Johnson & Johnson (JNJ) Q3 2026 earnings review
Johnson & Johnson's drug sales climb, but acquisitions cut profit
Johnson & Johnson's medicines business is speeding up while its medical-device sales lose pace. Sales rose 6%, led by cancer drugs and Tremfya, a treatment for psoriatic arthritis and bowel disease. Profit per share excluding one-offs fell 7.5% because of the cost of two research deals, the company said. Chief executive Joaquin Duato raised the full-year sales outlook slightly.
| Sales growth excluding currency and deals | 6.1% 5.7% last quarter |
|---|---|
| Sales | $25.4B +5.9% from a year ago |
| Profit per share, excluding one-offs | $2.59 -7.5% from a year ago |
| Full-year sales outlook | Raised $0.1B middle of the range: $101.2B, 7.4% growth |
⚖️ Verdict: 🟢 Bullish
The story got better because the medicines business now outgrows the loss of Stelara, an older drug facing cheaper copies. Sales of its immune-disease drugs rose for the first time in at least a year. One caution: medical-device growth slowed to 2.5%, although its chairman had forecast a pickup.
The question now is whether the fourth quarter can supply what the full-year plan needs. By our math, that is about 9% growth excluding currency, well above any quarter this year. An extra calendar week may deliver it, or weak device sales may leave the plan short. January's results will settle it.
🐂 Bull Case
Tremfya Now Outweighs Stelara's Decline
Johnson & Johnson's immunology unit sells drugs for immune-system diseases such as psoriatic arthritis and inflammatory bowel disease. Its old bestseller, Stelara, is losing sales to cheaper copies known as biosimilars. Tremfya, the successor, has to replace that revenue.
This quarter the replacement worked for the first time in at least a year. Immunology sales rose 1.4% excluding currency, after a 4.6% fall three months earlier.
- Tremfya: $2.4 billion, up 68% from a year ago
- Stelara: $716 million, down 54%
- Other immunology drugs, led by new launches Imaavy and Icotyde: $147 million, against $12 million a year ago
- Stelara's cost to total sales growth: about 4.2 percentage points, down from 4.6 last quarter
This matters because the Stelara loss shrinks every quarter while Tremfya keeps adding revenue. The older drug has held near $700 million for three quarters, so the yearly comparison gets easier from here. Tremfya added $350 million since last quarter.
What to watch: immunology sales in the fourth quarter, due in January. A second quarter of growth would show that the Stelara loss no longer sets the unit's direction.
Cancer Drugs Stay Ahead of the 2030 Target
Chief executive Joaquin Duato has set a target of more than $50 billion in annual cancer-drug sales by 2030. By our math, that requires growth of about 14.5% a year. Oncology, the cancer-drug unit, grew 16.7% excluding currency this quarter.
- Darzalex, for multiple myeloma: $4.2 billion, up 15.6%
- Carvykti, a one-time infusion for multiple myeloma: $710 million, up 35%
- Tecvayli, also for multiple myeloma: $312 million, up 77%
- Imbruvica, an older drug: $563 million, down 18%
The newer medicines carry the unit, so the pace does not depend on one product. Imbruvica keeps losing share to rivals, the company said, but it is now under 8% of oncology sales.
What to watch: oncology growth in the fourth quarter. A rate below 14.5% would put the 2030 target behind schedule for the first time this year.
Positives this quarter didn't test
Three parts of the positive case got no new sales numbers this quarter. Each still rests on Johnson & Johnson's own statements more than on reported results.
- Growth above 10% by 2030: Duato said he has a "clearer line of sight to double-digit growth by the end of the decade"; the fourth-quarter growth rate is the first test.
- Icotyde, a new psoriasis tablet: its sales stay inside a line called Other Immunology; a separate figure would show the size of the launch.
- Rybrevant injection for head and neck cancer: the FDA granted a priority review; an approval decision would open a new market.
🐻 Bear Case
Medical-Device Growth Slowed Again, to 2.5%
"Johnson & Johnson’s strong third-quarter performance and increased sequential growth reflect the accelerating momentum of our focused portfolio," chief executive Joaquin Duato said. MedTech, the division that sells surgical tools, heart devices, implants and contact lenses, did not fit that description.
The division grew 2.5% excluding currency, down from 3.6% last quarter. Growth was 4.6% at the start of the year. Its chairman, Tim Schmid, told investors in July that he expected a pickup in the second half.
- Abiomed heart pumps: down 1.5%, on "lower patient volumes"
- Surgery: down 1.0%, partly because of China's volume-based procurement programme
- Electrophysiology, devices that treat irregular heart rhythm: up 4.4%
- MedTech sales outside the US: up 0.1%
- Shockwave, devices for coronary and peripheral arteries: up 17.2%
This matters because MedTech is a third of sales, so its slowdown offsets part of the medicines gain. The division's profit margin did improve, but the company itself called the result "Modest operational growth".
What to watch: MedTech growth in the fourth quarter, and the investor review on December 8. Another quarter below 3% would mean the full-year sales plan rests on medicines alone.
Acquisitions Erased This Year's Profit Growth
Johnson & Johnson's profit per share excluding one-offs fell 7.5%, and the company said the figure "also reflects the impact of these M&A deals". The deals are the purchase of cancer-drug developer Firefly Bio and a partnership with Sail Biomedicines.
- Research spending: 18.3% of sales, up 3.0 percentage points from a year ago
- Cost of making the products, excluding one-offs: up 1.0 percentage point of sales
- Medicines division profit margin before tax: 35.4%, down from 44.3%
In July, with second-quarter results, the outlook pointed to profit growth of about 8% per share this year. The current plan points to about 3%, and by our math it needs an 18% rise in the fourth quarter.
