What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-02-20 compared with 2025-02-24 · 241 added, 221 removed, 353 unchanged (57% of the section changed)

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As a global leader at the intersection of healthcare and consumer goods, we are the world’s largest pure-play consumer health company by revenue with $15.1 billion in Net sales in the fiscal year 2025.

By combining the power of science with meaningful human insights and our digital strategy, we empower consumers to live healthier lives every day.

Built on more than a century of heritage and trusted by generations, our differentiated portfolio of iconic brands—including Tylenol ® , Neutrogena ® , Listerine ® , Johnson’s ® , BAND-AID ® Brand, Aveeno ® , Zyrtec ® , and Nicorette ® —is backed by science and recommended by healthcare professionals, which further reinforces our consumers’ connections to our brands.

By combining the power of science with meaningful consumer insights and our digital strategy, we empower consumers to live healthier lives every day.

Built on more than a century of heritage and trusted by generations, our differentiated portfolio of iconic brands—including Aveeno ® , BAND-AID ® Brand, Johnson’s ® , Listerine ® , Neutrogena ® , Nicorette ® , Tylenol ® , and Zyrtec ® —is backed by science and recommended by healthcare professionals, which further reinforces our consumers’ connections to our brands.

Our portfolio includes Self Care, Skin Health and Beauty, and Essential Health products, allowing us to connect with consumers globally in their daily rituals and the moments that matter most.

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With a sole focus on consumer health, our marketing organization operates efficiently by leveraging our precision marketing, e-commerce, and broader digital capabilities to develop unique consumer insights and further enhance the relevance of our brands.

Similarly, our research and development organization combines these consumer insights with deep, multi-disciplinary scientific expertise, and engagement with healthcare professionals, to drive innovative new products, solutions, and experiences centered around consumer health.

Similarly, our research and development organization combines these consumer insights with deep, multi-disciplinary scientific expertise, and active engagement with healthcare professionals, to drive innovative new products, solutions, and experiences centered around consumer health.

Our Business Segments

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and Other Self Care (Digestive Health, Smoking Cessation, Eye Care, and Other).

Major brands in the segment include Tylenol ® , Motrin ® , Nicorette ® , Benadryl ® , Zyrtec ® , Zarbee’s ® , ORSL TM , Rhinocort ® , and Calpol ® .

Major brands in the segment include Benadryl ® , Calpol ® , Motrin ® , Nicorette ® , Rhinocort ® , Tylenol ® , Zarbee’s ® , and Zyrtec ® .

• Skin Health and Beauty.

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and Hair, Sun, and Other.

Major brands in the segment include Neutrogena ® , Aveeno ® , Dr.Ci:Labo ® , OGX ® , Le Petit Marseillais ® , Lubriderm ® , and Rogaine ® .

Major brands in the segment include Aveeno ® , Dr.Ci:Labo ® , Le Petit Marseillais ® , Lubriderm ® , Neutrogena ® , OGX ® , and Rogaine ® .

• Essential Health.

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and Other Essential Health (Women’s Health, Wound Care, and Other).

Major brands in the segment include Listerine ® , Johnson’s ® , BAND-AID ® Brand, Stayfree ® , o.b.

® tampons, Carefree ® , and Desitin ® .

For additional information about our three reportable business segments, see “ —Key Factors Affecting Our Results—Our Brands and Product Portfolio ” and Note 18 , “Segments of Business and Geographic Areas , ” to the Consolidated Financial Statements included herein .

Major brands in the segment include BAND-AID ® Brand, Carefree ® , Desitin ® , Johnson’s ® , Listerine ® , o.b.

® tampons, and Stayfree ® .

For additional information about our three reportable business segments, see Note 18 , “Segments of Business and Geographic Areas , ” to the Consolidated Financial Statements included herein .

Separation from J&J

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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 of approximately 10.4% of our outstanding common stock and began trading on the 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 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 approximately 80.1% of our common stock, completing the Separation from J&J and transition to being a fully independent public company.

In May 2023, we completed an initial public offering and began trading on the NYSE under the ticker symbol “KVUE.” In July 2023, J&J announced an 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, completing the Separation and our transition to being a fully independent public company.

In May 2024, J&J completed an additional exchange offer through which J&J exchanged indebtedness of J&J for shares of our common stock owned by J&J.

Following the completion of the Debt for Equity Exchange, J&J no longer owned any shares of our common stock.

See Note 1, “Description of the Company and Summary of Significant Accounting Policies—Description of the Company and Business Segments,” to the Consolidated Financial Statements for additional information.

Following the completion of the Debt-for-Equity Exchange, J&J did not own any shares of our common stock.

We are incurring certain non-recurring separation-related costs in connection with our establishment as a standalone public company (the “Separation-related costs”).

We expect the Separation-related costs will continue through approximately the first half of fiscal year 2025.

Separation-related costs associated with information technology and other activities, primarily related to the disentanglement of systems and the discontinuance of certain information technology assets, are substantially completed.

However, costs related to legal entity name changes and certain other separation-related activities are expected to continue for a longer period than originally anticipated.

For additional information about the Separation, see Note 1, “Description of the Company and Summary of Significant Accounting Policies,” and Note 12, “Relationship with J&J,” to the Consolidated Financial Statements included herein.

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See Note 12, “Relationship with J&J,” to the Consolidated Financial Statements included herein for additional information on these agreements.

Kenvue Global Headquarters

Kenvue Global and North America Headquarters

On April 20, 2023, we entered into a long-term lease for a newly renovated global and North America corporate headquarters building and a newly constructed research and development building in Summit, New Jersey.

We expect to officially open our new global and North America corporate headquarters in March 2025.

In March 2025, we began operating out of the new global and North America corporate headquarters.

The relocation to our new campus from multiple U.S.- based locations will continue through 2026 when the new research and development building is expected to be complete.

When construction is completed, the campus will encompass approximately 290,000 square feet.

The Global and North America Headquarters Lease collectively includes the lease associated with the global and North America corporate headquarters building, the lease associated with the land where the research and development building is under construction, and the lease associated with land to be used for amenities.

On February 21, 2024, we listed our interim corporate headquarters in Skillman, New Jersey for sale, which met the criteria to be classified as held for sale at that date.

For the fiscal three months ended March 31, 2024, an impairment charge of $68 million was recorded on the held for sale asset associated with the interim corporate headquarters in Skillman.

See Note 1, “Description of the Company and Summary of Significant Accounting Policies—Assets Held for Sale,” to the Consolidated Financial Statements included herein for more information.

On February 21, 2024, we listed our former corporate headquarters in Skillman, New Jersey, for sale, which met the criteria to be classified as held for sale at that date.

For the fiscal three months ended March 31, 2024, an impairment charge of $68 million was recorded on the held for sale asset associated with the former corporate headquarters in Skillman.

During the fiscal three months ended December 28, 2025, we completed the sale of the Skillman, New Jersey, facility and recognized a gain of $17 million.

See Note 1, “Description of the Company and Summary of Significant Accounting Policies—Impairment of Long-Lived Assets—Assets Held for Sale,” to the Consolidated Financial Statements included herein for more information.

Recent Developments

Restructuring

See Note 20, “Subsequent Events,” to the Consolidated Financial Statements included herein for information about our restructuring initiative approved by our Board on February 17, 2026.

Strategic Review and Proposed Transaction with K-C

In July 2025, we announced that our Board had previously initiated a comprehensive review of strategic alternatives and has established a strategic review committee (the “Strategic Review Committee”) to oversee the ongoing process, which was discontinued effective February 18, 2026.

On November 2, 2025, following our Board’s review of strategic alternatives, our Board unanimously approved the execution of the Merger Agreement pursuant to which K-C will acquire all of the outstanding shares of the Company for a combination of stock and cash in a series of transactions, as described in Note 1, “Description of the Company and Summary of Significant Accounting Policies—Proposed Transaction with Kimberly-Clark,” to the Consolidated Financial Statements included herein.

Pursuant to the terms and subject to the conditions of the Merger Agreement, Company shareholders will receive the Merger Consideration consisting of 1) 0.14625 shares of K-C common stock and 2) $3.50 in cash for each share of the Company they own.

Upon completion of the Proposed Transaction, current K-C shareholders are expected to own approximately 54%, and current Company shareholders are expected to own approximately 46% of the combined company on a fully diluted basis.

The Merger Agreement contains customary representations, warranties, covenants, and termination rights.

The Proposed Transaction is expected to close in the second half of 2026 and is conditioned on the satisfaction or waiver of other customary closing conditions, including the receipt of antitrust clearance in the United States and a number of foreign regulatory approvals.

On January 29, 2026, our shareholders approved the adoption of the Merger Agreement and K-C’s shareholders approved the issuance of K-C common stock in connection with the Proposed Transaction, in each case at a special meeting of shareholders held for that purpose.

Additionally, the waiting period applicable to the Proposed Transaction under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, expired on February 4, 2026.

We are incurring costs, which primarily consist of expenses incurred in connection with the Proposed Transaction, including advisory fees, legal costs, and other professional service costs (the “Proposed Transaction costs”).

Acetaminophen Regulatory Developments

In September 2025, officials in the U.S.

federal government alleged that in utero exposure to acetaminophen (the active ingredient in Tylenol ® , an over-the-counter pain medication) may be associated with an increased risk of neurological conditions such as autism spectrum disorder and attention-deficit/hyperactivity disorder in children and cautioned against the use of Tylenol ® by pregnant women.

The FDA also stated it initiated the process for a label change for acetaminophen and issued a notice to physicians.

A third party, Informed Consent Action Network, filed a citizen petition in September 2025 regarding safety-related labeling changes for the use of over-the-counter acetaminophen-containing drug products during pregnancy.

Our subsidiary, Kenvue Brands LLC, submitted its response to the citizen petition in October 2025, requesting that the FDA deny the petition.

In November 2025, a second citizen petition was filed by a third party, the Americans for Scientific Integrity, requesting the FDA update the labeling of OTC acetaminophen-containing drug products to reflect a potential risk of neurodevelopmental harm, including autism spectrum disorder, from exposure during early childhood.

The foregoing actions may depress sales of acetaminophen and could result in an increased risk of future litigation containing similar claims.

See Note 17, “Commitments and Contingencies,” to the Consolidated Financial Statements included herein for details regarding certain litigation matters that are currently pending related to acetaminophen.

