What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-02-11 compared with 2025-02-13 · 214 added, 223 removed, 447 unchanged (49% of the section changed)

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The Innovative Medicine segment is focused on the following therapeutic areas:

Immunology, Infectious Diseases, Neuroscience, Oncology, Pulmonary Hypertension, and Cardiovascular and Metabolism.

Oncology, Immunology, Neuroscience, Pulmonary Hypertension, Infectious Diseases, and Cardiovascular and Metabolism.

Products in this segment are distributed directly to retailers, wholesalers, distributors, hospitals and healthcare professionals for prescription use.

The MedTech segment includes a broad portfolio of products used in the Orthopaedic, Surgery, Cardiovascular (previously referred to as Interventional Solutions) and Vision fields.

The MedTech segment includes a broad portfolio of products used in the Surgery, Orthopaedic, Cardiovascular and Vision fields.

These products are distributed to wholesalers, hospitals and retailers, and used principally in the professional fields by physicians, nurses, hospitals, eye care professionals and clinics.

The Chief Operating Decision Maker (CODM) is the Company's Chief Executive Officer (Principal Executive Officer).The Executive Committee is Johnson & Johnson’s senior leadership team responsible for setting the strategy and priorities of the Company and driving accountability at all levels.

In October 2025, the Company announced its intention to separate its Orthopaedics business.

The Company intends to explore multiple paths to effect the planned separation with a targeted completion within 18 to 24 months after the initial announcement.

The Chief Operating Decision Maker (CODM) is the Company's Chief Executive Officer (Principal Executive Officer).

The Executive Committee is Johnson & Johnson’s senior leadership team responsible for setting the strategy and priorities of the Company and driving accountability at all levels.

Within the strategic parameters provided by the Executive Committee, senior management groups at U.S.

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Management's discussion and analysis of results of operations and financial condition.

Prior periods disclosed herein were recast to reflect the continuing operations of the Company.

In 2025, worldwide sales increased 6.0% to $94.2 billion as compared to an increase of 4.3% in 2024.

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Total 6.0 % 4.3 %

The net impact of acquisitions and divestitures on the worldwide sales growth was a positive impact of 0.5% in 2024 and a positive impact of 1.5% in 2023.

The net impact of acquisitions and divestitures on the worldwide sales growth was a positive impact of 1.1% in 2025, primarily related to CAPLYTA and Shockwave and a positive impact of 0.5% in 2024 primarily related to Shockwave.

Sales by U.S.

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This represents increases of 6.9% in 2025 and 8.3% in 2024.

In the fiscal 2024, acquisitions and divestitures had a net positive impact of 0.7% on the U.S.

operational sales growth.

In the fiscal year 2025, acquisitions and divestitures had a net positive impact of 2.0% on the U.S.

sales growth primarily related to CAPLYTA and Shockwave.

Sales by international companies were $40.4 billion in 2025 and $38.5 billion in 2024.

This represents a decrease of 0.5% in 2024 and an increase of 1.9% in 2023.

In fiscal 2024, acquisitions and divestitures had a net positive impact of 0.2% on the international operational sales growth.

In fiscal 2024, the impact of the Covid-19 Vaccine sales decline on the international operational sales was a negative 2.6%.

This represents an increase of 5.0% in 2025, and a decrease of 0.5% in 2024.

In fiscal 2025, acquisitions and divestitures had a net positive impact of 0.1% on the international operational* sales growth, primarily related to Shockwave.

In the fiscal year 2025, the negative impact of the STELARA sales decline, due to biosimilar competition, was approximately 6.2%, 7.6% and 4.4% on worldwide, U.S.

and international operational sales, respectively.

The five-year compound annual growth rates for worldwide, U.S.

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2025 Annual Report

In 2024, sales by companies in Europe experienced a decline of 1.0% as compared to the prior year, which included an operational decline of 0.6% and a negative currency impact of 0.4%.

In fiscal 2024, the net impact of the Covid-19 Vaccine on the European regions change in operational sales was a negative 4.7%.

In 2025, sales by companies in Europe achieved growth of 6.5% as compared to the prior year, which included operational growth of 2.4% and a positive currency impact of 4.1%.

Sales by companies in the Western Hemisphere, excluding the U.S., achieved growth of 3.4% as compared to the prior year, which included operational growth of 8.4%, and a negative currency impact of 5.0%.

Sales by companies in the Asia-Pacific, Africa region experienced a decline of 1.2% as compared to the prior year, including operational growth of 2.3% offset by a negative currency impact of 3.5%.

Sales by companies in the Asia-Pacific, Africa region achieved growth of 3.2% as compared to the prior year, including operational growth of 3.1% and a positive currency impact of 0.1%.

In 2025, the Company utilized three wholesalers distributing products for both segments that represented approximately 21.8%, 15.5% and 11.1% of the total gross revenues.

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values may have been rounded

*operational excludes the effect of translational currency

Analysis of sales by business segments

Innovative Medicine segment

Innovative Medicine segment sales in 2024 were $57.0 billion, an increase of 4.0% from 2023, which included operational growth of 5.7% and a negative currency impact of 1.7%.

Innovative Medicine segment sales in 2025 were $60.4 billion, an increase of 6.0% from 2024, which included operational growth of 5.3% and a positive currency impact of 0.7%.

sales were $36.3 billion, an increase of 7.0%.

International sales were $23.0 billion, a decrease of 2.5%, which included operational growth of 1.3% offset by a negative currency impact of 3.8%.

In 2024, acquisitions and divestitures had a net negative impact of 0.1% on the operational sales growth of the worldwide Innovative Medicine segment.

In fiscal 2024, the net impact of the Covid-19 Vaccine on the total Innovative Medicine and International change in operational sales was a negative 1.8% and 4.2%, respectively.

International sales were $24.1 billion, an increase of 4.6%, which included operational growth of 2.9% and a positive currency impact of 1.7%.

In 2025, the net impact of acquisitions and divestitures on the worldwide Innovative Medicine segment operational sales growth was a positive 1.2%, related to CAPLYTA.

In 2025, the negative impact of the STELARA sales decline, primarily due to biosimilar competition, was an approximate 10.4%, 12.3% and 7.9% on worldwide, U.S.

and international Innovative Medicine segment operational sales, respectively.

