Johnson & Johnson Tops Q2 Estimates

Key Points

• Adjusted EPS reached $2.77 in Q2, topping estimates by $0.09, but fell year over year.

• Revenue rose 5.8% year over year to $23.7 billion, exceeding estimates by $889 million.

• Full-year 2025 sales and adjusted earnings guidance were both raised after notable pipeline and product progress.

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Johnson & Johnson (NYSE:JNJ), a global healthcare leader best known for its pharmaceutical, MedTech, and medical device portfolio, reported earnings for Q2 2025 on Wednesday, July 16, 2025, that topped analysts' consensus estimates. The company exceeded market expectations for both adjusted earnings and revenue, even as some non-GAAP profitability measures dipped from the prior year. Revenue was $23.7 billion, topping the analyst estimate of $22.85 billion, while adjusted EPS came in at $2.77 versus an estimated $2.68.

While the company’s operational strengths led to higher sales and the quarter saw progress in innovation and product launches, underlying profit growth slipped as the business faces patent expiries, higher costs, and mix pressures. Overall, the quarter was marked by strong sales momentum, multiple product and regulatory milestones, and a rosier outlook for the full year.

Source: Johnson & Johnson. Note: Analyst estimates provided by FactSet. YOY = Year over year.

Company Overview and Areas of Focus

Johnson & Johnson (NYSE:JNJ) develops, manufactures, and sells pharmaceutical drugs, medical devices, and MedTech products. Its operations span nearly every country, serving hospitals, doctors’ offices, and pharmacies worldwide. The company’s business is built on two main pillars: Innovative Medicine, which covers prescription drugs for diseases like cancer and autoimmune disorders, and MedTech, which includes medical equipment and technologies for surgery, orthopedics, vision, and cardiovascular care.

In recent years, the company has concentrated on strengthening its product pipeline and protecting patent exclusivity for key medicines. Maintaining a diverse product portfolio is essential to offset the impact of products losing exclusivity, such as STELARA (an immunology drug recently facing biosimilar competition). Johnson & Johnson’s future success relies on its ability to replace aging blockbusters with successful new launches, manage regulatory and cost challenges, and grow its market presence globally. Innovation and investment in research and development are at the heart of this effort.

Quarter Highlights: Revenue Growth and Key Product Updates

The quarter saw company-wide reported sales climb 5.8% year over year, beating expectations by $889 million. The stronger-than-expected revenue was supported by steady contributions from both the Innovative Medicine and MedTech divisions. Adjusted earnings per share did drop 1.8% year over year, most likely related to one-time expenses. GAAP EPS rose 18.7%.

U.S. sales paced the overall company, up 7.8% year over year in Q2, while international revenue increased 3.2%. Growth in the U.S. outstripped growth in global markets, partly offsetting macroeconomic and pricing headwinds abroad, especially from China’s medical device procurement programs.

In the Innovative Medicine division, sales increased 4.9%, with operational growth of 3.8%. Oncology drugs such as DARZALEX (an antibody for multiple myeloma), CARVYKTI (a CAR-T cell therapy for multiple myeloma), ERLEADA (prostate cancer treatment), and RYBREVANT/LAZCLUZE (lung cancer therapies) drove growth. Immunology products like TREMFYA (used for autoimmune diseases), as well as neuroscience drug SPRAVATO (for depression), also contributed. A material headwind was the ongoing decline of STELARA, which had an approximate 11.7% negative impact on Immunology revenue. Notably, the company is responding to this challenge by ramping up newer therapies, such as IMAAVY, which just received approval for the treatment of generalized myasthenia gravis, and TREMFYA, now launched for Crohn’s disease and ulcerative colitis.

MedTech sales rose 7.3% to $8.54 billion. Cardiovascular products, particularly electrophysiology devices and the Impella heart pump from the Abiomed acquisition, stood out as main drivers. General Surgery also benefited from new launches in wound closure. During the period, Johnson & Johnson began rolling out the OTTAVA robotic surgery system and introduced MedTech products such as ACUVUE OASYS MAX 1-Day Multifocal for Astigmatism (contact lenses), TECNIS Odyssey intraocular lens (for cataract surgery), and KINCISE 2 System (orthopedic power tool). Orthopedics remained a weaker spot, hit by pressure in the spine and sports segments and some one-offs in product timing and recognition, although new product launches are expected to help recovery in future periods.

On the regulatory and pipeline front, Johnson & Johnson achieved several important milestones, including FDA approval for IMAAVY in generalized myasthenia gravis and advances such as positive European Union opinions for its oncology assets (RYBREVANT for lung cancer, subcutaneous DARZALEX for multiple myeloma). Additionally, CARVYKTI presented strong five-year remission data in multiple myeloma, and new clinical data supported the expansion of both immunology and oncology franchises.

One-time and material financial impacts included a continued drop in adjusted free cash flow to about $6.2 billion, down from $7.5 billion a year ago. Tariff costs of around $400 million, concentrated in the MedTech segment and largely linked to tariffs on U.S. exports to China, also weighed on results. These tariff impacts appear as higher costs of goods and will continue to show up on the financial statements in coming quarters.

Dividends remain an essential element for holders of Johnson & Johnson shares. Johnson & Johnson declared its sixty-third consecutive annual dividend increase in April. The quarterly dividend held steady this quarter at $1.30 per share, offering a yield of 3.2%.

Looking Forward: Guidance and What to Watch

Management lifted its outlook for full-year 2025 after the quarter’s results. The sales guidance midpoint rose by $2 billion, putting the new outlook at $93.4 billion, or a 5.4% increase from the prior year, for estimated FY2025 reported sales. The adjusted operational EPS target was also raised to a new midpoint of $10.68, representing 7% year-on-year growth. These improvements reflect both foreign exchange benefits and better-than-expected product growth in key areas.

Notably, the company did not provide full-year guidance under standard accounting rules due to uncertainty around legal and acquisition-related expenses. Executives also signaled that while strong new product launches are expected to help offset branded drug patent losses and cost inflation, continued pressure from tariffs, margin mix, and competitive dynamics in orthopedics require close monitoring. For investors and observers, the pace at which new medications such as TREMFYA and CARVYKTI can replace declining revenue from older drugs, along with the ability to manage costs as tariffs ramp, will be crucial factors to watch.

Note: Revenue and net income are presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

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JesterAI is a Foolish AI, based on a variety of Large Language Models (LLMs) and proprietary Motley Fool systems. All articles published by JesterAI are reviewed by our editorial team, and The Motley Fool takes ultimate responsibility for the content of this article. JesterAI cannot own stocks and so it has no positions in any stocks mentioned. The Motley Fool recommends Johnson & Johnson. The Motley Fool has a disclosure policy.