For the fiscal twelve months ended December 28, 2025, we performed a qualitative assessment on each of our reporting units on the annual test date and concluded that no impairment to goodwill was necessary as it was more likely than not that the estimated fair value of each reporting unit was in excess of its respective carrying value.

In addition to the qualitative assessment performed as of the annual test date for the fiscal twelve months ended December 28, 2025, there was a reassessment of the long-term outlook for the Skin Health and Beauty business during the fiscal three months ended September 28, 2025.

The revised outlook aimed to address slower growth in the broader skincare categories, as well as the recent decline in profitability of the Skin Health and Beauty reporting unit.

We revised the internal forecasts to reflect the updated outlook.

These changes in circumstances were determined to be a triggering event, which resulted in a quantitative interim impairment assessment of the fair value of the Skin Health and Beauty reporting unit.

We also elected to perform a quantitative interim impairment assessment for the Self Care and Essential Health reporting units in conjunction with the assessment performed for the Skin Health and Beauty reporting unit.

We estimate the fair value of a reporting unit using a combination of a discounted cash flow model and a market-based approach.

The discounted cash flow model relies on assumptions regarding revenue and net income growth rates, projected working capital needs, capital expenditures, and discount rates.

Forecasted cash flows are discounted to present value to estimate the fair value.

Under the market-based approach, we utilize the guideline public company method and market transaction method.

These methods utilize valuation multiples derived from comparable publicly traded companies and relevant industry transactions, which are then applied to the reporting unit’s operating performance metrics.

Based on the results of the assessment, the estimated fair value of the Skin Health and Beauty reporting unit exceeded the carrying value by approximately 10%;

therefore, no impairment charge was recorded for the fiscal three months ended September 28, 2025.

If all other assumptions were held constant, an increase of approximately 100 basis points in the selected discount rate would have resulted in an impairment charge.

No impairment to goodwill was necessary for any of the reporting units, as the estimated fair value of each reporting unit exceeded its respective carrying value.

A decline in forecasted Net sales or net income, or adverse macroeconomic developments such as rising interest rates, could significantly reduce the excess between fair value and carrying value.

We will continue to monitor the performance of the Skin Health and Beauty business;

further deterioration of market conditions or an inability to execute on our strategies could lead to an impairment charge of the goodwill associated with the Skin Health and Beauty reporting unit in the future.

Macroeconomic Developments

Macroeconomic developments, including changes in global trade policies, may adversely affect prevailing economic conditions and our business, results of operations, or financial condition.

In 2025, the U.S.

government issued executive orders imposing tariffs on goods imported into the United States.

These actions, as well as retaliatory tariffs imposed by other countries on U.S.

exports, are expected to increase supply chain costs in certain geographies and create economic uncertainty for consumers.

While the situation is fluid, based on our current analysis of the effects of the tariffs that have been implemented by the United States and retaliatory measures that are in effect as of the reporting date, we estimate gross tariff exposure of approximately

$130 million annualized.

We continue to monitor the potential impacts that the increased tariffs and other trade restrictions may have on our business, and we continue to focus on internal mitigating actions to partially offset the impact.

Key Factors Affecting Our Results

We believe that our performance and future success depend on a number of factors that present significant opportunities for us but also pose risks and challenges, including those discussed below and in Part I, Item 1A, “Risk Factors,” of this Annual Report on Form 10-K.

We believe that our performance and future success depend on a number of factors that present significant opportunities for us but also pose risks and challenges, including those discussed below, in Part I, Item 1A, “Risk Factors,” and the section titled “Cautionary Note Regarding Forward-Looking Statements ” included herein.

Our Brands and Product Portfolio

We have a world-class, global portfolio of iconic and modern brands, and for over 135 years, we have been making and investing in consumer products that are trusted by generations of consumers.

We have a world-class, global portfolio of iconic brands, and for over 135 years, we have been making and investing in products that are trusted by generations of consumers.

Our business is balanced and resilient with leading brands across categories and geographic markets.

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Our brands are built for moments that uniquely matter;

these moments of care create an emotional connection to our products that creates deep bonds between consumers and our brands.

these moments of care create an emotional connection to our products, enabling deep bonds between consumers and our brands.

Consumers, customers, and third-party partners value and trust the reputation, reliability, and status of our brands and the quality, performance, and functionality of our products, and we believe there are significant opportunities to further increase our category and brand penetration by continuing to deepen our brand relevance and salience across our portfolio, continually earning a place for our products in consumers’ hearts and homes.

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Other recent trends that have affected consumer preferences include an aging population, premiumization (where consumers switch their purchases to premium alternatives), a growing middle class in emerging markets, and the rise of digital ecosystems that create new opportunities for personalized health solutions.

We expect these trends to continue and that consumers will continue to seek solutions that meet their health goals, creating growth opportunities across our product portfolio.

We expect these trends to continue so that consumers will continue to seek solutions that meet their health goals, creating growth opportunities across our product portfolio.

We rely on science.

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Increased Competition

Our products are sold in a highly competitive global marketplace, which, in recent years, has experienced increased retail trade concentration, the emergence of retail buying alliances, the rapid growth of e-commerce, and the integration of traditional and digital operations at key customers.

One of our customers accounted for approximately 12%, 12%, and 13% of total Net sales for the fiscal twelve months ended December 29, 2024, December 31, 2023, and January 1, 2023, respectively.

Our top 10 customers represented approximately 41%, 41%, and 42% of total Net sales for the fiscal twelve months ended December 29, 2024, December 31, 2023, and January 1, 2023, respectively .

Our products are sold in a highly competitive global marketplace, which, in recent years, has experienced increased retail trade concentration, the emergence of retail buying alliances, including the consolidation of bargaining strength across multiple partners, the rapid growth of e-commerce, the rise of agentic shopping, and the integration of traditional and digital operations at key customers.

One of our customers accounted for approximately 12% of total Net sales in each of the fiscal twelve months ended December 28, 2025, December 29, 2024, and December 31, 2023.

Our top 10 customers represented approximately 41% of total Net sales in each of the fiscal twelve months ended December 28, 2025, December 29, 2024, and December 31, 2023 .

A s a result of these trends, certain large-format customers have significant bargaining strength and represent a significant portion of our total Net sales.

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We have built our supply chain network 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 optimize our sourcing, manufacturing, and demand planning capabilities to meet evolving market dynamics.

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.

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The 2024 Multi-Year Restructuring Initiative primarily includes global workforce reductions, changes in management structure, and the transition to centralized shared-service functions in lower-cost locations.

As of the end of fiscal year 2025, we have substantially completed all actions under the 2024 Multi-Year Restructuring Initiative.

See Note 19, “Restructuring Expenses and Operating Model Optimization Initiatives,” to the Consolidated Financial Statements included herein for further information.

Supply Chain Optimization Initiatives

Since 2019, we have taken significant steps to meet consumer demand and mitigate supply chain constraints.

We have redesigned our manufacturing and distribution network, optimizing both in-house and external manufacturing and distribution footprints to improve lead time and reliability across the globe.

We selectively invested in specific technologies and expanded our capacity in different geographic markets with the intent to increase competitiveness by improving cost, speed, compliance, and customer service.

As a result, our historical results of operations reflect savings delivered through these end-to-end supply chain optimization initiatives.

Macroeconomic Trends

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The impact of these issues may adversely affect prevailing economic conditions and our business, results of operations, or financial condition.

Russia-Ukraine War

Although the long-term implications of the Russia-Ukraine War are difficult to predict at this time, the financial impact of the conflict during the fiscal twelve months ended December 29, 2024, December 31, 2023, and January 1, 2023 was not significant to our results of operations.

For the fiscal twelve months ended December 29, 2024, December 31, 2023, and January 1, 2023, our Ukrainian business represented 0.2%, 0.2%, and 0.1% of our Net sales, respectively.

As of both December 29, 2024 and December 31, 2023, our Ukrainian business represented 0.1% of our assets.

For the fiscal twelve months ended December 29, 2024, December 31, 2023, and January 1, 2023, our Russian business represented 1.1%, 1.0%, and 1.4% of our Net sales, respectively.

As of both December 29, 2024 and December 31, 2023, our Russian business represented 0.7% of our assets.

In the fiscal three months ended April 3, 2022, we announced our decision to suspend supply of all of our products into Russia other than our OTC medicines within our Self Care segment, which we continued to supply as patients rely on many of these products for healthcare purposes.

Supply of the suspended products terminated during the fiscal three months ended July 3, 2022.

We also suspended branded advertising, clinical trials, and additional investment in Russia.

We will continue to monitor the geopolitical situation in Russia and evaluate our activities and future operations in Russia.

Foreign Currency Exposure

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As a result, we face foreign currency exposure on the translation into U.S.

dollars of our results of

operations in numerous jurisdictions.

dollars of our results of operations in numerous jurisdictions.

We manage the impact of foreign exchange rate translation and transaction exposures through operational means and the use of derivative financial instruments such as forward foreign exchange contracts and cross currency swap contracts.

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Acquisitions and Divestitures

We continually assess and refine our portfolio through acquisitions of businesses as well as divestitures of assets that we do not believe are well integrated into our product portfolio and strategic direction.

We believe our strong balance sheet will allow us to strategically make acquisitions and divestitures while maintaining our disciplined approach to capital allocation.

We did not complete any significant acquisitions or divestitures during the fiscal twelve months ended December 29, 2024, December 31, 2023, and January 1, 2023.

We did not complete any significant acquisitions or divestitures during the fiscal twelve months ended December 28, 2025, December 29, 2024, and December 31, 2023.

Legal Proceedings

We and/or certain of our subsidiaries are involved from time to time in various lawsuits and claims relating to product liability, labeling, marketing, advertising, pricing, intellectual property, commercial contracts, foreign exchange controls, antitrust and trade regulation, labor and employment, indemnification, data privacy and cybersecurity, environmental, health and safety, and tax matters, governmental investigations, and other legal proceedings that arise in the ordinary course of our business.

See Note 17, “Commitments and Contingencies,” to the Consolidated Financial Statements included herein for additional information regarding our current legal proceedings.

A significant number of personal injury claims alleging that talc causes cancer were made against J&J and certain of its affiliates arising out of the use of body powders containing talc, primarily Johnson’s ® Baby Powder.

