Johnson & Johnson Raises Outlook as Sales Accelerate
Adjusted earnings fell 2.5% to $2.70 a share, putting margin pressure at the center of Johnson & Johnson's higher 2026 outlook.
Johnson & Johnson (JNJ), the diversified health-care company, raised its 2026 outlook after reported sales rose 9.9% to $24.1 billion, extending an acceleration from the year-earlier quarter even as profit narrowed.
The quarter showed stronger top-line momentum with a more mixed operating profile. Reported sales growth improved from 2.4% a year earlier and 9.1% in the fourth quarter, though sales slipped sequentially from $24.6 billion. Operational sales growth slowed to 6.4% from 7.1% in the prior quarter, and adjusted operational growth eased to 5.3% from 6.1%.
Adjusted earnings fell to $2.70 a share, reversing from 20.6% growth in the fourth quarter and 2.2% growth in the year-earlier period. GAAP earnings dropped 52.9% to $2.14 a share against a prior-year quarter that included a reversal of special charges.
Margin pressure came from operating costs rather than gross margin. Gross margin was essentially flat from a year earlier at 66.3% of sales, though it was down from 67.6% in the fourth quarter and 69.6% in the third quarter. Selling, marketing and administrative expense rose to 25.1% of sales from 23.3%, while research and development stayed flat at 14.7% of sales.
Innovative Medicine led the quarter, with sales up 11.2% reported and 7.4% operational, outpacing MedTech's 7.7% reported and 4.6% operational growth. Oncology was a major driver, with worldwide sales up 22.8% reported and DARZALEX sales up 22.5% reported; CARVYKTI U.S. sales rose 36.2%.
The STELARA drag eased to about 920 basis points on Innovative Medicine growth, compared with about 1,040 basis points for full-year 2025. MedTech had less acquisition help than it did last year, with deal activity reducing growth 0.1% after adding 1.1 percentage points to full-year 2025 growth, primarily from Shockwave.
Regional growth added another layer to the split. U.S. sales rose 8.3%, up from 7.5% in the fourth quarter and 5.9% a year earlier, while international reported sales rose 11.9% as foreign exchange helped reported results. Europe reported sales growth accelerated to 14.5%, aided by an 11.8-point currency benefit.
Johnson & Johnson raised its 2026 guidance from January, lifting the reported sales midpoint to $100.8 billion from $100.5 billion and the adjusted EPS midpoint to $11.55 from $11.53. The sales outlook implies 7.0% reported growth, above 2025's 6.0% growth, while the adjusted EPS outlook implies 7.1% growth, below 2025's 8.1% gain.
The company also disclosed a new $119 million adjustment tied to the planned separation of its Orthopaedics business, following the fourth-quarter announcement of that plan. It raised its quarterly dividend 3.1% to $1.34, a slower increase than last year's 4.8% lift.
Source: company public filings.