This Quarterly Report on Form 10-Q and Johnson & Johnson’s other publicly available documents contain “forward-looking statements” within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Management and representatives of Johnson & Johnson and its subsidiaries (the Company) also may from time to time make forward-looking statements. Forward-looking statements do not relate strictly to historical or current facts and reflect management’s assumptions, views, plans, objectives and projections about the future. Forward-looking statements may be identified by the use of words such as “plans,” “expects,” “will,” “anticipates,” “estimates,” and other words of similar meaning in conjunction with, among other things: discussions of future operations, expected operating results, financial performance; impact of planned acquisitions and dispositions; impact and timing of restructuring initiatives including associated cost savings and other benefits; the Company’s strategy for growth; product development activities; regulatory approvals; market position and expenditures.

Because forward-looking statements are based on current beliefs, expectations and assumptions regarding future events, they are subject to uncertainties, risks and changes that are difficult to predict and many of which are outside of the Company’s control. Investors should realize that if underlying assumptions prove inaccurate, or known or unknown risks or uncertainties materialize, the Company’s actual results and financial condition could vary materially from expectations and projections expressed or implied in its forward-looking statements. Investors are therefore cautioned not to rely on these forward-looking statements. Risks and uncertainties include, but are not limited to:

Risks related to product development, market success and competition

•Challenges and uncertainties inherent in innovation and development of new and improved products and technologies on which the Company’s continued growth and success depend, including uncertainty of clinical outcomes, additional analysis of existing clinical data, obtaining regulatory approvals, health plan coverage and customer access, and initial and continued commercial success;

•Challenges to the Company’s ability to obtain and protect adequate patent and other intellectual property rights for new and existing products and technologies in the United States and other important markets;

•The impact of patent expirations, typically followed by the introduction of competing generic, biosimilar or other products and resulting revenue and market share losses;

•Increasingly aggressive and frequent challenges to the Company’s patents by competitors and others seeking to launch competing generic, biosimilar or other products and increased receptivity of courts, the United States Patent and Trademark Office and other decision makers to such challenges, potentially resulting in loss of market exclusivity and rapid decline in sales for the relevant product sooner than expected;

•Competition in research and development of new and improved products, processes and technologies, which can result in product and process obsolescence;

•Competition to reach agreement with third parties for collaboration, licensing, development and marketing agreements for products and technologies;

•Competition based on cost-effectiveness, product performance, technological advances and patents attained by competitors; and

•Allegations that the Company’s products infringe the patents and other intellectual property rights of third parties, which could adversely affect the Company’s ability to sell the products in question and require the payment of money damages and future royalties.

Risks related to product liability, litigation and regulatory activity

•Product efficacy or safety concerns, whether or not based on scientific evidence, potentially resulting in product withdrawals, recalls, regulatory action on the part of the United States Food and Drug Administration (U.S. FDA) (or international counterparts), declining sales, reputational damage, increased litigation expense and share price impact;

•The impact, including declining sales and reputational damage, of significant litigation or government action adverse to the Company, including product liability claims and allegations related to pharmaceutical marketing practices and contracting strategies;

•The impact of an adverse judgment or settlement and the adequacy of reserves related to legal proceedings, including patent litigation, product liability, personal injury claims, securities class actions, government investigations, employment and other legal proceedings;

•Increased scrutiny of the healthcare industry by government agencies and state attorneys general resulting in investigations and prosecutions, which carry the risk of significant civil and criminal penalties, including, but not limited to, debarment from government business;

•Failure to meet compliance obligations in compliance agreements with governments or government agencies, which could result in significant sanctions;

•Potential changes to applicable laws and regulations affecting United States and international operations, including relating to: approval of new products; licensing and patent rights; sales and promotion of healthcare products; access to, and reimbursement and pricing for, healthcare products and services; environmental protection; and sourcing of raw materials;

•Compliance with local regulations and laws that may restrict the Company’s ability to manufacture or sell its products in relevant markets, including requirements to comply with medical device reporting regulations and other requirements such as the European Union’s Medical Devices Regulation;

•Changes in domestic and international tax laws and regulations, increasing audit scrutiny by tax authorities around the world and exposures to additional tax liabilities potentially in excess of existing reserves; and

•The issuance of new or revised accounting standards by the Financial Accounting Standards Board and regulations by the Securities and Exchange Commission.

Risks related to healthcare market trends and the realization of benefits from the Company's strategic initiatives

•Pricing pressures resulting from trends toward healthcare cost containment, including the continued consolidation among healthcare providers and other market participants, trends toward managed care, the shift toward governments increasingly becoming the primary payors of healthcare expenses, significant new entrants to the healthcare markets seeking to reduce costs and government pressure on companies to voluntarily reduce costs and price increases;

•Restricted spending patterns of individual, institutional and governmental purchasers of healthcare products and services due to economic hardship and budgetary constraints;

•Challenges to the Company’s ability to realize its strategy for growth including through externally sourced innovations, such as development collaborations, strategic acquisitions, licensing and marketing agreements, and the potential heightened costs of any such external arrangements due to competitive pressures;

•The potential that the expected strategic benefits and opportunities from any planned or completed acquisition or divestiture by the Company may not be realized or may take longer to realize than expected;

•The potential that the expected benefits and opportunities related to past and ongoing restructuring actions may not be realized or may take longer to realize than expected;

•The Company’s ability to realize the anticipated benefits from the separation of Kenvue Inc. (Kenvue).

Risks related to economic conditions, financial markets and operating internationally

•The risks associated with global operations on the Company and its customers and suppliers, including foreign governments in countries in which the Company operates;

•The impact of inflation and fluctuations in interest rates and currency exchange rates and the potential effect of such fluctuations on revenues, expenses and resulting margins;

•Potential changes in export/import and trade laws, regulations and policies of the United States and other countries, including any increased trade restrictions or tariffs and potential drug reimportation legislation;

•The impact on international operations from financial instability in international economies, sovereign risk, possible imposition of governmental controls and restrictive economic policies, and unstable international governments and legal systems;

•The impact of global public health crises and pandemics;

•Changes to global climate, extreme weather and natural disasters that could affect demand for the Company’s products and services, cause disruptions in manufacturing and distribution networks, alter the availability of goods and services within the supply chain, and affect the overall design and integrity of the Company’s products and operations;

•The impact of global or economic changes or events, including global tensions and war; and

•The impact of armed conflicts and terrorist attacks in the United States and other parts of the world, including social and economic disruptions and instability of financial and other markets.

Risks related to supply chain and operations

•Difficulties and delays in manufacturing, internally, through third-party providers or otherwise within the supply chain, that may lead to voluntary or involuntary business interruptions or shutdowns, product shortages, withdrawals or suspensions of products from the market, and potential regulatory action;

•Interruptions and breaches of the Company’s information technology systems or those of the Company’s vendors, which could result in reputational, competitive, operational or other business harm as well as financial costs and regulatory action;

•Reliance on global supply chains and production and distribution processes that are complex and subject to increasing regulatory requirements that may adversely affect supply, sourcing and pricing of materials used in the Company’s products; and

•The potential that the expected benefits and opportunities related to restructuring actions may not be realized or may take longer to realize than expected, including due to any required approvals from applicable regulatory authorities.

Investors also should carefully read the Risk Factors described in Item 1A of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2023, for a description of certain risks that could, among other things, cause the Company’s actual results to differ materially from those expressed in its forward-looking statements. Investors should understand that it is not possible to predict or identify all such factors and should not consider the risks described above to be a complete statement of all potential risks and uncertainties. The Company does not undertake to publicly update any forward-looking statement that may be made from time to time, whether as a result of new information or future events or developments.

Table of Contents

Part I — Financial information

Item 1 — Financial statements

Johnson & Johnson and subsidiaries consolidated balance sheets

(Unaudited; Dollars in Millions Except Share and Per Share Data)

September 29, 2024

December 31, 2023

Assets

Current assets:

Cash and cash equivalents (Note 4)

Marketable securities

Accounts receivable, trade, less allowances $ (2023, $)

Inventories (Note 2)

Prepaid expenses and other

Total current assets

Property, plant and equipment at cost

Less: accumulated depreciation

()

Property, plant and equipment, net

Intangible assets, net (Note 3)

Goodwill (Note 3)

Deferred taxes on income (Note 5)

Other assets

Total assets

Liabilities and shareholders’ equity

Current liabilities:

Loans and notes payable

Accounts payable

Accrued liabilities

Accrued rebates, returns and promotions

Accrued compensation and employee related obligations

Accrued taxes on income (Note 5)

Total current liabilities

Long-term debt (Note 4)

Deferred taxes on income (Note 5)

Employee related obligations (Note 6)

Long-term taxes payable (Note 5)

Other liabilities

Total liabilities

Commitments and Contingencies (Note 11)

per share (authorized shares; issued shares)

Accumulated other comprehensive income (loss) (Note 7)

()

Retained earnings and Additional paid-in capital

Less: common stock held in treasury, at cost ( and shares)

Total shareholders’ equity

Total liabilities and shareholders’ equity

See Notes to Consolidated Financial Statements


Form 10-Q			1

Table of Contents

Johnson & Johnson and subsidiaries consolidated statements of earnings

(Unaudited; Dollars & Shares in Millions Except Per Share Amounts)

Fiscal Third Quarter Ended

September 29,
2024

Percent
to Sales

October 1,
2023

Percent
to Sales

Sales to customers (Note 9)

Cost of products sold

Gross profit

Selling, marketing and administrative expenses

Research and development expense

In-process research and development impairments

Interest income

()

Interest expense, net of portion capitalized

Other (income) expense, net

Restructuring (Note 12)

Earnings before provision for taxes on income

Provision for taxes on income (Note 5)

Net earnings from continuing operations

Net earnings from discontinued operations, net of tax (Note 13)