These personal injury suits were filed primarily in state and federal courts in the United States and in Canada.

Pursuant to the Separation Agreement, J&J has retained the Talc-Related Liabilities and, as a result, has agreed to indemnify us for the Talc-Related Liabilities in the United States and Canada and any costs associated with resolving such claims.

We will, however, remain responsible for all liabilities on account of or relating to harm arising out of, based upon or resulting from, directly or indirectly, the presence of or exposure to talc or talc-containing products sold outside the United States or Canada.

Except for the Talc-Related Liabilities and certain other liabilities for which the Company was indemnified by J&J, the Company generally remains responsible for liabilities relating to, arising out of, or resulting from the past or current operation or conduct of the Company’s business.

See Note 17, “Commitments and Contingencies,” to the Consolidated Financial Statements included herein for additional information regarding legal proceedings.

Results of Operations

A detailed discussion of the period-over-period changes in the results for the fiscal twelve months ended December 28, 2025 and the fiscal twelve months ended December 29, 2024 is presented below.

A detailed discussion of the period-over-period changes in the results for the fiscal twelve months ended December 31, 2023 and the fiscal twelve months ended January 1, 2023 can be found under the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II., Item 7 of this Annual Report on Form 10-K for the fiscal twelve months ended December 31, 2023 filed on March 1, 2024 with the SEC (the “2023 Annual Report”).

A detailed discussion of the period-over-period changes in the results for the fiscal twelve months ended December 29, 2024 and the fiscal twelve months ended December 31, 2023 can be found under the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Annual Report on Form 10-K for the fiscal twelve months ended December 29, 2024 filed on February 24, 2025 with the SEC (the “2024 Annual Report”).

Fiscal Twelve Months Ended December 28, 2025 Compared with Fiscal Twelve Months Ended December 29, 2024

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Impairment charges 23 578 (555) (96.0)

Other operating expense (income), net 26 (10) 36 *

Other operating (income) expense, net (23) 26 (49) *

Operating income 2,414 1,841 573 31.1

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* Calculation not meaningful.

Net sales were $15.5 billion and $15.4 billion for the fiscal twelve months ended December 29, 2024 and December 31, 2023, respectively, an increase of $11 million, or 0.1%.

Excluding the impact of unfavorable changes in foreign currency exchange rates of $219 million, or 1.4%, Organic sales (a non-GAAP financial measure as defined in “Segment Results—Organic Sales Change” below) growth was $230 million, or 1.5%.

Organic sales growth was driven by favorable value realization (defined as price, including mix) of 2.7%, partially offset by volume-related decreases of 1.2%.

The increase in year-over-year value realization was primarily due to carryover price increases from the prior fiscal year as well as new pricing actions, while the volume-related decrease was primarily driven by Skin Health and Beauty and Self Care.

Organic sales growth was primarily driven by growth in Essential Health across all product categories, led by Oral Care, as well as growth in Self Care, partially offset by declines in Skin Health and Beauty due to volume-related decreases in the United States attributable to the carryover effects from prior fiscal year execution challenges and current fiscal year competitive pressures.

Net sales were $15.1 billion and $15.5 billion for the fiscal twelve months ended December 28, 2025 and December 29, 2024, respectively, a decrease of $331 million, or 2.1%.

Excluding the impact of favorable changes in foreign currency exchange rates of 0.2% and the reduction in Net sales related to divestitures of 0.1%, Organic sales (a non-GAAP financial measure as defined in “Segment Results—Organic Sales Change” below) decreased 2.2% driven by volume-related decreases of 2.3% partially offset by favorable value realization (defined as price, including mix) of 0.1%.

Volume-related decreases across segments were impacted by trade inventory reductions driven by retailer inventory management in the United States and changes in shipment timing as compared to the prior fiscal year in China, as well as lower seasonal incidences impacting Allergy Care, pediatric Pain Care, and Cough and Cold.

Favorable value realization was driven by new pricing actions, partially offset by strategic price investments, primarily in Skin Health and Beauty.

For additional information about the Net sales of our three reportable business segments, see “—Segment Results” below.

The following tables present a reconciliation of the change in U.S.

The following table presents a reconciliation of the change in U.S.

GAAP Net sales to the change in Organic sales for the fiscal twelve months ended December 28, 2025 as compared to the fiscal twelve months ended December 29, 2024:

Fiscal Twelve Months Ended December 29, 2024 vs December 31, 2023 (1)

Reported Net sales change

Impact of foreign currency Organic sales change

(Dollars in Millions) Amount Percent Amount Amount Percent

Total $ 11 0.1 % $ (219) $ 230 1.5 %

Fiscal Twelve Months Ended December 29, 2024 vs December 31, 2023 (1)

Reported Net sales change

Impact of foreign currency Organic sales change

Price/Mix (2)

Fiscal Twelve Months Ended December 28, 2025 vs.

December 29, 2024

Reported Net Sales Change Impact of Foreign Currency Acquisitions and Divestitures Organic Sales Change

Total Organic Sales Change Price/Mix (1)

Total (2.1) % 0.2 % (0.1) % (2.2) % 0.1 % (2.3) %

(1) Acquisitions and divestitures did not materially impact Net sales for the fiscal twelve months ended December 29, 2024 or December 31, 2023.

(1) Also referred to as value realization.

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Gross profit margin expanded 10 basis points to 58.1% for the fiscal twelve months ended December 28, 2025 as compared to 58.0% for the fiscal twelve months ended December 29, 2024.

Changes in both Cost of sales and gross profit margin were primarily due to gains attributable to the realization of benefits associated with our supply chain optimization initiatives.

Gross profit margin also increased due to value realization.

Changes in Cost of sales were primarily due to volume-related Net sales decreases.

Changes in both Cost of sales and gross profit margin were also driven by gains attributable to the realization of benefits associated with our supply chain optimization initiatives,

partially offset by net input cost inflation and the impact of tariffs imposed on goods imported into the United States.

Changes in both Cost of sales and gross profit margin were also impacted by a reduction in stock-based compensation expense attributable to a refinement to the methodology of our stock-based compensation expense allocations, forfeitures of unvested stock-based awards, and the vesting of stock-based awards.

Selling, General, and Administrative Expenses

Selling, general, and administrative expenses were $6.3 billion and $6.1 billion for the fiscal twelve months ended December 29, 2024 and December 31, 2023, respectively, an increase of $188 million, or 3.1%.

Selling, general, and administrative expenses as a percentage of Net sales increased 120 basis points to 41.0% for the fiscal twelve months ended December 29, 2024, as compared to 39.8% for the fiscal twelve months ended December 31, 2023, primarily attributable to higher expenses related to brand support, including advertising and healthcare professional engagement, as we increased our investment to further support sales across segments and geographies, and an additional quarter of incremental ongoing public company costs not incurred last year.

These cost increases were partially offset by savings from Our Vue Forward and a $217 million decrease in Separation-related costs.

Selling, general, and administrative expenses were $6.1 billion and $6.3 billion for the fiscal twelve months ended December 28, 2025 and December 29, 2024, respectively, a decrease of $241 million, or 3.8%.

Selling, general, and administrative expenses as a percentage of Net sales decreased 70 basis points to 40.3% for the fiscal twelve months ended December 28, 2025, as compared to 41.0% for the fiscal twelve months ended December 29, 2024.

The decrease in Selling, general, and administrative expenses was primarily attributable to a $187 million decrease in Separation-related costs and savings from Our Vue Forward, partially offset by higher expenses related to brand support and Proposed Transaction costs incurred in the fiscal twelve months ended December 28, 2025.

The decrease was also driven by a reduction in stock-based compensation expense attributable to forfeitures of unvested stock-based awards as well as the vesting of stock-based awards, partially offset by a refinement to the methodology of our stock-based compensation expense allocations.

Restructuring Expenses

Restructuring expenses were $185 million for the fiscal twelve months ended December 29, 2024, driven by costs incurred under Our Vue Forward related to global workforce reductions, changes in management structure, and the transition to centralized shared-service functions in lower-cost locations, as we began strategic initiatives intended to enhance organizational efficiencies and better position Kenvue for future growth.

This includes employee-related costs, information technology and project-related costs, and other implementation costs.

Restructuring expenses were $290 million and $185 million for the fiscal twelve months ended December 28, 2025 and December 29, 2024, respectively, an increase of $105 million.

Restructuring expenses relate to costs incurred under Our Vue Forward, and the increase was driven by higher information technology and project-related costs.

See Note 19, “Restructuring Expenses and Operating Model Optimization Initiatives,” to the Consolidated Financial Statements included herein for additional information.

Impairment Charges

Impairment charges were $578 million for the fiscal twelve months ended December 29, 2024, which primarily included a non-cash charge of $488 million ($337 million after-tax) to adjust the carrying value of intangible assets and property, plant, and equipment related to the Dr.Ci:Labo ® skin health business.

Impairment charges were $23 million and $578 million for the fiscal twelve months ended December 28, 2025 and December 29, 2024, respectively, a decrease of $555 million.

Impairment charges for the fiscal twelve months ended December 28, 2025 were driven by a non-cash impairment charge of $23 million related to the ORSL ® trade name following regulatory changes in India.

Impairment charges for the fiscal twelve months ended December 29, 2024 were driven by a non-cash charge of $488 million ($337 million after-tax) to adjust the carrying value of intangible assets and property, plant, and equipment related to the Dr.Ci:Labo ® skin health business.

The impairment was due primarily to revisions to internal forecasts for the business as a result of updates in our strategy to reach more consumers and appropriately address evolving market dynamics, including shifts in consumer sentiment in China, as well as changing shopping patterns in the region.

The increase also included the impact of a $68 million non-cash impairment charge related to our interim corporate headquarters in Skillman, New Jersey, which was classified as held for sale on February 21, 2024.

Impairment charges for the fiscal twelve months ended December 29, 2024 were also driven by the impact of a $68 million non-cash impairment charge related to our former corporate headquarters in Skillman, New Jersey, which was classified as held for sale on February 21, 2024.

Additionally, we recognized a non-cash impairment charge of $22 million related to certain software development assets.

See Note 1, “Description of the Company and Summary

of Significant Accounting Policies—Impairment of Long-Lived Assets,” to the Consolidated Financial Statements included herein for additional information.

