J&J(JNJ) - 2026 Q3 - Quarterly Report

Financial Performance - Sales to customers for the fiscal third quarter ended September 28, 2025, were $23,993 million, a 6.8% increase from $22,471 million in the same period of 2024[21] - Gross profit margin improved to 69.6% in Q3 2025, compared to 69.0% in Q3 2024, with gross profit of $16,690 million[21] - Net earnings for the fiscal third quarter were $5,152 million, representing a 91.3% increase from $2,694 million in Q3 2024[21] - For the fiscal nine months ended September 28, 2025, sales to customers reached $69,629 million, up 5.5% from $66,301 million in the same period of 2024[22] - Net earnings for the nine months were $21,688 million, a significant increase of 103.8% compared to $10,635 million in the prior year[22] - Comprehensive income for the fiscal third quarter of 2025 was $4,220 million, up from $1,425 million in the prior year, reflecting a growth of 195.5%[23] - The fiscal nine months saw net earnings of $21,688 million, a 103.8% increase from $10,635 million in the same period of 2024, with basic earnings per share rising to $9.01 from $4.42[22] Cost Management - Research and development expenses decreased to $3,672 million, down from $4,952 million in Q3 2024, reflecting a strategic focus on cost management[21] - The company reported a decrease in selling, marketing, and administrative expenses as a percentage of sales, from 24.8% in 2024 to 24.3% in 2025[22] - Selling, marketing, and administrative expenses accounted for 24.7% of sales in Q3 2025, slightly up from 24.3% in Q3 2024[21] - Research and development expenses for Innovative Medicine were $2,944 million in Q3 2025, compared to $4,213 million in Q3 2024, indicating a focus on cost management[90] Cash Flow and Investments - Cash flows from operating activities for the nine months ended September 28, 2025, were $17,221 million, slightly down from $17,283 million in the same period of 2024[31] - The company reported a net cash used for investing activities of $19,103 million for the nine months ended September 28, 2025, compared to $17,279 million in 2024[31] - Total cash and cash equivalents at the end of the period were $18,231 million, down from $19,980 million in the previous year[31] - The company repurchased common stock totaling $4,031 million in the nine months ended September 28, 2025, compared to $2,150 million in the same period of 2024, representing an increase of 87.5%[31] Strategic Initiatives - The company is focusing on strategic initiatives, including potential acquisitions and market expansions, to enhance growth prospects[9] - The planned separation of the Orthopaedics business is expected to enhance focus and operational efficiency, with anticipated benefits from this strategic initiative[14] - The acquisition of Intra-Cellular Therapies, Inc. was completed for $14.5 billion, enhancing the company's portfolio in mental health with the addition of CAPLYTA[96][97] - The acquisition of Shockwave Medical Inc. was completed for $12.6 billion, contributing to the MedTech segment's growth[102] Market Performance - U.S. Oncology sales reached $3,468 million in Q3 2025, a 23.2% increase from $2,816 million in Q3 2024[82] - Total Innovative Medicine sales in the U.S. rose by 6.0% to $9,402 million, while international sales increased by 7.9% to $6,161 million, resulting in a worldwide growth of 6.8% to $15,563 million[87] - Total MedTech sales in the U.S. grew by 6.6% to $4,306 million, with international sales up by 7.0% to $4,124 million, leading to a worldwide increase of 6.8% to $8,430 million[88] Legal and Regulatory Matters - The Company and Janssen Pharmaceuticals have settled state and subdivision claims related to opioids for up to $5.0 billion, with approximately 80% paid by the end of fiscal third quarter 2025[132] - The Company continues to face approximately 23 remaining opioid cases in various state courts and 285 cases in the Ohio multi-district litigation[133] - The Company recorded a litigation expense of $0.4 billion in both Q3 and the first nine months of 2024, primarily related to Risperdal Gynecomastia[91] - The Company is preparing for bellwether trials in California and New Jersey in late 2025 and early 2026, respectively[123] Tax and Financial Reserves - The worldwide effective income tax rate increased to 21.5% for the fiscal nine months of 2025, up from 16.9% in 2024, primarily due to the enactment of the One Big Beautiful Bill Act[69][70] - The company had approximately $2.2 billion of liabilities from unrecognized tax benefits as of September 28, 2025[72] - The Company reversed previously accrued reserves of approximately $7.0 billion for the Talc settlement proposal in the fiscal nine months of 2025[71]