Johnson & Johnson JNJ · USD

Segments of business and geographic areasFollowing the separation of the Consumer Health business in the fiscal third quarter of 2023, the Company is now organized into two reportable segments: Innovative Medicine and MedTech. The Company’s chief operating decision maker (CODM) is the Chief Executive Officer (Principal Executive Officer). For the Innovative Medicine and MedTech segments, the CODM uses segment income before tax to allocate resources (including employees, financial, and capital resources) for each segment predominantly in the annual forecasting process. The CODM considers planning-to-actual variances on a quarterly basis to assess performance and make decisions about allocating resources to the segments. Sales to Customers % Change(Dollars in Millions)202520242023’25 vs. ’24’24 vs. ’23INNOVATIVE MEDICINEOncologyU.S.$13,65910,8548,46225.8 %28.3 International11,7219,9269,19918.1 7.9 Worldwide25,38020,78117,66122.1 17.7 CARVYKTIU.S.1,49286946971.6 85.2 International3959430**Worldwide1,88796350095.9 92.7 DARZALEXU.S.8,2666,5885,27725.5 24.8 International6,0855,0824,46719.7 13.8 Worldwide14,35111,6709,74423.0 19.8 ERLEADAU.S.1,4531,2821,06513.4 20.3 International2,1211,7171,32223.5 29.8 Worldwide3,5742,9992,38719.2 25.6 IMBRUVICAU.S.8921,0201,051(12.5)(3.0)International1,9312,0182,214(4.3)(8.8)Worldwide2,8233,0383,264(7.1)(6.9)RYBREVANT/ LAZCLUZE(1)U.S.53425766**International2007027**Worldwide73432793**TALVEY(2)U.S.3402415640.9 *International123467**Worldwide4632876361.3 *TECVAYLIU.S.4444183346.3 25.3 International2261316172.8 *Worldwide67054939522.1 38.8 Sales to Customers % Change(Dollars in Millions)202520242023’25 vs. ’24’24 vs. ’23ZYTIGA /abiraterone acetateU.S.233450(33.2)(32.2)International480597837(19.7)(28.6)Worldwide502631887(20.4)(28.8)OTHER ONCOLOGYU.S.2141459347.5 55.9 International162172235(6.0)(26.8)Worldwide37631732818.5 (3.4)ImmunologyU.S.9,87211,35511,539(13.1)(1.6)International5,8566,4736,513(9.5)(0.6)Worldwide15,72817,82818,052(11.8)(1.2)REMICADEU.S.1,1711,0091,14316.0 (11.7)U.S. Exports7498147(24.8)(33.0)International5234975495.3 (9.5)Worldwide1,7681,6051,83910.2 (12.8)SIMPONI / SIMPONI ARIAU.S.1,1931,0821,12410.3 (3.8)International1,4751,1081,07333.1 3.3 Worldwide2,6682,1902,19721.8 (0.3)STELARAU.S.3,8476,7206,966(42.7)(3.5)International2,2303,6413,892(38.7)(6.4)Worldwide6,07810,36110,858(41.3)(4.6)TREMFYAU.S.3,5292,4432,14744.5 13.7 International1,6261,22799932.5 22.8 Worldwide5,1553,6703,14740.5 16.6 OTHER IMMUNOLOGYU.S.

