Johnson & Johnson Raises 2026 Outlook as Q3 Sales Rise 5.9%

Johnson & Johnson (NYSE: JNJ) tightened and increased its full-year 2026 sales and adjusted earnings guidance after third-quarter revenue rose 5.9%, supported by oncology, neuroscience and new product launches. Adjusted profit declined, however, while a one-time charge related to the proposed talc litigation resolution sharply reduced GAAP earnings.

Worldwide sales reached $25.4 billion in the quarter ended in 2026, up from $24.0 billion a year earlier. Operational sales, which exclude translational currency effects, grew 6.0%, including an approximately 420-basis-point headwind from STELARA.

Adjusted net earnings fell 6.8% to $6.34 billion, and adjusted diluted earnings per share declined 7.5% to $2.59. On a GAAP basis, net earnings dropped 95.9% to $210 million, while diluted EPS fell to $0.09 from $2.12. The GAAP results included a one-time special charge tied to the proposed talc litigation resolution, as well as expenses associated with the acquisition of Firefly Bio and a strategic collaboration with Sail Biomedicines.

Research and development expense increased 26.7% to $4.65 billion. Gross margin narrowed to 68.1% of sales from 69.6%, while adjusted earnings before taxes declined 9.1% to $7.67 billion.

Innovative Medicine growth offsets STELARA pressure

Innovative Medicine sales increased 7.7% to $16.76 billion, or 7.9% operationally, despite an approximately 690-basis-point drag from STELARA. Adjusted operational growth, which also excludes acquisitions and divestitures, was 8.0% worldwide.

Oncology sales rose 16.7% operationally to $7.60 billion. Johnson & Johnson attributed the performance to share gains and market growth for DARZALEX, site expansion for CARVYKTI, and uptake of TECVAYLI, TALVEY and the RYBREVANT-LAZCLUZE combination. ERLEADA also benefited from continued share gains, while IMBRUVICA declined amid competitive pressure and an unfavorable patient mix.

Neuroscience sales advanced 17.6% operationally to $2.38 billion. SPRAVATO benefited from physician adoption and increased patient demand, while CAPLYTA maintained momentum following its launch in adjunctive major depressive disorder and continued demand in bipolar disorder and schizophrenia.

Immunology sales declined 9.6% operationally to $4.22 billion. STELARA was affected by biosimilar competition and greater adoption of newer treatment classes, while REMICADE and SIMPONI also faced share losses and biosimilar pressure. TREMFYA continued to gain share across its indications, including momentum in inflammatory bowel disease, and launches of IMAAVY and ICOTYDE contributed in the U.S.

Innovative Medicine’s adjusted segment income before tax fell 14.0% to $5.93 billion. The segment’s R&D expense increased 32.1% to $3.89 billion, including expenses related to the Firefly Bio acquisition.

MedTech posts modest growth

MedTech sales rose 2.5% on both a reported and operational basis to $8.64 billion. Adjusted segment income before tax increased 12.1% to $1.98 billion, with gross margin improving to 64.1% from 63.0%.

Cardiovascular sales grew 4.1% operationally to $2.31 billion. Electrophysiology benefited from procedure growth, commercial execution and new products, while Shockwave delivered double-digit growth. Abiomed declined because of lower patient volumes, partly offset by continued adoption of the Impella 5.5 heart pump.

Vision sales increased 5.1% operationally to $1.46 billion, supported by the ACUVUE OASYS 1-Day family, premium intraocular lenses and recent product launches. Orthopaedics sales rose 3.4% operationally to $2.35 billion as new hip, knee and trauma products supported growth.

Surgery sales declined 1.0% operationally to $2.53 billion. The company cited volume-based procurement in China, its surgery transformation program, Middle East disruptions and competitive pressure. Separately, the U.S. Food and Drug Administration granted De Novo authorization to the OTTAVA robotic surgical system for 10 general surgery procedures. Johnson & Johnson said it had signed the system’s first commercial customer, while an inguinal hernia trial remained in progress.

Full-year outlook increased and narrowed

Johnson & Johnson now expects 2026 operational sales of $100.5 billion to $100.9 billion, representing growth of 6.7% to 7.1%. The midpoint increased by $0.1 billion from the July outlook. Estimated reported sales are projected at $101.0 billion to $101.4 billion, with an expected $0.5 billion positive currency impact.

The company increased and tightened its adjusted operational EPS forecast to $10.95 to $11.05, representing growth of 1.5% to 2.4%. Adjusted reported EPS is expected to be $11.05 to $11.15. The midpoint of each EPS range increased by $0.06.

Management expects adjusted pretax operating margin to decrease by approximately 60 basis points, compared with a roughly 75-basis-point decline in the previous outlook. The company also narrowed its expected effective tax rate to 17.0% to 17.5%.

Johnson & Johnson reported approximately $15 billion of estimated free cash flow as of Oct. 13, along with $17 billion in cash and marketable securities and $45 billion in debt. It invested $4.7 billion in R&D during the quarter and paid $3.2 billion in dividends.

The outlook remains subject to clinical and regulatory uncertainty, competition and patent expirations, currency and interest-rate movements, manufacturing and supply-chain challenges, litigation and government action. The company also identified execution of its planned Orthopaedics separation and realization of the anticipated benefits as sources of uncertainty.