Major Innovative Medicine therapeutic area sales:

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Change Currency

Total Oncology $25,380 $20,781 22.1 % 20.9 % 1.2 %

CARVYKTI 1,887 963 95.9 94.3 1.6

DARZALEX 14,351 11,670 23.0 22.0 1.0

ERLEADA 3,574 2,999 19.2 17.2 2.0

IMBRUVICA 2,823 3,038 (7.1) (8.6) 1.5

RYBREVANT/ LAZCLUZE (1)

734 327 * * *

463 287 61.3 60.3 1.0

TECVAYLI 670 549 22.1 21.5 0.6

ZYTIGA /abiraterone acetate 502 631 (20.4) (21.2) 0.8

Other Oncology 376 317 18.5 17.5 1.0

Total Immunology 15,728 17,828 (11.8) (12.0) 0.2

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Other Immunology 61 3 * * *

Total Infectious Diseases 3,396 4,418 (23.1) (22.7) (0.4)

COVID-19 VACCINE 198 1,117 (82.4) (82.4) 0.0

EDURANT/rilpivirine 1,272 1,150 10.6 10.6 0.0

PREZISTA/PREZCOBIX/REZOLSTA/SYMTUZA 1,712 1,854 (7.7) (7.1) (0.6)

Other Infectious Diseases 214 297 (27.6) (25.0) (2.6)

Total Neuroscience 7,837 7,115 10.1 9.9 0.2

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Other Neuroscience 1,048 1,175 (10.9) (11.5) 0.6

Total Oncology 20,781 17,661 17.7 19.8 (2.1)

CARVYKTI 963 500 92.7 92.7 0.0

DARZALEX 11,670 9,744 19.8 22.2 (2.4)

ERLEADA 2,999 2,387 25.6 27.3 (1.7)

IMBRUVICA 3,038 3,264 (6.9) (5.2) (1.7)

TECVAYLI 549 395 38.8 39.8 (1.0)

ZYTIGA /abiraterone acetate 631 887 (28.8) (25.0) (3.8)

Other Oncology 931 484 92.5 94.3 (1.8)

Total Pulmonary Hypertension 4,437 4,282 3.6 3.2 0.4

OPSUMIT 2,184 1,973 10.7 11.9 (1.2)

OPSUMIT/OPSYNVI (4)

2,325 2,225 4.5 4.0 0.5

UPTRAVI 1,902 1,817 4.7 4.3 0.4

Other Pulmonary Hypertension 209 240 (12.7) (13.0) 0.3

Total Infectious Diseases 3,241 3,396 (4.6) (6.5) 1.9

EDURANT/rilpivirine 1,486 1,272 16.9 12.2 4.7

PREZISTA/PREZCOBIX/REZOLSTA/SYMTUZA 1,579 1,712 (7.7) (8.1) 0.4

Other Infectious Diseases (5)

175 412 (57.5) (57.7) 0.2

Total Cardiovascular / Metabolism / Other 3,778 3,562 6.1 6.0 0.1

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2025 Annual Report

Immunology products sales were $17.8 billion in 2024, representing a decrease of 1.2% as compared to the prior year.

The decline of STELARA (ustekinumab) sales was driven by share loss primarily due to European biosimilar entrants.

Lower sales of REMICADE (infliximab) was due to continued biosimilar competition.

The growth of TREMFYA (guselkumab) was due to market growth and share gains.

Sales of STELARA in the United States were approximately $6.7 billion in fiscal 2024.

Third parties have filed abbreviated Biologics License Applications with the FDA seeking approval to market biosimilar versions of STELARA.

The Company has settled certain litigation under the Biosimilar Price Competition and Innovation Act of 2009.

According to patent settlement and license agreements, the Company expects continued launches of biosimilar versions of STELARA in Europe and the United States in 2025 which will impact the Company’s sales of STELARA.

Biosimilar versions of REMICADE have been introduced in the United States and certain markets outside the United States and additional competitors continue to enter the market.

Continued infliximab biosimilar competition will result in a further reduction in sales of REMICADE.

Infectious disease products sales were $3.4 billion in 2024, a decline of 23.1% as compared to the prior year primarily driven by a decline in COVID-19 vaccine revenue.

Neuroscience products sales were $7.1 billion in 2024, representing a decrease of 0.4% as compared to the prior year primarily driven by a decline in Other Neuroscience.

The decline was partially offset by the growth of SPRAVATO (esketamine) driven by the ongoing launch and increased physician and patient demand.

(1) Previously in Other Oncology, Includes the sales of RYBREVANT and RYBREVANT + LAZCLUZE

(2) Previously in Other Oncology

(3) Acquired with Intra-Cellular Therapies on April 2, 2025

(4) OPSYNVI was previously in Other Pulmonary Hypertension

(5) Includes the Covid-19 Vaccine in 2024

* Percentage greater than 100% or not meaningful

Oncology products achieved sales of $25.4 billion in 2025, representing an increase of 22.1% as compared to the prior year.

Strong sales of DARZALEX (daratumumab) were driven by continued share gains and market growth.

Growth of ERLEADA (apalutamide) was primarily due to continued share gains and market growth.

Sales of CARVYKTI (ciltacabtagene autoleucel) were driven by continued share gains, capacity expansion and manufacturing efficiencies.

Additionally, sales from the ongoing launches of TECVAYLI (teclistamab-cqyv), TALVEY (talquetamab-tgvs) and RYBREVANT (amivantamab), included in Other Oncology, contributed to the growth.

Growth was partially offset by ZYTIGA (abiraterone acetate) due to loss of exclusivity and IMBRUVICA (ibrutinib) due to global competitive pressures.

Pulmonary Hypertension products sales were $4.3 billion, representing an increase of 12.3% as compared to the prior year.

Sales growth of both OPSUMIT (macitentan) and UPTRAVI (selexipag) was driven by market growth and share gains.

Growth in Other Pulmonary Hypertension was driven by OPSYNVI (macitentan/tadalafil).

Cardiovascular/Metabolism/Other products sales were $3.6 billion, a decline of 3.0% as compared to the prior year driven by declines in Other.

Growth of ERLEADA (apalutamide) was primarily due to continued share gains and market growth partially offset by the impact of Medicare Part D redesign.

Increased sales of CARVYKTI (ciltacabtagene autoleucel) were driven by continued share gains and capacity expansion.

Additionally, sales from the ongoing launches and share gains of TECVAYLI (teclistamab-cqyv), TALVEY (talquetamab-tgvs) and RYBREVANT (amivantamab)/LAZCLUZE (lazertinib) contributed to the growth.

Growth was partially offset by ZYTIGA (abiraterone acetate) due to loss of exclusivity and IMBRUVICA (ibrutinib) due to competitive pressures and the impact of Medicare Part D redesign.

Immunology products sales were $15.7 billion in 2025, a decline of 11.8% as compared to the prior year primarily due to the decline of STELARA (ustekinumab) sales driven by the impact of biosimilar competition and Medicare Part D redesign.

The growth of TREMFYA (guselkumab) was due to share gains and market growth.

The increase in SIMPONI/SIMPONI ARIA sales was primarily driven by the Merck, Sharp & Dohme return of rights in Europe in the fiscal fourth quarter of 2024.

The increase in REMICADE (infliximab) sales was due to favorable patient mix, market growth and the Merck, Sharp & Dohme return of rights in Europe in the fiscal fourth quarter of 2024, partially offset by continued biosimilar competition.

Sales of STELARA in the United States were approximately $3.8 billion in fiscal 2025.

Third parties have filed biologics license applications with the U.S.

FDA, the European Medicines Agency, and other government authorities seeking approval to market biosimilar versions of STELARA around the globe.

The Company expects continued launches of biosimilar versions of STELARA globally which will continue to negatively impact the Company’s sales of STELARA.

At least two biosimilars are pursuing regulatory approval for a SIMPONI biosimilar in the United States, which would likely result in a significant reduction in future sales.

Neuroscience products, which include sales of CAPLYTA (lumateperone) acquired with the Intra-Cellular Therapies (Intra- Cellular) acquisition on April 2, 2025, achieved sales of $7.8 billion in 2025, representing an increase of 10.1% as compared to the prior year.