Net earnings

Net earnings per share (Note 8)

Continuing operations - basic

Discontinued operations - basic

Total net earnings per share - basic

Continuing operations - diluted

Discontinued operations - diluted

Total net earnings per share - diluted

Avg. shares outstanding

Basic

Diluted

See Notes to Consolidated Financial Statements

Prior year results have been recast to reflect the continuing operations of Johnson & Johnson


2

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Johnson & Johnson and subsidiaries consolidated statements of earnings

(Unaudited; Dollars & Shares in Millions Except Per Share Amounts)

Fiscal Nine Months Ended

September 29,
2024

Percent
to Sales

October 1,
2023

Percent
to Sales

Sales to customers (Note 9)

Cost of products sold

Gross profit

Selling, marketing and administrative expenses

Research and development expense

In-process research and development impairments

Interest income

()

Interest expense, net of portion capitalized

Other (income) expense, net

Restructuring (Note 12)

Earnings before provision for taxes on income

Provision for taxes on income (Note 5)

Net earnings from continuing operations

Net earnings from discontinued operations, net of tax (Note 13)

Net earnings

Net earnings per share (Note 8)

Continuing operations - basic

Discontinued operations - basic

Total net earnings per share - basic

Continuing operations - diluted

Discontinued operations - diluted

Total net earnings per share - diluted

Avg. shares outstanding

Basic

Diluted

See Notes to Consolidated Financial Statements

Prior year results have been recast to reflect the continuing operations of Johnson & Johnson


Form 10-Q			3

Table of Contents

Johnson & Johnson and subsidiaries consolidated statements of comprehensive income

(Unaudited; Dollars in Millions)

Fiscal Third Quarter Ended

Fiscal Nine Months Ended

September 29, 2024

October 1, 2023

September 29, 2024

October 1, 2023

Net earnings

Other comprehensive income (loss), net of tax

Foreign currency translation

()

Securities:

Unrealized holding gain (loss) arising during period

Net change

Employee benefit plans:

Prior service cost amortization during period

()

Gain (loss) amortization during period

()

Consumer settlement/curtailment

Net change

()

Derivatives & hedges:

Unrealized gain (loss) arising during period

()

Reclassifications to earnings

()

Net change

()

Other comprehensive income (loss)

()


Form 10-Q			5

Table of Contents

Fiscal Third Quarter Ended October 1, 2023

Total

Retained

Earnings and Additional Paid-in Capital

Accumulated
Other
Comprehensive
Income

Common Stock
Issued Amount

Treasury
Stock
Amount

Non-Controlling interest (NCI)

Balance, July 2, 2023

()

Net earnings

—

Cash dividends paid ($ per share)

()

—

Employee compensation and stock option plans

—

Repurchase of common stock

()

—

()

—

Total

Retained

Earnings and Additional Paid-in Capital

Accumulated
Other
Comprehensive
Income

Common Stock
Issued Amount

Treasury
Stock
Amount

Non-Controlling interest (NCI)

Balance, January 1, 2023

()

Net earnings

—

Cash dividends paid ($ per share)

()

—

Employee compensation and stock option plans

()

—

Repurchase of common stock

()

—

()

—

Other

()

—

()

—

Kenvue Separation / IPO

()

Other comprehensive income (loss), net of tax

()

—

()

—

Balance, October 1, 2023

()

See Notes to Consolidated Financial Statements


6

Table of Contents

Johnson & Johnson and subsidiaries consolidated statements of cash flows

(Unaudited; Dollars in Millions)

Fiscal Nine Months Ended

September 29,
2024

October 1,
2023

Cash flows from operating activities

Net earnings

Adjustments to reconcile net earnings to cash flows from operating activities:

Depreciation and amortization of property and intangibles

Stock based compensation

Asset write-downs

Charge for purchase of in-process research and development assets

Gain on Kenvue separation

()

Net gain on sale of assets/businesses

()

Deferred tax provision

()

Credit losses and accounts receivable allowances

()

Changes in assets and liabilities, net of effects from acquisitions and divestitures:

Increase in accounts receivable

()

Increase in inventories

()

Increase in accounts payable and accrued liabilities

Decrease/(Increase) in other current and non-current assets

()

(Decrease)/Increase in other current and non-current liabilities

()

Net cash flows from operating activities

Cash flows from investing activities

Additions to property, plant and equipment

()

Proceeds from the disposal of assets/businesses, net (Note 10)

Acquisitions, net of cash acquired (Note 10)

()

Purchases of in-process research and development assets (Note 10)

()

Purchases of investments

()

Sales of investments

Credit support agreements activity, net

()

Other (including capitalized licenses and milestones)

()

Net cash (used by) / from investing activities

()

Cash flows from financing activities

Dividends to shareholders

()

Repurchase of common stock

()

Proceeds from short-term debt, net

Repayment of short-term debt, net

()

Proceeds from long-term debt, net of issuance costs

Repayment of long-term debt

()

Proceeds from the exercise of stock options/employee withholding tax on stock awards, net

Credit support agreements activity, net

Settlement of convertible debt acquired from Shockwave

()

Proceeds of short and long-term debt, net of issuance cost, related to the debt that transferred to Kenvue at separation

Proceeds from Kenvue initial public offering

Cash transferred to Kenvue at separation

()


Form 10-Q			7

Table of Contents

Fiscal Nine Months Ended

September 29,
2024

October 1,
2023

Other

()

Net cash used by financing activities

()

Effect of exchange rate changes on cash and cash equivalents

()

(Decrease) / Increase in cash and cash equivalents

()

Cash and cash equivalents from continuing operations, beginning of period

Cash and cash equivalents from discontinued operations, beginning of period

Cash and Cash equivalents beginning of period

Cash and cash equivalents from continuing operations, end of period

Cash and cash equivalents from discontinued operations, end of period

Cash and cash equivalents, end of period

Acquisitions (Note 10)

Fair value of assets acquired

Fair value of liabilities assumed

()

Net cash paid for acquisitions

The weighted average amortization period for patents and trademarks is approximately years. The weighted average amortization period for customer relationships and other intangible assets is approximately years. The amortization expense of amortizable intangible assets included in the cost of products sold was $ billion and $ billion for the fiscal third quarters ended September 29, 2024 and October 1, 2023, respectively. The amortization expense of amortizable intangible assets included in the cost of products sold was $ billion for both the fiscal nine months ended September 29, 2024 and October 1, 2023, respectively. Intangible asset write-downs are included in Other (income) expense, net.


10

Table of Contents

See Note 10 to the Consolidated Financial Statements for additional details related to acquisitions and divestitures.

Note 4 —

billion net, related to net investment and cash flow hedges. On an ongoing basis, the Company monitors counter-party credit ratings. The Company considers credit non-performance risk to be low because the Company primarily enters into agreements with commercial institutions that have at least an investment grade credit rating. Refer to the table on significant financial assets and liabilities measured at fair value contained in this footnote for receivables and payables with these commercial institutions. As of September 29, 2024, the Company had notional amounts outstanding for forward foreign exchange contracts, cross currency interest rate swaps and interest rate swaps of $ billion, $ billion and $ billion, respectively. As of December 31, 2023, the Company had notional amounts outstanding for forward foreign exchange contracts, cross currency interest rate swaps and interest rate swaps of $ billion, $ billion and $ billion, respectively.

All derivative instruments are recorded on the balance sheet at fair value. Changes in the fair value of derivatives are recorded each period in current earnings or other comprehensive income, depending on whether the derivative is designated as part of a hedge transaction, and if so, the type of hedge transaction.

The designation as a cash flow hedge is made at the entrance date of the derivative contract. At inception, all derivatives are expected to be highly effective. Foreign exchange contracts designated as cash flow hedges are accounted for under the forward method and all gains/losses associated with these contracts will be recognized in the income statement when the hedged item impacts earnings. Changes in the fair value of these derivatives are recorded in accumulated other comprehensive income until the underlying transaction affects earnings and are then reclassified to earnings in the same account as the hedged transaction.

Gains and losses associated with interest rate swaps and changes in fair value of hedged debt attributable to changes in interest rates are recorded to interest expense in the period in which they occur. Gains and losses on net investment hedges are accounted for through the currency translation account within accumulated other comprehensive income. The portion excluded from effectiveness testing is recorded through interest (income) expense using the spot method. On an ongoing basis, the Company assesses whether each derivative continues to be highly effective in offsetting changes of hedged items. If and when a derivative is no longer expected to be highly effective, hedge accounting is discontinued.

The Company designated its Euro denominated notes with due dates ranging from 2024 to 2044 as a net investment hedge of the Company's investments in certain of its international subsidiaries that use the Euro as their functional currency in order to reduce the volatility caused by changes in exchange rates.

As of September 29, 2024, the balance of deferred net loss on derivatives included in accumulated other comprehensive income was $ million after-tax. For additional information, see the Consolidated Statements of Comprehensive Income and Note 7. The Company expects that substantially all of the amounts related to forward foreign exchange contracts will be reclassified into earnings over the next 12 months as a result of transactions that are expected to occur over that period. The maximum length of time over which the Company is hedging transaction exposure is months, excluding interest rate contracts and net investment hedge contracts. The amount ultimately realized in earnings may differ as foreign exchange rates change. Realized gains and losses are ultimately determined by actual exchange rates at maturity of the derivative.