Income taxesThe provision for taxes on income on continuing operations consists of:(Dollars in Millions)202520242023Currently payable:U.S. taxes$1,1632,2002,705International taxes3,0762,6043,090Total currently payable4,2394,8045,795Deferred:U.S. taxes2,008(2,539)(3,440)International taxes(470)356(619)Total deferred1,538(2,183)(4,059)Provision for taxes on income$5,7772,6211,736Below is a tabular rate reconciliation of the U.S. statutory income tax rate of 21% to the Company's effective income tax rate for the fiscal year 2025, pursuant to the new disclosure requirements of ASU 2023-09 (See Note 1 of the Consolidated Financial Statements):(Dollars in Millions)2025U.S. $15,254International17,327Earnings before taxes on income:32,581Tax rates:U.S. federal statutory rate6,84221.0%State & local taxes:(1)1620.5 Foreign tax effects:(861)(2.7)IrelandStatutory tax rate difference between Ireland & U.S.(473)(1.5)Other(11)(0.0)SwitzerlandStatutory tax rate difference between Switzerland & U.S.(607)(1.9)Other2830.9 All Other Jurisdictions(53)(0.2)Effects of changes in tax laws or rates enacted in the current period: 1,0033.1 OBBBA Deferred NCTI Remeasurement1,0033.1 Effects of cross border tax laws:1,6014.9 NCTI(2)9993.1 Subpart F5221.6 Other800.2 Tax credits: (2,455)(7.6)NCTI foreign tax credits(2)(1,324)(4.1)Subpart F foreign tax credits(656)(2.0)All other tax credits(475)(1.5)Changes in valuation allowances:1360.4 Nontaxable or nondeductible items:550.2 Changes in unrecognized tax benefits:(111)(0.3)Other adjustments:(595)(1.8)Net tax benefit on ordinary losses(595)(1.8)Effective Rate$5,77717.7 %(1)Majority of state taxes are in the following states AL, CA, FL, IL, IN, KY, MA, MI, NJ, NY, PA, TN, VA, WI(2)NCTI includes $(0.6) billion of accrued benefits as the Company has elected to account for NCTI under the deferred method. (See Note 1 to the Consolidated Financial Statements)The fiscal year 2025 effective tax rate increased by 2.0% as compared to fiscal year 2024 effective tax rate.The increase in the worldwide effective tax rate is primarily due to the United States enacting OBBBA (see Note 1). As a result, the Company remeasured its deferred tax balances related to NCTI for the changes in the tax rate and recorded a one-time re-measurement cost of approximately $1.0 billion which is reflected in the effective tax rate table under effects of changes in tax laws or rates enacted in the current period.

Acquisitions and divestituresBusiness combinationsAcquisitions of a business are accounted for as business combinations applying the acquisition method of accounting. Under this method, the assets acquired and liabilities assumed are recorded at their respective fair values as of the acquisition date in the Company’s consolidated financial statements. The excess of the purchase price over the fair value of the acquired net assets, where applicable, is recorded as goodwill. The results of operations of these acquisitions have been included in the Company’s financial statements from their respective dates of acquisition.2025 TransactionsDuring the fiscal year 2025, the Company acquired Intra-Cellular Therapies, Inc. (Intra-Cellular) and Halda Therapeutics OpCo, Inc. (Halda Therapeutics) for a total of $17.5 billion, net of cash acquired.Halda TherapeuticsOn December 26, 2025, the Company completed the acquisition of Halda Therapeutics, a clinical-stage biotechnology company with proprietary Regulated Induced Proximity TArgeting Chimera (RIPTACTM) platform to develop oral, targeting therapies for multiple types of solid tumors, including prostate cancer, in an all-cash merger transaction for total consideration transferred of approximately $3.05 billion, net of cash acquired. The acquisition was accounted for as a business combination and the results of operations and goodwill are included in the Innovative Medicine segment as of the acquisition date. Included in the total consideration transferred is $0.2 billion of acquisition-related costs, primarily related to post-closing compensationexpense due to the acceleration of equity awards. This expense was recorded in Other (income) expense, net.The fair value of the assets acquired is $3.4 billion, which primarily relates to acquired in-process research and development (IPR&D) of $2.8 billion and goodwill of $0.6 billion. The fair value of the liabilities assumed is $0.6 billion, primarily related to deferred taxes. These values are preliminary and based on the best estimate of management, which is subject to change within the measurement period. The acquired in-process research and development includes two assets, HLD-0915 and HLD-0117, that are being studied to treat prostate cancer and breast cancer, respectively. The fair value of the IPR&D assets were calculated assuming a discount rate of 17% and 17.5%, respectively.