Growth of SPRAVATO (esketamine) was driven by continued increased physician and patient demand.

Growth was partially offset by the sales decline of INVEGA SUSTENNA / XEPLION / INVEGA TRINZA / TREVICTA primarily due to the impact of Medicare Part D redesign.

Pulmonary Hypertension products achieved sales of $4.4 billion, representing an increase of 3.6% as compared to the prior year.

Sales growth of OPSUMIT (macitentan)/OPSYNVI (macitentan/tadalafil) was driven by share gains and market growth partially offset by the impact of Medicare Part D redesign and UPTRAVI (selexipag) was driven by market growth partially offset by the impact of Medicare Part D redesign.

The Company expects generic competition for OPSUMIT in 2026, which would likely result in a significant reduction in future sales.

Infectious disease products sales were $3.2 billion in 2025, a decline of 4.6% as compared to the prior year primarily driven by declines across the portfolio including COVID-19 vaccine revenue in Other Infectious Diseases.

The decline was partially offset by growth of EDURANT/rilpivirine.

Cardiovascular/Metabolism/Other products achieved sales were $3.8 billion, representing an increase of 6.1% as compared to the prior year.

The growth of XARELTO (rivaroxaban) sales was primarily driven by the impact of Medicare Part D redesign and market growth partially offset by continued share loss.

The Company maintains a policy that no end customer will be permitted direct delivery of product to a location other than the billing location.

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(Chemical Name) Indication US

BALVERSA (erdafitinib) Treatment of Patients with Locally Advanced or Metastatic Urothelial Carcinoma and Selected Fibroblast Growth Factor Receptor Gene Alterations (THOR) • •

CARVYKTI (ciltacabtagene autoleucel) Treatment for Relapsed and Refactor multiple myeloma with 1-3 PL (CARTITUDE-4) • •

DARZALEX (daratumumab) Treatment for frontline multiple myeloma transplant eligible (PERSEUS) • •

AKEEGA (niraparib/abiraterone) Treatment of patients with M1 Metastatic Castration-Sensitive Prostate Cancer (AMPLITUDE) • •

CAPLYTA (lumateperone) Adjunctive treatment for Major Depressive Disorder •

DARZALEX (daratumumab) Treatment for frontline multiple myeloma transplant ineligible (CEPHEUS) • •

DARZALEX (daratumumab) Treatment as subcutaneous monotherapy for high-risk smoldering multiple myeloma (AQUILA) • •

EDURANT (rilpivirine) Treatment for pediatric patients (2-12 years old) with HIV • •

ICOTYDE (icotrokinra) Treatment for Psoriasis (ICONIC) • •

INLEXZO (gemcitabine intravesical system) Treatment for non muscle invasive bladder cancer (SunRISe-1) •

IMAAVY (nipocalimab) Treatment for Generalized Myasthenia Gravis (Vivacity MG3) • •

IMAAVY (nipocalimab) Treatment for Generalized Myasthenia Gravis Pediatrics (VIBRANCE MG) •

IMBRUVICA (ibrutinib) Treatment for frontline MCL (Triangle) •

nipocalimab Treatment for Generalized Myasthenia Gravis • •

OPSUMIT (macitentan) Treatment for pediatric pulmonary arterial hypertension (TOMORROW) • •

OPSYNVI (macitentan/tadalafil STCT) Treatment for pulmonary arterial hypertension • •

REKAMBYS Treatment for Adolescents HIV •

RYBREVANT (amivantamab) In Combination with Chemotherapy for the First-Line Treatment of Adult Patients with Advanced Non-Small Cell Lung Cancer with Activating EGFR Exon 20 Insertion Mutations (PAPILLON) • •

RYBREVANT (amivantamab) Treatment for subcutaneous (PALOMA-3) • •

RYBREVANT / LAZCLUZE Treatment for Non-Small Cell Lung Cancer (MARIPOSA) • •

RYBREVANT Treatment for Non-Small Cell Lung Cancer 2L (MARIPOSA-2) • •

SIMPONI (golimumab) Treatment of Patients with Pediatric Ulcerative Colitis • •

SPRAVATO (esketamine) monotherapy Treatment of Patients with Treatment Resistant Depression (TRD4005) •

SIMPONI (golimumab) Treatment of Patients with Pediatric Ulcerative Colitis (PURSUIT 2) • •

SPRAVATO (esketamine) Treatment of Patients with Treatment Resistant Depression monotherapy (TRD4005) •

STELARA (ustekinumab) Treatment of Patients with Pediatric Crohn's Disease • •

STELARA (ustekinumab) Treatment of Patients with Pediatric Ulcerative Colitis (UNIFI JR) • •

TECVAYLI (teclistamab) Multiple Myeloma 1-3PLs (MajesTEC-3) •

TREMFYA (guselkumab) Treatment of Patients with Ulcerative Colitis (QUASAR) •

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TREMFYA (guselkumab) Treatment of Patients with Crohn's Disease (GALAXI) • •

TREMFYA (guselkumab) Treatment of Patients with Pediatric Psoriasis •

UPTRAVI (selexipag) Treatment of Patients with Pediatric Pulmonary Arterial Hypertension (SALTO) •

TREMFYA (guselkumab) Treatment of Patients with Pediatric Psoriasis (PROTOSTAR) • •

TREMFYA (guselkumab) Treatment of patients with Psoriatic Arthritis Structural Damage (APEX) •

TREMFYA (guselkumab) Treatment of Patients with Pediatric Juvenile Psoriatic Arthritis •

2025 Annual Report

MedTech segment

The MedTech segment sales in 2024 were $31.9 billion, an increase of 4.8% from 2023, which included operational growth of 6.2% and a negative currency impact of 1.4%.

The MedTech segment sales in 2025 were $33.8 billion, an increase of 6.1% from 2024, which included operational growth of 5.4% and a positive currency impact of 0.7%.

sales were $17.4 billion, an increase of 6.6% as compared to the prior year.

International sales were $15.5 billion, an increase of 2.6% as compared to the prior year, which included operational growth of 5.4% and a negative currency impact of 2.8%.

International sales were $16.4 billion, an increase of 5.5% as compared to the prior year, which included operational growth of 4.1% and a positive currency impact of 1.4%.

In 2025, the net impact of acquisitions and divestitures on the MedTech segment worldwide operational sales growth was a positive 1.1% primarily related to the Shockwave acquisition.

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Cardiovascular 8,928 7,707 15.8 15.2 0.6

7,707 6,350 21.4 22.8 (1.4)

Electrophysiology 5,634 5,267 7.0 6.4 0.6

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Shockwave (1)

1,146 564 * * *

Other Cardiovascular 397 380 4.3 3.8 0.5

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Total MedTech Sales $33,792 31,857 6.1 % 5.4 % 0.7 %

(1) Previously referred to as Interventional Solutions

(1) Acquired on May 31, 2024

* Percentage greater than 100% or not meaningful

The Surgery franchise sales were $9.8 billion in 2024, representing a decrease of 1.9% from 2023.

The decline in Advanced Surgery was primarily due to China volume-based procurement across all platforms and competitive pressures in Energy and Endocutters.

