Johnson & Johnson

Worldwide sales were $25.3 billion, up 5.6% operationally, with U.S. sales up 7.3% and outside the U.S. up 3.4%. Net earnings were $5.5 billion and diluted EPS was $2.27 versus $2.29 a year ago; adjusted net earnings were $7.1 billion and adjusted diluted EPS was $2.90, up 5.7% and 4.7%, respectively. Innovative Medicine sales were $16.4 billion, up 6.8%, and MedTech sales were $8.9 billion, up 3.6%. For full-year 2026, J&J raised operational sales growth guidance to 6.5%-7.1% and reported sales growth to 7.0%-7.6%, with midpoint sales of $100.6 billion operationally and $101.1 billion reported. Adjusted operational EPS was raised to $11.50-$11.65 and reported EPS to $11.60-$11.75. The company now expects approximately 75 bps improvement in adjusted pre-tax operating margin, net interest expense of $250 million-$300 million, a full-year tax rate of 17.0%-18.0%, and free cash flow approaching $21 billion.

Joaquin Duato framed the quarter as proof that J&J is delivering on its plan for accelerated growth in 2026, citing a top-line and bottom-line beat and raised guidance. He emphasized the breadth of the portfolio, saying the company has 28 products and platforms each with more than $1 billion in annual sales, and pointed to new launches like ICOTYDE, INLEXZO, and RYBREVANT as reasons for confidence into 2027 and beyond. His tone was upbeat and confident, with repeated references to double-digit growth by the end of the decade and leadership in oncology, immunology, neuroscience, cardiovascular, surgery, and vision.

Joe Wolk said the quarter was supported by the in-market portfolio and new product launches, and noted that despite headwinds the company still exceeded expectations. He said J&J ended Q2 with about $21 billion of cash and marketable securities and about $49 billion of debt, for net debt of about $28 billion, and generated about $8.7 billion of year-to-date free cash flow, remaining on track for full-year free cash flow approaching $21 billion. He also outlined capital allocation priorities: invest in launches and R&D, pursue selective acquisitions like Firefly Bio, and return capital mainly through the dividend. On guidance, he highlighted a $400 million increase in operational sales guidance, a roughly $100 million negative FX change versus prior guidance, a higher expected adjusted pre-tax margin improvement of about 75 bps, and raised adjusted operational EPS guidance to $11.50-$11.65.

Analysts focused on how much of the raised sales outlook came from Pharma versus MedTech, and Joe Wolk said that was a fair read: Pharma is benefiting from early launches and TREMFYA strength, while MedTech should improve in the second half even though Abiomed growth is tempered. Questions on ICOTYDE and INLEXZO centered on launch metrics, prescriber counts, payer coverage, and how the products fit alongside existing psoriasis and bladder cancer therapies; management cited 11,000 patients on ICOTYDE, 6,000 unique prescribers, over 50% commercial coverage within 90 days, and INLEXZO being used by 1 in 3 eligible patients with new patient insertions up 75% quarter over quarter. Analysts also pressed on Abiomed softness and procedure trends; Tim Schmid attributed the weakness to physician selectivity after a neutral U.K. study, said the issue is behavioral not structural, and stressed that J&J is not seeing a broad-based slowdown in procedures.