Form 10-Q			11

Table of Contents


12

Table of Contents

() Derivatives designated as hedging instruments()Gain (Loss) on net investment hedging relationship:Cross currency interest rate swaps contracts: Amount of gain or (loss) recognized in income on derivative amount excluded from effectiveness testing Amount of gain or (loss) recognized in AOCIGain (Loss) on cash flow hedging relationship:Forward foreign exchange contracts: Amount of gain or (loss) reclassified from AOCI into income ()() Amount of gain or (loss) recognized in AOCI ()()Cross currency interest rate swaps contracts: Amount of gain or (loss) reclassified from AOCI into income Amount of gain or (loss) recognized in AOCI$()(Dollars in Millions)September 29, 2024December 31, 2023September 29, 2024December 31, 2023Long-term Debt$()()Gain/(Loss)
Recognized In
Income on DerivativeGain/(Loss)
Recognized In
Income on Derivative(Dollars in Millions)Location of
Gain /(Loss)
Recognized in
Income on DerivativeFiscal Third Quarter EndedFiscal Nine Months EndedDerivatives Not Designated as Hedging InstrumentsSeptember 29, 2024October 1, 2023September 29, 2024October 1, 2023Foreign Exchange ContractsOther (income) expense$()

)Interest (income) expenseCross Currency interest rate swaps$()Interest (income) expense

The following table is the effect of net investment hedges for the fiscal nine months ended in 2024 and 2023:

Gain/(Loss)
Recognized In
Accumulated OCI

Location of Gain or (Loss)
Reclassified from Accumulated
OCI Into Income

Gain/(Loss) Reclassified From
Accumulated OCI
Into Income

(Dollars in Millions)

September 29, 2024

October 1, 2023

September 29, 2024

October 1, 2023

Debt

$()

Interest (income) expense

Cross Currency interest rate swaps

Interest (income) expense


14

Table of Contents

()Equity Investments without readily determinable value$

(1)Recorded in Other (income)/expense, net

(2)Other includes impact of currency

% remaining stake in Kenvue. A debt-for-equity exchange was completed in the fiscal second quarter of 2024.

On May 15, 2024, the Company issued $ billion aggregate principal amount of commercial paper and received $ billion of net cash proceeds to be used for general corporate purposes. On May 17, 2024, the Company completed a Debt-for-Equity Exchange of its remaining shares of Kenvue Common Stock for the outstanding Commercial Paper. Upon completion of the Debt-for-Equity Exchange, the Commercial Paper was satisfied and discharged, and the Company no longer owns any shares of Kenvue Common Stock. This exchange resulted in a loss of approximately $ billion recorded in Other (income) expense.

Fair value is the exit price that would be received to sell an asset or paid to transfer a liability. Fair value is a market-based measurement determined using assumptions that market participants would use in pricing an asset or liability. In accordance with ASC 820, a three-level hierarchy was established to prioritize the inputs used in measuring fair value. The levels within the hierarchy are described below with Level 1 inputs having the highest priority and Level 3 inputs having the lowest.

The fair value of a derivative financial instrument (i.e., forward foreign exchange contracts, interest rate contracts) is the aggregation by currency of all future cash flows discounted to its present value at the prevailing market interest rates and subsequently converted to the U.S. Dollar at the current spot foreign exchange rate. The Company does not believe that fair values of these derivative instruments materially differ from the amounts that could be realized upon settlement or maturity, or that the changes in fair value will have a material effect on the Company’s results of operations, cash flows or financial position. The Company also holds equity investments which are classified as Level 1 and debt securities which are classified as Level 2. The Company holds acquisition related contingent liabilities based upon certain regulatory and commercial events, which are classified as Level 3, whose values are determined using discounted cash flow methodologies or similar techniques for which the determination of fair value requires significant judgment or estimations.

The following three levels of inputs are used to measure fair value:

Level 1 — Quoted prices in active markets for identical assets and liabilities.

Level 2 — Significant other observable inputs.

Level 3 — Significant unobservable inputs.


Form 10-Q			15

Table of Contents

Interest rate contracts(2)

Total Liabilities: Forward foreign exchange contracts

Interest rate contracts(2)

(1)Held to maturity investments are reported at amortized cost and gains or losses are reported in earnings.

(2)Available for sale debt securities are reported at fair value with unrealized gains and losses reported net of taxes in other comprehensive income.

As of the fiscal year ended December 31, 2023, the carrying amount was approximately the same as the estimated fair value.

Fair value of government securities and obligations and corporate debt securities was estimated using quoted broker prices and significant other observable inputs.

Due after one year through five yearsDue after five years through ten yearsTotal debt securities$


Form 10-Q			17

Table of Contents

Non-Current Debt

% Notes due 2026

% Notes due 2027

% Notes due 2028

% Notes due 2028 (MM Euro )

% Notes due 2029 (1)

% Notes due 2029

% Notes due 2030

% Notes due 2031(1)

% Notes due 2032 (MM Euro )(1)

% Notes due 2033

% Notes due 2034(1)

% Notes due 2035 (B Euro )

% Notes due 2036 (MM Euro )(1)

% Notes due 2036

% Notes due 2037

% Notes due 2038

% Notes due 2040

% Notes due 2041

% Notes due 2043

% Notes due 2044 (B Euro )(1)

% Notes due 2046

% Notes due 2047

% Notes due 2048

% Notes due 2050

% Notes due 2054(1)

% Notes due 2060

OtherTotal Non-Current Debt$

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

The weighted average effective interest rate on non-current debt is %.


18

Table of Contents

billion at December 31, 2023.

Fair value of the non-current debt was estimated using market prices, which were corroborated by quoted broker prices and significant other observable inputs.

billion of commercial paper which has a weighted average interest rate of % and a weighted average maturity of approximately .

Note 5 —

% and %, respectively. The change in the consolidated tax rate as compared to the prior year is primarily due to charges of approximately $ billion in the fiscal nine months of 2024 and approximately $ billion in the fiscal nine months of 2023, both related to talc matters. Both charges were recorded at an effective U.S. federal and state tax rate of approximately % (for further information see Note 11 to the Consolidated Financial Statements). Further, the Company acquired Yellow Jersey Therapeutics AG (Yellow Jersey), a demerged subsidiary of Numab Therapeutics AG, to secure the global rights to NM26, a bispecific antibody compound and recorded a related $ billion non-tax-deductible expense associated with the acquisition in the fiscal third quarter of 2024 (for further information see Note 10 to the Consolidated Financial Statement).

Additionally in the fiscal nine months of 2024, the effective tax rate was unfavorably impacted by legislative changes that went into effect for Pillar Two in some of the Company's foreign jurisdictions which were partially offset by an increase in available U.S. foreign tax credits. The Company incurred tax audit expenses in the fiscal second quarter of 2024 related to multi-year transfer pricing agreements with the IRS and certain other foreign jurisdictions.

As of September 29, 2024, the Company had approximately $ billion of liabilities from unrecognized tax benefits. The Company conducts business and files tax returns in numerous countries and currently has tax audits in progress in a number of jurisdictions. With respect to the United States, the Internal Revenue Service (IRS) has completed its audit for the tax years through 2016 and has commenced the audit for tax years 2017 through 2020.

The Company currently expects completion of multi-year transfer pricing agreements with the IRS and certain other foreign jurisdictions in the next 12 months. As a result, the Company has classified approximately $ billion of unrecognized tax benefits and associated interest as a current liability on the “Accrued taxes on Income” line of the Consolidated Balance Sheet as of the end of the third fiscal quarter of 2024 in anticipation of final settlement.

In other major jurisdictions where the Company conducts business, the years that remain open to tax audit go back to the year 2013. The Company believes it is possible that tax audits may be completed over the next twelve months by taxing authorities in some jurisdictions outside of the United States. However, the Company is not able to provide a reasonably reliable estimate of the timing of any other future tax payments relating to uncertain tax positions.


Form 10-Q			19

Table of Contents

Note 6 —

Interest costExpected return on plan assets()()()()()()()()

Amortization of prior service cost/(credit)

()()()()()()Recognized actuarial (gains)/losses()()Curtailments and settlements()()()Net periodic benefit cost/(credit)$()()()()

The service cost component of net periodic benefit cost is presented in the same line items on the Consolidated Statement of Earnings where other employee compensation costs are reported, including Cost of products sold, Research and development expense, Selling, marketing and administrative expenses, and in the fiscal third quarter and fiscal nine months of 2023, Net earnings from discontinued operations, net of taxes if related to the separation of Kenvue. All other components of net periodic benefit cost are presented as part of Other (income) expense, net on the Consolidated Statement of Earnings.

Company contributions

For the fiscal nine months ended September 29, 2024, the Company contributed $ million and $ million to its U.S. and international retirement plans, respectively. The Company plans to continue to fund its U.S. defined benefit plans to comply with the Pension Protection Act of 2006. International plans are funded in accordance with local regulations.

Note 7 —

)()()()()Net change()September 29, 2024()()()()

Amounts in accumulated other comprehensive income are presented net of the related tax impact. Foreign currency translation is not adjusted for income taxes where it relates to permanent investments in international subsidiaries. For additional details on comprehensive income see the Consolidated Statements of Comprehensive Income.


20

Table of Contents

Note 8 —

Basic net earnings per share from discontinued operations Total net earnings per share - basicAverage shares outstanding — basicPotential shares exercisable under stock option plansLess: shares which could be repurchased under treasury stock method()()()()Average shares outstanding — dilutedDiluted net earnings per share from continuing operationsDiluted net earnings per share from discontinued operations Total net earnings per share - diluted$(Shares in Millions)The diluted net earnings per share calculation excluded the following number of shares related to stock options, as the exercise price of these options was greater than the average market value of the Company’s stock.


Form 10-Q			21

Table of Contents

Note 9 —

business segments: Innovative Medicine and MedTech.

Sales by segment of business

()%$()%

International

()

Worldwide

()

REMICADE

U.S.

()()

U.S. Exports

()()

International

()()

Worldwide

()()

SIMPONI / SIMPONI ARIA

U.S.

()()

International

()()

Worldwide

()()

STELARA

U.S.

()()

International

()

Worldwide

()()

TREMFYA

U.S.

International

Worldwide

OTHER IMMUNOLOGY

U.S.