This was partially offset by the strength of the portfolio and commercial execution in Biosurgery as well as the strength of new products in Endocutters.

Growth in General Surgery was primarily driven by technology penetration and benefits from the differentiated Wound Closure portfolio as well as increased procedure volume.

This growth was offset by the negative impact of currency and the Acclarent divestiture.

The Orthopaedics franchise sales were $9.2 billion in 2024, representing an increase of 2.4% from 2023.

The fiscal 2024 includes a one-time revenue recognition timing change related to certain products across all Orthopaedic platforms in the U.S.

which positively impacted the worldwide Orthopaedics franchise growth as well as the negative impact from the near-term revenue disruption related to the previously announced Orthopaedics restructuring.

The growth in Hips reflects continued strength of the portfolio primarily in the Anterior approach, and global procedure growth.

The growth in Knees was primarily driven by the ATTUNE portfolio, pull through related to the VELYS Robotic assisted solution and global procedure growth.

Growth in Trauma was driven by the adoption of recently launched products.

The decline in Spine, Sports & Other was primarily driven by competitive pressures and impacts from China volume-based procurement.

This was partially offset by growth in the U.S.

The Cardiovascular franchise, which includes sales from Shockwave Medical (Shockwave) acquired on May 31, 2024, achieved sales of $7.7 billion in 2024, representing an increase of 21.4% from 2023.

Electrophysiology growth was driven by global procedure growth, new product performance and commercial execution.

This was partially offset by the impacts of volume-based procurement in China and competitive pressures in Pulsed Field Ablation catheters in the U.S.

Abiomed sales reflect the strength of all major commercialized regions driven by the continued adoption of Impella 5.5 and Impella RP.

The Surgery franchise achieved sales of $10.1 billion in 2025, representing an increase of 3.0% from 2024.

Growth in Advanced Surgery was primarily due to the strength of the portfolio and commercial execution in Biosurgery as well as new products in Endocutters.

This was partially offset by China volume-based procurement across all platforms and competitive pressures in Energy and Endocutters.

Growth in General Surgery was primarily driven by technology penetration and upgrades within the differentiated Wound Closure portfolio.

This growth was partially offset by the impact from divestitures.

The Orthopaedics franchise achieved sales of $9.3 billion in 2025, representing an increase of 1.1% from 2024.

All platforms were negatively impacted by revenue disruption from the previously announced Orthopaedics restructuring, which is now substantially complete, the negative impact of volume-based procurement in China and selling days.

The growth in Hips was primarily due to new product launches.

The growth in Knees was primarily driven by the ATTUNE portfolio, pull through related to the VELYS Robotic assisted solution.

Growth in Trauma was driven by the adoption of recently launched products and commercial execution.

The decline in Spine, Sports & Other was primarily driven by competitive pressures and price pressures in the U.S.

Early Interventional segment partially offset by new product launches.

In October 2025, the Company announced its intention to separate its Orthopaedics business.

The Company intends to explore multiple paths to effect the planned separation with a targeted completion within 18 to 24 months after the initial announcement.

The Cardiovascular franchise achieved sales of $8.9 billion in 2025, representing an increase of 15.8% from 2024.

Electrophysiology growth was driven by procedure growth, new product performance and commercial execution.

This was partially offset by competitive pressures in Pulsed Field Ablation catheters.

Abiomed sales reflect the continued strong adoption of Impella 5.5 and Impella CP.

Shockwave sales growth was driven by Coronary and Peripheral portfolios and new product launches.

The Vision franchise achieved sales of $5.5 billion in 2025, representing an increase of 6.3% from 2024.

Contact Lenses/Other growth was primarily driven by price actions, continued strong performance in the ACUVUE OASYS 1-Day family of products (including recent launches), impacts from a one-time change in contract shipping terms in the U.S.

and lapping of prior year impacts of Russian sanctions partially offset by U.S.

distributor stocking dynamics.

Surgical growth was primarily driven by the continued strength of recent innovations and commercial execution partially offset by China volume-based procurement and competitive pressures in the U.S.

Contact Lenses/Other growth was primarily driven by market growth, continued strong performance in the ACUVUE OASYS 1-Day family of products (including recent launches) and strategic price actions.

Surgical growth was primarily driven by the continued strength of recent product innovations, robust demand and commercial execution.

Analysis of consolidated earnings before provision for taxes on income

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Cost of products sold:

Cost of products sold decreased as a percent to sales driven by:

• Lower one-time COVID-19 vaccine supply network related exit costs in 2024 ($0 in 2024 versus $0.2 billion 2023) in the Innovative Medicine business

• Prior year restructuring related excess inventory costs in the MedTech business

Cost of products sold increased as a percent to sales driven by:

• Unfavorable product mix driven by the decline of STELARA sales and unfavorable transactional currency in the Innovative Medicine business

• Tariffs, unfavorable transactional currency and macroeconomic factors in the MedTech business

partially offset by

• The fair value Inventory step-up of $0.4 billion related to the business combination accounting associated with Shockwave

The intangible asset amortization expense included in cost of products sold was $4.5 billion for both fiscal years 2024 and 2023.

• Non-recurring, acquisition related fair value Inventory step-up of $0.1 billion in 2025 versus $0.4 billion in 2024 related to the business combination accounting associated with the Shockwave acquisition in the MedTech business

The intangible asset amortization expense included in cost of products sold was $4.6 billion in fiscal 2025 and $4.5 billion in fiscal 2024.

Selling, Marketing and Administrative expense:

Selling, Marketing and Administrative Expenses increased as a percent to sales driven by:

• Increased commercial investment in the Innovative Medicine business

Selling, Marketing and Administrative Expenses decreased as a percent to sales driven by:

• Corporate administrative expense rationalization

• Planned leverage in the Innovative Medicine business

partially offset by

• Optimization efforts related to the residual costs associated with the Kenvue separation

• Increased investment related to the acquisition of Intra-Cellular (CAPLYTA)

Research and Development expense:

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The Company remains committed to investing in research and development with the aim of delivering high quality and innovative products.

Research and Development increased as a percent to sales primarily driven by:

• Acquired in-process research & development expense of $1.25 billion to secure the global rights to the NM26 bispecific antibody (Yellow Jersey acquisition) and pipeline advancement in the Innovative Medicine business

• Acquired in-process research & development expense of $0.5 billion from the V-Wave acquisition in the MedTech business

Research and Development decreased as a percent to sales primarily driven by:

• Acquired in-process research & development expense of $1.25 billion to secure the global rights to the NM26 bispecific antibody (Yellow Jersey acquisition) in the Innovative Medicine business in 2024

• Acquired in-process research & development expense of $0.5 billion from the V-Wave acquisition and a Laminar milestone of $0.3 billion in the MedTech business in 2024

• Leverage resulting from investment prioritization in the Innovative Medicine business

In-Process Research and Development Impairments (IPR&D):

In the fiscal year 2024, the Company recorded a charge of approximately $0.2 billion associated with the M710 (biosimilar) asset acquired as part of the acquisition of Momenta Pharmaceuticals in 2020.

In the fiscal year 2025, the Company recorded a charge of approximately $0.1 billion primarily related to a non-strategic asset acquired with Abiomed in 2022.