What to watch: fourth-quarter profit per share excluding one-offs. A result near $2.91, which the plan implies by our math, would show the deal costs stopped in the third quarter.
Talc Proposal Brought a $5.5 Billion Charge
Johnson & Johnson has faced lawsuits over its talc products for years. This quarter it announced a proposed resolution of the ovarian talc claims and booked $5.5 billion of litigation charges. The release describes "a one-time special charge for the proposed talc litigation resolution".
The charge left reported profit at $0.09 a share, against $2.12 a year ago. A proposal is not a final settlement, so the lawsuits can continue if claimants or courts reject it. The release gives no payment schedule.
What to watch: the quarterly filing, which should give the terms and the remaining reserve. Acceptance by claimants would remove the largest legal risk the healthcare group carries.
Risks this quarter didn't answer
Four standing risks stayed open. One of them produced a hard number this quarter, and the other three produced none in the release or the slides.
- Generic copies: US sales of Opsumit, a pulmonary hypertension drug, fell 53% on "lower demand following U.S. generic entrants"; next quarter's US figure will show where the fall stops.
- Orthopaedics separation: costs reached $369 million in the quarter, and the release names no structure; the December 8 investor review may.
- Trial results: Icotyde's psoriatic arthritis data remains pending on the 2026 list; a readout would move the launch case either way.
- Tariff recoveries: the July margin outlook counted on them, and the release does not mention tariffs; the fourth-quarter margin will show whether they arrived.
👓 Other Themes
FDA Cleared the Ottava Surgical Robot
The FDA authorised Ottava, which Johnson & Johnson calls "the world’s first table-integrated soft tissue robotic system". Four robotic arms sit inside a standard operating table, and the clearance covers 10 general-surgery procedures. The company has signed its first commercial customer. Ottava has no sales yet, so it does not change this year's numbers.
Currency Stopped Adding to Reported Sales
Exchange rates added 1.4 percentage points to sales growth over nine months but subtracted 0.1 point this quarter. Johnson & Johnson kept its estimate of a $0.5 billion currency gain for the full year. By our math, that leaves a currency loss of roughly $0.5 billion in the fourth quarter, so reported growth should trail growth excluding currency.
💲 Other KPIs
International sales rose 1.5%, or 1.8% excluding currency, the weakest pace in the five quarters shown. Europe fell 0.6% as reported. US sales grew 9.1%, so the home market supplied most of the quarter's growth.
Free cash flow, the cash left after spending on plants and equipment, reached about $15.1 billion in nine months, up 6%. By our math the third quarter alone brought in $6.4 billion, against $8.0 billion a year earlier. Both 2026 figures rest on company estimates.
Net debt, borrowings minus cash and securities, held near $28 billion for a second quarter. Debt fell by $4 billion to $45 billion. Cash and securities dropped to $17 billion. Shareholders received $3.2 billion in dividends during the quarter.
The average share count rose 0.8% from a year ago, so buybacks have not reduced it. Each share's claim on profit therefore shrank slightly, and the dividend remains the main way the healthcare group returns cash.
🔮 Guidance
Raised. Johnson & Johnson lifted the bottom of the range, and the middle is now 6.6%. Nine-month growth on this measure was 5.7%, so the plan needs a much stronger fourth quarter.
Raised. The middle of the range moved up $0.1 billion to $100.7 billion, or 6.9% growth. By our math, that leaves about 9.5% for the fourth quarter, against 6.0% in the third. The final quarter has an extra week this fiscal year, and the Stelara comparison eases. Third raise this year, and the smallest: +$0.2 billion, +$0.4 billion, +$0.1 billion.
Raised. The middle of the range is now $101.2 billion, up $0.1 billion, or 7.4% growth. By our math, reported sales must rise about 7.6% in the fourth quarter. The plan assumes a euro at $1.15 and an unchanged $0.5 billion currency gain for the year.
Raised. The middle of the range now implies growth of about 2.0%, up from 1.4%. The bottom of the range rose $0.09 and the top $0.04, so the healthcare group mainly removed the weaker outcomes.
Raised. The middle of the range rose $0.06 to $11.10, or 2.9% growth. By our math, that leaves $2.91 for the fourth quarter, an 18% rise. Profit on this measure fell 7.5% this quarter. The range issued with second-quarter results was $11.60–$11.75. A lower tax rate and lower interest cost support the raise.
Raised. This margin is sales minus product, selling and research costs. The plan now has it falling about 0.6 percentage points this year instead of 0.75. With second-quarter results the plan called for a 0.75-point gain. By our math the margin fell 3.9 points this quarter, so the outlook implies a recovery in the fourth.
❓ Key Questions
What changed in the outlook on July 29?
The release compares today's outlook with ranges dated July 29. Those sit $0.64 a share below the ranges given with second-quarter results. Investors need the split between Firefly Bio, Sail Biomedicines and anything else.
How much cash will the talc proposal cost, and when?
The quarter carried $5.5 billion of litigation charges, but the release gives no payment schedule, no acceptance threshold and no remaining reserve. Those terms decide whether the risk has ended or only has a number.
What produces 9% sales growth in the fourth quarter?
By our math the full-year plan needs it, against 6.0% this quarter. Investors need the split between the extra fiscal week, the easier Stelara comparison and real demand.
When will Icotyde sales appear as a separate line?
The psoriasis tablet is central to the growth plan, yet its sales remain inside Other Immunology, which reached $147 million. Without a separate figure, nobody outside the company can size the launch.
What structure will the Orthopaedics separation take?
Separation costs have reached $746 million this year, and the release still names no structure or date. Abiomed raises a similar gap: heart-pump sales fell again, with no near-term growth target.