, significantly boosting its Innovative Medicine and MedTech portfolios97103 - Legal Proceedings (Talc): Following a court dismissal, the company reversed approximately $7.0 billion of previously accrued reserves for the talc settlement proposal in the first half of 2025. The remaining reserve is approximately $4.0 billion122218 - Restructuring: A new restructuring program for the MedTech Surgery franchise was initiated in 2025 with estimated costs of $0.9-$1.0 billion. An ongoing program for the Orthopaedics franchise continues182183 - Income Taxes: The effective tax rate for the first six months of 2025 was 17.8%, up from 16.1% in 2024, primarily due to a shift in income to higher tax jurisdictions and the tax impact of the talc reserve reversal7071 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management discusses Q2 and H1 2025 financial performance, including sales, profitability, liquidity, and capital resources YTD 2025 Sales Performance vs. YTD 2024 | Region/Segment | Sales ($B) | Total Change | Operational Change* | | :--- | :--- | :--- | :--- | | Worldwide | $45.6 | +4.1% | +4.4% | | U.S. | $25.8 | +6.9% | +6.9% | | International | $19.8 | +0.7% | +1.4% | | Innovative Medicine | $29.1 | +3.6% | +4.0% | | MedTech | $16.6 | +5.0% | +5.1% | - For the first six months of 2025, acquisitions and divestitures had a net positive impact of 1.3% on worldwide operational sales growth, while the decline in STELARA sales due to biosimilar competition had a negative impact of approximately 5.9%186 - The Innovative Medicine segment's growth was driven by Oncology products like DARZALEX and CARVYKTI, but was significantly dampened by a 38.6% decline in STELARA sales197 - The MedTech segment's growth was led by the Cardiovascular franchise, which grew 20.0% operationally, boosted by the Shockwave acquisition. The Orthopaedics franchise declined 2.3% operationally, impacted by a restructuring program212215 Major Cash Flow Activities (First Six Months 2025) | Activity | Amount ($B) | | :--- | :--- | | Net cash from operations | $8.1 | | Acquisitions, net of cash acquired | $(14.5) | | Additions to PP&E | $(1.8) | | Dividends to shareholders | $(6.1) | | Repurchase of common stock | $(2.1) | | Net proceeds from debt | $12.7 | - Cash and cash equivalents decreased by $5.5 billion during the first six months of 2025, ending the period at $18.6 billion254 - The company's net debt position increased to $31.9 billion as of June 29, 2025, from a net debt position of $16.0 billion in the prior year's second quarter, primarily to fund acquisitions259 Item 3. Quantitative and Qualitative Disclosures About Market Risk No material change in the company's assessment of market risk sensitivity since the prior fiscal year's annual report - There has been no material change in the Company's assessment of its sensitivity to market risk since its last annual report273 Item 4. Controls and Procedures Management concluded disclosure controls were effective, with no material changes to internal control over financial reporting - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of June 29, 2025274 - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, these controls275 Part II - Other Information Item 1. Legal Proceedings Incorporates detailed discussion of legal proceedings from Note 11, covering talc and product liability matters - Information regarding legal proceedings is incorporated by reference from Note 11 to the Consolidated Financial Statements278 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company did not repurchase any common stock through open-market transactions during Q2 fiscal 2025 - The Company did not repurchase any shares of its Common Stock in open-market transactions during the fiscal second quarter of 2025281 Item 5. Other Information No directors or executive officers adopted or terminated Rule 10b5-1 trading arrangements during Q2 2025 - During the fiscal second quarter of 2025, no directors or officers adopted or terminated a Rule 10b5-1 trading arrangement282 Item 6. Exhibits Lists exhibits filed with Form 10-Q, including CEO and CFO certifications required by Sarbanes-Oxley Act - The report includes required certifications from the CEO and CFO under Sections 302 and 906 of the Sarbanes-Oxley Act283284