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Introduction & Market Context
Johnson & Johnson (NYSE:JNJ) presented its third-quarter 2025 results on October 14, showcasing robust performance across most business segments. The healthcare giant reported significant earnings growth and raised its full-year guidance while announcing plans to separate its Orthopaedics business to sharpen strategic focus.
Following the earnings release, J&J’s stock showed mixed reactions, initially rising 0.58% in pre-market trading to $192 but declining 1.65% during regular trading hours to close at $190.9, according to market data.
The company’s presentation highlighted a "powerful new era of accelerated growth" as it continues to advance its pharmaceutical pipeline and MedTech innovations.
Quarterly Performance Highlights
Johnson & Johnson reported worldwide sales of $24.0 billion for Q3 2025, representing a 6.8% reported increase and a 5.4% operational increase year-over-year. The company’s diluted earnings per share (EPS) surged 91.0% to $2.12, while adjusted diluted EPS grew 15.7% to $2.80, exceeding analyst expectations of $2.76.
As shown in the following financial highlights chart comparing Q3 2025 to Q3 2024 performance:
The substantial 91.2% increase in GAAP earnings from $2.7 billion in Q3 2024 to $5.2 billion in Q3 2025 demonstrates the company’s strong operational execution. U.S. sales grew 6.2% to $13.7 billion, while international sales increased 7.6% on a reported basis and 4.4% operationally to $10.3 billion.
The regional breakdown of Q3 2025 sales shows growth across all markets:
"We are in a new era of accelerated growth at Johnson & Johnson," stated CEO Joaquin Duato during the presentation, emphasizing the company’s momentum and strategic focus on innovation.
Segment Performance Analysis
Johnson & Johnson’s Innovative Medicine segment, which accounts for approximately 65% of total sales, generated $15.6 billion in Q3 2025, up 6.8% on a reported basis and 5.3% operationally. The segment’s performance was driven by strong growth in Oncology and Neuroscience, partially offset by declines in Immunology due to Stelara headwinds.
The following chart illustrates the Innovative Medicine sales breakdown by therapeutic area:
Oncology emerged as the standout performer with sales of $6.5 billion, up 21.3% reported and 19.2% operationally, driven by strong demand for Darzalex, Erleada, and Carvykti. Neuroscience also showed impressive growth at 15.3% reported and 14.6% operationally, reaching $2.0 billion, fueled by Caplyta and Spravato.
However, Immunology sales declined 9.8% reported and 10.6% operationally to $4.2 billion, primarily due to Stelara facing biosimilar competition, which impacted growth by approximately 1,070 basis points.
The MedTech segment delivered $8.4 billion in sales, increasing 6.8% on a reported basis and 5.6% operationally, with growth across all categories:
Cardiovascular led MedTech growth with a 12.6% reported increase (11.6% operational) to $2.2 billion, driven by Electrophysiology, Abiomed, and Shockwave. Vision and Orthopaedics also showed solid performance, growing 7.7% and 3.8% on a reported basis, respectively.
Strategic Initiatives
A key strategic announcement during the presentation was Johnson & Johnson’s plan to separate its Orthopaedics business, which generated $2.3 billion in Q3 2025 sales. The company indicated this separation would strengthen J&J’s focus on its core businesses while positioning DePuy Synthes for long-term success as a standalone entity.
The separation process is expected to take approximately 18-24 months to complete, with the company emphasizing that this represents "the best path forward for all stakeholders."
The presentation also outlined Johnson & Johnson’s capital allocation strategy, prioritizing organic growth investments followed by strategic M&A, competitive dividends, and share repurchases:
In Q3 2025, J&J invested $3.7 billion in R&D ($10.4 billion year-to-date) and distributed $3.1 billion in dividends ($9.3 billion year-to-date). The company reported approximately $19 billion in cash and marketable securities, with net debt of around $27 billion.
Forward-Looking Statements
Johnson & Johnson raised its full-year 2025 guidance, now projecting adjusted operational sales growth of 3.5% to 4.0%, up from the previous guidance of 3.2% to 3.7%. The company expects reported sales between $93.5 billion and $93.9 billion, with adjusted EPS in the range of $10.63 to $10.73.
The updated 2025 P&L guidance compared to previous projections:
Looking ahead to 2026, Johnson & Johnson anticipates accelerating sales growth in both Innovative Medicine and MedTech segments. For Innovative Medicine, the company expects continued erosion from Stelara but highlighted potential growth from new product approvals, including icotrokinra. In MedTech, J&J anticipates continued adoption of newer products and planned launches in 2026, including the expected OTTAVA de Novo submission.
The company’s Innovative Medicine pipeline shows numerous potential approvals, submissions, and clinical data presentations for 2025:
During the earnings call Q&A session, analysts inquired about the Orthopaedics spin-off strategy and growth potential of key products. Management emphasized the company’s commitment to research and development and maintaining a competitive edge through innovation, reinforcing confidence in J&J’s organic growth strategy without requiring large mergers and acquisitions.
Full presentation:
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