In the fiscal year 2024, the Company recorded a charge of approximately $0.2 billion primarily associated with the M710 (biosimilar) asset acquired as part of the acquisition of Momenta Pharmaceuticals in 2020.

There was also a partial impairment of this asset for $0.2 billion in the fiscal 2023.

This asset is now fully impaired.

This asset is fully impaired.

Other (Income) Expense, Net:

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(JJDC), changes in the fair value of securities, investment (income)/loss related to employee benefit programs, gains and losses on divestitures, certain transactional currency gains and losses, acquisition and divestiture related costs, litigation accruals and settlements, as well as royalty income.

Other (income) expense, net for the fiscal year 2024 reflected less expense of $1.9 billion as compared to the prior year primarily due to the following:

Other (income) expense, net for the fiscal year 2025 reflected an increase in income of $11.9 billion as compared to the prior year primarily due to the following:

(Dollars in Billions)(Income)/Expense 2025 2024 Change

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$ (6.0) 5.5 (11.5)

Acquisition, Integration and Divestiture related (2)

Employee benefit plan related (0.5) (0.9) 0.4

Changes in the fair value of securities (2)

(0.4) 0.3 (0.7)

COVID-19 vaccine manufacturing exit related costs 0.1 0.4 (0.3)

Acquisition, Integration and Divestiture related (3)

0.2 0.8 (0.6)

Monetization of royalty rights 0.0 (0.3) 0.3

Employee benefit plan related (0.9) (1.4) 0.5

Other (0.5) (0.7) 0.2

Total Other (Income) Expense, Net $ (7.2) 4.7 (11.9)

(1) The fiscal years 2024 and 2023 include charges primarily for talc matters (See Note 19 to the Consolidated Financial Statements for more details).

The fiscal year 2023 includes favorable intellectual property related litigation settlements of approximately $0.3 billion.

(2) The fiscal year 2024 is primarily related to the acquisition of Shockwave.

The fiscal year 2023 is primarily related to the impairment of Ponvory and one-time integration costs related to the acquisition of Abiomed.

(1) The fiscal year 2025 includes the reversal of approximately $7.0 billion, a significant portion of the previously accrued talc reserve and an expense of $0.8 billion for the Auris shareholder litigation.

The fiscal year 2024 includes charges of approximately $5.1 billion for talc matters (See Note 19 to the Consolidated Financial Statements for additional details).

(2) The fiscal year 2024 includes the loss of $0.4 billion on the completion of the debt for equity exchange of the retained stake in Kenvue.

The fiscal year 2023 includes $0.4 billion related to the unfavorable change in the fair value of the remaining stake in Kenvue and $0.4 billion related to the partial impairment of Idorsia convertible debt and the change in the fair value of the Idorsia equity securities held.

(3) The fiscal year 2025 is primarily related to the acquisitions of Intra-Cellular (CAPLYTA) and Halda Therapeutics partially offset by the reduction of the Abiomed contingent value right (CVR) liability.

The fiscal year 2024 is primarily related to the acquisition of Shockwave.

Interest (Income) Expense:

Interest income in the fiscal years 2024 and 2023 was $1.3 billion.

Interest expense in the fiscal years 2024 and 2023 was $0.8 billion.

Interest income in the fiscal year 2025 was $1.1 billion as compared to $1.3 billion in 2024.

Interest income decreased as compared to the prior year driven by lower interest rates earned on cash balances.

Interest expense in the fiscal year 2025 was $1.0 billion as compared to $0.8 billion in 2024.

Interest expense was higher as compared to the prior year due to a higher average debt balance.

Cash, cash equivalents and marketable securities totaled $20.1 billion at the end of 2025, and averaged $22.3 billion as compared to the cash, cash equivalents and marketable securities total of $24.5 billion and $23.7 billion average balance in 2024.

The total debt balance at the end of 2025 was $47.9 billion with an average debt balance of $42.3 billion as compared to $36.6 billion at the end of 2024 and an average debt balance of $33.0 billion.

The higher debt balance was due to the senior unsecured notes issued by the Company in the fiscal second quarter of 2024.

The net proceeds from this offering were used to fund the Shockwave acquisition which closed on May 31, 2024 and for general corporate purposes.

The higher debt balance was due to the senior unsecured notes issued by the Company in the fiscal first quarter of 2025.

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.

Income before tax by segment

Income (loss) before tax by segment of business were as follows:

Income before tax by segment of business was as follows:

Income Before Tax Segment Sales Percent of Segment

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26,379 22,659 94,193 88,821 28.0 25.5

Expenses not allocated to segments (2)

(Income) Expenses not allocated to segments (2)

(6,202) 5,972

Worldwide income before tax $ 32,581 16,687 94,193 88,821 34.6 % 18.8

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(2) Amounts not allocated to segments include interest (income) expense and general corporate (income) expense.

The fiscal years 2024 and 2023 include charges for talc matters of approximately $5.1 billion and $7.0 billion, respectively.

The fiscal 2024 includes a loss of approximately $0.4 billion related to the debt to equity exchange of the Company's remaining shares of Kenvue Common Stock.

The fiscal year 2023 includes an approximately $0.4 billion unfavorable change in the fair value of the retained stake in Kenvue.

The fiscal year 2025 includes the reversal of approximately $7.0 billion, a significant portion of the previously accrued talc reserve.

The fiscal year 2024 includes charges for talc matters of approximately $5.1 billion and a loss of approximately $0.4 billion related to the debt to equity exchange of the Company's remaining shares of Kenvue Common Stock.

2025 Annual Report

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In 2025, the Innovative Medicine segment income before tax as a percent to sales was 36.9% versus 33.2% in 2024.

The decrease in the income before tax as a percent of sales was primarily driven by the following:

• Acquired in-process research and development expense of $1.25 billion to secure the global rights to the NM26 bispecific antibody

• Litigation expense of $0.4 billion in 2024, primarily related to Risperdal Gynecomastia, versus favorable litigation related items of $0.1 billion in 2023

• Increased research and development to advance the pipeline

• Increased commercial investment in selling and marketing expenses

The increase in the income before tax as a percent of sales was primarily driven by the following:

• Acquired in-process research and development expense of $1.25 billion to secure the global rights to the NM26 bispecific antibody (Yellow Jersey acquisition) in 2024

• Litigation income of $0.1 billion in 2025 versus expense of $0.4 billion in 2024, primarily related to Risperdal Gynecomastia

• Research & development leverage resulting from investment prioritization

partially offset by

• Acquisition, integration and divestiture related net expense of $0.4 billion in 2025 primarily related to Intra-Cellular and Halda Therapeutics and $0.1 billion in 2024

• Monetization of royalty rights of $0.3 billion in 2024

• Lower one-time COVID-19 Vaccine related exit costs of $0.1 billion in 2024 versus $0.7 billion in 2023

• Lower amortization expense of $0.2 billion in 2024 versus 2023

• Restructuring charges of $0.1 billion in 2024 versus $0.5 billion in 2023

• A gain of $0.1 billion in 2024 as compared to a loss of $0.4 billion in 2023 related to changes in the fair value of securities

• Unfavorable Product mix, the impact of Medicare Part D redesign and unfavorable transactional currency

• Increased investment related to the acquisition of Intra-Cellular (CAPLYTA)

MedTech segment:

In 2025, the MedTech segment income before tax as a percent to sales was 12.2% versus 11.7% in 2024.

