01—Abstract
Summary
Summary of the 10-Q filed November 3, 2025. Cited figures are marked; the original filing is the authoritative source.
Kenvue Inc. reported net sales of $3.76 billiona for the fiscal three months ended September 28, 2025, down $135 million, or 3.5%, from $3.90 billion a year earlier.
Organic sales decreased 4.4%, driven by volume declines of 4.0% and unfavorable value realization of 0.4%, with shipment timing in China, trade inventory reductions in the United States, and lower seasonal incidence cited as drivers. Net income rose to $398 millionb from $383 million, helped by a lower tax provision, and diluted EPS was $0.21 versus $0.20. For the nine months, net sales were $11.34 billion (down 3.8%) and net income was $1.14 billion versus $737 million, which included a $578 million impairment charge in the prior-year period.
Segment adjusted operating income fell 7.1% for the nine months to $2.89 billionc, with Skin Health and Beauty down 24.7%. The most significant event is the Merger Agreement signed November 2, 2025 with Kimberly-Clark Corporation. Kenvue shareholders would receive 0.14625 shares of K-C common stock plus $3.50 in cash per share, with Kenvue holders expected to own about 46% of the combined company on a fully diluted basis.
The transaction is expected to close in the second half of 2026 and requires Kenvue shareholder approval, K-C shareholder approval, and U.S. antitrust and foreign regulatory clearances. The filing discloses a $1,136 milliond termination fee payable in certain circumstances. The filing also flags risks including the September 2025 federal acetaminophen statements and possible FDA label change, a Texas state lawsuit filed October 2025, and talc and other product litigation.
The Skin Health and Beauty reporting unit's fair value exceeded its carrying value by approximately 10%, and the filing notes that further deterioration could lead to a goodwill impairment. Total debt was $8.97 billion at quarter end, and cash and cash equivalents were $1.14 billion.
02—Key points
Key Highlights
- Q3 2025 net sales of $3.76 billion, down $135 million (3.5%) year over year; organic sales down 4.4% with volume down 4.0%.
- Q3 2025 net income of $398 million ($0.21 per diluted share) versus $383 million ($0.20) in Q3 2024; provision for taxes fell to $128 million from $194 million.
- Nine-month net sales of $11.34 billion, down 3.8%; nine-month net income of $1.14 billion versus $737 million, with the prior year including a $578 million impairment charge.
- Segment adjusted operating income for the nine months was $2.89 billion, down 7.1%; Skin Health and Beauty fell 24.7% to $378 million.
- Merger Agreement with Kimberly-Clark signed November 2, 2025: each Kenvue share converts into 0.14625 K-C shares plus $3.50 cash, with a $1,136 million termination fee in certain circumstances; closing expected in the second half of 2026.
- Acetaminophen developments in September 2025 may depress sales and could increase litigation risk, and a Texas state lawsuit was filed in October 2025.
- Quarterly dividend of $0.2075 per share declared October 29, 2025; cash and cash equivalents were $1.14 billion and total debt was $8.97 billion at September 28, 2025.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2025, Kenvue kept $0.11.
- Revenue$3.76B100.0%
- Cost of revenue−$1.54B40.9%
- Gross profit$2.23B59.1%
- Operating costs−$1.60B42.4%
- Operating income$629.0M16.7%
- Interest, other & tax−$231.0M6.1%
- Net income$398.0M10.6%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2025filed November 3, 2025Financial Statements
Q3 FY2025 against Q3 FY2024
| Line item | Q3 FY2025Q3 FY2024 | Change |
|---|---|---|
| Revenue | $3.76B$3.90B | −3.5% |
| Cost of Revenue | $1.54B$1.62B | −4.9% |
| Gross Profit | $2.23B$2.28B | −2.5% |
| R&D Expenses | $94.00M$97.00M | −3.1% |
| SG&A Expenses | $1.51B$1.59B | −4.9% |
| Operating Income | $629.00M$654.00M | −3.8% |
| Interest Expense | $107.00M$108.00M | −0.9% |
| Net Income | $398.00M$383.00M | +3.9% |
| EPS (Basic) | $0.21$0.20 | +5.0% |
| EPS (Diluted) | $0.21$0.20 | +5.0% |
| Shares Outstanding (Basic) | 1.92B1.92B | +0.2% |
| Shares Outstanding (Diluted) | 1.92B1.92B | −0.1% |
05—Questions
Frequently Asked Questions
What is the deal with Kimberly-Clark and what will shareholders receive?
Kenvue entered into a Merger Agreement on November 2, 2025 with Kimberly-Clark Corporation. Each Kenvue common share will be converted into 0.14625 shares of K-C common stock plus $3.50 in cash. Kenvue stockholders are expected to own about 46% of the combined company on a fully diluted basis, and K-C's board will add three Kenvue designees. The transaction is expected to close in the second half of 2026, subject to shareholder and regulatory approvals.
What drove the decline in third-quarter net sales?
Net sales fell 3.5% to $3.76 billion. Organic sales decreased 4.4%, with volume down 4.0% and value realization down 0.4%. The filing attributes the volume declines to shipment timing in China, trade inventory reductions driven by U.S. retailer inventory management, and lower seasonal incidence affecting pediatric Pain Care and Allergy. Unfavorable value realization reflected strategic price investments, primarily in Skin Health and Beauty.
Why did net income rise despite lower sales?
Third-quarter net income rose to $398 million from $383 million. Operating income fell to $629 million from $654 million, but the provision for taxes dropped to $128 million from $194 million, and the effective tax rate fell to 24.3% from 33.6%. The filing attributes the lower tax provision mainly to changes in the jurisdictional mix of income and favorable return-to-provision adjustments.
What are the main legal and regulatory risks disclosed?
The filing describes September 2025 U.S. federal statements that acetaminophen may be associated with neurological conditions and an FDA initiative to change the label, which may depress acetaminophen sales and increase litigation risk. In October 2025 Texas filed a petition alleging deceptive trade practices and fraudulent transfer, and new UK personal injury claims were filed over Johnson's Baby Powder. Kenvue says it cannot reasonably estimate potential liability for these matters. Talc liabilities in the U.S. and Canada are indemnified by J&J, while those outside those countries remain with Kenvue.
Is there a risk of goodwill impairment?
The Skin Health and Beauty reporting unit's estimated fair value exceeded its carrying value by approximately 10%, so no impairment was recorded in the quarter. The filing states that an increase of about 100 basis points in the discount rate would have resulted in an impairment charge. Further deterioration in sales, profitability, or market conditions could lead to a future goodwill impairment for this reporting unit.
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