()()

International

Worldwide

()()Infectious Diseases

U.S.

()

International

()()

Worldwide

()()

COVID-19 VACCINE

U.S.

International

()()

Worldwide

()()

EDURANT / rilpivirine


22

Table of Contents

()()

International

Worldwide

PREZISTA / PREZCOBIX / REZOLSTA / SYMTUZA

U.S.

()

International

()

Worldwide

()

OTHER INFECTIOUS DISEASES

U.S.

()()

International

()()

Worldwide

()()Neuroscience

U.S.

International

()()

Worldwide

CONCERTA / methylphenidate

U.S.

()()

International

()()

Worldwide

()()

INVEGA SUSTENNA / XEPLION / INVEGA TRINZA / TREVICTA

U.S.

International

()()

Worldwide

SPRAVATO

U.S.

International

Worldwide

OTHER NEUROSCIENCE

U.S.

()()

International

()()


Form 10-Q			23

Table of Contents

()()Oncology

U.S.

International

Worldwide

CARVYKTI

U.S.

International

Worldwide

DARZALEX

U.S.

International

Worldwide

ERLEADA

U.S.

International

Worldwide

IMBRUVICA

U.S.

()()

International

()()

Worldwide

()()TECVAYLI

U.S.

International

Worldwide

ZYTIGA / abiraterone acetate

U.S.

()()

International

()()

Worldwide

()()OTHER ONCOLOGY

U.S.

International

Worldwide

* Pulmonary Hypertension

U.S.

International

Worldwide

OPSUMIT

U.S. International()()Worldwide

UPTRAVI


24

Table of Contents

International Worldwide

OTHER PULMONARY HYPERTENSION

U.S.

International()()Worldwide Cardiovascular / Metabolism / OtherU.S.()()International()()Worldwide()()

XARELTO

U.S.()()International Worldwide()()

OTHER

U.S.()()International()()Worldwide()()TOTAL INNOVATIVE MEDICINE U.S. International ()Worldwide MEDTECH

Cardiovascular(1)

U.S. International Worldwide

ELECTROPHYSIOLOGY

U.S. International Worldwide

ABIOMED

U.S. International Worldwide

SHOCKWAVE(2)

U.S.**International**Worldwide**

OTHER CARDIOVASCULAR(1)

U.S.


Form 10-Q			25

Table of Contents

Worldwide OrthopaedicsU.S. International Worldwide

HIPS

U.S. International() Worldwide

KNEES

U.S. International Worldwide

TRAUMA

U.S. International Worldwide

SPINE, SPORTS & OTHER

U.S.() International ()Worldwide()()SurgeryU.S.()()International()()Worldwide()()

ADVANCED

U.S.()()International()()Worldwide()()

GENERAL

U.S.()()International Worldwide VisionU.S. International ()Worldwide ()

CONTACT LENSES / OTHER

U.S.


26

Table of Contents

()()Worldwide ()

SURGICAL

U.S.()()International Worldwide TOTAL MEDTECH U.S. International Worldwide WORLDWIDE U.S. International ()Worldwide$ %$ %

* Percentage greater than 100% or not meaningful

(1) Previously referred to as Interventional Solutions

(2) Acquired on May 31, 2024

Earnings before provision for taxes by segment

()%$ %

MedTech(2)

()()Segment earnings before provision for taxes()

Less: Expense not allocated to segments (3)

Worldwide income (loss) before tax$()%$ %


Form 10-Q			41

Table of Contents

Item 2 — Management’s discussion and analysis of financial condition and results of operations

Results of operations

Sales to customers

Analysis of consolidated sales

For the fiscal nine months of 2024, worldwide sales were $66.3 billion, a total increase of 4.0%, including an operational (which excludes translational currency) increase of 5.6% as compared to 2023 fiscal nine months sales of $63.8 billion. Currency fluctuations had a negative impact of 1.6% for the fiscal nine months of 2024. In the fiscal nine months of 2024, acquisitions and divestitures had net positive impact of 0.3% on the worldwide operational sales growth. In the fiscal nine months of 2024, the impact of the Covid-19 Vaccine sales decline on the worldwide operational sales was a negative 1.5%.

Sales by U.S. companies were $37.1 billion in the fiscal nine months of 2024, which represented an increase of 7.7% as compared to the prior year. In the fiscal nine months of 2024, acquisitions and divestitures had net positive impact of 0.4% on the U.S. operational sales growth. Sales by international companies were $29.2 billion, a decrease of 0.4%, including an operational increase of 3.1%, offset by a negative currency impact of 3.5% as compared to the fiscal nine months sales of 2023. In the fiscal nine months of 2024, the net impact of acquisitions and divestitures on the international operational sales growth was a positive 0.1%. In the fiscal nine months of 2024, the impact of the Covid-19 Vaccine sales decline on the international operational sales was a negative 3.2%.

In the fiscal nine months of 2024, sales by companies in Europe experienced a decline of 1.0%, which included an operational decline of 0.7% and a negative currency impact of 0.3%. In the fiscal nine months of 2024, the impact of the Covid-19 Vaccine sales decline on the European region operational sales was a negative 6.0%. Sales by companies in the Western Hemisphere, excluding the U.S., achieved growth of 5.8%, which included an operational increase of 21.4%, and a negative currency impact of 15.6%. Sales by companies in the Asia-Pacific, Africa region experienced a decline of 1.6%, including an operational increase of 2.8% offset by a negative currency impact of 4.4%.

Fiscal nine months 2024
sales by geographic region (in billions)

Fiscal nine months 2024
sales by segment (in billions)

Note: values may have been rounded


42

Table of Contents

For the fiscal third quarter of 2024, worldwide sales were $22.5 billion, a total increase of 5.2%, which included operational growth of 6.3% and a negative currency impact of 1.1% as compared to 2023 fiscal third quarter sales of $21.4 billion. In the fiscal third quarter of 2024, the net impact of acquisitions and divestitures on worldwide operational sales growth was a positive 0.9%. In the fiscal third quarter of 2024, the impact of the Covid-19 Vaccine sales decline on the worldwide operational sales was a negative 0.2%.

Sales by U.S. companies were $12.9 billion in the fiscal third quarter of 2024, which represented an increase of 7.6% as compared to the prior year. In the fiscal third quarter of 2024, the net impact of acquisitions and divestitures on the U.S. operational sales growth was a positive 1.1%. Sales by international companies were $9.6 billion, a total increase of 2.2%, which included operational growth of 4.6% and a negative currency impact of 2.4%. In the fiscal third quarter of 2024, the net impact of acquisitions and divestitures on international operational sales growth was a positive 0.6%. In the fiscal third quarter of 2024, the impact of the Covid-19 Vaccine sales decline on the international operational sales was a negative 0.5%.

In the fiscal third quarter of 2024, sales by companies in Europe achieved growth of 4.0%, which included a operational growth of 3.0% and a positive currency impact of 1.0%. In the fiscal third quarter of 2024, the impact of the Covid-19 Vaccine sales decline on the European region operational sales was a negative 0.8%. Sales by companies in the Western Hemisphere, excluding the U.S., achieved growth of 0.3%, including operational growth of 20.3% and a negative currency impact of 20.0%. Sales by companies in the Asia-Pacific, Africa region achieved growth of 0.5%, which included operational growth of 1.5% partially offset by a negative currency impact of 1.0%.

Q3 2024
Sales by Geographic Region (in billions)

Q3 2024
Sales by Segment (in billions)

Note: values may have been rounded


Form 10-Q			43

Table of Contents

Analysis of sales by business segments

Innovative Medicine

Innovative Medicine segment sales in the fiscal nine months of 2024 were $42.6 billion, an increase of 3.9% as compared to the same period a year ago, with an operational increase of 5.5% and a negative currency impact of 1.6%. In the fiscal nine months of 2024, the impact of the Covid-19 Vaccine sales decline on the Innovative Medicine segment operational sales was a negative 2.4%. U.S. Innovative Medicine sales increased 8.2% as compared to the same period a year ago. International Innovative Medicine sales decreased by 1.7%, including operational growth of 2.1% offset by a negative currency impact of 3.8%. In the fiscal nine months of 2024, the impact of the Covid-19 Vaccine sales decline on the international Innovative Medicine segment operational sales was a negative 5.3%. In the fiscal nine months of 2024, the net impact of acquisitions and divestitures on the Innovative Medicine segment operational sales growth was a negative 0.1%.