Other Operating Expense (Income), Net

Other operating expense (income), net was $26 million and $(10) million for the fiscal twelve months ended December 29, 2024 and December 31, 2023, respectively, a change of $36 million.

Expense for the fiscal twelve months ended December 29, 2024 was driven by the $59 million accounting impact of net economic benefit arrangements with J&J in connection with the Deferred Local Businesses (see Note 1, “Description of the Company and Summary of Significant Accounting Policies,” to the Consolidated Financial Statements included herein for additional information), partially offset by $34 million of royalty income.

Income for the fiscal twelve months ended December 31, 2023 was driven by the prior period reversal of a $45 million contingent liability that was no longer considered to be probable, $35 million of royalty income, and a $9 million gain recognized on the sale of a manufacturing facility in Lancaster, Pennsylvania in the fiscal twelve months ended December 31, 2023, partially offset by the $28 million accounting impact of net economic benefit arrangements with J&J in connection with the Deferred Local Businesses, and $26 million of litigation expense.

See Note 13, “Other Operating Expense (Income), Net and Other Expense, Net,” to the Consolidated Financial Statements included herein for additional information.

See Note 1, “Description of the Company and Summary of Significant Accounting Policies—Impairment of Long-Lived Assets,” to the Consolidated Financial Statements included herein for additional information.

Other Operating (Income) Expense, Net

Other operating (income) expense, net was $(23) million and $26 million for the fiscal twelve months ended December 28, 2025 and December 29, 2024, respectively, a change of $49 million.

Other operating (income) expense, net for the fiscal twelve months ended December 28, 2025 and December 29, 2024 was driven by the $38 million and $59 million impact, respectively, of net economic benefit arrangements with J&J in connection with the Deferred Local Businesses (see Note 1, “Description of the Company and Summary of Significant Accounting Policies—Variable Interest Entities and Net Economic Benefit Arrangements,” to the Consolidated Financial Statements included herein for additional information), partially offset by $37 million and $34 million, respectively, of royalty income.

Other operating (income) expense, net for the fiscal twelve months ended December 28, 2025 was also driven by the $17 million gain recognized on the sale of the Skillman, New Jersey, facility.

See Note 13, “Other Operating (Income) Expense, Net and Other Expense, Net,” to the Consolidated Financial Statements included herein for additional information.

Other Expense, Net

Other expense, net was $36 million and $48 million for the fiscal twelve months ended December 28, 2025 and December 29, 2024, respectively, a decrease of $12 million.

Expense for the fiscal twelve months ended December 29, 2024 was driven by $72 million in losses on investments, partially offset by a $21 million gain recognized on the release of tax indemnification reserves that were no longer considered to be probable.

Expense for the fiscal twelve months ended December 31, 2023 was driven by $58 million in currency losses on transactions and $7 million in losses on investments.

See Note 13, “Other Operating Expense (Income), Net and Other Expense, Net,” to the Consolidated Financial Statements included herein for additional information.

Other expense, net for the fiscal twelve months ended December 28, 2025 was driven by $46 million of currency losses on transactions.

Other expense, net for the fiscal twelve months ended December 29,

2024 was driven by $72 million in losses on investments, partially offset by a $21 million gain recognized on the release of tax indemnification reserves that were no longer considered to be probable.

See Note 13, “Other Operating (Income) Expense, Net and Other Expense, Net,” to the Consolidated Financial Statements included herein for additional information.

Interest Expense, Net

Interest expense, net was $379 million and $378 million for the fiscal twelve months ended December 28, 2025 and December 29, 2024, respectively, an increase of $1 million.

The increase in expense was driven by an additional quarter of interest expense recognized on the Senior Notes and notes issued under the Commercial Paper Program not incurred last fiscal year, along with $33 million of interest income recognized in the fiscal three months ended July 2, 2023 in relation to the Facility Agreement (as defined in Note 5, “Borrowings—Facility Agreement,” to the Consolidated Financial Statements included herein) as well as interest income earned in the fiscal six months ended July 2, 2023 on debt proceeds in escrow.

Interest expense, net in both fiscal periods primarily consisted of interest expense, including amortization of discounts and debt issuance costs, recognized on the Senior Notes (as defined in Note 5, “Borrowings,” to the Consolidated Financial Statements included herein) and notes issued under our commercial paper program.

See Note 5, “Borrowings,” to the Consolidated Financial Statements included herein for additional information.

Provision for Taxes

Provision for taxes was $385 million and $526 million for the fiscal twelve months ended December 29, 2024 and December 31, 2023, respectively, a decrease of $141 million.

The decrease in Provision for taxes was primarily due to lower year-to-date income in comparison to the prior fiscal period as a result of the Dr.Ci:Labo ® skin health business impairment for the fiscal twelve months ended December 29, 2024 and the recording of a valuation allowance against a deferred tax asset related to future foreign tax benefits in the fiscal twelve months ended December 31, 2023.

The decrease is offset by fewer releases of uncertain tax positions due to the expiration of certain statutes of limitations and reduced tax benefits derived from the Separation as compared to the fiscal twelve months ended December 31, 2023 as well as unfavorable return-to-provision adjustments and shortfall on stock-based compensation recorded during the fiscal twelve months ended December 29, 2024.

Provision for taxes was $529 million and $385 million for the fiscal twelve months ended December 28, 2025 and December 29, 2024, respectively, an increase of $144 million.

The increase in Provision for taxes was primarily the result of higher current year pre-tax income, income tax benefits recognized during the fiscal twelve months ended December 29, 2024 resulting from the impairment to the Dr.Ci:Labo ® skin health business, as well as an increase in unrecognized tax benefits driven by new developments in ongoing tax audits during the fiscal twelve months ended December 28, 2025 as compared to the fiscal twelve months ended December 29, 2024.

The increase was partially offset by favorable return-to-provision adjustments.

In addition, the worldwide effective income tax rates for the fiscal twelve months ended December 28, 2025 and December 29, 2024 were 26.5% and 27.2%, respectively.

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Segment Results

Segment profit is based on Operating income, excluding depreciation, amortization of intangible assets, Separation-related costs, restructuring and operating model optimization initiatives, impairment charges, the impact of the conversion of stock-based awards, issuance of Founder Shares (as defined below), Other operating expense (income), net, and unallocated general corporate administrative expenses (referred to herein as “Segment adjusted operating income”), as the Chief Operating Decision Maker (the “CODM) excludes these items in assessing segment financial performance.

General corporate/unallocated expenses, which include expenses related to treasury, legal operations, and certain other expenses, along with gains and losses related to

the overall management of our Company, are not allocated to the segments.

Segment profit is based on Operating income, excluding depreciation, amortization of intangible assets, Separation-related costs, restructuring expenses and operating model optimization initiatives, impairment charges, the impact of the conversion of stock-based awards, issuance of Founder Shares (as defined below), Proposed Transaction costs, Other operating (income) expense, net, and unallocated general corporate administrative expenses (referred to herein as “Segment adjusted operating income”), as the Chief Operating Decision Maker (the “CODM”) excludes these items in assessing segment financial performance.

General corporate/unallocated expenses, which include expenses related to treasury, legal operations, and certain other expenses, along with gains and losses related to the overall management of our Company, are not allocated to the segments.

In assessing segment performance and managing operations, the CODM does not review segment assets.

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A detailed discussion of the period-over-period changes in Segment net sales and Segment adjusted operating income for the fiscal twelve months ended December 28, 2025 and the fiscal twelve months ended December 29, 2024 is presented below.

A detailed discussion of the period-over-period changes in Segment net sales and Segment adjusted operating income for the fiscal twelve months ended December 31, 2023 and the fiscal twelve months ended January 1, 2023 can be found under the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II., Item 7 of our 2023 Annual Report.

A detailed discussion of the period-over-period changes in Segment net sales and Segment adjusted operating income for the fiscal twelve months ended December 29, 2024 and the fiscal twelve months ended December 31, 2023 can be found under the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our 2024 Annual Report.

Fiscal Twelve Months Ended December 28, 2025 Compared with Fiscal Twelve Months Ended December 29, 2024

The following tables presents Segment net sales and Segment adjusted operating income and the period-over-period changes in Segment net sales and Segment adjusted operating income for the fiscal twelve months ended December 29, 2024 and December 31, 2023.

During the fiscal twelve months ended December 29, 2024, we adopted ASU 2023-07, as described in more detail in Note 1, “Description of the Company and Summary of Significant Accounting Policies— Recently Adopted Accounting Standards,” to the Consolidated Financial Statements included herein.

The following tables present Segment net sales and Segment adjusted operating income and the period-over-period changes in Segment net sales and Segment adjusted operating income for the fiscal twelve months ended December 28, 2025 and December 29, 2024.

See Note 18, “Segments of Business and Geographic Areas,” to the Consolidated Financial Statements included herein for further details regarding Segment net sales and Segment adjusted operating income.

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December 28, 2025 December 29, 2024 Change 2024 to 2025

(Dollars in Millions) Self Care

Skin Health and Beauty

Essential Health

Self Care Skin Health and Beauty

Essential Health Total

Amount Percent

$ 6,527 $ 4,240 $ 4,688 $ 15,455 $ 6,451 $ 4,378 $ 4,615 $ 15,444 $ 11 0.1 %

(Dollars in Millions) Self Care Skin Health and Beauty Essential Health Total Self Care Skin Health and Beauty Essential Health Total Amount Percent

Net sales $ 6,378 $ 4,114 $ 4,632 $ 15,124 $ 6,527 $ 4,240 $ 4,688 $ 15,455 $ (331) (2.1) %

Segment adjusted Cost of sales (1)

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Separation-related costs (5)

Restructuring and operating model optimization initiatives 221 32

Restructuring expenses and operating model optimization initiatives (6)

Impairment charges (7)

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Founder Shares (9)

Other operating expense (income), net 26 (10)

Proposed Transaction costs (10)

Other operating (income) expense, net

General corporate/unallocated expenses 329 314

Operating income

$ 2,414 $ 1,841

Other expense, net

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Income before taxes

(1) The Company defines Segment adjusted cost of sales as Cost of sales adjusted for amortization of intangible assets, Separation-related costs, conversion of stock-based awards, Founder Shares, operating model optimization initiatives, and general corporate/unallocated expenses.

(2) Other segment expense items for each reportable segment include employee-related costs, brand support, shipping and handling costs, research and development costs, and certain other operating expenses (income).

