JNJ | Q4 2025

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Overview

• Non-GAAP EPS of $2.46 in-line.

• Revenue of $24.6B (+9.3% Y/Y) beats by $440M.

KEY Takeaways

• Full-year revenue grew 5.3% operationally to $94.2 billion, despite a 620 bp headwind from STELARA. Excluding STELARA, underlying growth was double-digit.

• Q4 revenue increased 7.1% operationally to $24.6 billion, with 7.5% growth in the U.S. and 6.6% growth internationally.

• Adjusted EPS rose 20.6% year over year in Q4 to $2.46, up from $2.04.

• Adjusted operating margin improved to 28.7% in Q4, up from 24.1% a year ago.

• The company generated $19.7 billion of free cash flow in 2025, roughly flat year over year despite higher capital spending and tariff impacts.

• JNJ ended 2025 with approximately $20 billion of cash and marketable securities, $48 billion of debt, and net debt of about $28 billion.

• Management reiterated dividend durability, supported by nearly $20 billion in annual free cash flow and a strong balance sheet.

• Management expects 2026 operational sales growth of 5.7%–6.7%, with reported revenue projected to reach approximately $100–$100.5 billion.

• Adjusted EPS for 2026 is guided to $11.28–$11.48, representing ~5.5% growth at the midpoint, despite higher tariffs and increased investment spending.

NOTES

Johnson & Johnson (JNJ) finished full-year 2025 on a strong note, and the key takeaway from the quarter (and the year) is that the business is back in growth mode.

Full-year sales came in at $94.2 billion, up 5.3% operationally, despite a significant drag from STELARA losing exclusivity. Management made it clear that if you strip out STELARA entirely, the underlying business actually grew at a double-digit pace, which helps explain the confidence found on the earnings call.

For Q4, revenue reached $24.6 billion, up just over 7% operationally, with growth in both the U.S. and international markets. Earnings improved quite nicely as well, with adjusted EPS growing more than 20% year over year.

On the pharmaceutical side, momentum continues to shift toward newer growth drivers with oncology as the backbone of the portfolio.

DARZALEX continues to perform like a true franchise drug, growing more than 20% for the year and now generating over $14 billion in annual sales. CARVYKTI, the company’s CAR-T therapy for multiple myeloma, is scaling rapidly as manufacturing capacity expands, while newer assets like TECVAYLI and TALVEY are adding depth to the multiple myeloma lineup.

Immunology certainly had its highs and lows. STELARA sales saw another big decline (over 1,000 bp) as biosimilars entered the market, but TREMFYA is clearly emerging as the next growth engine.

TREMFYA posted more than 60% growth in the quarter, driven largely by its success in inflammatory bowel disease, and management now sees it as a potential $10 billion-plus product over time.

They also reiterated excitement around ICOTYDE, an oral IL-23 therapy expected to launch in 2026, which they believe could expand the market beyond injectable treatments.

Neuroscience continues to put up strong numbers for the company. SPRAVATO delivered solid growth again, with rising adoption for treatment-resistant depression, and CAPLYTA is off to a fast start following its approval as an adjunctive therapy for major depressive disorder.

MedTech also pulled its weight in Q4. Revenue grew nearly 6% operationally, led by Cardiovascular, Surgery, and Vision.

Cardiovascular was the standout, with strong adoption of Abiomed’s Impella devices and continued growth at Shockwave, which has now become a billion-dollar platform.

Electrophysiology remains competitive, but management pushed back on concerns that the business is falling behind, pointing to accelerating growth and increasing adoption of its VARIPULSE system.

Surgery grew a bit slower than some of the other areas, weighed down by pricing pressure and procurement programs in China, but Johnson & Johnson continues to invest heavily in robotics.

The OTTAVA surgical system and the MONARCH platform are long-term bets that management believes can materially change the growth profile of the segment later this decade.

Vision delivered steady results, with contact lenses and premium intraocular lenses both performing well, reinforcing Vision as one of MedTech’s more consistent growth areas.

Now getting a bit deeper into the financials, the company generated nearly $20 billion in free cash flow in 2025 (pretty flat YoY), even while increasing capital investment and absorbing tariff costs. Johnson & Johnson ended the year with a strong balance sheet and expects free cash flow to rise to around $21 billion in 2026.

That level of cash generation supports continued investment in R&D and acquisitions while also supporting the dividend, which management repeatedly framed as a priority without signaling any concerns about sustainability.

Guidance for 2026 calls for operational sales growth between 5.7% and 6.7%, with revenue expected to cross the $100 billion mark. Adjusted earnings per share are projected to grow in the mid-single digits, with some margin expansion despite higher tariffs and continued investment spending.

With all of that said, the company also made sure to address some headwinds. STELARA erosion will continue, though off a smaller base, and a few other products may face generic competition beginning in 2026.

Tariffs are expected to weigh more heavily on MedTech margins this year, and pricing pressure in China remains an ongoing headwind.

The talc litigation also came up quite a bit, with management reiterating its intent to aggressively defend the company and stressing that it does not change their financial strategy.

Overall, this was a great quarter for the company. Johnson & Johnson is clearly trying to change the narrative around its growth profile, positioning itself less as a slow-and-steady stalwart and more as a diversified innovator with multiple engines firing at once.

Whether that plays out exactly as planned will depend on execution, but coming out of 2025, I wouldn’t bet against Johnson & Johnson.

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