TLDR
- Q1 revenue hits $21.9B, rising 4.2% operationally
- Adjusted EPS up 2.2% to $2.77
- MedTech and Innovative Medicine show solid growth
- Dividend raised for 63rd consecutive year
- STELARA and tariffs weigh on margins and outlook
Johnson & Johnson reported strong first-quarter 2025 results, with revenue rising 4.2% operationally to $21.9 billion. Yet, JNJ stock dipped 0.48% to close at $153.62 as investors focused on pressure from STELARA’s loss of exclusivity and rising tariff costs.
The earnings report showed solid performance across both the Innovative Medicine and MedTech divisions. Despite macro challenges, the company reaffirmed its full-year EPS guidance and increased its sales outlook.
EPS Lifted By Charge Reversals, But Adjusted Figures Steady
GAAP earnings per share jumped to $4.54 in Q1, largely due to the reversal of prior charges. Adjusted EPS came in at $2.77, up 2.2% from a year earlier. Adjusted net earnings reached $6.7 billion, supported by resilient performance in key product areas.
Free cash flow totaled around $3.4 billion, giving JNJ plenty of room to keep investing and returning value to shareholders.
MedTech And Pharma Units Stay Resilient
The MedTech division brought in $8 billion, rising 4.1% as cardiovascular and surgical vision products gained traction. Meanwhile, Innovative Medicine delivered $13.9 billion in sales, growing 4.2% even with an 810 basis point drag from STELARA competition.
Eleven brands posted double-digit gains, helping offset biosimilar erosion in immunology.
Dividend Hike And Pipeline Progress Support Long-Term Outlook
Johnson & Johnson raised its dividend by 4.8%, marking its 63rd consecutive annual increase. This underscores management’s confidence in future cash flows, even amid some uncertainty.
The company also highlighted pipeline wins, including FDA approval of TREMFYA for Crohn’s disease and promising data for its oncology combo therapy RYBREVANT and LAZCLUZE. It also launched a trial for OTTAVA, its surgical robotics system.
The recently closed acquisition of Intra-Cellular Therapies adds CAPLYTA to JNJ’s neuroscience portfolio, leading to a $700 million boost in full-year sales guidance.
Key Risks Include STELARA, Tariffs, And Litigation
STELARA’s decline remains a major drag. The loss of exclusivity caused an 810 basis point hit to pharma growth. Gross margins have also dipped due to pricing pressure and Medicare Part D redesign.
Tariffs tied to China are expected to cost the company $400 million this year. The orthopedic segment fell 3.1%, facing competition and one-time issues. Also weighing on sentiment are unresolved legal challenges around the talc product litigation.
While JNJ’s diversified model remains a strength, these headwinds could dampen near-term profitability. The stock’s modest performance compared to the broader S&P 500 reflects that cautious outlook.
Still, with steady cash flow, a healthy dividend, and innovation in high-growth areas, Johnson & Johnson continues to offer long-term value for defensive investors.