(3) Depreciation includes the amortization of integration and development costs capitalized in connection with cloud computing arrangements.

$ 1,999 $ 1,415

(1) We define Segment adjusted cost of sales as Cost of sales adjusted for amortization of intangible assets, Separation-related costs,

conversion of stock-based awards, Founder Shares (as defined below), operating model optimization initiatives, and general corporate/unallocated expenses.

(2) Other segment expense items for each reportable business segment include brand support, employee-related costs, shipping and handling costs, research and development costs, and certain other operating expenses (income).

(3) Depreciation consists of depreciation of property, plant, and equipment and amortization of integration and development costs capitalized in connection with cloud computing arrangements.

(4) Relates to the amortization of definite-lived intangible assets (primarily trademarks, trade names, and customer lists) over their estimated useful lives.

(5) Separation-related costs includes depreciation expense on Separation-related assets for the fiscal twelve months ended December 29, 2024.

See Note 1, “Description of the Company and Summary of Significant Accounting Policies—Separation-Related Costs,” to the Consolidated Financial Statements included herein for additional information regarding Separation-related costs.

(6) Restructuring expenses and operating model optimization initiatives relate to the 2024 Multi-Year Restructuring Initiative.

See Note 19, “Restructuring Expenses and Operating Model Optimization Initiatives,” to the Consolidated Financial Statements included herein for additional information.

(7) Impairment charges for the fiscal twelve months ended December 28, 2025 includes $23 million recognized in connection with the ORSL ® trade name following regulatory changes in India.

Impairment charges for the fiscal twelve months ended December 29, 2024 includes $488 million recognized in relation to Dr.Ci:Labo ® long-lived assets, $68 million recognized on the held for sale asset associated with the Company’s former corporate headquarters in Skillman, New Jersey, and $22 million recognized on certain software development assets.

(8) Segment adjusted operating income excludes the impact of the conversion of stock-based awards that occurred on August 23, 2023 (see Note 11, “Stock-Based Compensation,” to the Consolidated Financial Statements included herein for additional information).

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(9) On August 25, 2023, our Compensation & Human Capital Committee approved equity grants to individuals employed by Kenvue as of October 2, 2023 (the “Founder Shares”).

On October 2, 2023, the Founder Shares were granted to all Kenvue employees in the form of stock options and PSUs to executive officers and either stock options and PSUs or RSUs to non-executive individuals (see Note 11, “Stock-Based Compensation,” to the Consolidated Financial Statements included herein for additional information).

On October 2, 2023, the Founder Shares were granted to all Kenvue employees in the form of stock options and performance stock units (“PSUs”) to executive officers and either stock options and PSUs or restricted stock units (“RSUs”) to non-executive individuals.

(10) Proposed Transaction costs primarily consist of expenses incurred in connection with the Proposed Transaction, including advisory fees, legal costs, and other professional service costs.

Fiscal Twelve Months Ended Change in Fiscal Year

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Segment net sales $ 15,124 100.0 % $ 15,455 100.0 % $ (331) (2.1) %

$ 15,455 100.0 % $ 15,444 100.0 % $ 11 0.1 %

Self Care $ 2,109 $ 2,173 $ (64) (2.9) %

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$ 3,762 $ 3,942 $ (180) (4.6) %

(1) Refer to the table above for the reconciliation of Segment adjusted operating income to Operating income and Income before taxes on the Consolidated Financial Statements.

(1) Refer to the table above for the reconciliation of Segment adjusted operating income to Operating income and Income before taxes in the Consolidated Financial Statements.

Organic Sales Change

We define Organic sales, a non-GAAP financial measure, as Net sales excluding the impact of changes in foreign currency exchange rates and the impact of acquisitions and divestitures.

We assess our Net sales performance by measuring the period-over-period change in Organic sales (previously referred to as “Organic growth”).

Management believes reporting period-over-period changes in Organic sales provides investors with additional, supplemental information that is useful in assessing our results of operations by excluding the impact of certain items that we believe do not directly reflect our underlying operations.

The following tables present a reconciliation of the change in U.S.

We assess our Net sales performance by measuring the period-over-period change in Organic sales.

Management believes reporting period-over-period changes in Organic sales provides investors with supplemental information that is useful in assessing our results of operations by excluding the impact of certain items that we believe do not directly reflect our underlying operations.

The following table presents a reconciliation of the change in U.S.

GAAP Net sales to the change in Organic sales for the fiscal twelve months ended December 28, 2025 as compared to the fiscal twelve months ended December 29, 2024:

Fiscal Twelve Months Ended December 29, 2024 vs December 31, 2023 (1)

Reported Net sales change

Impact of foreign currency Organic sales change

(Dollars in Millions) Amount Percent Amount Amount Percent

Self Care $ 76 1.2 % $ (44) $ 120 1.9 %

Skin Health and Beauty (138) (3.2) (57) (81) (1.9)

Essential Health 73 1.6 (118) 191 4.1

Total $ 11 0.1 % $ (219) $ 230 1.5 %

Fiscal Twelve Months Ended December 29, 2024 vs December 31, 2023 (1)

Reported Net sales change

Impact of foreign currency Organic sales change

Price/Mix (2)

Fiscal Twelve Months Ended December 28, 2025 vs.

December 29, 2024

Reported Net Sales Change Impact of Foreign Currency Acquisitions and Divestitures Organic Sales Change

Total Organic Sales Change Price/Mix (1)

Self Care (2.3) % 0.7 % — % (3.0) % 0.4 % (3.4) %

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Total (2.1) % 0.2 % (0.1) % (2.2) % 0.1 % (2.3) %

(1) Acquisitions and divestitures did not materially impact Net sales for the fiscal twelve months ended December 29, 2024 or December 31, 2023.

(1) Also referred to as value realization.

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Self Care Segment Net Sales

The Self Care Segment Net sales were $6.5 billion for both the fiscal twelve months ended December 29, 2024 and December 31, 2023.

For the fiscal twelve months ended December 29, 2024, Net sales increased $76 million, or 1.2%, as compared to the fiscal twelve months ended December 31, 2023.

Excluding the impact of unfavorable changes in foreign currency exchange rates of $44 million, or 0.7%, Organic sales growth was $120 million, or 1.9%.

Organic sales growth was primarily driven by favorable value realization of 2.5% due to the performance in Smoking Cessation as a result of effective promotional strategies and product innovation, as well as Digestive Health and Allergy Care.

Partially offsetting the favorable value realization, volume-related decreases reduced Organic sales by 0.6% driven by declines in Pain Care resulting from trade inventory fluctuations primarily in the United States as well as declines in pediatric products attributable to lower incidences of illnesses primarily in APAC and North America.

The Self Care Segment Net sales were $6.4 billion and $6.5 billion for the fiscal twelve months ended December 28, 2025 and December 29, 2024, respectively, a decrease of $149 million, or 2.3%.

Excluding the impact of favorable changes in foreign currency exchange rates of 0.7%, Organic sales decreased 3.0% driven by volume-related decreases of 3.4%, partially offset by favorable value realization of 0.4%.

Volume-related decreases, primarily in China and the United States, were primarily attributable to the impact of softer seasons on Allergy Care, Cough and Cold, and pediatric Pain Care, coupled with changes in shipment timing as compared to the prior fiscal period due to the impact of lower inventory replenishment following inventory builds in the prior year.

Volume-related decreases were partially offset by growth in Smoking Cessation in Europe, Middle East, and Africa.

Favorable value realization was primarily attributable to new pricing actions, partially offset by strategic price investments.

Self Care Segment Adjusted Operating Income

The Self Care Segment adjusted operating income decreased by $64 million, or 2.9%, to $2,109 million for the fiscal twelve months ended December 28, 2025 as compared to the fiscal twelve months ended December 29, 2024.

The decrease was primarily driven by increased investment in our brands and volume-related Net sales decreases, partially offset by favorable value realization and the realization of benefits associated with our supply chain optimization initiatives.

The decrease was primarily driven by volume-related Net sales decreases, volume deleverage at internal manufacturing sites, unfavorable changes in foreign currency exchange rates, net input cost inflation, and the impact of tariffs imposed on goods imported into the United States, partially offset by lower expenses related to brand support, the realization of benefits associated with our supply chain optimization initiatives, and savings from Our Vue Forward resulting in administrative expense reductions.

Skin Health and Beauty Segment

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The Skin Health and Beauty Segment Net sales were $4.1 billion and $4.2 billion for the fiscal twelve months ended December 28, 2025 and December 29, 2024, respectively, a decrease of $126 million, or 3.0%.

Excluding the impact of unfavorable changes in foreign currency exchange rates of $57 million, or 1.3%, Organic sales decline was $81 million, or 1.9%.

The Organic sales decline was primarily driven by volume-related decreases of 3.5%, primarily in the United States attributable to the carryover effects from prior fiscal year execution challenges, as well as current fiscal year competitive pressures, coupled

with market softness in China primarily impacting the first half of the fiscal year, partially offset by growth primarily in EMEA and LATAM.

Partially offsetting the volume-related decrease, favorable value realization increased Organic sales by 1.6%.

Excluding the impact of the reduction in Net sales related to divestitures of 0.3%, Organic sales decreased 2.7% driven by both volume-related decreases of 1.8% and unfavorable value realization of 0.9% attributable to strategic price investments.

Volume-related decreases were attributable to changes in shipment timing as compared to the prior fiscal year due to the impact of lower inventory replenishment following inventory builds in the prior year in China, as well as trade inventory reductions driven by retailer inventory management in the United States.

Volume-related decreases were further impacted by performance in the United States, primarily attributable to distribution losses, underperformance in e-commerce, and current fiscal year competitive pressures resulting in market share losses, as well as a softer sun season in the United States.

Skin Health and Beauty Segment Adjusted Operating Income

The Skin Health and Beauty Segment adjusted operating income decreased by $130 million, or 21.4%, to $477 million for the fiscal twelve months ended December 28, 2025 as compared to the fiscal twelve months ended December 29, 2024.

The decrease was primarily driven by increased investment in our brands and volume-related Net sales decreases, partially offset by the realization of benefits associated with our supply chain optimization initiatives and favorable value realization.

The decrease was primarily driven by volume-related Net sales decreases, unfavorable value realization, higher expenses related to brand support, net input cost inflation, unfavorable changes in foreign currency exchange rates, and the impact of tariffs

imposed on goods imported into the United States, partially offset by the realization of benefits associated with our supply chain optimization initiatives and savings from Our Vue Forward resulting in administrative expense reductions.

Essential Health Segment

Essential Health Segment Net Sales

The Essential Health Segment Net sales were $4.7 billion and $4.6 billion for the fiscal twelve months ended December 29, 2024 and December 31, 2023, respectively, an increase of $73 million, or 1.6%.

Excluding the impact of unfavorable changes in foreign currency exchange rates of $118 million, or 2.5%, Organic sales growth was $191 million, or 4.1%.

Organic sales growth, primarily driven by favorable value realization of 3.9% across all product categories, was led by strong performance in Oral Care, attributable to product innovation and effective promotional strategies, and growth in Women’s Health.

The Essential Health Segment Net sales were $4.6 billion and $4.7 billion for the fiscal twelve months ended December 28, 2025 and December 29, 2024, respectively, a decrease of $56 million, or 1.2%.

Excluding the impact of unfavorable changes in foreign currency exchange rates of 0.5%, Organic sales decreased 0.7% driven by volume-related decreases of 1.2%, partially offset by favorable value realization of 0.5%.

Volume-related decreases were attributable to trade inventory reductions driven by retailer inventory management in the United States, primarily in Oral Care and Wound Care, as well as market deceleration and competitive pressures in Oral Care in North America, partially offset by growth across product categories in Latin America.

Favorable value realization was primarily attributable to new pricing actions, partially offset by strategic price investments.

Essential Health Segment Adjusted Operating Income

The Essential Health Segment adjusted operating income increased by $14 million, or 1.2%, to $1,176 million for the fiscal twelve months ended December 28, 2025 as compared to the fiscal twelve months ended December 29, 2024.

The increase was primarily driven by favorable value realization and the realization of benefits associated with our supply chain optimization initiatives, partially offset by increased investment in our brands.

The increase was primarily driven by the realization of benefits associated with our supply chain optimization initiatives, savings from Our Vue Forward resulting in administrative expense reductions, lower expenses related to brand support, and favorable value realization, partially offset by volume-related Net sales decreases, unfavorable changes in foreign currency exchange rates, net input cost inflation, and the impact of tariffs imposed on goods imported into the United States.

Liquidity and Capital Resources

Prior to April 4, 2023, our working capital requirements and capital expenditures were satisfied as part of J&J’s corporate-wide cash management and centralized funding programs, and a substantial portion of our cash was transferred to J&J.

Cash and cash equivalents held by J&J at the corporate level were not specifically identifiable to us.

Effective April 4, 2023, upon completion of the Consumer Health Business Transfer (as defined in Note 1, “Description of the Company and Summary of Significant Accounting Policies—Description of the Company and Business Segments,” to the Consolidated Financial Statements included herein), we no longer participate in J&J’s corporate-wide cash management and centralized funding programs.

Summarized cash flow information for the fiscal twelve months ended December 28, 2025 and December 29, 2024 were as follows:

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A detailed discussion of the period-over-period changes in the results for the fiscal twelve months ended December 28, 2025 and the fiscal twelve months ended December 29, 2024 is presented below.

Operating Activities

Net cash flows from operating activities were $1.8 billion and $3.2 billion for the fiscal twelve months ended December 29, 2024 and December 31, 2023, respectively, a decrease of $1,399 million.

The decrease was primarily attributable to changes in working capital balances driven by a net decrease in Accounts payable and Accrued liabilities due to the timing of payments and an increase in Trade receivables due to the timing of sales and collections.

Net cash flows from operating activities were $2.2 billion and $1.8 billion for the fiscal twelve months ended December 28, 2025 and December 29, 2024, respectively, an increase of $428 million.

The increase was primarily attributable to net changes in working capital balances driven by Accounts payable and accrued liabilities due to the timing of payments and Trade receivables due to the timing of sales relative to collections.

Investing Activities

Net cash flows used in investing activities were $425 million and $488 million for the fiscal twelve months ended December 29, 2024 and December 31, 2023, respectively, a decrease of $63 million.

Net cash flows used in investing activities were primarily driven by purchases of property, plant, and equipment in both the fiscal twelve months ended December 29, 2024 and December 31, 2023, partially offset by proceeds from the sale of assets in the fiscal twelve months ended December 31, 2023.

Net cash flows used in investing activities were $436 million and $425 million for the fiscal twelve months ended December 28, 2025 and December 29, 2024, respectively, an increase of $11 million.

Net cash flows used in investing activities were primarily driven by purchases of property, plant, and equipment in both the fiscal twelve months ended December 28, 2025 and December 29, 2024.

Financing Activities

Net cash flows used in financing activities were $1.6 billion and $2.5 billion for the fiscal twelve months ended December 29, 2024 and December 31, 2023, respectively, a decrease of $962 million.

Net cash flows used in financing activities for the fiscal twelve months ended December 29, 2024 were primarily driven by $1,552 million of dividends paid and $235 million of payments made to purchase treasury stock, partially offset by $157 million of net proceeds from the issuance of commercial paper under the Commercial Paper Program (as defined below).

Net cash flows used in financing activities for the fiscal twelve months ended December 31, 2023 were primarily driven by $13.8 billion in distributions to J&J in connection with the Separation, $766 million of dividends paid, and Net transfers to J&J of $274 million, partially offset by approximately $7.7 billion of net proceeds from Senior Notes (as defined below), $4.2 billion of proceeds from the sale of common stock in connection with the Kenvue IPO, and $574 million of net proceeds from the issuance of commercial paper under the Commercial Paper Program.

Net transfers to J&J were driven by cash pooling and general financing activities, indirect corporate cost allocations from J&J, and taxes deemed to be settled with J&J.

For further details regarding Net transfers to J&J, see Note 12, “Relationship with J&J—Net Transfers to J&J,” to the Consolidated Financial Statements included herein.

Net cash flows used in financing activities were $1.8 billion and $1.6 billion for the fiscal twelve months ended December 28, 2025 and December 29, 2024, respectively, an increase of $272 million.

Net cash flows used in financing activities for the fiscal twelve months ended December 28, 2025 were primarily driven by $1,581 million of dividends paid, the $750 million repayment of the 5.50% Senior Notes due 2025, $197 million of payments made to purchase treasury stock, and $146 million of net repayments of our commercial paper program, partially offset by $746 million of net proceeds from the issuance of the 4.85% Senior Notes due 2032.

Sources of Liquidity

Our primary sources of liquidity are cash on hand, which consisted of Cash and cash equivalents of $1.1 billion as of December 29, 2024, cash flows from operations, borrowing capacity under our Revolving Credit Facility (as defined below) of $4.0 billion, and authorized Commercial Paper Program issuance of $4.0 billion.

As of December 29, 2024, we had no amounts outstanding under the Revolving Credit Facility and $797 million of outstanding balances under our Commercial Paper Program, net of a related discount of $3 million.

Our primary sources of liquidity are cash on hand, which consisted of Cash and cash equivalents of $1.1 billion as of December 28, 2025, cash flows from operations, borrowing capacity under our Revolving Credit Facility (as defined below) of $4.0 billion which expires in March 2029, and authorized commercial paper program issuance of $4.0 billion.

Also, on February 24, 2025, we filed a registration statement on Form S-3 with the SEC under which from time to time we may sell securities.

On May 22, 2025, we issued a series of senior unsecured notes maturing in 2032 (the “2025 Senior Notes”) in an aggregate principal amount of $750 million.

As of December 28, 2025, total debt was $8,524 million.

As of December 28, 2025, we had $7,687 million of Senior Notes (as defined below) outstanding, net of related discounts and debt issuance costs of $63 million, no amounts outstanding under the Revolving Credit Facility, and $699 million of outstanding balances under our commercial paper program, net of a related discount of $1 million.

Our ability to fund our operating needs will depend on our ability to continue to generate positive cash flows from operations and on our ability to obtain debt financing on acceptable terms or to issue additional equity or equity-linked securities.

Based upon our history of generating positive cash flows, we believe our existing cash and cash generated from operations will be sufficient to service our current obligations for at least the next 12 months.

Management believes that our cash balances and funds provided by operating activities, along with borrowing capacity and access to capital markets, taken as a whole, provide adequate liquidity to meet all of our current and long-term obligations when due, including third-party debt that we incurred in connection with the Separation, adequate liquidity to fund capital expenditures, and flexibility to meet investment opportunities that may arise.

Management believes that our cash balances and funds provided by operating activities, along with borrowing capacity and access to capital markets, taken as a whole, provide adequate liquidity to meet all of our current and long-term obligations when due, including third-party debt, adequate liquidity to fund capital expenditures, and flexibility to meet investment opportunities that may arise.

However, we cannot assure you that we will be able to obtain additional debt or equity financing on acceptable terms in the future.

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To further Our Vue Forward, on May 6, 2024, our Board approved the 2024 Multi-Year Restructuring Initiative to build on our strengths, improve our underlying information technology infrastructure, and optimize our cost structure by rebalancing resources to better position us for future growth.

The 2024 Multi-Year Restructuring Initiative is expected to result in pre-tax restructuring expenses and other charges totaling approximately $550 million.

We planned to incur approximately $275 million in pre-tax restructuring expenses and other charges in each of fiscal year 2024 and fiscal year 2025.

We incurred lower than expected spend in fiscal year 2024 due to the shift in timing of certain information technology and project-related costs to fiscal year 2025 and lower than expected employee-related costs relating to severance spend due to employee redeployment and voluntary exits.

Over the life of the initiative, a majority of the pre-tax expenses and other charges are expected to be paid in cash.

These charges are expected to be funded primarily through cash flows generated from operations.

We began to realize savings resulting from the 2024 Multi-Year Restructuring Initiative in fiscal year 2024, and we expect to realize the full extent of annualized pre-tax gross cost savings of approximately $350 million beginning in fiscal year 2026.

We expect to reinvest all or a portion of the benefits associated with the 2024 Multi-Year Restructuring Initiative in future growth opportunities, including immediate reinvestment behind advertising, product promotion, and healthcare professional engagement.

Our estimates of the costs of the initiative and the expected benefits are preliminary estimates and are subject to a number of assumptions, including local law requirements in various jurisdictions.

Actual charges may differ, possibly materially, from the estimates provided above.

