Johnson & Johnson Raises Outlook as Adjusted Earnings Rebound
The health-care products maker lifted its 2026 adjusted-earnings forecast to $11.68 a share.
Johnson & Johnson (JNJ), the health-care products maker, returned adjusted earnings to growth in the second quarter as sales rose 6.6% from a year earlier.
Underlying sales momentum strengthened even as reported growth slowed from 9.9% in the prior quarter. Adjusted operational growth accelerated to 5.7% from 5.3%, while currency contributed one percentage point to reported growth, down from 3.5 points.
Revenue increased to $25.31 billion from a year earlier and rose 5.2% sequentially. GAAP net earnings were nearly flat at $5.53 billion, while diluted earnings fell 0.9% to $2.27 a share. Adjusted net earnings rose 5.7% to $7.08 billion, reversing the prior quarter's decline, and adjusted earnings increased 4.7% to $2.90 a share.
Innovative Medicine remained the faster-growing segment, with sales up 7.8% and operational growth of 6.8%. The drag from STELARA eased to about 7.6 percentage points from 9.2 points in the prior quarter, helping the business improve from 4.9% reported growth a year earlier as acquisition support largely rolled off.
MedTech sales rose 4.5%, slowing from 7.7% in the prior quarter, while operational growth eased to 3.6% from 4.6%. International reported growth slowed to 5.7% as the currency contribution fell sharply, though international operational growth slipped only modestly to 3.4%.
Gross margin widened 0.3 percentage point to 68.2% as product costs grew more slowly than sales. The benefit did not carry through to the bottom line: the GAAP pretax margin contracted to 26.7% as selling and marketing expenses outpaced revenue growth, other expense increased and the effective tax rate rose.
Johnson & Johnson now expects 2026 reported sales of $100.8 billion to $101.4 billion, raising the midpoint by $300 million to $101.1 billion. It also expects adjusted earnings of $11.43 to $11.93 a share, with the midpoint up $0.13 from its previous forecast.
The company began an Innovative Medicine supply-chain restructuring program targeting exits from certain manufacturing locations by the end of 2029, with estimated costs of $650 million to $750 million. It recorded $200 million of related expense in the quarter, while estimated first-half free cash flow rose about 40% to $8.7 billion.