The decrease in the income before tax as a percent to sales was primarily driven by the following:

• Acquisition and integration related costs of $1.0 billion in 2024 (primarily related to the Shockwave acquisition) versus $0.2 billion in 2023 related to Abiomed

• Acquired in-process research and development expense of $0.5 billion from the V-Wave acquisition in 2024

• Higher amortization expense of $0.2 billion in 2024 related to Shockwave

The increase in the income before tax as a percent to sales was primarily driven by the following:

• Acquisition, integration and divestiture related net income of $0.2 billion in 2025 primarily driven by a contingent value right liability reduction associated with Abiomed versus net costs of $1.0 billion in 2024 primarily related to the Shockwave acquisition

• Acquired in-process research and development expense of $0.5 billion from the V-Wave acquisition and $0.3 billion for a Laminar milestone in 2024

• Gain on the sale of securities of $0.2 billion in 2025

partially offset by

• A gain of $0.2 billion related to the Acclarent divestiture in 2024

• Restructuring related charge of $0.2 billion in 2024 versus $0.3 billion in 2023

• Litigation expense of $0.9 billion in 2025, primarily related to Auris shareholder litigation

• Higher restructuring related costs of $0.5 billion in 2025 versus $0.2 billion in 2024

• Tariffs, unfavorable transactional currency and macroeconomic factors in Cost of products sold

Restructuring:

In the fiscal year 2023, the Company completed a prioritization of its research and development (R&D) investment within the Innovative Medicine segment to focus on the most promising medicines with the greatest benefit to patients.

In 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 was $205 million in the fiscal year 2025, of which $76 million was recorded in Restructuring, $122 million in Other income and expense and $7 million in Cost of products sold on the Consolidated Statement of Earnings.

The pre-tax restructuring expense 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 its MedTech segment to streamline operations by exiting certain markets, product lines and distribution network arrangements.

The pretax restructuring expense was $307 million in the fiscal year 2025, of which $152 million was recorded in Restructuring, $84 million in Cost of products sold and $71 million in Other (Income)/Expense on the Consolidated Statement of Earnings primarily for costs related to asset impairments as well as market and product exits.

The pre-tax restructuring expense was $167 million in the fiscal year 2024, of which $132 million was recorded in Restructuring and $35 million was recorded in Cost of products sold on the Consolidated Statement of Earnings, primarily included costs related to market and product exits.

The pre-tax restructuring expense was $319 million in the fiscal year 2023, of which $40 million was recorded in Restructuring and $279 million was recorded in Cost of products sold on the Consolidated Statement of Earnings, 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 the 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 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.

The pre-tax restructuring charge of approximately $0.1 billion in the fiscal year 2024 was recorded in Restructuring on the Consolidated Statement of Earnings, and included the termination of partnered and non-partnered development program costs, asset impairments and asset divestments.

The pre-tax restructuring charge of approximately $0.5 billion in the fiscal year 2023, of which $449 million was recorded in Restructuring and $30 million was recorded in Cost of products sold on the Consolidated Statement of Earnings, and included the termination of partnered and non-partnered program costs and asset impairments.

Total project costs of approximately $0.6 billion have been recorded since the restructuring was announced.

The program was completed in the fiscal fourth quarter of 2024.

In the fiscal year 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 $0.2 billion in the fiscal year 2024, of which $132 million was recorded in Restructuring and $35 million was recorded in Cost of products sold on the Consolidated Statement of Earnings, primarily included costs related to market and product exits.

The pre-tax restructuring expense of $0.3 billion in the fiscal year 2023, of which $40 million was recorded in Restructuring and $279 million was recorded in Cost of products sold on the Consolidated Statement of Earnings, primarily included inventory and instrument charges related to market and product exits.

Total project costs of approximately $0.5 billion have been recorded since the restructuring was announced.

The pre-tax restructuring charge of $102 million in the fiscal year 2024 was recorded in Restructuring on the Consolidated Statement of Earnings, and included the termination of partnered and non-partnered development program costs, asset impairments and asset divestments.

The pre-tax restructuring expense was $479 million in the fiscal year 2023, of which $449 million was recorded in Restructuring and $30 million was recorded in Cost of products sold on the Consolidated Statement of Earnings included the termination of partnered and non-partnered 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.

See Note 20 to the Consolidated Financial Statements for additional details related to the restructuring programs.

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Several EU and non-EU countries have enacted Pillar Two legislation with an initial effective date of January 1, 2024, with other aspects of the law effective in 2025 or later.

In the fiscal year 2024, the net impact of Pillar Two legislation was less than 1.0% to the Company’s effective tax rate.

While countries continue to enact new provisions or issue new regulations, based on current guidance, the Company expects the net impact of Pillar Two in fiscal year 2025 to be up to 1.0% to the Company’s effective tax rate.

While countries continue to enact new provisions or issue new regulations this could have an impact to the Company’s effective tax rate.

The Company will continue to monitor further developments to determine any potential impact in the countries in which we operate, such as the recently issued administrative guidance on the side-by-side system that will fully exclude U.S.

parented groups from certain provisions of the Pillar Two Framework.

Liquidity and capital resources

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Cash and cash equivalents were $19.7 billion at the end of 2025 as compared to $24.1 billion at the end of 2024.

The primary sources and uses of cash that contributed to the $2.2 billion increase were:

The primary sources and uses of cash that contributed to the $4.4 billion decrease were:

(Dollars in billions)

1 unchanged sentence

24.5 cash generated from operating activities

(18.6) net cash used by investing activities

(3.1) net cash used by financing activities

(23.6) net cash used for investing activities

(5.5) net cash used for financing activities

0.2 effect of exchange rate and rounding

2 unchanged sentences

See Note 1 to the Consolidated Financial Statements for additional details on cash, cash equivalents and marketable securities.

2025 Annual Report

Cash flow from operations of $24.5 billion was the result of:

1 unchanged sentence

$26.8 Net Earnings

8.4 non-cash expenses and other adjustments primarily for depreciation and amortization, stock-based compensation, asset write-downs and charges for acquired in-process research and development assets partially offset by net gain on sale of assets/businesses and the deferred tax provision

1.7 a decrease in other current and non-current assets

10.4 non-cash expenses and other adjustments primarily for depreciation and amortization, stock-based compensation, asset write-downs, charges for acquired in-process research and development and deferred tax provision partially offset by net gain on sale of assets/businesses

(6.2) an increase in other current and non-current assets

(5.7) a decrease in other current and non-current liabilities

2.4 an increase in accounts payable and accrued liabilities

1 unchanged sentence

$24.5 Cash flow from operations

2024 Annual Report

Cash flow used for investing activities of $23.6 billion was primarily due to:

3 unchanged sentences

0.7 proceeds from the disposal of assets/businesses, net

(1.8) acquired in-process research and development assets

(0.4) acquired in-process research and development /related milestones

0.7 net sales of investments

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(0.2) credit support agreements activity, net

(1.0) settlement of convertible debt acquired from Shockwave

0.1 other and rounding

$(5.5) Net cash used for financing activities

The following table summarizes cash taxes paid net of refunds:

(Dollars in Millions) 2024 2023 2022

$3,815 4,722 2,158

State and Local taxes 341 236 216

$4,156 4,958 2,374

Total Foreign 2,558 3,616 2,849

Total cash taxes paid net of refunds $6,714 $8,574 $5,223

(1) Includes TCJA foreign undistributed earnings payments of $2.0 billion in fiscal year 2024, $1.5 billion in fiscal year 2023 and $0.8 billion in fiscal year 2022

As of December 28, 2025, the Company's notes payable and long-term debt was in excess of cash, cash equivalents and marketable securities.