Major Innovative Medicine therapeutic area sales — Fiscal Nine Months Ended



(Dollars in Millions)	September 29, 2024	October 1, 2023	Total Change		Operations Change		Currency Change
Immunology	$13,590	$13,457	1.0	%	2.6	%	(1.6)	%
REMICADE	1,246	1,410	(11.6)		(10.3)		(1.3)
SIMPONI/ SIMPONI ARIA	1,607	1,695	(5.2)		(0.7)		(4.5)
STELARA	8,012	8,105	(1.2)		0.0		(1.2)
TREMFYA	2,721	2,237	21.6		23.3		(1.7)
Other Immunology	3	9	(66.8)		(66.8)		—
Infectious Diseases	2,622	3,566	(26.5)		(26.1)		(0.4)
COVID-19 VACCINE	198	1,073	(81.6)		(81.6)		0.0
EDURANT/rilpivirine	950	843	12.7		12.6		0.1
PREZISTA/ PREZCOBIX/ REZOLSTA/ SYMTUZA	1,305	1,415	(7.8)		(7.2)		(0.6)
Other Infectious Diseases	169	235	(28.0)		(25.1)		(2.9)
Neuroscience	5,340	5,339	0.0		1.8		(1.8)
CONCERTA/methylphenidate	482	603	(20.0)		(17.0)		(3.0)
INVEGA SUSTENNA/ XEPLION/ INVEGA TRINZA/ TREVICTA	3,159	3,104	1.8		2.7		(0.9)
SPRAVATO	780	483	61.5		61.8		(0.3)
Other Neuroscience	920	1,149	(19.9)		(15.8)		(4.1)
Oncology	15,284	13,043	17.2		19.3		(2.1)
CARVYKTI	629	341	84.3		84.2		0.1
DARZALEX	8,586	7,194	19.3		21.8		(2.5)
ERLEADA	2,215	1,740	27.3		29.0		(1.7)
IMBRUVICA	2,307	2,476	(6.8)		(5.2)		(1.6)
TECVAYLI	403	269	49.6		50.0		(0.4)
ZYTIGA/ abiraterone acetate	496	686	(27.8)		(23.7)		(4.1)
Other Oncology	649	336	93.4		95.1		(1.7)
Pulmonary Hypertension	3,190	2,798	14.0		16.1		(2.1)
OPSUMIT	1,639	1,437	14.1		15.4		(1.3)
UPTRAVI	1,352	1,163	16.3		17.5		(1.2)
Other Pulmonary Hypertension	199	199	0.3		11.9		(11.6)
Cardiovascular / Metabolism / Other	2,605	2,834	(8.1)		(7.7)		(0.4)
XARELTO	1,697	1,840	(7.8)		(7.8)		—
Other	908	994	(8.7)		(7.7)		(1.0)
Total Innovative Medicine Sales	$42,632	$41,037	3.9	%	5.5	%	(1.6)	%


44

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Innovative Medicine segment sales in the fiscal third quarter of 2024 were $14.6 billion, an increase of 4.9% as compared to the same period a year ago, including an operational increase of 6.3% and a negative currency impact of 1.4%. In the fiscal third quarter of 2024, the impact of the Covid-19 Vaccine sales decline on the Innovative Medicine segment operational sales was a negative 0.3%. U.S. Innovative Medicine sales increased 7.5% as compared to the same period a year ago. International Innovative Medicine sales increased by 1.2%, including an operational increase of 4.4% partially offset by a negative currency impact of 3.2%. In the fiscal third quarter of 2024, the impact of the Covid-19 Vaccine sales decline on the international Innovative Medicine operational sales was a negative 0.8%. In the fiscal third quarter of 2024, the net impact of acquisitions and divestitures on the Innovative Medicine segment operational sales growth was a negative 0.1%.

Major Innovative Medicine therapeutic area sales — Fiscal Third Quarter Ended


(Dollars in Millions)	September 29, 2024	October 1, 2023	Total Change		Operations Change		Currency Change
Immunology	$4,621	$4,849	(4.7	%)	(3.3	%)	(1.4)	%
REMICADE	419	461	(9.1)		(7.7)		(1.4)
SIMPONI/ SIMPONI ARIA	516	629	(18.0)		(13.6)		(4.4)
STELARA	2,676	2,864	(6.6)		(5.7)		(0.9)
TREMFYA	1,007	891	13.0		14.3		(1.3)
Other Immunology	1	2	(45.6)		(45.6)		—
Infectious Diseases	836	859	(2.7)		(2.4)		(0.3)
COVID-19 VACCINE	1	41	(97.7)		(98.9)		1.2
EDURANT/rilpivirine	330	297	11.5		10.6		0.9
PREZISTA/ PREZCOBIX/ REZOLSTA/ SYMTUZA	449	447	0.6		1.5		(0.9)
Other Infectious Diseases	55	74	(25.4)		(22.9)		(2.5)
Neuroscience	1,755	1,742	0.8		1.7		(0.9)
CONCERTA/ methylphenidate	142	189	(24.8)		(22.5)		(2.3)
INVEGA SUSTENNA/ XEPLION/ INVEGA TRINZA/ TREVICTA	1,049	1,029	1.9		2.4		(0.5)
SPRAVATO	284	183	54.9		55.3		(0.4)
Other Neuroscience	281	340	(17.4)		(15.7)		(1.7)
Oncology	5,380	4,533	18.7		20.5		(1.8)
CARVYKTI	286	152	87.7		87.6		0.1
DARZALEX	3,016	2,499	20.7		22.9		(2.2)
ERLEADA	790	631	25.4		26.3		(0.9)
IMBRUVICA	753	808	(6.8)		(5.5)		(1.3)
TECVAYLI	135	112	20.6		21.4		(0.8)
ZYTIGA/ abiraterone acetate	150	214	(30.0)		(27.5)		(2.5)
Other Oncology	250	117	*		*		*
Pulmonary Hypertension	1,102	954	15.6		17.0		(1.4)
OPSUMIT	571	490	16.8		17.4		(0.6)
UPTRAVI	458	402	14.2		15.2		(1.0)
Other Pulmonary Hypertension	72	63	15.0		25.9		(10.9)
Cardiovascular / Metabolism / Other	884	957	(7.6)		(7.2)		(0.4)
XARELTO	592	625	(5.2)		(5.2)		—

Other	292	332	(12.0)		(10.9)		(1.1)
Total Innovative Medicine Sales	$14,580	$13,893	4.9	%	6.3	%	(1.4)	%

*percentage greater than 100% or not meaningful


Form 10-Q			45

Table of Contents

Immunology products experienced operational decline of 3.3% as compared to the same period a year ago. The growth of TREMFYA (guselkumab) was due to market growth and share gains partially offset by unfavorable patient mix. The growth was offset by declines of STELARA (ustekinumab) sales driven by net unfavorable patient mix and share loss primarily due to European biosimilar entrants partially offset by market growth, SIMPONI/SIMPONI ARIA sales due to return of rights by Merck, Sharp & Dohme in the fiscal fourth quarter of 2024, and lower sales of REMICADE (infliximab) due to biosimilar competition.

Sales of STELARA in the United States were approximately $7.0 billion in fiscal 2023. Third parties have filed abbreviated Biologics License Applications with the FDA seeking approval to market biosimilar versions of STELARA. The Company has settled certain litigation under the Biosimilar Price Competition and Innovation Act of 2009. As a result of these settlements and other agreements with separate third parties, the Company does not anticipate the launch of a biosimilar version of STELARA until January 1, 2025 in the United States. In July 2024, a biosimilar version of STELARA launched in certain European markets for certain indications.

Biosimilar versions of REMICADE have been introduced in the United States and certain markets outside the United States and additional competitors continue to enter the market. Continued infliximab biosimilar competition will result in a further reduction in sales of REMICADE.

Infectious disease products experienced an operational decline of 2.4% as compared to the same period a year ago primarily driven by a decline in COVID-19 vaccine revenue. The Company does not anticipate any COVID-19 vaccine revenue in the remainder of fiscal 2024.

Neuroscience products achieved operational sales growth of 1.7% as compared to the same period a year ago. The growth of SPRAVATO (esketamine) was driven by the ongoing launch and increased physician and patient demand. Growth was partially offset by declines in Other Neuroscience.

Oncology products achieved operational sales growth of 20.5% as compared to the same period a year ago. Strong sales of DARZALEX (daratumumab) were driven by continued share gains in all regions and market growth. Growth of ERLEADA (apalutamide) was due to continued share gains and inventory dynamics. Increased sales of CARVYKTI (ciltacabtagene autoleucel) were driven by continued share gains, capacity expansion and manufacturing efficiencies. Additionally, sales from the ongoing launch of TECVAYLI (teclistamab-cqyv) and the launch of TALVEY (talquetamab-tgvs) and RYBREVANT (amivantamab) in Other Oncology contributed to the growth. Growth was partially offset by ZYTIGA (abiraterone acetate) due to loss of exclusivity and IMBRUVICA (ibrutinib) declines due to competitive pressures.

Pulmonary Hypertension achieved operational sales growth of 17.0% as compared to the same period a year ago. Sales growth of OPSUMIT (macitentan) was driven by favorable patient mix, market growth and share gains. Sales growth of UPTRAVI (selexipag) was driven by market growth, favorable patient mix and share gains partially offset by inventory dynamics in the U.S.

Cardiovascular / Metabolism / Other products experienced an operational decline of 7.2% as compared to the same period a year ago. The decline of XARELTO (rivaroxaban) sales was primarily driven by unfavorable patient mix and share loss.

The Company maintains a policy that no end customer will be permitted direct delivery of product to a location other than the billing location. This policy impacts contract pharmacy transactions involving non-grantee 340B covered entities for most of the Company’s drugs, subject to multiple exceptions. Both grantee and non-grantee covered entities can maintain certain contract pharmacy arrangements under policy exceptions. The Company has been and will continue to offer 340B discounts to covered entities on all of its covered outpatient drugs, and it believes its policy will improve its ability to identify inappropriate duplicate discounts and diversion prohibited by the 340B statute. The 340B Drug Pricing Program is a U.S. federal government program requiring drug manufacturers to provide significant discounts on covered outpatient drugs to covered entities.


46

Table of Contents

MedTech

The MedTech segment sales in the fiscal nine months of 2024 were $23.7 billion, an increase of 4.1% as compared to the same period a year ago, with an operational increase of 5.7% and a negative currency impact of 1.6%. U.S. MedTech sales increased 6.7%. International MedTech sales increased by 1.6%, including an operational increase of 4.7% and a negative currency impact of 3.1%. In the fiscal nine months of 2024, the net impact of acquisitions and divestitures on the MedTech segment operational sales growth was a positive 1.0%, primarily Shockwave.