We incurred lower than expected spend in fiscal year 2024 due to the shift in timing of certain information technology and project-related costs to fiscal year 2025.

As of the end of fiscal year 2025, we have substantially completed all actions under the 2024 Multi-Year Restructuring Initiative.

The 2024 Multi-Year Restructuring Initiative resulted in pre-tax restructuring expenses and other charges totaling

$556 million through the fiscal twelve months ended December 28, 2025.

A majority of the pre-tax expenses and other charges have been, and are expected to continue to be, paid in cash and funded primarily through cash flows generated from operations.

We began to realize savings resulting from the 2024 Multi-Year Restructuring Initiative in fiscal year 2024, and we have realized annualized pre-tax gross cost savings in excess of $350 million as of the end of fiscal year 2025.

We largely reinvested savings realized from the 2024 Multi-Year Restructuring Initiative in future growth opportunities, including immediate reinvestment behind advertising, product promotion, and healthcare professional engagement.

See Note 19, “Restructuring Expenses and Operating Model Optimization Initiatives,” to the Consolidated Financial Statements included herein for further information.

See Note 20, “Subsequent Events,” to the Consolidated Financial Statements included herein for information about our restructuring initiative approved by our Board on February 17, 2026.

Supplier Finance Program

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Our obligations to the suppliers, including amounts due, and scheduled payment dates (which have general payment terms between 30 and 120 days), are not affected by a participating supplier’s decision to participate in the program.

See Note 1, “Description of the Company and Summary of Significant Accounting Policies—Supplier Finance Program,” to the Consolidated Financial Statements included herein.

See Note 1, “Description of the Company and Summary of Significant Accounting Policies—Supplier Finance Program,” to the Consolidated Financial Statements included herein for further information.

On March 22, 2023, we issued eight series of senior unsecured notes (the “2023 Senior Notes”) in an aggregate principal amount of $7.75 billion.

The net proceeds to us from the 2023 Senior Notes were approximately $7.7 billion after deductions of discounts and issuance costs of $77 million.

The net proceeds were reflected as Restricted cash on the Consolidated Balance Sheet prior to their release from escrow on April 5, 2023.

Upon release from escrow, these funds were loaned to J&J through a facility agreement (the “Facility Agreement”) dated April 5, 2023.

The interest payments on the 2023 Senior Notes are due on March 22 and September 22 of each year and commenced on September 22, 2023.

For further details on the Senior Notes, see Note 5, “Borrowings—Senior Notes,” to the Consolidated Financial Statements included herein.

Our Senior Notes are governed by an indenture and supplemental indenture between us and a trustee (collectively, the “Indenture”).

On May 22, 2025, we issued the 2025 Senior Notes in an aggregate principal amount of $750 million, which bear an interest rate of 4.850% per annum.

The interest payments on the 2025 Senior Notes are due on May 22 and November 22 of each year and commenced on November 22, 2025.

The 2025 Senior Notes, collectively with the 2023 Senior Notes, are referred to as the “Senior Notes.”

On February 13, 2026, we issued a notice of full redemption to the holders of the 5.35% Senior Notes due 2026.

All $750 million aggregate principal amount outstanding of the 5.35% Senior Notes due 2026 will be redeemed on February 23, 2026 at par plus accrued and unpaid interest to, but not including, the redemption date.

The Senior Notes are governed by an indenture and supplemental indentures between us and a trustee (collectively, the “Indenture”).

The Indenture contains certain covenants, including limitations on us and certain of our subsidiaries’ ability to incur liens or engage in certain sale-leaseback transactions.

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In addition, the Indenture contains other customary terms, including certain events of default, upon the occurrence of which the Senior Notes may be declared immediately due and payable.

For further details on the Senior Notes, see Note 5, “Borrowings—Senior Notes,” to the Consolidated Financial Statements included herein.

Commercial Paper Program

On March 3, 2023, we entered into a commercial paper program (the “Commercial Paper Program”).

On March 3, 2023, we entered into a commercial paper program.

Our Board has authorized the issuance of up to $4.0 billion in an aggregate principal amount of commercial paper under the commercial paper program.

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For further details on the commercial paper program, see Note 5, “Borrowings—Commercial Paper Program,” to the Consolidated Financial Statements included herein.

Prior to the Kenvue IPO, we issued $1.25 billion under the Commercial Paper Program which, collectively with the Senior Notes as further described above, are referred to as the “Debt Financing Transactions.”

Revolving Credit Facility

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dollars and Euros.

On January 30, 2025, we requested an extension of the maturity date of the Revolving Credit Facility from March 6, 2028 to March 6, 2029, and on February 21, 2025, such extension became effective with respect to all lenders under the Revolving Credit Facility, each of which accepted such request.

The terms of the Revolving Credit Facility otherwise remain unchanged.

For further details on the Revolving Credit Facility, see Note 5, “Borrowings—Revolving Credit Facility,” to the Consolidated Financial Statements included herein.

Facility Agreement

On April 5, 2023, we entered into the Facility Agreement, allowing us to lend the proceeds from the issuance of debt (including commercial paper) in an aggregate amount of $8.9 billion to J&J.

Upon completion of the Kenvue IPO on May 8, 2023, the Facility Agreement was terminated and the balance of the loans, and all accrued interest, were repaid by J&J for a total cash inflow of $9.0 billion.

We remitted this cash back to J&J as a distribution in connection with the Separation.

Distribution to J&J

On May 8, 2023, in conjunction with the Consumer Health Business Transfer, we distributed $13.8 billion to J&J from 1) the net proceeds received from the sale of the common stock in the Kenvue IPO, 2) the net proceeds received from the Debt Financing Transactions, and 3) any cash and cash equivalents in excess of the $1.17 billion retained by us immediately following the Kenvue IPO.

Interest Expense, Net

We recognized Interest expense, net of $378 million in the Consolidated Statement of Operations during the fiscal twelve months ended December 29, 2024, which primarily includes interest expense, including amortization of discounts and debt issuance costs, recognized on the Senior Notes and interest expense recognized on notes issued under the Commercial Paper Program.

We recognized Interest expense, net of $379 million in the Consolidated Statement of Operations during the fiscal twelve months ended December 28, 2025, which primarily includes interest expense, including amortization of discounts and debt issuance costs, recognized on the Senior Notes and interest expense recognized on notes issued under our commercial paper program.

Compliance with Covenants

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As of December 28, 2025, we expect our primary cash requirements for fiscal year 2026 to include capital expenditures.

We made payments of $434 million for property, plant, and equipment during the fiscal twelve months ended December 29, 2024.

We made payments of $475 million for purchases of property, plant, and equipment during the fiscal twelve months ended December 28, 2025.

Share Repurchase Program

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The intent of this repurchase program is to offset dilution from the vesting or exercise of equity-based awards under the Kenvue 2023 Plan (as defined in Note 11, “Stock-Based Compensation,” to the Consolidated Financial Statements included herein).

We repurchased 10,858,444 shares of our outstanding common stock for $235 million under the program during the fiscal twelve months ended December 29, 2024.

On November 2, 2025, we entered into the Merger Agreement pursuant to which K-C will acquire all of the outstanding shares of the Company for a combination of stock and cash in a series of transactions, as described in Note 1, “Description of the Company and Summary of Significant Accounting Policies—Proposed Transaction with Kimberly-Clark,” to the Consolidated Financial Statements included herein.

In accordance with the terms of the Merger Agreement, and subject to the exceptions therein, we are not permitted to repurchase, redeem, or otherwise acquire any of our equity interests without the prior written consent of K-C.

Prior to entering into the Merger Agreement, we repurchased approximately 9,179,000 shares of our outstanding common stock for $197 million under the program during the fiscal twelve months ended December 28, 2025.

No shares have been repurchased subsequent to the execution of the Merger Agreement.

Contractual Obligations

We are party to contractual obligations involving commitments to make payments to third parties, which impact our short-term and long-term liquidity and capital resource needs.

Our contractual cash obligations include required payments of short-term and long-term debt principal and interest, purchase obligations, expected obligations under our pension plans, operating and finance lease payments, and tax-related obligations.

Our contractual cash obligations include required payments of short-term and long-term debt principal and interest, purchase obligations, expected obligations under our pension plans, operating and

finance lease payments, and tax-related obligations.

Our material cash requirements include the following contractual and other obligations:

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Net sales exclude taxes collected by us on behalf of governmental authorities and include the shipping and handling fees charged to customers.

discounts to customers, rebates, sales incentives, and product returns, which are estimated at the time of the sale using the “expected value” method or the “most likely amount” method based on the form of variable consideration.

The nature of our business gives rise to several types of variable consideration including trade promotions, comprised of coupons, product listing allowances, cooperative advertising arrangements, volume-based incentive programs, as well as discounts to customers, rebates, sales incentives, and product returns, which are estimated at the time of the sale using the “expected value” method or the “most likely amount” method based on the form of variable consideration.

Trade promotions, discounts to customers, rebates, and sales incentives are issued to customers at the point of sale and are estimated based on contractual terms, historical experience, trend analysis, and projected market conditions in the various markets served.

Revenue is recognized net of provisions for discounts and trade promotions.

The potential of estimates to vary differs by product, customer type, and geographic location.

The potential of estimates to vary differs by product,

customer type, and geographic location.

Historically, adjustments to these estimates to reflect updated expectations or actual results have not been material to our overall business.

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Following the Kenvue IPO, these hypothetical foreign tax credit benefits are not available for future utilization by us and were removed from the tax provision.

Furthermore, we operated as part of J&J until the completion of the Exchange Offer on August 23, 2023, and therefore the Company was included in J&J’s U.S.

Furthermore, we operated as part of J&J until the completion of the Exchange Offer on August 23, 2023, and therefore we were included in J&J’s U.S.

federal consolidated income tax return until that date.

We filed a standalone U.S.

Federal consolidated income tax return and a standalone return in most other jurisdictions in which it operates for the remainder of fiscal year 2023 and will continue to file a standalone return for all fiscal years thereafter.

Certain current income tax liabilities related to our activities included in J&J’s income tax returns were assumed to be immediately settled with J&J through the Net Investment from J&J or Additional Paid-In Capital accounts on the Consolidated Balance Sheets and reflected in the Consolidated Statements of Cash Flows as a financing activity for the fiscal twelve months ended December 31, 2023 and January 1, 2023.

federal consolidated income tax return and a standalone return in most other jurisdictions in which we operated for the remainder of fiscal year 2023 and have continued to file a standalone return for all fiscal years thereafter.