The Company has documented cybersecurity policies and standards, assesses risks from cybersecurity threats, and monitors information systems for potential cybersecurity issues. To protect the Company’s information systems from cybersecurity threats, the Company uses various security tools supporting protection, detection, and response capabilities. The Company maintains a cybersecurity incident response plan to help ensure a timely, consistent response to actual or attempted cybersecurity incidents impacting the Company. The Company also identifies and assesses third-party risks within the enterprise, and through the Company's use of third-party service providers, across a range of areas including data security and supply chain through a structured third-party risk management program. The Company maintains a formal information security training program for all employees that includes training on matters such as phishing and email security best practices. Employees are also required to complete mandatory training on data privacy.To evaluate and enhance its cybersecurity program, the Company periodically utilizes third-party experts to undertake maturity assessments of the Company’s information security program.To date, the Company is not aware of any cybersecurity incident that has had or is reasonably likely to have a material impact on the Company’s business or operations; however, because of the frequently changing attack techniques, along with the increased volume and sophistication of the attacks, there is the potential for the Company to be adversely impacted. This impact could result in reputational, competitive, operational or other business harm as well as financial costs and regulatory action. Refer to the risk factor captioned An information security incident, including a cybersecurity breach, could have a negative impact to the Company’s business or reputation in Part I, Item 1A. Risk factors for additional description of cybersecurity risks and potential related impacts on the Company.

BorrowingsThe components of long-term debt are as follows:(Dollars in Millions)2025 20242.625% Notes due 2025$—7500.55% Notes due 2025—9992.45% Notes due 20262,0001,9992.95% Notes due 20279689270.95% Notes due 20271,4991,4584.50% Notes due 2027(4)749—1.150% Notes due 2028 (750MM Euro 1.1785)(1)/(750MM Euro 1.0401)(2)8827772.90% Notes due 20281,4981,4984.55% Notes due 2028(4)748—6.95% Notes due 2029299 2984.80% Notes due 20291,1471,1462.70% Notes due 2029 (4) (600MM Euro 1.1785)(1)707—1.30% Notes due 20301,6931,6464.70% Notes due 2030(4)996—4.90% Notes due 20311,1461,1453.20% Notes due 2032 (700MM Euro 1.1785)(1)/($700MM Euro 1.0401)(2)8227254.85% Notes due 2032(4)1,243—4.95% Notes due 20334994994.375% Notes due 20338538543.05% Notes due 2033(4) ( 700MM Euro 1.1785)(1)823—4.95% Notes due 20348478461.650% Notes due 2035 (1.5B Euro 1.1785)(1)/(1.5B Euro 1.0401)(2)1,7581,5505.00% Notes due 2035(4)1,244—3.35% Notes due 2036 (800MM Euro 1.1785)(1)(800MM Euro 1.0401)(2)9388273.587% Notes due 20369198695.95% Notes due 2037995 9943.625% Notes due 20371,4091,3583.35% Notes due 2037(4) (1B Euro 1.1785)(1)1,176—5.85% Notes due 2038697 6973.40% Notes due 20389949934.50% Notes due 2040542 5412.10% Notes due 20408988454.85% Notes due 20412982974.50% Notes due 20434974963.55% Notes due 2044 (1B Euro 1.1785)(1)(1B Euro 1.0401)(2)1,1681,0303.60% Notes due 2045(4) (700MM Euro 1.1785)(1)819—3.73% Notes due 20461,9791,9783.75% Notes due 20478768223.50% Notes due 20487447442.25% Notes due 20508618085.25% Notes due 20548438433.70% Notes due 2055(4) (1B Euro 1.1785)(1)1,173—2.45% Notes due 20601,1121,058Other79 83Subtotal41,438(3)32,400(3)Less current portion2,000 1,749Total long-term debt$39,438 $30,651(1)Translation rate at December 28, 2025.(2)Translation rate at December 29, 2024.(3)The excess of the carrying value over the fair value of debt was $1.7 billion and $2.0 billion at the end of the fiscal year 2025 and the fiscal year 2024, respectively.(4)In the fiscal first quarter of 2025, the Company issued senior unsecured notes for approximately $9.2 billion. The net proceeds from this offering were used to fund the Intra-Cellular Therapies, Inc. acquisition which closed on April 2, 2025, and for general corporate purposes. Fair value of the long-term debt was estimated using market prices, which were corroborated by quoted broker prices and significant other observable inputs.The Company has access to substantial sources of funds at numerous banks worldwide.

