01—Abstract
Summary
Summary of the 10-Q filed April 22, 2026. Cited figures are marked; the original filing is the authoritative source.
Johnson & Johnson reported strong top-line growth in its first fiscal quarter of 2026, with total sales reaching $24.1 billiona, a 9.9% increase year-over-year.
This growth was driven by a robust 11.2% increase in the Innovative Medicine segment and a 7.7% increase in the MedTech segment. The company benefited from a 6.4% operational growth and a positive 3.5% currency impact, with acquisitions contributing an additional 1.1% to the operational sales growth. Despite this top-line strength, net earnings saw a significant decrease to $5.2 billionb from $11.0 billion in the prior year's first quarter, largely due to the reversal of a $7.0 billion talc reserve in the prior year.
Key drivers for the Innovative Medicine segment included strong performance in oncology, with products like DARZALEX and CARVYKTI showing substantial growth, although the Immunology segment faced headwinds from biosimilar competition for STELARA, leading to an 11.8%c operational decline in that sub-segment. The MedTech segment demonstrated broad-based growth across its Cardiovascular, Surgery, Vision, and Orthopaedics franchises, signaling continued momentum in medical device and technology offerings. While operational performance was solid, the company's effective tax rate decreased significantly to 12.6% from 19.3% year-over-year, partly due to tax benefits related to equity compensation programs.
02—Key points
Key Highlights
- Worldwide sales increased by 9.9% to $24.1 billion in Q1 2026, driven by strong performance in both Innovative Medicine and MedTech segments.
- Innovative Medicine segment sales grew by 11.2% to $15.4 billion, with oncology products like DARZALEX and CARVYKTI showing particularly strong growth.
- MedTech segment sales increased by 7.7% to $8.6 billion, with growth across all major franchises including Cardiovascular, Surgery, Vision, and Orthopaedics.
- Net earnings decreased to $5.2 billion from $11.0 billion in the prior year's quarter, largely due to the absence of a significant talc reserve reversal recorded in Q1 2025.
- The effective income tax rate decreased to 12.6% in Q1 2026 from 19.3% in Q1 2025, benefiting from tax advantages related to equity compensation.
- The company is proceeding with its plan to separate its Orthopaedics business, exploring various strategic options for completion within 18-24 months.
- Cash and cash equivalents increased by $2.0 billion to $21.7 billion, supported by positive operating cash flows.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2026filed April 22, 2026Financial Statements
Q1 FY2026 against Q1 FY2025
| Line item | Q1 FY2026Q1 FY2025 | Change |
|---|---|---|
| Revenue | $24.06B$21.89B | +9.9% |
| Cost of Revenue | $8.11B$7.36B | +10.2% |
| Gross Profit | $15.96B$14.54B | +9.8% |
| SG&A Expenses | $6.03B$5.11B | +18.0% |
| Net Income | $5.24B$11.00B | −52.4% |
| EPS (Basic) | $2.17$4.57 | −52.5% |
| EPS (Diluted) | $2.14$4.54 | −52.9% |
| Shares Outstanding (Basic) | 2.41B2.41B | +0.1% |
| Shares Outstanding (Diluted) | 2.45B2.42B | +0.9% |
05—Questions
Frequently Asked Questions
What was the primary driver for the significant decrease in net earnings compared to the previous year?
The substantial decrease in net earnings from $11.0 billion in Q1 2025 to $5.2 billion in Q1 2026 was primarily due to the absence of a $7.0 billion talc reserve reversal that was recognized in the prior year's first quarter. Excluding this one-time item, operational performance would show a different trend.
How is the STELARA biosimilar competition impacting Johnson & Johnson's performance?
The biosimilar competition for STELARA is having a significant negative impact, particularly on the Innovative Medicine segment. In Q1 2026, the sales decline of STELARA due to biosimilar competition represented approximately 9.2% of worldwide Innovative Medicine segment operational sales, leading to an overall operational decline of 11.8% in the Immunology sub-segment.
What is the outlook for the planned separation of the Orthopaedics business?
Johnson & Johnson announced its intention to separate its Orthopaedics business in October 2025 and is currently exploring multiple strategic paths. The company targets a completion of this separation within 18 to 24 months from the announcement date.
How has the company's debt position changed, and what is its liquidity situation?
The company's total debt (notes payable and long-term debt) increased to approximately $55.0 billion as of March 29, 2026, from $52.3 billion in the prior year, resulting in a net debt position of $32.9 billion. Despite this increase in debt, the company maintains a strong liquidity position with $21.7 billion in cash and cash equivalents and access to credit facilities and commercial paper markets to fund its operations and other obligations, including ongoing litigation reserves.
06—Continue