Johnson & Johnson Raises 2026 Sales Outlook After Talc Charge
The company lifted estimated reported sales to $101.2 billion at the midpoint and adjusted EPS to $11.10, while third-quarter GAAP earnings were $0.09 a share.
Johnson & Johnson (JNJ) raised its 2026 sales outlook after a third quarter in which reported growth slowed to 5.9% and a one-time talc charge collapsed GAAP earnings to $0.09 a share.
The health care company now estimates full-year 2026 reported sales of $101.0 billion to $101.4 billion, or 7.2% to 7.6% growth, versus $100.8 billion to $101.4 billion, or 7.0% to 7.6%, in July. Adjusted EPS guidance moved to $11.05 to $11.15, or 2.4% to 3.3% growth, from $10.96 to $11.11, or 1.6% to 3.0%.
Chairman and Chief Executive Officer Joaquin Duato said the company’s “strong third-quarter performance and increased sequential growth reflect the accelerating momentum of our focused portfolio.”
Reported sales were $25.399 billion, up 5.9% from $23.993 billion a year earlier. Operational growth was 6.0% and adjusted operational growth was 6.1%. Net earnings were $210 million, down 95.9% from $5.152 billion. The $0.09 EPS reflected a special charge for the proposed talc litigation resolution, the Firefly Bio acquisition, and a Sail Biomedicines collaboration. Adjusted EPS was $2.59, down 7.5% from $2.80. Adjusted net earnings were $6.339 billion.
The pre-tax litigation-related adjustment was $5.519 billion, versus $15 million a year earlier. Other (income) expense, net, swung to a $5.780 billion expense from $478 million of income. Gross profit margin was 68.1%. Research and development expense rose 26.7% to $4.652 billion, or 18.3% of sales, and included $339 million of in-process R&D impairments. Estimated free cash flow was about $15.100 billion.
U.S. sales were $14.959 billion, up 9.1% on a reported, operational, and adjusted operational basis. International sales were $10.440 billion, up 1.5% reported, 1.8% operational, and 1.9% adjusted operational. Europe sales were $5.405 billion. Western Hemisphere excluding the U.S. was $1.385 billion. Asia-Pacific and Africa were $3.650 billion.
Innovative Medicine sales were $16.757 billion, up 7.7% reported, 7.9% operational, and 8.0% adjusted operational. Growth was driven by TREMFYA and new products in Other in Immunology, DARZALEX, CARVYKTI, TECVAYLI, RYBREVANT/LAZCLUZE, and ERLEADA in Oncology, and SPRAVATO and CAPLYTA in Neuroscience, partially offset by STELARA (an approximate 690-basis-point impact), SIMPONI/SIMPONI ARIA, and REMICADE in Immunology, OPSUMIT/OPSYNVI in Pulmonary Hypertension, and IMBRUVICA in Oncology. U.S. Innovative Medicine sales were $10.447 billion. International Innovative Medicine sales were $6.310 billion.
MedTech sales were $8.642 billion, up 2.5% on all three measures. Growth was driven by electrophysiology products and Shockwave in Cardiovascular, contact lenses in Vision, and trauma in Orthopaedics. U.S. MedTech sales were $4.512 billion. International MedTech sales were $4.130 billion.
The company received U.S. market authorization for OTTAVA, which it described as the world’s first table-integrated soft tissue robotic system, FDA approval of IMAAVY for warm autoimmune hemolytic anemia, and FDA priority review for RYBREVANT FASPRO in advanced head and neck cancer. It also completed the Firefly Bio acquisition and announced a Sail Biomedicines collaboration on in vivo CAR-T programs.
Restructuring expense was $181 million. A supply-chain program in Innovative Medicine is expected to cost $650 million to $750 million through 2029. Surgery-franchise restructuring in MedTech is expected to finish by the end of 2026. Orthopaedics separation-related costs were $369 million.
Duato said the progress and strategic investments “give us clearer line of sight to double-digit growth by the end of the decade.”