1 unchanged sentence

The debt balance at the end of 2025 was $47.9 billion as compared to $36.6 billion in 2024.

In the fiscal second quarter of 2024, the Company issued senior unsecured notes for a total of $6.7 billion.

In the fiscal first quarter of 2025, the Company issued senior unsecured notes for a total of $9.2 billion.

For additional details on borrowings, see Note 7 to the Consolidated Financial Statements.

The net proceeds from this offering were used to fund the Shockwave acquisition which closed on May 31, 2024, and for general corporate purposes.

The net proceeds from this offering were used to fund the Intra-Cellular Therapies, Inc.

acquisition for approximately $14.5 billion which closed on April 2, 2025, and for general corporate purposes.

Considering recent market conditions, the Company has re-evaluated its operating cash flows and liquidity profile and does not foresee any significant incremental risk.

The Company anticipates that operating cash flows, the ability to raise funds from external sources, borrowing capacity from existing committed credit facilities and access to the commercial paper markets will continue to provide sufficient resources to fund operating needs, including the Company's remaining balance to be paid on the agreement to settle opioid litigation for approximately $1.5 billion and the approximately $11.6 billion ($13.5 billion nominal) reserve for talc matters (See Note 19 to the Consolidated Financial Statements for additional details).

The Company anticipates that operating cash flows, the ability to raise funds from external sources, borrowing capacity from existing committed credit facilities and access to the commercial paper markets will continue to provide sufficient resources to fund operating needs, including the Company’s reserve balance of approximately $3.4 billion related to talc matters, $2.0 billion related to the current portion of Corporate bonds due and the remaining

approximately $1.1 billion to settle opioid litigation (See Note 19 to the Consolidated Financial Statements for additional details).

In addition, the Company monitors the global capital markets on an ongoing basis and from time to time may raise capital when market conditions are favorable.

On May 8, 2023, Kenvue, completed an initial public offering (the IPO) resulting in the issuance of 198,734,444 shares of its common stock, par value $0.01 per share (the Kenvue Common Stock), at an initial public offering of $22.00 per share for net proceeds of $4.2 billion.

The excess of the net proceeds from the IPO over the net book value of the Johnson & Johnson

divested interest was $2.5 billion and was recorded to additional paid-in capital.

As of the closing of the IPO, Johnson & Johnson owned approximately 89.6% of the total outstanding shares of Kenvue Common Stock and at July 2, 2023, the non-controlling interest of $1.3 billion associated with Kenvue was reflected in equity attributable to non-controlling interests in the consolidated balance sheet.

On August 23, 2023, Johnson & Johnson completed the disposition of an additional 80.1% ownership of Kenvue Common Stock through an exchange offer, which resulted in Johnson & Johnson acquiring 190,955,436 shares of the Company’s common stock in exchange for 1,533,830,450 shares of Kenvue Common Stock.

The $31.4 billion of Johnson & Johnson common stock received in the exchange offer is recorded in Treasury stock.

Following the exchange offer, the Company owned 9.5% of the total outstanding shares of Kenvue Common Stock that was recorded in other assets within continuing operations at the fair market value of $4.3 billion as of August 23, 2023 and $3.9 billion as of December 31, 2023.

Johnson & Johnson divested net assets of $11.6 billion as of August 23, 2023, and the accumulated other comprehensive loss attributable to the Consumer Health business at that date was $4.3 billion.

Additionally, at the date of the exchange offer, Johnson & Johnson decreased the non-controlling interest by $1.2 billion to record the deconsolidation of Kenvue.

This resulted in a gain on the exchange offer of $21.0 billion that was recorded in Net earnings from discontinued operations, net of taxes in the consolidated statements of earnings for the fiscal third quarter of 2023.

This one-time gain includes a gain of $2.8 billion on the Kenvue Common Stock retained by Johnson & Johnson.

The gain on the exchange offer qualifies as a tax-free transaction for U.S.

federal income tax purposes.

On May 15, 2024, the Company issued $3.6 billion aggregate principal amount of commercial paper and received $3.6 billion of net cash proceeds to be used for general corporate purposes.

On May 17, 2024, the Company completed a Debt-for-Equity Exchange of its remaining 182,329,550 shares of Kenvue Common Stock for the outstanding Commercial Paper.

Upon completion of the Debt-for-Equity Exchange, the Commercial Paper was satisfied and discharged and the Company no longer owns any shares of Kenvue Common Stock.

This exchange resulted in a loss of approximately $0.4 billion recorded in Other (income) expense.

The following table summarizes the Company’s material contractual obligations and their aggregate maturities as of December 28, 2025:

To satisfy these obligations, the Company intends to use cash from operations.

(Dollars in Millions) Tax Legislation

(TCJA) Debt Obligations Interest on

(Dollars in Millions) Debt Obligations Interest on

Debt Obligations Total

7 unchanged sentences

For tax matters, see Note 8 to the Consolidated Financial Statements.

For the proposed talc settlement payments, see Note 19 to the Consolidated Financial Statements.

2024 Annual Report

For talc matters, see Note 19 to the Consolidated Financial Statements.

Financing and market risk

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A 10% appreciation of the U.S.

Dollar from the December 29, 2024 market rates would increase the unrealized value of the Company’s forward contracts by $0.2 billion.

Dollar from the December 28, 2025 market rates would increase the unrealized value of the Company’s forward contracts by approximately $0.2 billion.

Conversely, a 10% depreciation of the U.S.

Dollar from the December 29, 2024 market rates would decrease the unrealized value of the Company’s forward contracts by $0.2 billion.

Dollar from the December 28, 2025 market rates would decrease the unrealized value of the Company’s forward contracts by approximately $0.3 billion.

In either scenario, the gain or loss on the forward contract would be offset by the gain or loss on the underlying transaction, and therefore, would have no impact on future anticipated earnings and cash flows.

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Commitment fees under the agreement are not material.

2025 Annual Report

Total borrowings at the end of 2025 and 2024 were $47.9 billion and $36.6 billion, respectively.

The increase in the borrowings was due to the issuance of new debt in 2024.

The increase in the borrowings was primarily due to the issuance of new debt 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 for approximately $14.5 billion which closed on April 2, 2025, and for general corporate purposes.

In 2025, net debt (cash and current marketable securities, net of debt) was $27.8 billion compared to net debt of $12.1 billion in 2024.

2 unchanged sentences

A summary of borrowings can be found in Note 7 to the Consolidated Financial Statements.

The Company increased its dividend in 2024 for the 62 nd consecutive year.