Major MedTech franchise sales — Fiscal Nine Months Ended



(Dollars in Millions)	September 29, 2024	October 1, 2023	Total Change		Operations Change		Currency Change
Surgery	$7,338	$7,507	(2.2	%)	0.0	%	(2.2)	%
Advanced	3,337	3,504	(4.8)		(2.7)		(2.1)
General	4,001	4,002	0.0		2.3		(2.3)
Orthopaedics	6,843	6,674	2.5		3.2		(0.7)
Hips	1,220	1,162	5.0		5.6		(0.6)
Knees	1,147	1,069	7.2		7.7		(0.5)
Trauma	2,285	2,238	2.1		2.7		(0.6)
Spine, Sports & Other	2,191	2,205	(0.6)		0.1		(0.7)
Cardiovascular(1)	5,645	4,681	20.6		22.3		(1.7)
Electrophysiology	3,946	3,449	14.4		16.5		(2.1)
Abiomed	1,112	966	15.1		15.5		(0.4)
Shockwave (2)	306	—	*		*		—
Other Cardiovascular(1)	281	267	5.3		7.2		(1.9)
Vision	3,843	3,864	(0.5)		1.1		(1.6)
Contact Lenses/Other	2,796	2,820	(0.9)		1.0		(1.9)
Surgical	1,048	1,044	0.3		1.4		(1.1)
Total MedTech Sales	$23,669	$22,727	4.1	%	5.7	%	(1.6)	%

(1) Previously referred to as Interventional Solutions

(2) Acquired on May 31, 2024

*Percentage greater than 100% or not meaningful


Form 10-Q			47

Table of Contents

The MedTech segment sales in the fiscal third quarter of 2024 were $7.9 billion, an increase of 5.8% as compared to the same period a year ago, which included operational growth of 6.4% and a negative currency impact of 0.6%. U.S. MedTech sales increased 7.8%. International MedTech sales increased by 3.9%, including operational growth of 5.0% and a negative currency impact of 1.1%. In the fiscal third quarter of 2024, the net impact of acquisitions and divestitures on the MedTech segment operational sales growth was a positive 2.7%, primarily Shockwave.

Major MedTech franchise sales — Fiscal Third Quarter Ended


(Dollars in Millions)	September 29, 2024	October 1, 2023	Total Change		Operations Change		Currency Change
Surgery	$2,434	$2,479	(1.8)	%	(0.7	%)	(1.1)	%
Advanced	1,109	1,164	(4.7)		(3.6)		(1.1)
General	1,325	1,314	0.8		2.0		(1.2)
Orthopaedics	2,191	2,164	1.2		1.3		(0.1)
Hips	381	375	1.7		1.9		(0.2)
Knees	352	338	4.0		4.1		(0.1)
Trauma	761	742	2.6		2.8		(0.2)
Spine, Sports & Other	696	710	(1.9)		(2.0)		0.1
Cardiovascular(1)	1,966	1,558	26.2		26.5		(0.3)
Electrophysiology	1,279	1,161	10.2		10.7		(0.5)
Abiomed	362	311	16.3		16.3		0.0
Shockwave(2)	229	—	*		*		—
Other Cardiovascular(1)	96	87	10.4		10.2		0.2
Vision	1,300	1,256	3.5		4.0		(0.5)
Contact Lenses/Other	968	928	4.2		4.7		(0.5)
Surgical	333	328	1.3		1.9		(0.6)
Total MedTech Sales	$7,891	$7,458	5.8	%	6.4	%	(0.6)	%

(1) Previously referred to as Interventional Solutions

(2) Acquired on May 31, 2024

*Percentage greater than 100% or not meaningful

The Surgery franchise experienced an operational sales decline of 0.7% as compared to the prior year fiscal third quarter. The Surgery franchise results were positively impacted by price increases associated with Argentina hyperflation. The operational decline in Advanced Surgery was primarily due to China Volume-Based Procurement across all platforms, competitive pressures in Energy and Endocutters, go to market changes in EMEA and harmonic market decline in the U.S. in Energy, and tender timing outside the U.S. in Biosurgery. This was partially offset by the strength of the portfolio and commercial execution in Biosurgery as well as the strength of new products in Endocutters and lapping of prior year supply challenges outside the U.S. in Energy. The operational growth in General Surgery was primarily driven by technology penetration and upgrades within the differentiated Wound Closure portfolio and lapping of prior year impacts from Russia sanctions. The growth was partially offset by the impact of the Acclarent divestiture.

The Orthopaedics franchise achieved operational sales growth of 1.3% as compared to the prior year fiscal third quarter. The operational growth in Hips reflects the continued strength of the portfolio partially offset by China volume-based procurement impacts. The operational growth in Knees was primarily driven by procedures, continued strength of the ATTUNE portfolio, pull through related to the VELYS Robotic assisted solution partially offset by tender timing outside the U.S. The operational growth in Trauma was driven by the continued adoption of recently launched products, procedure growth and commercial execution partially offset by China volume-based procurement impacts. The operational sales decline in Spine, Sports & Other was primarily driven by competitive pressures and China volume-based procurement impacts partially offset by growth in Craniomaxillofacial and Shoulders and outside the U.S. market growth.

The Cardiovascular franchise, which includes sales from Shockwave Medical (Shockwave) acquired on May 31, 2024, achieved operational sales growth of 26.5% as compared to the prior year fiscal third quarter. Electrophysiology grew by double digits due to global procedure growth, new products and commercial execution. The growth was partially offset by competitive PFA pressures in


48

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ablation catheters in the U.S. and prior year trade inventory dynamics and volume-based procurement in China. Abiomed sales reflect the strength of all major commercialized regions driven by continued strong adoption of Impella 5.5 and Impella RP.

The Vision franchise achieved operational sales growth of 4.0% as compared to the prior year fiscal third quarter. The Contact Lenses/Other operational growth was driven by price actions, continued strong performance in the ACUVUE OASYS 1-Day family of products (including recent launches), impacts from a one-time change in contract shipping terms in the U.S. and lapping of prior year impacts of Russian sanctions. The Surgical operational growth was primarily driven by the continued strength of recent innovations and commercial execution partially offset by China volume-based procurement and competitive pressures in the U.S.

Analysis of consolidated earnings before provision for taxes on income

Consolidated earnings before provision for taxes on income for the fiscal third quarter of 2024 was $3.3 billion representing 14.9% of sales as compared to $5.2 billion in the fiscal third quarter of 2023, representing 24.4% of sales.

Consolidated earnings before provision for taxes on income for the fiscal nine months of 2024 was $12.8 billion representing 19.3% of sales as compared to $10.2 billion in the fiscal nine months of 2023, representing 16.1% of sales.

Cost of products sold

(Dollars in billions. Percentages in chart are as a percent to total sales)

Fiscal nine months Q3 2024 versus Fiscal nine months Q3 2023

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

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

•Favorable patient mix in the Innovative Medicine business

partially offset by

•The fair value Inventory step-up of $0.2 billion related to the business combination accounting associated with Shockwave

The intangible asset amortization expense included in cost of products sold for the fiscal nine months of 2024 and 2023 was $3.4 billion in both periods.

Q3 2024 versus Q3 2023

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

•The fair value inventory step-up related to the business combination accounting and amortization of $0.3 billion related to Shockwave

•Unfavorable currency in the Innovative Medicine business

partially offset by

•Prior year restructuring related excess inventory costs and current year supply chain efficiencies in the MedTech business


Form 10-Q			49

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The intangible asset amortization expense included in cost of products sold for the fiscal third quarters of 2024 and 2023 was $1.2 billion and $1.1 billion in the fiscal third quarter of 2024 and 2023, respectively.

Selling, marketing and administrative expenses

(Dollars in billions. Percentages in chart are as a percent to total sales)

Fiscal nine months Q3 2024 versus Fiscal nine months Q3 2023

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

•Timing of brand marketing investment in the Innovative Medicine and MedTech businesses

partially offset by

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

Q3 2024 versus Q3 2023

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

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

Research and development expense

Research and development expense by segment of business was as follows:


	Fiscal Third Quarter Ended							Fiscal Nine Months Ended
	2024				2023			2024				2023
(Dollars in Millions)	Amount		% of Sales*		Amount	% of Sales*		Amount		% of Sales*		Amount	% of Sales*
Innovative Medicine	$4,213		28.9	%	$2,778	20.0	%	$9,831		23.1	%	$8,604	21.0	%
MedTech	739		9.4		669	9.0		2,103		8.9		2,001	8.8
Total research and development expense	$4,952		22.0	%	$3,447	16.2	%	$11,934		18.0	%	$10,605	16.6	%
Percent increase/(decrease) over the prior year	43.7	%						12.5	%
*As a percent to segment sales

Fiscal nine months Q3 2024 versus Fiscal nine months Q3 2023

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

•Expense of $1.25 billion to secure the global rights to the NM26 bispecific antibody (Yellow Jersey acquisition)

•Phasing of expenses in the MedTech business


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Q3 2024 versus Q3 2023

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

•Expense of $1.25 billion to secure the global rights to the NM26 bispecific antibody (Yellow Jersey acquisition)

•Phasing of expenses in the MedTech business

In-process research and development (IPR&D) impairments

In the fiscal nine months of 2024, the Company recorded a charge of approximately $0.2 billion associated with the M710 (biosimilar) asset acquired as part of the acquisition of Momenta Pharmaceuticals in 2020. There was also a partial impairment of this asset for $0.2 billion in the fiscal third quarter of 2023. This asset is now fully impaired. Additionally, the fiscal nine months of 2023, the Company recorded a charge of approximately $0.1 billion associated with the IPR&D acquired with Pulsar Vascular in 2016.

Interest (income) expense

Interest (income) expense in the fiscal nine months of 2024 was net income of $433 million as compared to $277 million in the fiscal nine months of 2023 primarily due to higher rates of interest earned on cash balances and a lower average rate on the debt partially offset by a higher average debt balance related to funding the Shockwave acquisition. Interest (income) expense in the fiscal third quarter of 2024 was net income of $99 million as compared to $182 million in the fiscal third quarter of 2023 primarily due to a due to a higher average debt balance related to funding the Shockwave acquisition and a lower average cash balance. The balance of cash, cash equivalents and current marketable securities was $20.3 billion at the end of the fiscal third quarter of 2024 as compared to $23.5 billion at the end of the fiscal third quarter of 2023. The Company’s debt position was $35.8 billion as of September 29, 2024, as compared to $29.9 billion the same period a year ago.