Certain current income tax liabilities related to our activities included in J&J’s income tax returns were assumed to be immediately settled with J&J through the Net Investment from J&J or Additional Paid-In Capital accounts on the Consolidated Balance Sheet and reflected in the Consolidated Statement of Cash Flows as a financing activity for the fiscal twelve months ended December 31, 2023.

Following the Exchange Offer, our operating footprint, as well as tax return elections and assertions, are different, and therefore, our income taxes, as presented in the Consolidated Financial Statements, may differ in future periods.

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We previously followed J&J’s accounting policy to consider the deferred tax effects of GILTI.

Effective in the fiscal three months

ended October 1, 2023, the Company changed the accounting principle for GILTI from the deferred approach to the period cost approach.

Effective in the fiscal three months ended October 1, 2023, we changed the accounting principle for GILTI from the deferred approach to the period cost approach.

We entered into a tax matters agreement with J&J in connection with the Separation.

For more information on the Tax Matters Agreement, see Note 12, “Relationship with J&J—Transactions with J&J, Including the Separation Agreement,” to the Consolidated Financial Statements included herein and our 2024 Proxy Statement.

For more information on the Tax Matters Agreement, see Note 12, “Relationship with J&J—Tax Indemnification,” to the Consolidated Financial Statements included herein and our 2025 Proxy Statement.

See Note 1, “Description of the Company and Summary of Significant Accounting Policies—Income Taxes,” and Note 14, “Income Taxes,” to the Consolidated Financial Statements included herein for further information regarding income taxes.

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Our definite-lived intangible assets are subjected to a test of impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

When assessing for potential indicators of impairment, we consider several factors including any adverse changes in legal factors or in the business climate that could affect the value of an asset, any adverse changes in the extent or manner in which an asset is used or is expected to be used, and current or forecasted reductions in net sales, operating income, or cash flows associated with the use of an asset.

If any indicators of impairment are present, the asset group is tested for recoverability by comparing the carrying amount of the asset group to the net undiscounted cash flows expected to be generated from the asset group.

When assessing for potential indicators of impairment, we consider several factors including any macroeconomic conditions, adverse changes in legal factors or in the business climate that could affect the value of an asset, any adverse changes in the extent or manner in which an asset is used or is expected to be used, and current or forecasted reductions in Net sales, operating income, or cash flows associated with the use of an asset.

If any indicators of impairment are present, the asset group is tested for recoverability by comparing the carrying value of the asset group to the net undiscounted future cash flows expected to be derived from the asset group.

If the net undiscounted cash flows are less than the carrying value of the asset group, we then perform the next step, which is to determine the fair value of the asset group, and record an impairment, if any.

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The fair value of a reporting unit refers to the price that would be received to sell the unit as a whole in an orderly transaction between market participants.

We estimate the fair value of a reporting unit using a discounted cash flow model.

We estimate the fair value of a reporting unit using a combination of a discounted cash flow model and a market-based approach.

The discounted cash flow model relies on assumptions regarding revenue and net income growth rates, projected working capital needs, capital expenditures, and discount rates.

To estimate fair value, we discount the forecasted cash flows of each reporting unit.

Forecasted cash flows are developed using long-term growth rates and then discounted to present value to estimate the fair value.

The discount rate we use represents the estimated weighted-average cost of capital, which reflects the overall level of inherent risk involved in the reporting unit’s operations and the rate of return a market participant would expect to earn.

The quantitative fair value test is performed utilizing long-term growth rates and discount rates applied to the estimated cash flows in estimation of fair value.

Under the market-based approach, we utilize the guideline public company method and market transaction method.

To forecast a reporting unit’s cash flows, we take into consideration economic conditions and trends, estimated future operating results, management’s projections, a market participant’s view of growth rates and product lives, and anticipated future economic conditions.

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The inputs used in determining the grant date fair value are the expected volatility, expected dividend yield, risk-free rate, and expected term.

The grant date fair value of each restricted stock unit (“RSU”) granted is equivalent to the closing price of our common stock on the New York Stock Exchange on the grant date.

We grant performance stock units (“PSUs”), including those with both performance vesting conditions and market-based vesting conditions (the “Performance PSUs”).

The grant date fair value of each RSU granted is equivalent to the closing price of our common stock on the New York Stock Exchange on the grant date.

We grant PSUs, including those with both performance vesting conditions and market-based vesting conditions (the “Performance PSUs”).

The grant date fair value of each Performance PSU granted, inclusive of the fair value associated with the achievement of the specified performance metrics and the relative total shareholder return goal, is estimated on the grant date using the Monte Carlo valuation model.

The inputs used in determining the grant fate fair value are the length of the performance period, the risk-free rate, and the stock prices, correlations, and expected volatility of the Company and the firms in the selected peer group.

The inputs used in determining the grant date fair value are the length of the performance period, the risk-free rate, and the stock prices, correlations, and expected volatility of the Company and the firms in the selected peer group.

The payout of the Performance PSUs is assessed by determining the achievement of the specified performance metrics as well as by comparing the Company’s total shareholder return (“TSR”) during a three-year period to the respective TSR of companies in a selected performance peer group.

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Other Information

Baby Powder Transition

On August 11, 2022, we announced the commercial decision to transition to an all cornstarch-based baby powder portfolio.

As a result of this transition, talc-based Johnson’s ® Baby Powder was discontinued globally in 2023.

Talc-based Johnson’s ® Baby Powder was previously discontinued during 2020 in certain markets, including the United States and Canada.

The impact of this change did not have a significant impact on our results of operations.

Deferred Markets

Deferred Legal Entities and Deferred Markets

Pursuant to the Separation Agreement, in order to ensure compliance with applicable law, to obtain necessary governmental approvals and other consents, and for other business reasons, we and J&J deferred certain transfers of assets and assumptions of liabilities of businesses in certain non-U.S.

jurisdictions, including China, Malaysia, and Russia, until after the completion of the Kenvue IPO.

On September 11, 2023, J&J transferred the equity interests in the majority of the Deferred Legal Entities (as defined in Note 1, “Description of the Company and Summary of Significant Accounting Policies,” to the Consolidated Financial Statements included herein) to the Company that previously had been consolidated as Variable Interest Entities in the Consolidated Financial Statements.

The Consolidated Financial Statements included herein include businesses in all jurisdictions in which we operate following the completion of the Separation, including any Deferred Local Business (as defined in Note 1, “Description of the Company and Summary of Significant Accounting Policies,” to the Consolidated Financial Statements included herein).

For more information regarding Deferred Local Businesses, see Part I, Item 1A, “Risk Factors—Risks Related to Our Relationship with J&J—The transfer of certain assets and liabilities from J&J to us contemplated by the Separation has not been completed and may be significantly delayed or not occur at all,” and Note 1, “Description of the Company and Summary of Significant Accounting Policies,” to the Consolidated Financial Statements included herein.

During the fiscal three months ended October 1, 2023, J&J transferred the equity interests in the majority of the Deferred Legal Entities (as defined in Note 1, “Description of the Company and Summary of Significant Accounting Policies—Variable Interest Entities and Net Economic Benefit Arrangements,” to the Consolidated Financial Statements included herein) to the Company, and during the fiscal three months ended December 28, 2025, transferred the equity interests of the remaining Deferred Legal Entities that previously had been consolidated as Variable Interest Entities in the Consolidated Financial Statements.

The Consolidated Financial Statements included herein include businesses in all jurisdictions in which we operate following the completion of the Separation, including any Deferred Markets (as defined and further discussed in Note 1, “Description of the Company and Summary of Significant Accounting Policies—Variable Interest Entities and Net Economic Benefit Arrangements,” to the Consolidated Financial Statements included herein).

Provision for Taxes

On December 15, 2022, the EU Member States formally adopted the EU’s Pillar Two Directive, which g enerally provides for a minimum effective tax rate of 15%, as established by the Organization for Economic Co-operation Development (“OECD”) Pillar Two Inclusive Framework that was supported by over 130 countries worldwide.

On December 15, 2022, the EU Member States formally adopted the EU’s Pillar Two Directive, which g enerally provides for a minimum effective tax rate of 15%, as established by the Organization for Economic Co-operation and Development’s (the “OECD”) Pillar Two Inclusive Framework (“Pillar Two”) that was supported by over 130 countries worldwide.

The EU effective dates are January 1, 2024, and January 1, 2025, for different aspects of the directive.

On July 17, 2023, the OECD published Administrative Guidance proposing certain safe harbors that effectively extend certain effective dates to January 1, 2027.

The OECD continues to release additional guidance, including guidance on safe harbors for which we may qualify, and many countries have already implemented legislation consistent with the OECD Pillar Two Framework.

The OECD continues to release additional guidance, including guidance on safe harbors for which we may qualify, and many countries have already implemented legislation consistent with Pillar Two.

Due to these new rules, our provision for taxes could be unfavorably impacted as the legislation becomes effective in countries in which we conduct business.

However, based on our current analysis, currently enacted laws for Pillar Two do not have a significant impact on the Consolidated Financial

However, based on our current analysis, currently enacted laws for Pillar Two do not have a significant impact on the Consolidated Financial Statements .

We are continuing to evaluate the Model Global Anti-Base Erosion Rules for Pillar Two and related legislation, and their potential impact on future periods.

In addition, in January 2025, the United States issued an executive order expressing disagreement with certain aspects of Pillar Two.

In June 2025, the Group of Seven issued a statement supporting the exclusion of U.S.

parented groups from certain aspects of Pillar Two in exchange for the United States not imposing certain retaliatory taxes.

On January 5, 2026, the OECD announced the Side-by-Side (“SbS”) package, implemented as administrative guidance and modifying the operation of the Pillar Two rules.

The package introduces simplifications and new safe harbors for U.S.

and other multinational companies where domestic and international tax systems meet robust requirements to coexist with Pillar Two, which would fully exempt U.S.

parented groups from the application of the Income Inclusion Rule and Undertaxed Profits Rule Pillar Two top up taxes.

The SbS package also extends the current Transitional Country-by Country Reporting Safe Harbor by one year.

We will continue to monitor any additional changes to Pillar Two.

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