The Company increased its dividend in 2025 for the 63 rd consecutive year.

Cash dividends paid were $5.14 per share in 2025 and $4.91 per share in 2024.

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The sales returns reserve for the total Company has been approximately 1.0% of annual net trade sales during the fiscal years 2025, 2024 and 2023.

Promotional programs, such as product listing allowances are recorded in the same period as related sales and include volume-based sales incentive programs.

Promotional programs are recorded in the same period as related sales and include volume-based sales incentive programs.

Volume-based incentive programs are based on the estimated sales volumes for the incentive period and are recorded as products are sold.

1 unchanged sentence

The Company also earns profit-share payments through collaborative arrangements of certain products, which are included in sales to customers.

Profit-share payments were less than 2.0% of the total revenues in fiscal year 2024 and 2023, respectively, and less than 3.0% of the total revenues in the fiscal year 2022 and are included in sales to customers.

In addition, the Company enters into collaboration arrangements that contain multiple revenue generating activities.

Amounts due from collaborative partners for these arrangements are recognized as each activity is performed or delivered, based on the relative selling price.

Upfront fees received as part of these arrangements are deferred and recognized over the performance period.

Profit-share payments were less than 2.0% of the total revenues in the fiscal year 2025, 2024 and 2023.

In addition, the Company enters into collaboration arrangements that contain multiple performance obligations.

Amounts due from collaborative partners for these arrangements are recognized as each performance obligation is satisfied, based on the relative selling price.

Upfront fees received as part of these arrangements are generally deferred and recognized over the performance period.

See Note 1 to the Consolidated Financial Statements for additional disclosures on collaborations.

1 unchanged sentence

The Company currently discloses the impact of changes to assumptions in the quarterly or annual filing in which there is a material financial statement impact.

2024 Annual Report

Below are tables that show the progression of accrued rebates, returns, promotions, reserve for doubtful accounts and reserve for cash discounts by segment of business for the fiscal years ended December 28, 2025 and December 29, 2024.

19 unchanged sentences

(1) Includes reserve for customer rebates of $262 million at December 28, 2025 and $187 million at December 29, 2024, recorded as a contra asset.

(2) Includes prior period adjustments

(2) Includes adjustments to revenue recognized as a result of changes in estimates for prior year transactions

2025 Annual Report

MedTech segment

22 unchanged sentences

GAAP accounting and tax reporting, recorded as deferred tax assets or liabilities.

The Company estimates deferred tax assets and liabilities based on enacted tax regulations and rates.

Future changes in tax laws and rates may affect recorded deferred tax assets and liabilities.

The Company has unrecognized tax benefits for uncertain tax positions.

The Company estimates deferred tax assets and liabilities based on enacted tax law and rates.

Future changes in tax laws and rates may affect recorded deferred tax assets and liabilities in the future.

The Company records unrecognized tax benefits for uncertain tax positions.

The Company follows U.S.

1 unchanged sentence

Management believes that changes in these estimates would not have a material effect on the Company's results of operations, cash flows or financial position.

The Company has recorded deferred tax liabilities on all undistributed earnings prior to December 31, 2017 from its international subsidiaries.

The Company has not provided deferred taxes on the undistributed earnings subsequent to January 1, 2018 from certain international subsidiaries where the earnings are considered to be indefinitely reinvested.

The Company has not provided deferred taxes on the undistributed earnings on certain international subsidiaries where the earnings are considered to be indefinitely reinvested.

The Company intends to continue to reinvest these earnings in those international operations.

If the Company decides at a later date to repatriate these earnings to the U.S., the Company would be required to provide for the net tax effects on these amounts.

If the Company decides at a later date to repatriate these earnings to the U.S., the Company would be required to record the net tax effects on these amounts.

The Company estimates that the tax effect of this repatriation would be approximately $0.6 billion under currently enacted tax laws and regulations and at current currency exchange rates.

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In addition to accruals in the self insurance program, claims that exceed the insurance coverage are accrued when losses are probable and amounts can be reasonably estimated.

The Company follows the provisions of U.S.

GAAP when recording litigation related contingencies.

A liability is recorded when a loss is probable and can be reasonably estimated.

2024 Annual Report

See Notes 1 and 19 to the Consolidated Financial Statements for further information regarding product liability and legal proceedings.

32 unchanged sentences

The litigation requests a declaration that the IRA violates Janssen’s rights under the First Amendment and the Fifth Amendment to the Constitution and therefore that Janssen is not subject to the IRA’s mandatory pricing scheme.

The impact of the IRA on our business and the broader pharmaceutical industry remains uncertain, as litigation filed by Janssen and other pharmaceutical companies remains ongoing and while CMS has publicly announced the maximum fair price for each of the selected drugs, implementation of the program is still in progress.

In April 2024, Janssen appealed the district court’s denial of its summary judgment motion to the Third Circuit.

Russia-Ukraine War

Although the long-term implications of Russia’s invasion of Ukraine are difficult to predict at this time, the financial impact of the conflict in the fiscal year 2024, including accounts receivable or inventory reserves, was not material.

As of and for each of the fiscal years ending December 29, 2024 and December 31, 2023, the business of the Company’s Russian subsidiaries represented less than 1% of the Company’s consolidated assets and revenues.

The Company does not maintain Ukraine subsidiaries subsequent to the Kenvue separation.

In March of 2022, the Company took steps to suspend all advertising, enrollment in clinical trials, and any additional investment in Russia.

The Company continues to supply products relied upon by patients for healthcare purposes.

Conflict in the Middle East

Although the long-term implications of the conflict in the Middle East are difficult to predict at this time, the financial impact of the conflict in the fiscal year 2024, including accounts receivable or inventory reserves, was not material.

As of and for each of the fiscal years ending December 29, 2024 and December 31, 2023, the business of the Company’s Israel subsidiaries represented 1% of the Company’s consolidated assets and represented less than 1% of revenues.

While the impact of the IRA on our business and the broader pharmaceutical industry remains uncertain, as litigation filed by Janssen and other pharmaceutical companies remains ongoing, CMS has publicly announced the maximum fair price for each of the selected drugs and has recently begun implementing the program.

In December 2025, Janssen sought review by the U.S.

Supreme Court of the Third Circuit's majority affirmance of the district court’s ruling in favor of the government.

The long-term implications of regional conflicts on the Company are difficult to predict.

The financial impact of known existing conflicts in the fiscal 2025 was not material.

2025 Annual Report

The Company is exposed to fluctuations in currency exchange rates.

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Changes to the statutory tax rate may occur at any time, and any related expense or benefit recorded may be material to the fiscal quarter and year in which the law change is enacted.

The Company may be further impacted by the imposition of tariffs, trade protection measures or other policies adopted by any jurisdiction that favor domestic companies and technologies over foreign competitors.

The Company faces various worldwide healthcare changes that may continue to result in pricing pressures that include healthcare cost containment and government legislation relating to sales, promotions, pricing and reimbursement of healthcare products.

2024 Annual Report

Changes in the behavior and spending patterns of purchasers of healthcare products and services, including delaying medical procedures, rationing prescription medications, reducing the frequency of physician visits and foregoing healthcare insurance coverage may continue to impact the Company’s businesses.

30 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis