Kenvue Inc. 10-K

Item 1. BUSINESS Company Overview At Kenvue, our purpose is to realize the extraordinary power of everyday care. With $15.4 billion in net sales in 2023, we are the world’s largest pure-play consumer health company by revenue. We seek to deliver sustainable profitable growth through delivering science-backed innovative products, solutions and experiences centered around consumer health. With a presence in more than 165 countries worldwide and an over 135-year legacy, we are a global leader at the intersection of healthcare and consumer goods. We operate our business through three reportable business segments: 1) Self Care, 2) Skin Health and Beauty, and 3) Essential Health. Our differentiated portfolio comprises a range of products that include iconic brands and widely recognized household names such as Tylenol ® , Neutrogena ® , Listerine ® , Johnson’s ® , BAND-AID ® Brand Adhesive Bandages, Aveeno ® , Zyrtec ® , and Nicorette ® . This broad portfolio allows us to provide holistic consumer health solutions to our consumers across a spectrum of product categories and hold leading positions across numerous large and attractive categories globally. These comprehensive solutions are backed by science and several of our brands have a long history of recommendations by healthcare professionals, which further reinforces our consumers’ confidence in our brands. Our brand portfolio and global scale across four regions—1) North America, 2) Asia Pacific (“APAC”), 3) Europe, Middle East, and Africa (“EMEA”), and 4) Latin America (“LATAM”)—and is well balanced geographically with approximately half of its net sales generated outside North America in 2023. We aim to leverage our flexible distribution network, consumer health thought leadership and data-driven customer partnerships to continue to drive joint value creation for us and our retail customers. Underpinned by Kenvue’s Healthy Lives Mission, our comprehensive Environmental, Social, and Governance (“ESG”) strategy, our core capabilities are supported by our commitment to building a resilient and sustainable business that creates value for all our stakeholders over the long term. Separation from Johnson & Johnson In November 2021, Johnson & Johnson (“J&J”), our former parent company, announced its intention to separate its Consumer Health segment (the “Consumer Health Business”) into an independent publicly traded company (the “Separation”). Kenvue was incorporated in Delaware in February 2022, as a wholly owned subsidiary of J&J, to serve as the ultimate parent company of J&J’s Consumer Health Business. In April 2023, J&J completed the transfer of substantially all of the assets and liabilities of the Consumer Health Business to us and our subsidiaries. In May 2023, we completed an initial public offering (the “IPO” or “Kenvue IPO”) of approximately 10.4% of our outstanding common stock and began trading on the New York Stock Exchange (“NYSE”) under the ticker symbol “KVUE.” Following the Kenvue IPO, J&J owned approximately 89.6% of our outstanding common stock. In July 2023, J&J announced an exchange offer (the “Exchange Offer”) under which its shareholders could exchange shares of J&J common stock for shares of our common stock owned by J&J. In August 2023, J&J completed the Exchange Offer and exchanged shares representing 80.1% of our common stock, completing the Separation from J&J and transition to being a fully independent public company. Following the Separation, J&J continues to own approximately 9.5% of our outstanding common stock. See Note 1, “Description of the Company and Summary of Significant Accounting Policies,” to the Consolidated Financial Statements included herein for additional information. We entered into a separation agreement (the “Separation Agreement”) and various agreements with J&J for the purpose of effecting the Separation. These agreements provide a framework for our relationship with J&J and govern various interim and ongoing relationships between us and J&J that follow the completion of the Kenvue IPO. See Note 12, “Relationship with J&J,” to the Consolidated Financial Statements included herein for additional information on these agreements. 5 Brands and Product Portfolio We have a world-class, intentionally designed, portfolio of iconic, trusted brands that are leaders in their respective categories, and include some of the most recognizable household names across its industry. Our overall strategy prioritizes operating our portfolio in a highly targeted manner, focusing on the most attractive categories and geographic markets. Each of our reportable segments are focused on driving financial performance by leveraging specific category expertise and capabilities while also benefiting from our scale to collaborate across the organization, including in brand management and marketing, R&D and innovation, insights and analytics and digital commerce. The reportable global segments are as follows: • Self Care. Our Self Care product categories include: Pain Care; Cough, Cold, and Allergy; and Other Self Care (Digestive Health; Smoking Cessation; Eye Care; and Other). Major brands in the segment include Tylenol ® , Motrin ® , Benadryl ® , Nicorette ® , Zyrtec ® , Zarbee’s ® , ORSL TM , Rhinocort ® , and Calpol ® . Our Self Care brands offer accessibility to health care solutions with over-the-counter medicines and other naturally inspired products. These brands deliver connected health offerings, including digital diagnostics and telemedicine, to expand its personalized solutions to consumers. • Skin Health and Beauty. Our Skin Health and Beauty product categories include: Face and Body Care; and Hair, Sun, and Other. Major brands in the segment include Neutrogena ® , Aveeno ® , Dr.Ci:Labo ® , OGX ® , Le Petit Marseillais ® , Lubriderm ® , and Rogaine ® . Our portfolio of skin and hair care brands focus on dermatological solutions by leveraging partnerships with skin experts and scientific expertise to create differentiated, science-backed products recommended by healthcare professionals. • Essential Health. Our Essential Health product categories include: Oral Care; Baby Care; and Other Essential Health (Women’s Health; Wound Care; and Other). Major brands in the segment include Listerine ® , Johnson’s ® , BAND-AID ® Brand Adhesive Bandages, Stayfree ® , o.b. ® tampons, Carefree ® , and Desitin ® Diaper Rash. Our Essential Health brands deliver positive experiences and outcomes for consumers at every stage of life and raise standards of personal care across baby care, wound care, oral care, and menstrual health categories. Brand Marketing Our digital-first approach to marketing is centrally focused on the consumer. Our marketing organization places the consumer at the center of all decisions related to our product delivery, services offering and the experiences we create. Our marketing footprint spans four regions, and our global presence allows us to tailor our marketing strategy and campaigns to the distinctive needs of our consumers in local markets throughout the world. It is our global scale and modern marketing capabilities that enable deep human-level connections with consumers. We understand, by leveraging insights across our product offerings, that consumer behavior and expectations are constantly changing. Based on these consumer insights, we are continuously evolving our brand messaging to ensure that we drive relevance with consumers and healthcare professionals, ultimately seeking to stimulate demand to drive growth. Our marketing expertise is built on a combination of human empathy, science that improves health outcomes and a digital-first approach to our content and media ecosystem. Our consumer-first approach and rigorous clinical testing allows us to articulate science in ways that meet the needs of our consumers and healthcare professionals as we win their trust, endorsement and loyalty. We are a digital-first modern marketing company. Since our leadership team took the helm in 2019, we have significantly increased our share of digital spend from approximately 44% of total media spend in 2019 to approximately 73% in 2023. This shift towards digital media has enabled flexibility and allowed us to efficiently reach high-value audiences that drive scaled demand. In addition, through this shift to digital-first approach, we can continually evaluate the impact of its media investments and consumer communications through data science and analytics. We ultimately use media ROI to evaluate and invest in these next-best growth channels and opportunities. Our combined digital-first precision capabilities maximize reach, performance and returns while reducing costs. Product Development and Innovation Our R&D organization combines deep, multi-disciplinary scientific expertise and engagement with healthcare professionals and places human empathy at the heart of our product development process. We leverage our extensive capabilities and consumer 6 insights to drive innovative new products and solutions that meet the specific needs of our consumers while enhancing their overall standard of care. We have a passionate, global team of approximately 1,500 scientists, doctors, pharmacists and engineers with expertise across a range of core disciplines, including formulation science, regulatory affairs, quality, medical affairs, medical safety, clinical operations, microbiology and packaging. Our R&D organization operates a global footprint of innovation hubs located close to consumers in key geographic markets. Our global R&D teams coordinate across the product development lifecycle in partnership with consumers and our long-standing relationships with healthcare professionals and academic institutions to co-create a continuous pipeline of meaningful innovation. We have built extensive capabilities, through our translational science and consumer insights teams, to understand our consumers’ and healthcare professionals’ key needs and current challenges, ensuring that our products are centered around human empathy. Across our end-to-end organization, we have continuous touchpoints with our consumers and healthcare professionals, utilizing a suite of digital tools to ensure we hear from our consumers regardless of where they are located. Our insights, design, marketing and research teams then leverage these consumer insights to identify key unmet needs and potential product opportunities. Supply Chain and Manufacturing Our global and balanced manufacturing footprint provides us with the flexibility and agility to benefit from economies of scale and global supply chain agreements, enabling us to grow our business and expand margins. We are continuously modernizing our supply chain operations while better connecting with and serving customers. Our end-to-end, digitally connected supply chain ecosystem is designed to optimize the flexibility and agility of our route-to-market. Reliability and resiliency remain our priority throughout our fit-for-purpose supply chain, ensuring that we can deliver our products to our customers and consumers whenever and wherever they need them. Our supply chain network is purpose-built to deploy resources across the globe where they are most needed. Our sourcing, manufacturing, and demand planning capabilities are continuously optimized to meet evolving market dynamics. Our extensive distribution network and sales organization enable us to establish strategic partnerships with key suppliers and retailers across multiple markets and channels, where we further leverage our scale to drive flexible manufacturing capacity and supply chain optimization. We believe this approach builds and supports our resilience across economic cycles and allows us to prioritize or expand our geographic focus based on our strategic priorities. Sources and Availability of Materials We maintain global operations and work with a vast supplier base. The principal raw materials used in our products include resin, pulp and corn derivatives, vegetable oils and oleochemicals. The majority of raw and packaging materials used are purchased from third parties and available from several sources. We do purchase certain raw and packaging materials from single-source suppliers or a limited number of suppliers; however, no single supplier provides a significant portion of our total material requirements. Certain raw and packaging material commodities are subject to market price variations. For further information regarding the impact of changes in commodity prices, see Item 1A, “Risk Factors — Volatility in the cost or availability of raw materials and other inputs for our products, including due to military conflicts, has adversely affected, and could in the future continue to adversely affect, our business, results of operations or financial condition.” Manufacturing Footprint Our in-house manufacturing footprint delivered over half of our production volume in 2023, with the remaining production volume being supplied by an extensive network of external manufacturing facilities operated by trusted third-party suppliers. This combination provides us with significant operational flexibility enhancing our ability to respond to demand while optimizing capital allocation. Warehousing and Distribution Capabilities Our distribution network is designed to respond to increasingly complex consumer and customer demand. The majority of our distribution centers are operated in partnership with expert third-party operators in order to leverage their scale, expertise and 7 technology platforms. In all cases, whether in-house or external, our distribution centers must comply with its rigorous quality compliance standards and are subject to our audit process. Quality Control and Compliance With a rigorous approach to product safety and quality control, we have a strong culture of quality across our end-to-end organization enhanced by rigorous compliance procedures. We invested in quality systems and data analytics platform to further drive proactive quality management and improve the effectiveness of our quality control system. Suppliers are key partners in our commitment to quality and therefore are expected to provide services and goods that consistently meet our quality standards. In order to ensure compliance with our high-quality standards, we conduct regular quality audits of our supplier base and their facilities. Our supply chain is also subject to external audits by national regulatory bodies, including the U.S. Food and Drug Administration (“FDA”), which conduct multiple regulatory inspections every year. Competition The consumer health and personal care sectors are large and dynamic, with a significant number of competitors that vary from well-established consumer packaged goods (“CPG”) companies with well-known legacy businesses globally to emerging niche-oriented brands. Given the breadth of our portfolio and global footprint, we compete with a broad set of competitors that include: 1) consumer healthcare businesses that are either independent or part of larger pharmaceutical groups; 2) global CPG companies that operate in similar or adjacent categories; 3) regional companies that operate in our categories within the markets in which we compete; 4) generic over-the-counter (“OTC”) manufacturers and private-label brands together with their customers in both traditional retail and online; and (5) emerging niche-oriented brands in our categories with distribution either through traditional retail or online and direct-to-consumer (“DTC”) channels. Across our three core segments, we experience significant degrees of competition. Our key competitors for each segment globally include: • Self Care. Haleon, Procter & Gamble, Reckitt Benckiser Group, and private-label brands • Skin Health and Beauty . Beiersdorf, L’Oréal, Procter & Gamble, Unilever, and private-label brands • Essential Health . Colgate-Palmolive, Kimberly Clark, Procter & Gamble, Unilever, and private-label brands See “Risk Factors” for additional information on our competitive risks. Environmental, Social, and Governance Our ESG management approach is designed to effectively govern and manage impacts and risks while also enabling us to identify opportunities that accelerate innovation and growth and drive business value for all our stakeholders. In October 2023, we launched an update of our Healthy Lives Mission, which includes public ESG goals and commitments intended to position our brands as healthy choices for both people and the planet and to better manage ESG-related impacts, risks, and opportunities. Kenvue’s Healthy Lives Mission is our call for everyday care in action and is supported by three pillars: nurture Healthy People, enrich a Healthy Planet, and maintain Healthy Practice. Within these three pillars, we are focused on nine priority areas for which we have established goals and commitments to hold ourselves accountable and demonstrate progress: • Nurture Healthy People . We aim to advance the well-being of the communities in which we operate and equip them with innovative products and actionable information to make healthier decisions everyday. ◦ Diversity, Equity & Inclusion ◦ Workforce Health, Safety & Well-being ◦ Public Health + Product Quality & Consumer Safety 8 • Enrich a Healthy Planet. We strive to enrich a healthy planet by making responsible and renewable choices to help safeguard the earth’s health and resources while managing the impacts we create. ◦ Climate Change ◦ Plastics ◦ Biodiversity, Land & Forests + Waste • Maintain Healthy Practice. We believe in promoting a culture of integrity, ethics and transparency to build trust and create meaningful, long-term value. ◦ Sustainable Product Innovation ◦ Product Transparency ◦ Human Rights & Labor + Ethics & Compliance Environmental Human health is inseparably linked to environmental health, and as the world’s largest pure-play consumer health company by revenue, our commitment to everyday care extends to the planet we call home. We are dedicated to advancing sustainability across our operations – from product and packaging design to material sourcing, manufacturing and transportation. Our Healthy Planet goals include: • Climate change: reduce our carbon footprint and the impact of climate change across our operations and value chain • Plastics: improve sustainability of product packaging • Biodiversity, land & forest: source materials responsibly and avoid deforestation Social We strive to advance the well-being of the communities in which we operate and aim to equip them with innovative products and information to make healthier decisions every day. Our goal is to put the power of everyday care into the hands of consumers around the world. We are dedicated to raising the standard of personal care and tackling preventable diseases through our products and resources—helping people with the tools to make healthier choices for themselves, their loved ones, and the planet. For more information, see “—Human Capital” below. Governance We support our culture of integrity, ethics and transparency to build trust and create meaningful, long-term value. Whether for people, business partners or our planet, the Kenvue purpose of realizing the power of everyday care guides how we treat our people, innovate, conduct business, and design our products. Our Board of Directors (the “Board”) is ultimately responsible for independent oversight of our ESG impacts, risks, and opportunities and for ensuring our ESG priorities and commitments are integrated into Kenvue’s long-term strategy. On an annual basis, our full Board receives an update on our “Healthy Lives Mission”, and on our ESG performance. In addition, oversight for ESG, sustainability and reporting is allocated across all three key Committees of the Board, and after each regularly scheduled Committee meeting, the Committees report to our full Board with updates on their areas of designated ESG oversight responsibilities. Our Board has adopted Principles of Corporate Governance to assist it in guiding our governance practices. In addition, among other policies, our Board has adopted a Kenvue Code of Conduct designed to provide employees with guidance on our compliance policies and a Code of Business Conduct & Ethics for Members of our Board of Directors and Executive Officers that sets forth additional guidelines applicable to members of our Board and Kenvue’s executive officers, both of which can be found on our website at https://investors.kenvue.com/governance/governance-documents/. We are proud of what we have already achieved and will provide more details about our progress against these goals and commitments when we publish our 2024 Healthy Lives Mission Report, which will be available on https://investors.kenvue.com/esg. References to our 2024 Healthy Lives Mission Report are for informational purposes only and 9 neither the 2024 Healthy Lives Mission Report nor the other information on our website is incorporated by reference into this Annual Report on Form 10-K. Human Capital Company Culture At Kenvue, we strive to build a culture of performance that rewards for impact. We are united by a common Purpose to realize the extraordinary power of everyday care and anchored in our core values: 1) we put people first, 2) we care fiercely, 3) we earn trust with science, and 4) we solve with courage. We strive to provide an environment where every employee (or Kenvuer) can be at their best, do meaningful work in service of our customers and consumers, be inspired by a strong sense of belonging and meaningful growth opportunities, and be rewarded for their impact. Demographics As of December 31, 2023, we had approximately 22,000 employees, with approximately 25% located in North America, 28% in EMEA, 29% in APAC, and 18% in Latin America. Approximately 99% of our global employees were full time and 1% were part-time employees. Our global workforce covers a broad range of functions, including manufacturing employees making up 24% of our workforce. Diversity, Equity, and Inclusion We believe that our commitment to diversity, equity and inclusion drives collaboration and strengthens our ability to compete effectively. Recognizing the importance of innovation in our industry to meet the evolving needs of our consumers, we remain focused on having the right capabilities and a workforce that is reflective of the customers and consumers we serve. As of December 31, 2023, our global workforce was approximately 50% male and 50% female, and 36% of our U.S. employees identify as racial or ethnic minorities. Our manager-level and above positions were held by approximately 47% men and 53% women, and 36% of our U.S. employees in manager-level and above positions identified as racial or ethnic minorities. The Kenvue Leadership Team is globally diverse, currently represented by 9 different nationalities, and 54% of the Kenvue Leadership Team are women. We believe that bringing diverse backgrounds and perspectives together helps us drive innovation and deliver solutions that exceed customer expectations and creates long-term value. Our Code of Conduct specifically articulates our responsibility to create an inclusive environment and to respect the dignity and diversity of all people. Kenvue’s Healthy People goals and commitments include: • Strengthen the representation of women at all management levels to reflect the market in which we operate; • Strengthen ethnic representation within our U.S. workforce at all management levels to reflect the market in which we operate; • Pay all Kenvuers equitably based on role, experience, market competitiveness and performance; and • Achieve a company-wide Inclusion Index Score in the top quartile. The Inclusion Index is a favorability metric designed to assess the level of inclusion within our organization. Our talent practices aim to drive higher levels of transparency, empowerment, and accountability that enables superior performance through high levels of engagement. For example, we have initiatives in place that aim to advance diverse representation by creating diverse interview teams and candidate slates and by expanding diversity outreach efforts through organizations that serve and engage talent from a variety of communities. We offer team members access to ongoing inclusion and diversity education and support throughout their career journey through employee resource groups known as Kenvuer Impact Networks and mentorship. In addition, we offer flexible work arrangements that enable agile ways of working and promote inclusion, health, well-being, empowerment, and accountability. Learning and Development We invest in the learning and development of all Kenvuers to ensure their skills remain relevant and keep pace with the rapid evolution in the marketplace. Learning can happen in different ways, including on-the-job, on special assignment, and in classroom training, to develop functional and/or leadership skills. Ultimately, our goal is to ensure this ongoing commitment to development and growth yields superior performance and higher levels of engagement that differentiates us from our competitors. 10 Engagement We believe that an engaged workforce is more likely to deliver higher levels of performance and further differentiates us in the marketplace. We believe that open and honest communication among all team members creates a collaborative and inclusive work environment. We regularly conduct surveys that gauge Kenvuer sentiment in areas like strategic alignment, execution, inclusion, effectiveness of our people leaders, and career development. We also strive to actively support the communities we serve worldwide as well as those in which our Kenvuers live and work through strategic investments. Our global community engagement program is just one way in which we connect our passionate purpose-driven workforce to fulfill our potential and create possibilities. We make financial contributions, provide in-kind charitable product donations and volunteer the time of team members to help non-profit organizations achieve their goals and generate societal impact. Compensation, Benefits, and Well-being We offer compensation and benefit programs designed to attract, develop, and retain top talent. We reward and recognize superior performance, support our growth and talent strategy, closely align Kenvuer compensation with company and individual performance, as well as attract, develop and retain top talent in a highly competitive environment. We aim to provide base pay that is competitive for a Kenvuer’s position, skill level, experience and geographic location. In addition to base pay, we seek to motivate and reward Kenvuers at certain job levels with annual cash incentives and equity awards. Additionally, we conduct periodic benchmarking analyses to help ensure Kenvue’s compensation programs remain competitive and regularly assess internal pay equity. We offer competitive employee benefits packages, which vary by country and region, in support of the emotional, physical health, and well-being of our Kenvuers. These employee benefits packages may include retirement plan, core and supplemental life insurance, medical and dental insurance, health savings accounts, well-being reimbursement programs, adoption assistance, fertility benefits, and parental leave. We work hard to create an environment where Kenvuers feel a strong sense of belonging, feel empowered to care for their health and well-being and that of their families, feel like they can grow and have fulfilling careers, and feel recognized and valued for their contributions. Health, Safety, and Well-being As a global leader in personal health and wellness, we believe in investing in Kenvuer health, safety, and well-being as foundational to our purpose and values. We have robust processes to identify potential safety risks associated with workplace activities, and to develop measures and implement controls to mitigate possible exposure to hazards. We support Kenvuers with general safety training and have implemented specific programs for those working in potentially high-risk environments. Intellectual Property We rely on a combination of intellectual property rights, including trademarks, trade secrets, patents and copyrights, as well as rights to third-party intellectual property pursuant to licenses and other contracts, to establish, maintain, protect and enforce the intellectual property and other proprietary information used in our business. Establishing, maintaining, protecting and enforcing our intellectual property and other proprietary rights in the United States and around the world is important to our success, and we consider these rights, in the aggregate, to be material to our business. To facilitate the Separation and enable our operations to continue with minimal interruption following the Separation, J&J has granted licenses to use certain intellectual property rights retained by J&J that we used in the conduct of its business prior to the Separation, including the “Johnson & Johnson” name and signature and other legacy J&J branding, for a limited duration following the Separation. For additional information about these licenses, see the Company’s definitive proxy statement for its 2024 Annual Meeting of Shareholders, which will be filed within 120 days after the end of the fiscal year to which this Annual Report on Form 10-K relates (the “Proxy Statement”). Our brands are critical to our success, and trademark protection is an important part of establishing and maintaining brand recognition for our products in the United States and around the world. The vast majority of our net sales are derived from products bearing proprietary trademarks and trade names. These trademarks and trade names convey that the products we sell are “brand name” products. We seek to obtain protection for these trademarks and trade names by all appropriate means, and we consider them, in the aggregate, to be material to our business. For trademarks registered in the United States, a Declaration 11 of Use must be filed between the fifth and sixth years after initial registration, then may be renewed in the tenth year, and renewed every 10 years after that, so long as the mark is still being used in commerce. Trademarks registered in other countries generally have varying terms and renewal policies. We actively file and maintain a portfolio of patents in the United States and around the world and seek to obtain and enforce patent protection by all appropriate means. While we consider these patents, and the protection thereof, to be important, we do not consider any single patent to be material to any material product or product family, and we do not expect the expiration of any single patent to have a material impact on any material product or product family. In the United States, the patent term is generally 20 years from the date the earliest non-provisional patent application to which the patent claims priority is filed, and, in many other countries, the patent term is also generally 20 years from the filing date of the patent application. Government Regulations We are subject to extensive government regulations in the United States and around the world. U.S. federal authorities, including the FDA, the Federal Trade Commission (“FTC”), the Consumer Product Safety Commission (“CPSC”), the Occupational Safety and Health Administration (“OSHA”), the Environmental Protection Agency (“EPA”) and the Drug Enforcement Administration (“DEA”), regulate various aspects of our business, along with parallel authorities at the state and local levels and comparable authorities in other jurisdictions. Government regulations in the United States and around the world apply to many areas of our business, including most aspects of our products. It is our policy and practice to comply with all government regulations applicable to our business. The process of obtaining regulatory approvals and complying with applicable federal, state and local regulations in the United States and around the world is complex, time-consuming and costly and may impact our business strategies. In addition, the global regulatory landscape is subject to rapid and unexpected changes, including as a result of the Russia-Ukraine War, the recent military conflict in the Middle East, and the general trend toward increasingly stringent regulation and enforcement around the world in recent years. For additional information about risks associated with government regulations, see “Risk Factors—Risks Related to Government Regulation and Legal Proceedings.” New or more stringent laws or regulations, more restrictive interpretations of existing laws or regulations or increased enforcement actions by governmental and regulatory agencies around the world could increase our ongoing costs of compliance, alter the environment in which we do business or otherwise adversely affect our business, results of operations or financial condition. We have products in a number of different regulatory classifications, and these classifications and their application to our products may vary from market to market. Accordingly, certain of our products are subject to varying levels of regulation in different geographic markets. The following description discusses the material effects of the regulatory landscape applicable to our business, with particular focus on the United States, the European Union, and China, which are some of our key geographic markets for our business from a regulatory perspective and markets that we believe are representative of the material differences in the regulation of our business across the various geographic markets in which we operate. Quality and Safety The FDA and comparable authorities in other jurisdictions regulate the facilities and operational procedures that we use to manufacture our products. We are required to register our facilities with these authorities. Products are required to be manufactured in our facilities in accordance with current Good Manufacturing Practices (“cGMP”) or similar manufacturing standards in each country in which we manufacture products. In addition, many of our products are subject to regulation by the CPSC under the Poison Prevention Packaging Act (“PPPA”), the Consumer Product Safety Act, the Federal Hazardous Substances Act and other laws enforced by the CPSC. These statutes and related regulations establish safety standards and bans for consumer products. Certain state laws also address the safety of consumer products and may mandate reporting or labeling requirements. Noncompliance with these laws may result in penalties or other regulatory action and related reputational harm. Drug Products In order to market and sell a new drug product in the United States, a manufacturer must 1) file a New Drug Application (“NDA”) that shows the quality, safety and effectiveness of the new drug, 2) file an Abbreviated NDA that demonstrates the equivalence of a generic product to another company’s branded drug product or 3) comply with the FDA’s monograph system. Most of our OTC products marketed in the United States are regulated pursuant to the FDA’s monograph system. The monographs establish the conditions, such as active ingredients, uses (indications), doses, labeling and testing, under which an OTC drug is generally recognized as safe and effective and can be marketed without an NDA and FDA premarket approval. 12 Products marketed under the OTC monograph system are required to conform to specific quality, formula and labeling requirements. Monograph drug products that do not comply with these standards can be deemed unapproved new drugs and can be required to be withdrawn from the market. The Over-the-Counter Monograph Safety, Innovation, and Reform Act (the “OTC Monograph Reform Act”), enacted in March 2020, is expected to introduce significant reform to the OTC monograph system, including by replacing the FDA’s existing rule making process with an administrative order process for issuing, revising and amending OTC monographs. Under the OTC Monograph Reform Act, the FDA can also require manufacturers to conduct additional testing to ensure the safety and efficacy of monograph drug products. For example, in September 2021 the FDA issued a Proposed Order Amending the OTC Monograph for Sunscreen Drug Products requiring additional data for certain ingredients to ensure their safety. In addition, certain of our OTC products, including certain Zyrtec ® , Zyrtec-D ® , Pepcid ® , and certain Imodium and Motrin products, are approved by the FDA through the NDA process rather than through the monograph system. In addition, the DEA regulates certain of our OTC products containing pseudoephedrine, such as Sudafed ® and Zyrtec-D ® , pursuant to the Combat Methamphetamine Epidemic Act (“CMEA”). Among other requirements, the CMEA sets daily and 30-day sales limits for pseudoephedrine products purchased by consumers. We are also subject to similar regulations at the state level. Our OTC products containing pseudoephedrine are also subject to heightened regulatory regimes in other jurisdictions around the world. In the European Union (“EU”), our OTC products, including certain Nicorette ® products that are not marketed by us in the United States, are subject to extensive pre- and post-marketing regulation by regulatory authorities at both the EU and EU Member State level. There are several administrative mechanisms to request regulatory approval of OTC products, including 1) the standalone national procedure for authorization in a single EU Member State, 2) the mutual recognition procedure, which is used when a product is already authorized in at least one EU Member State and approval is sought in at least one other EU Member State, and 3) the decentralized procedure, which is used when a product has not yet been authorized in the EU and authorization is sought simultaneously in several EU Member States. In China, our OTC products are regulated by the National Medical Products Administration (“NMPA”), which is the primary authority for the safety and registration of medicines, medical devices and cosmetics. Cosmetics A number of our products marketed in the United States, including many of our products in the Skin Health and Beauty segment, are considered cosmetics regulated by the FDA through the Federal Food, Drug, and Cosmetic Act and the Fair Packaging and Labeling Act. Our cosmetic products include Aveeno ® Restorative Skin Therapy Oat Repairing Cream, Aveeno ® Restorative Skin Therapy Sulfate-Free Body Wash, Johnson’s ® Baby Powder and certain of our Listerine ® mouthwash products. Cosmetics are not subject to premarket approval by the FDA, but certain ingredients, such as certain color additives, are required to be preauthorized, and the FDA seeks to ensure cosmetic products are not adulterated or misbranded. If the safety of a product or its ingredients has not been adequately substantiated, an appropriate warning label is required to be included on the product. Other warnings may also be mandated pursuant to FDA regulations. The FDA monitors compliance of cosmetic products with applicable regulations through market surveillance and inspection of cosmetic manufacturers and distributors to ensure that products do not contain false or misleading labeling, are not adulterated and are not manufactured under unsanitary conditions. Inspections also may arise from consumer or competitor complaints filed with the FDA. In the event that the FDA determines that one of our products fails to comply with FDA regulations, we may be required, or we may independently decide, to conduct a recall or market withdrawal of that product or to correct the failure by making changes to that product, including its manufacturing, formulation or label. In addition, the Modernization of Cosmetics Regulation Act, enacted in December 2022, is expected to expand the FDA’s regulatory authority over cosmetic products, including by providing the FDA with new mandatory recall authority over cosmetics and by requiring the registration of cosmetic manufacturing facilities, the reporting of certain adverse events, the issuance of cGMP requirements and the establishment of safety substantiation requirements. In addition, certain of our cosmetic products, including those containing low-viscosity hydrocarbons such as baby oil, are regulated by the CPSC under the PPPA. See “—Quality and Safety.” Medical Devices Medical devices are subject to regulation in the various jurisdictions in which we operate. Although there is variation among jurisdictions in how our products are classified, medical devices are broadly defined as products which a manufacturer intends 13 to be used to treat, cure, prevent, mitigate or diagnose disease. Medical devices generally achieve their purpose by physical modes of action; the principal intended action may not be pharmacological, immunological or metabolic. Certain of our products marketed in the United States, such as BAND-AID ® Brand Adhesive Bandages (including Ourtone Adhesive Bandages), Listerine ® Sensitivity Defense Mouthrinse and Tylenol ® SmartCheck Digital Ear Scope, are medical devices regulated by the FDA through a system that, unless exempt, requires us to receive premarket clearance for commercial distribution known as a 510(k) clearance. To obtain 510(k) clearance, a device is required to be determined to be substantially equivalent in intended use and in safety and efficacy to a benchmark device, or “predicate,” that is already legally in commercial distribution. Any modification to a 510(k) cleared device that could significantly affect its safety or efficacy or that would constitute a change in its intended use generally requires a new 510(k) clearance. If we determine that a new 510(k) clearance is not required but the FDA subsequently disagrees, the FDA may retroactively require us to obtain a new 510(k) clearance and may require us to cease marketing, or conduct a recall, of the modified device until the new 510(k) clearance is obtained. In the European Union, manufacturers may self-certify compliance of certain medical devices by submitting notifications to the competent authority, with files open to inspection by a competent authority. In May 2021, the Medical Device Regulation (Regulation (EU) 2017/745) (“MDR”) came into effect in the European Union. The MDR is more comprehensive than the prior regime as it greatly increases the rigor and robustness of the regulations governing medical device products. All medical devices are expected to meet the MDR requirements, and there is no “grandfathering” of products. In addition, all approved products and their manufacturers are subject to re-review on periodic cycles of up to every four years. In recent years, we have also introduced certain connected health offerings as non-medical device apps, including certain products that are not offered in the United States, such as the Nicorette ® QuickMist SmartTrack, which is deemed a wellness app and, as such, is not regulated as a medical device by the health authorities in the countries in which it is offered. Any determination that medical device clearance is required for a product that we currently offer as a non-medical device may cause us to cease marketing, or conduct a recall, of the modified product until such clearance is obtained. In China, locally manufactured medical devices gain market authorization through municipal authorities, while medical devices that are not manufactured in China are reviewed by the NMPA and must be accompanied by appropriate documentation showing that the device has been approved in its country of origin. Dietary Supplements Some of our products under the Zarbee’s ® brand and the Lactaid ® brand that are marketed in the United States are considered dietary supplement products and are governed by the Dietary Supplement Health and Education Act of 1994, which defines and regulates dietary supplements. Dietary ingredients that were not marketed in the United States before October 15, 1994 are required to be the subject of a new dietary ingredient notification submitted to the FDA at least 75 days before the initial marketing, unless the ingredient has been present in the food supply as an article used for food without being chemically altered. The FDA may determine that the notification does not provide an adequate basis to conclude that a new ingredient is reasonably expected to be safe, which could effectively prevent the marketing of the ingredient. Furthermore, a company that uses a statement of nutritional support in the labeling for a product is required to possess information substantiating that the statement is truthful and not misleading. If the FDA determines that a particular statement of nutritional support is an unacceptable drug claim or an unauthorized version of a health claim, or if the FDA determines that a particular claim is not adequately supported by existing scientific evidence or is otherwise false or misleading, the claim cannot be used and any product bearing the claim on its labeling could be subject to regulatory action. A comparable regulatory regime operates in the European Union, where dietary supplements, including some of our products under the Zarbee’s ® brand, are regulated as food products pursuant to the Food Supplements Directive 2002/46/EC. Most EU Member States have implemented notification procedures that require reporting prior to or immediately after the commencement of sales of a dietary supplement. Labeling and Product Claims Kenvue is subject to various laws on labeling and product claims, including with respect to the characteristics, quality, safety, performance and benefits of Kenvue’s products. Kenvue typically is required to have a reasonable basis to support any factual marketing claims, and what constitutes a reasonable basis for substantiation can vary widely from market to market and from product to product. For example, while cosmetic labeling does not require FDA premarket approval, the FDA regulates cosmetic labeling claims and monitors, and takes action against, claims that are not truthful, are misleading or make medicinal claims. The FDA is also responsible for taking action against any misbranded dietary supplement product after it reaches the market. In addition, while Kenvue’s labeling and advertising claims for its monograph drug products, such as certain 14 Benadryl ® , Tylenol ® and Neutrogena ® products, and advertising claims for NDA products are not subject to approval by the FDA, labeling claims for Kenvue’s NDA products, such as certain Zyrtec ® , Pepcid ® , Imodium ® and Motrin ® products, are approved by the FDA. In certain circumstances, Kenvue may also be subject to additional regulations depending on the nature of the labeling and product claims. For example, the U.S. Department of Agriculture enforces federal standards for organic production and use of the term “organic” on product labeling. The FTC regulates the use of endorsements and testimonials in advertising as well as relationships between Kenvue, on the one hand, and advertisers and influencers, on the other hand, pursuant to principles described in the FTC’s Guides Concerning the Use of Endorsements and Testimonials in Advertising (the “Endorsement Guides”). The Endorsement Guides provide that an endorsement should reflect the honest opinion of the endorser and cannot be used to make a claim about a product that the product’s marketer could not itself legally make. The Endorsement Guides also stipulate that, if there is a connection between an endorser and the marketer that consumers would not expect and this connection would affect how consumers evaluate the endorsement, then that connection should be disclosed. If Kenvue’s advertising claims or claims made by its social media influencers or by other endorsers with whom Kenvue has a material connection do not comply with the Endorsement Guides or any requirements of the FTC Act or similar state requirements, then the FTC and state authorities could subject Kenvue to investigations and enforcement actions, impose penalties, require Kenvue to pay monetary consumer redress, require Kenvue to revise its marketing materials or require Kenvue to accept burdensome injunctions, any of which could adversely affect Kenvue’s business, results of operations or financial condition. Furthermore, the National Advertising Division (“NAD”) of the Better Business Bureau administers a self-regulatory program of the advertising industry to ensure truth and accuracy in national advertising. NAD monitors national advertising and entertains inquiries and challenges from competitors and consumers. Kenvue may also be subject to various state consumer protection laws, including California’s Proposition 65, which requires a specific warning on any product that contains a substance listed by California as having been found to cause cancer or birth defects, unless the level of such substance in the product is below a safe harbor level. In the European Union, advertising of products is subject both to general consumer advertising requirements pursuant to the Unfair Commercial Practices Directive (Directive 2005/29/EC), which imposes a general prohibition on misleading and aggressive advertising, as well as more specific regulations in respect of various product classifications. For example, pursuant to Directive 2001/83/EC, advertisements of Kenvue’s OTC products must, among other requirements, 1) be set out in such a way that it is clear that the message is an advertisement and that the product is clearly identified as a medicinal product, 2) not refer to claims of recovery in improper, alarming or misleading terms and 3) not suggest that the effects of taking the medicine are guaranteed, are unaccompanied by adverse reactions or are better than, or equivalent to, those of another treatment or medicinal product. The European Union has also established a legal framework for cosmetic labeling claims based on the Cosmetics Products Regulation (Regulation (EC) No 1223/2009). So-called “responsible persons” must ensure that a cosmetic product made available on the market is safe for human health when used under normal or reasonably foreseeable conditions, taking into account presentation, labeling, instructions for use and disposal and any other indication or information provided by the responsible person. In China, advertisements of OTC products must, among other requirements, include an “OTC” marking and must not contain difficult or confusing medical or pharmaceutical terms that could mislead the public about a product’s efficacy or safety. Pricing Our activities are subject to a variety of price control laws and regulations in some of the markets in which we operate. The range and extent of these price control mechanisms vary by market. In addition, price control laws or regulations may become more stringent during times of uncertain or unfavorable economic or market conditions, such as during times of economic slowdown, recession or inflation. Environment, Health and Safety The EPA and parallel state and local authorities in the United States, as well as comparable authorities around the world, enforce a broad range of environmental laws and regulations in the jurisdictions in which we manufacture and sell our products or otherwise operates our business. These include requirements governing product content and labeling, the handling, manufacture, transportation, storage, use and disposal of chemicals and other hazardous materials and wastes, the discharge and emission of pollutants and the cleanup of contamination in the environment. For more information on the broad range of environmental, health and safety laws that Kenvue is subject to. See “Risk Factor s— Risks Related to Government Regulation and Legal Proceedings — We are subject to a broad range of environmental, health and safety laws and regulations, and the 15 impact of any obligations under these laws and regulations could adversely affect our business, results of operations or financial condition.” We are also subject to extensive and evolving regulations regarding the manufacturing, processing, distribution, importing, exporting and labeling of our products and their raw materials. In the European Union, the Registration, Evaluation, Authorisation and Restriction of Chemicals (“REACH”) regulations came into effect in 2007, with implementation rolling out over time. Registered chemicals then can be subject to further evaluation and potential restrictions. Since the promulgation of REACH, other countries have enacted or are in the process of implementing similar comprehensive chemical regulations. Our operations are also subject to regulation under OSHA and parallel state and local occupational health and safety standards, as well as occupational health and safety standards applicable to our operations in other jurisdictions. These standards establish certain employer responsibilities, including requirements to maintain a workplace free of recognized hazards likely to cause serious injury or death, certain medical and hygiene standards, licensing and permitting obligations and various recordkeeping, disclosure and procedural requirements. Privacy and Data Protection We are subject to increasingly complex and changing privacy and data protection laws and regulations in the United States and around the world that impose broad compliance obligations on the collection, transmission, dissemination, use, privacy, confidentiality, security, retention, availability, integrity and other processing of health-related and other sensitive and personal information. In the United States, we are subject to a range of privacy and data protection laws and regulations, the specific requirements of which vary from state to state. We are also subject to federal health information privacy laws. Outside the United States, the European Union’s General Data Protection Regulation (“EU GDPR”) and the United Kingdom’s General Data Protection Regulation (“U.K. GDPR”), together with national legislation, regulations and guidelines of the EU Member States and the United Kingdom governing the processing of personal data, impose strict obligations and restrictions on the ability to collect, analyze, store, transfer and otherwise process personal data, including health data and adverse event reporting. In China, we are subject to the Personal Information Protection Law (“PIPL”), which applies to the processing of personal information of natural persons within China, the processing of personal information outside China where the purpose is to provide products and services within China and the analysis or assessment of the activities of individuals within China. While similar to the GDPR, the PIPL contains unique requirements not found in the GDPR. In addition, we are subject to China’s Cybersecurity Law, which establishes its overall security framework and China’s Data Security Law, which aims to protect the security of processed data. Additional privacy and data protection laws and regulations are being developed around the world, including in other jurisdictions in which Kenvue operates, and privacy enforcement by governmental authorities globally, particularly on data localization requirements and international data flows, has increased in recent years. Compliance with these new and changing laws has impacted, and may in the future impact, Kenvue’s business strategies, and unforeseen changes to privacy laws may affect Kenvue’s ability to tailor and personalize Kenvue’s products and services to meet Kenvue’s strategic goals or consumer expectations, which could adversely affect Kenvue’s business, results of operations or financial condition. Anti-Corruption We are subject to various anti-corruption laws and regulations, such as the U.S. Foreign Corrupt Practices Act (“FCPA”), that generally prohibit companies from promising, offering or giving anything of value to foreign officials with the corrupt intent of influencing the foreign official for the purpose of obtaining or retaining business or gaining any improper advantage. Similar to the U.S. application and enforcement of the FCPA, various jurisdictions in which we operate have laws and regulations, including the U.K. Bribery Act 2010 and Chinese anti-corruption laws, aimed at preventing and penalizing corrupt behavior. In addition, our interactions and financial relationships with healthcare professionals and government officials (including individuals acting on behalf of hospitals or other institutions owned or controlled by a government body) are subject to varying degrees of regulation and restriction in the jurisdictions in which we operate. These regulations and restrictions are generally intended to protect against corruption and conflicts of interest in connection with the expenditure of government funds and to ensure fairness and transparency in their legislative, regulatory and procurement processes. Other Regulations We are also subject to a variety of other laws and regulations in the United States and around the world. For example, we must comply with an increasing number of laws designed to combat abuses of human rights in supply chain operations. In addition, our selling practices are regulated by competition law authorities in the United States and around the world. We are also subject to laws and sanctions imposed by the United States (including those imposed by the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”) and other authorities that may prohibit us or our affiliates from doing business in certain 16 countries or restrict the type of business that may be conducted by us or our affiliates. For example, actions taken in response to the Russia-Ukraine War have included the imposition of export controls and broad financial and economic sanctions against Russia, Belarus and specific areas of Ukraine. Enforcement activities under these laws and regulations could subject us to additional administrative and legal proceedings and actions, which could include claims for civil penalties, criminal sanctions and administrative remedies. Seasonality Our business is generally not seasonal. However, certain products within our Self Care and Skin Health and Beauty segments are subject to degrees of seasonal sales fluctuations. For example, in our Self Care segment, certain of our OTC products, such as Tylenol ® and Motrin ® , are typically purchased more frequently during the cold and flu season in the winter or, in the case of Zyrtec ® and Benadryl ® , during high allergy seasons in the spring and the fall. In addition, in our Skin Health and Beauty segment, sales of our products that contain SPF are typically higher in the summer and sales of our products that contain moisturizers are typically higher in the fall and the winter. The net effect of these seasonal sales fluctuations on our worldwide annual sales has historically been minimal within each of our business segments and across our business as a whole. Available Information The Company’s main corporate website address is www.kenvue.com. All of the Company’s SEC filings are available free of charge on the Company’s investor relations website at https://investors.kenvue.com, as soon as reasonably practicable after having been electronically filed or furnished to the SEC. We file annual reports, quarterly reports, current reports, proxy statements and other documents with the SEC under the Securities Exchange Act of 1934 (the “Exchange Act”). The SEC maintains an Internet site that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC at https://www.sec.gov. The Company encourage investors and others interested in the Company to review the information posted to its investor relations site, the Company's SEC filings, press releases, public conference calls, and webcasts. Use of Website to Provide Information From time to time, we have used, and expect in the future to use, our website as a means of disclosing material information to the public in a broad, non-exclusionary manner, including for purposes of the SEC’s Regulation Fair Disclosure (Reg FD). Financial and other material information regarding the Company is routinely posted on our website and accessible at https://investors.kenvue.com. In order to receive notifications regarding new postings to our website, investors are encouraged to enroll on our website to receive automatic email alerts. None of the information on our website is incorporated into this Annual Report or any other filings the Company makes with the SEC.