Other (income) expense, net*

Fiscal nine months Q3 2024 versus Fiscal nine months Q3 2023

Other (income) expense, net for the fiscal nine months of 2024 reflected less expense of $2.2 billion as compared to the prior year primarily due to the following:


Fiscal Nine Months
(Dollars in Billions)(Income)/Expense	September 29, 2024		October 1, 2023	Change

Litigation related(1)	5.5		6.7	(1.2)
Acquisition, Integration and Divestiture related	0.7		0.1	0.6
Changes in the fair value of securities(2)	0.4		1.1	(0.7)
COVID-19 Vaccine manufacturing related exit costs	0.1		0.4	(0.3)
Employee benefit plan related	(0.7)		(1.1)	0.4
Monetization of royalty rights	(0.3)		0.0	(0.3)
Other	(0.8)		(0.1)	(0.7)


Total Other (Income) Expense, Net	$	4.9	7.1	(2.2)

(1)The fiscal nine months of 2024 and 2023 include charges for talc matters. The fiscal nine months of 2023 includes favorable intellectual property related litigation settlements of approximately $0.3 billion.

(2)The fiscal nine months of 2024 includes the loss on the completion of the debt for equity exchange of the retained stake in Kenvue. The fiscal nine months of 2023 includes $0.6 billion related to the unfavorable change in the fair value of the Kenvue securities and $0.4 billion related to the partial impairment of Idorsia convertible debt and the change in the fair value of the Idorsia equity securities held.


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Q3 2024 versus Q3 2023

Other (income) expense, net for the fiscal third quarter of 2024 reflected an increase in expense of $1.3 billion as compared to income in the prior year primarily due to the following:


Fiscal Third Quarter
(Dollars in Billions)(Income)/Expense	September 29, 2024		October 1, 2023	Change

Litigation related(1)	$	2.4	(0.1)	2.5
Acquisition, Integration and Divestiture related	0.1		0.0	0.1
Changes in the fair value of securities(2)	0.0		1.0	(1.0)
Monetization of royalty rights	(0.3)		0.0	(0.3)
Employee benefit plan related	(0.2)		(0.3)	0.1
Other	(0.2)		(0.1)	(0.1)


Total Other (Income) Expense, Net	$	1.8	0.5	1.3

(1)The fiscal third quarter of 2024 includes charges for talc matters.

(2)The fiscal third quarter of 2023 includes $0.6 billion related to the unfavorable change in the fair value of the Kenvue securities and $0.4 billion related to the partial impairment of Idorsia convertible debt and the change in the fair value of the Idorsia equity securities held.

*Other (income) expense, net is the account where the Company records gains and losses related to the sale and write-down of certain investments in equity securities held by Johnson & Johnson Innovation - JJDC, Inc. (JJDC), changes in the fair value of securities, gains and losses on divestitures, gains and losses on sale of assets, certain transactional currency gains and losses, acquisition-related costs, litigation accruals and settlements, investment (income)/loss related to employee benefit plans, as well as royalty income.

Earnings before provision for taxes by segment

Income before tax by segment of business for the fiscal nine months were as follows:


	Income Before Tax		Segment Sales		Percent of Segment Sales
(Dollars in Millions)	September 29, 2024	October 1, 2023	September 29, 2024	October 1, 2023	September 29, 2024		October 1, 2023
Innovative Medicine	$14,910	$14,008	$42,632	$41,037	35.0	%	34.1	%
MedTech	3,668	4,265	23,669	22,727	15.5		18.8
Segment earnings before tax	18,578	18,273	66,301	63,764	28.0		28.7
Less: Expenses not allocated to segments(1)	5,778	8,037
Worldwide income before tax	$12,800	$10,236	$66,301	$63,764	19.3	%	16.1	%

(1)Amounts not allocated to segments include interest (income) expense, certain litigation expenses and general corporate (income) expense. The fiscal nine months of 2024 and 2023 include charges for talc matters of approximately $5.1 billion and $7.0 billion, respectively. The fiscal nine months of 2024 includes a loss of approximately $0.4 billion related to the debt to equity exchange of the Company's remaining shares of Kenvue Common Stock. The fiscal nine months of 2023 includes the unfavorable change in the fair value of the retained stake in Kenvue of approximately $0.6 billion.

Innovative Medicine segment

The Innovative Medicine segment income before tax as a percent of sales in the fiscal nine months of 2024 was 35.0% versus 34.1% for the same period a year ago. The increase in the income before tax as a percent of sales for the fiscal nine months of 2024 as compared to the prior year was primarily driven by the following:

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

•Restructuring related charge of $0.1 billion in 2024 versus $0.4 billion in 2023


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•Unfavorable changes in the fair value of securities of $0.5 billion in 2023

•Favorable patient mix in Cost of products sold

•Monetization of royalty rights of $0.3 billion in 2024

partially offset by

•Expense of $1.25 billion to secure the global rights to the NM26 bispecific antibody

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

MedTech segment

The MedTech segment income before tax as a percent of sales in the fiscal nine months of 2024 was 15.5% versus 18.8% for the same period a year ago. The decrease in the income before tax as a percent of sales for the fiscal nine months of 2024 was primarily driven by the following:

•Acquisition and integration related costs of $0.9 billion in 2024 (primarily related to the Shockwave acquisition) versus $0.1 billion in 2023 related to Abiomed

•Intangible asset amortization of $1.3 billion in 2024 versus $1.1 billion in 2023

•Timing of brand marketing investment

partially offset by

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

•Restructuring related charge of $0.1 billion in 2024 versus $0.2 billion in 2023

•An IPR&D charge in 2023 of approximately $0.1 billion related to the Pulsar Vascular acquisition in the fiscal year 2016

Income (loss) before tax by segment of business for the fiscal third quarters were as follows:


	Income Before Tax		Segment Sales		Percent of Segment Sales
(Dollars in Millions)	September 29, 2024	October 1, 2023	September 29, 2024	October 1, 2023	September 29, 2024		October 1, 2023
Innovative Medicine	$4,482	$4,794	$14,580	$13,893	30.7	%	34.5	%
MedTech	1,059	1,185	7,891	7,458	13.4		15.9
Segment earnings before tax	5,541	5,979	22,471	21,351	24.7		28.0
Less: Expenses not allocated to segments(1)	2,203	762
Worldwide income (loss) before tax	$3,338	$5,217	$22,471	$21,351	14.9	%	24.4	%

(1)Amounts not allocated to segments include interest (income) expense, certain litigation expenses and general corporate (income) expense. The fiscal third quarter of 2024 includes charges for talc matters of $2.0 billion. The fiscal third quarter of 2023 includes the unfavorable change in the fair value in the retained stake in Kenvue of approximately $0.6 billion.

Innovative Medicine segment

The Innovative Medicine segment income before tax as a percent of sales in the fiscal third quarter of 2024 was 30.7% versus 34.5% for the same period a year ago. The decrease in the income before tax as a percent of sales for the fiscal third quarter of 2024 as compared to the prior year was primarily driven by the following:

•Payment of $1.25 billion to secure the global rights to the NM26 bispecific antibody

•Litigation expense of $0.4 billion in 2024 primarily related to Risperdal Gynecomastia

•Unfavorable currency in Cost of products sold

partially offset by

•An In-process research and development impairment of $0.2 billion in 2023 related to the M710 (biosimilar) asset acquired with Momenta in 2020

•Restructuring expense of $0.1 billion in 2023

•Unfavorable changes in the fair value of securities of $0.4 billion in 2023

•Monetization of royalty rights of $0.3 billion in 2024


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MedTech segment

The MedTech segment income before tax as a percent of sales in the fiscal third quarter of 2024 was 13.4% versus 15.9% for the same period a year ago. The decrease in the income before tax as a percent of sales for the fiscal third quarter of 2024 as compared to the prior year was primarily driven by the following:

•Acquisition and integration related costs of $0.3 billion in 2024 (primarily related to the Shockwave acquisition)

•Intangible asset amortization of $0.5 billion in 2024 versus $0.4 billion in 2023

partially offset by

•Restructuring related charge of $0.2 billion in 2023

Restructuring

In the fiscal year 2023, the Company completed a prioritization of its research and development (R&D) investment within the Innovative Medicine segment to focus on the most promising medicines with the greatest benefit to patients. This resulted in the exit of certain programs within therapeutic areas. The R&D program exits are primarily in infectious diseases and vaccines including the discontinuation of its respiratory syncytial virus (RSV) adult vaccine program, hepatitis and HIV development. Pre-tax Restructuring expense was immaterial in the fiscal third quarter of 2024 and $0.1 billion of expense in the fiscal nine months of 2024, and included the termination of partnered and non-partnered development program costs, asset impairments and asset divestments. The pre-tax restructuring charge of approximately $0.1 billion and $0.4 billion in the fiscal third quarter and fiscal nine months of 2023, respectively, included the termination of partnered and non-partnered program costs and asset impairments. Total project costs of approximately $0.6 billion have been recorded since the restructuring was announced.

In the fiscal year 2023, the Company initiated a restructuring program of its Orthopaedics franchise within its MedTech segment to streamline operations by exiting certain markets, product lines and distribution network arrangements. The pre-tax restructuring expense was immaterial in the fiscal third quarter of 2024 and $0.1 billion in the fiscal nine months of 2024, and primarily included costs related to market and product exits. The pre-tax restructuring expense of $0.2 billion in the fiscal third quarter and fiscal nine months of 2023, of which $9 million was recorded in Restructuring and $226 million was recorded in Cost of products sold on the Consolidated Statement of Earnings. Total project costs of approximately $0.4 billion have been recorded since the restructuring was announced.