Savings planThe Company has voluntary 401(k) savings plans designed to enhance the existing retirement programs covering eligible employees. The Company matches a percentage of each employee’s contributions consistent with the provisions of the plan for which the employee is eligible. Total Company matching contributions to the plans were $277 million, $282 million and $263 million in fiscal years 2025, 2024 and 2023, respectively.

RestructuringIn fiscal 2025, the company initiated a restructuring program of its Surgery franchise within the MedTech segment to simplify and focus operations by exiting certain non-strategic product lines and optimize select sites across the network. The pre-tax restructuring expense of $0.2 billion in the fiscal year 2025, primarily included costs related to asset impairments as well as product exits. The estimated costs of the total program are between $0.9 billion - $1.0 billion and is expected to be substantially completed by the end of fiscal year 2026. In fiscal 2023, the Company initiated a restructuring program of its Orthopaedics franchise within the MedTech segment to streamline operations by exiting certain markets, product lines and distribution network arrangements. The pre-tax restructuring expense of $0.3 billion in the fiscal year 2025 primarily included costs related asset impairments as well as market and product exits. The pre-tax restructuring expense of $0.2 billion in the fiscal year 2024 primarily included costs related to market and product exits. The pre-tax restructuring expense of $0.3 billion in the fiscal year 2023 primarily included inventory and instrument charges related to market and product exits. Total project costs of approximately $0.8 billion have been recorded since the restructuring was announced and the program has been substantially completed in the fiscal year 2025.In fiscal 2023, the Company completed a prioritization of its research and development (R&D) investment within its Innovative Medicine segment to focus on the most promising medicines with the greatest benefit to patients. This resulted in the exit of certain programs within certain therapeutic areas. The R&D program exits are primarily in infectious diseases and vaccines including the discontinuation of its respiratory syncytial virus (RSV) adult vaccine program, hepatitis and HIV development. Pre-tax Restructuring expenses of $0.1 billion in the fiscal year 2024 included the termination of partnered and non-partnered development program costs, asset impairments and asset divestments. Pre-tax Restructuring expenses of $0.5 billion in the fiscal year 2023 included the termination of partnered and non-partnered development program costs and asset impairments. Total project costs of approximately $0.6 billion have been recorded since the restructuring was announced and the program was completed in the fiscal fourth quarter of 2024.

Legal proceedingsJohnson & Johnson and certain of its subsidiaries are involved in various lawsuits and claims regarding product liability; intellectual property; commercial; indemnification and other matters; governmental investigations; and other legal proceedings that arise from time to time in the ordinary course of their business.The Company records accruals for loss contingencies associated with these legal matters when it is probable that a liability will be incurred, and the amount of the loss can be reasonably estimated. As of December 28, 2025, the Company has determined that the liabilities associated with certain litigation matters are probable and can be reasonably estimated. The Company has accrued for these matters and will continue to monitor each related legal issue and adjust accruals as might be warranted based on new information and further developments in accordance with ASC 450-20-25. For these and other litigation and regulatory matters discussed below for which a loss is probable or reasonably possible, the Company is unable to estimate the possible loss or range of loss beyond the amounts accrued. Amounts accrued for legal contingencies often result from a complex series of judgments about future events and uncertainties that rely heavily on estimates and assumptions including timing of related payments. The ability to make such estimates and judgments can be affected by various factors including, among other things, whether damages sought in the proceedings are unsubstantiated or indeterminate; scientific and legal discovery has not commenced or is not complete; proceedings are in early stages; matters present legal uncertainties; there are significant facts in dispute; procedural or jurisdictional issues; the uncertainty and unpredictability of the number of potential claims; ability to achieve comprehensive multi-party settlements; complexity of related cross-claims and counterclaims; and/or there are numerous parties involved. To the extent adverse awards, judgments or verdicts have been rendered against the Company, the Company does not record an accrual until a loss is determined to be probable and can be reasonably estimated.