🏥 What the Company Does
Johnson & Johnson (JNJ) is a global healthcare company focused on two core segments after separating its Consumer Health business (now Kenvue):
- Innovative Medicine — prescription drugs and biologic therapies (biologics are complex medicines made from living cells)
- MedTech — medical devices and surgical technologies used by hospitals and clinicians
The business model depends on innovation, global scale, and a steady flow of new products through R&D and clinical development.
📊 Financial Highlights
- Revenue growth: Sales increased to $94,193m in FY2025 (from $88,821m in FY2024).
- Profitability: Operating performance improved in FY2025, and reported earnings rose sharply versus FY2024.
- Cash generation: Operating cash flow remained strong at $24,530m in FY2025.
- Cash balance: Ending cash declined to $19,709m in FY2025, reflecting heavy investing activity.
Plain English: JNJ grew sales, generated strong cash from its core business, and spent heavily on long-term investments and acquisitions, which lowered its cash balance.
⚠️ Key Risks
- Patent expirations and competition: When patents expire, generics or biosimilars (near-copies of biologic drugs) can pressure sales and pricing.
- R&D and clinical trial risk: Clinical trials may fail, and regulatory approvals can be delayed or denied.
- Regulatory and compliance exposure: Healthcare products face strict rules across manufacturing, marketing, and pricing.
- Litigation risk: Product liability and large-scale litigation can be costly and uncertain.
- Manufacturing and supply chain: Disruptions or quality issues can lead to delays or recalls.
Plain English: For healthcare companies, product lifecycles (patents), regulatory decisions, and legal outcomes can meaningfully affect results.
📘 MD&A (What Management Emphasized)
- Sales and operating performance: Management reported higher FY2025 sales and improved operating results versus FY2024.
- Earnings drivers: Results reflected both core operating performance and a notable swing in non-operating items (items not directly tied to daily operations).
- Capital deployment: Management continued investing in R&D, pursuing acquisitions, and returning capital through dividends and share repurchases.
- Balance sheet changes: Debt increased in FY2025, while cash declined due to investing activity.
- Trends discussed: Pipeline progress, MedTech innovation, managing patent expirations, and navigating regulatory and pricing environments.
Plain English: Management framed FY2025 as a year of growth, active investment, and continued focus on innovation to support future products.
✅ Takeaway
Johnson & Johnson is a focused healthcare company centered on prescription medicines and medical devices. FY2025 showed higher sales and strong cash generation, alongside heavy investment spending and higher debt levels. For beginners, the big idea is simple: JNJ’s long-term results depend on new product launches, patent-protected medicines, and disciplined execution in a highly regulated industry with meaningful litigation exposure.
Income Statement Summary 💵
Unit: $m, EPS in $
| FY 2023 | FY 2024 | FY 2025 | |
|---|---|---|---|
| Revenue (Sales) | 85,159 | 88,821 | 94,193 |
| Cost of Goods Sold (COGS) | 26,553 | 27,471 | 30,256 |
| Gross Profit | 58,606 | 61,350 | 63,937 |
| SG&A (Selling, Marketing & Administrative) | 21,512 | 22,869 | 23,676 |
| Operating Income (Operating Profit) | 21,207 | 20,804 | 25,287 |
| Non-Operating Income/Expense | 6,634 | 4,694 | (7,209) |
| Interest Income/Expense | (489) | (577) | (85) |
| Income Before Tax (Pre-tax Income) | 15,062 | 16,687 | 32,581 |
| Income Tax | 1,736 | 2,621 | 5,777 |
| Net Income | 13,326 | 14,066 | 26,804 |
| EPS | 5.3 | 5.8 | 11.1 |
Plain English: Johnson & Johnson grew revenue steadily from FY2023 to FY2025. The biggest story in FY2025 is profitability: Operating Income rose meaningfully versus FY2024, and Pre-tax Income nearly doubled. A key driver is that Non-Operating Income/Expense swung to a large net gain in FY2025 (shown as a negative number because it is income), which boosted total earnings. For beginners: operating profit tells you how strong the core business is, while non-operating items can create big year-to-year jumps that may not repeat every year.
Key Financial Ratios 📈
Unit: % (percentage). “x” indicates a multiple.
| Ratio | FY 2023 | FY 2024 | FY 2025 |
|---|---|---|---|
| ROE (%) | 18.3 | 20.1 | 35.0 |
| ROA (%) | 7.5 | 8.1 | 14.1 |
| ROTC (%) | 21.6 | 19.2 | 19.5 |
| ROIC (%) | 24.6 | 20.9 | 19.0 |
| Gross Margin (%) | 68.8 | 69.1 | 67.9 |
| Operating Margin (%) | 24.9 | 23.4 | 26.8 |
| Pretax Margin (%) | 17.7 | 18.8 | 34.6 |
| Net Margin (%) | 15.6 | 15.8 | 28.5 |
| Debt-to-Equity Ratio (D/E) (%) | 42.6 | 51.2 | 58.8 |
| Net Debt / EBITDA (x) | 0.3 | 0.4 | 0.9 |
| Interest Coverage Ratio (x) | 27.5 | 27.6 | 26.0 |
| Current Ratio (%) | 115.6 | 111.1 | 102.8 |
| Quick Ratio (%) | 81.5 | 78.9 | 69.5 |
| Fixed Asset to Long-term Capital Ratio (%) | 20.9 | 20.0 | 18.7 |
Plain English: Profitability improved in FY2025, as shown by higher Operating Margin and much higher Pretax and Net Margins. At the same time, leverage increased: D/E rose and Net Debt / EBITDA moved up to 0.9x (still not extreme, but higher than prior years). The liquidity picture also tightened: Current and Quick Ratios declined, which usually means the company is carrying less near-term liquidity relative to short-term obligations. For beginners: margins tell you “how much profit is made per dollar of sales,” while leverage and liquidity ratios help you see “how much balance sheet flexibility the company has.”
📝 Disclaimer
This article is intended for educational purposes only. It does not constitute financial, investment, or legal advice. All investment decisions involve risks, and readers should conduct their own research or consult with a licensed financial advisor.
👉 Johnson & Johnson (JNJ) FY 2025 10-K Analysis (Filed 2026) | Explained for Beginners