Provision for taxes on income

The worldwide effective income tax rate for the fiscal nine months was 16.9% in 2024 and 10.2% in 2023.

On December 15, 2022, the European Union (EU) Member States formally adopted the EU’s Pillar Two Directive, which generally provides for a minimum effective tax rate of 15%, as established by the Organization for Economic Co-operation and Development (OECD) Pillar Two Framework that was supported by over 130 countries worldwide. As of December 31, 2023, several EU and non-EU countries have enacted Pillar Two legislation with an initial effective date of January 1, 2024, with other aspects of the law effective in 2025 or later. The Company is estimating that as a result of this legislation the 2024 effective tax rate will increase by approximately 1.0% to 1.5% compared to fiscal 2023. Further legislation, guidance and regulations that may be issued in the future, as well as other business events, may impact this estimate.

For further details related to the 2024 provision for taxes refer to Note 5 to the Consolidated Financial Statements.


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Liquidity and capital resources

Acquisitions
(net of cash acquired)

Proceeds from the disposal of assets/businesses, net

Dividends to shareholders

Cash flows

Cash and cash equivalents were $20.0 billion at the end of the fiscal third quarter of 2024 as compared with $21.9 billion at the end of fiscal year 2023. The primary sources and uses of cash that contributed to the $1.9 billion decrease were:


(Dollars In Billions)
21.9		Q4 2023 Cash and cash equivalents balance
17.3		net cash generated from operating activities
(17.3)		net cash used by investing activities
(1.8)		net cash used by financing activities
(0.1)		effect of exchange rate changes on cash and cash equivalents
$	20.0	Q3 2024 Cash and cash equivalents

In addition, the Company had $0.3 billion in marketable securities at the end of the fiscal third quarter of 2024 and $1.1 billion at the end of fiscal year 2023.

Cash flow from operations of $17.3 billion was the result of:


(Dollars In Billions)
$	10.6	Net earnings
5.6		non-cash expenses and other adjustments primarily for depreciation and amortization, stock-based compensation, charge for in-process research and development assets and asset write-downs partially offset by the net gain on sale of assets/businesses and the deferred tax provision
(2.3)		an increase in accounts receivable and inventories
2.7		an increase in accounts payable and accrued liabilities
0.9		a decrease in other current and non-current assets
(0.3)		a decrease in other current and non-current liabilities
0.1		Other and rounding
$	17.3	Net cash flows from operations


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Cash flow used by investing activities of $17.3 billion was primarily from:


(Dollars In Billions)
$	(2.8)	additions to property, plant and equipment
0.6		proceeds from the disposal of assets/businesses, net
(15.1)		acquisitions, net of cash acquired
(1.3)		purchases of in-process research and development assets
0.7		net sales of investments
0.7		credit support agreements activity, net
(0.1)		Other (primarily capitalized licenses and milestones)
$	(17.3)	Net cash used by investing activities

Cash flow used by financing activities of $1.8 billion was primarily from:


(Dollars In Billions)
$	(8.8)	dividends to shareholders
(2.2)		repurchase of common stock
9.5		net proceeds from short and long term debt
0.7		proceeds from stock options exercised/employee withholding tax on stock awards, net
(1.0)		Settlement of convertible debt acquired from Shockwave
$	(1.8)	Net cash used by financing activities

The Company has access to substantial sources of funds at numerous banks worldwide and has the ability to issue up to $20 billion in Commercial Paper. Furthermore, in June 2024, the Company secured a new 364-day Credit Facility of $10 billion (expiration on June 25, 2025) which may be used for general corporate purposes including to support our commercial paper borrowings. Interest charged on borrowings under the credit line agreement is based on either Secured Overnight Financing Rate (SOFR) Reference Rate or other applicable market rate as allowed plus applicable margins. Commitment fees under the agreement are not material.

As of September 29, 2024, the Company had cash, cash equivalents and marketable securities of approximately $20.3 billion and had approximately $35.8 billion of notes payable and long-term debt for a net debt position of $15.5 billion as compared to the prior year fiscal third quarter net debt position of $6.4 billion. In the fiscal second quarter of 2024, the Company issued senior unsecured notes for a total of $6.7 billion. For additional details on borrowings, see Note 4 to the Consolidated Financial Statements. The net proceeds from this offering were used to fund the Shockwave acquisition which closed on May 31, 2024, and for general corporate purposes. The Company anticipates that operating cash flows, the ability to raise funds from external sources, borrowing capacity from existing committed credit facilities and access to the commercial paper markets will continue to provide sufficient resources to fund operating needs, including the Company’s remaining balance to be paid on the agreement to settle opioid litigation for approximately $1.7 billion and the approximately $12.0 billion ($13.9 billion nominal) reserve remaining for talc matters (See Note 11 to the Consolidated Financial Statements for additional details). In addition, the Company monitors the global capital markets on an ongoing basis and from time to time may raise capital when market conditions are favorable.

In the fiscal nine months of 2024, the Company paid approximately $3.5 billion to the U.S. Treasury including $2.0 billion related to the current installment due on foreign undistributed earnings as part of the TCJA charge (see Note 1 to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023), $1.3 billion primarily related to the normal estimated payments for the first nine months of fiscal 2024 and $0.2 billion in payments for certain items under examination for the 2017 through 2020 U.S. IRS audit. Additionally, the Company has paid $1.7 billion in income related taxes net of refunds to foreign jurisdictions in the first nine months of fiscal 2024.

Dividends

On July 17, 2024, the Board of Directors declared a regular cash dividend of $1.24 per share, payable on September 10, 2024, to shareholders of record as of August 27, 2024.

On October 15, 2024, the Board of Directors declared a regular cash dividend of $1.24 per share, payable on December 10, 2024, to shareholders of record as of November 26, 2024. The Company expects to continue the practice of paying regular quarterly cash dividends.


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Other information

New accounting pronouncements

Refer to Note 1 to the Consolidated Financial Statements for new accounting pronouncements.

Economic and market factors

In July 2023, Janssen Pharmaceuticals, Inc. (Janssen) filed litigation against the U.S. Department of Health and Human Services as well as the Centers for Medicare and Medicaid Services challenging the constitutionality of the Inflation Reduction Act’s (IRA) Medicare Drug Price Negotiation Program. The litigation requests a declaration that the IRA violates Janssen’s rights under the First Amendment and the Fifth Amendment to the Constitution and therefore that Janssen is not subject to the IRA’s mandatory pricing scheme. In April 2024, Janssen appealed the district court’s denial of its summary judgment motion to the Third Circuit.

Russia-Ukraine war

Although the long-term implications of Russia’s invasion of Ukraine are difficult to predict at this time, the financial impact of the conflict in the fiscal third quarter of 2024, including accounts receivable or inventory reserves, was not material. As of the fiscal nine months ending September 29, 2024, and the fiscal year ending December 31, 2023, the business of the Company’s Russian subsidiaries represented less than 1% of both Company’s consolidated assets and revenues. The Company does not maintain Ukraine subsidiaries subsequent to the Kenvue separation.

In March of 2022, the Company took steps to suspend all advertising, enrollment in clinical trials, and any additional investment in Russia. The Company continues to supply products relied upon by patients for healthcare purposes.

Conflict in the Middle East

Although the long-term implications of the conflict in the Middle East are difficult to predict at this time, the financial impact of the conflict in the fiscal third quarter of 2024, including accounts receivable or inventory reserves, was not material. As of the fiscal nine months ending September 29, 2024, and the fiscal year ending December 31, 2023, the business of the Company’s Israel subsidiaries represented approximately 1% of the Company’s consolidated assets and represented less than 1% of revenues.

Other Macroeconomic Considerations

The Company operates in certain countries where the economic conditions continue to present significant challenges. The Company continues to monitor these situations and take appropriate actions. Inflation rates and currency exchange rates continue to have an effect on worldwide economies and, consequently, on the way the Company operates. The Company has accounted for operations in Venezuela, Argentina and Turkey as highly inflationary, as the prior three-year cumulative inflation rate surpassed 100%. In the face of increasing costs, the Company strives to maintain its profit margins through cost reduction programs, productivity improvements and periodic price increases.

Governments around the world consider various proposals to make changes to tax laws, which may include increasing or decreasing existing statutory tax rates. In connection with various government initiatives, companies are required to disclose more information to tax authorities on operations around the world, which may lead to greater audit scrutiny of profits earned in other countries. A change in statutory tax rate in any country would result in the revaluation of the Company’s deferred tax assets and liabilities related to that particular jurisdiction in the period in which the new tax law is enacted. This change would result in an expense or benefit recorded to the Company’s Consolidated Statement of Earnings. The Company closely monitors these proposals as they arise in the countries where it operates. Changes to the statutory tax rate may occur at any time, and any related expense or benefit recorded may be material to the fiscal quarter and year in which the law change is enacted.

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

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

The Company faces regular intellectual property challenges from third parties, including generic and biosimilar manufacturers, seeking to manufacture and market generic and biosimilar versions of key pharmaceutical products prior to the expiration of the applicable patents. These challengers file Abbreviated New Drug Applications or abbreviated Biologics License Applications with the FDA or otherwise challenged the coverage and/or validity of the Company’s patents. In the event the Company is not


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successful in defending the patent claims challenged in the resulting lawsuits, generic or biosimilar versions of the products at issue may be introduced to the market, resulting in the potential for substantial market share and revenue losses for those products, and which may result in a non-cash impairment charge in any associated intangible asset. There is also risk that one or more competitors could launch a generic or biosimilar version of the product at issue following regulatory approval even though one or more valid patents are in place.

Item 3 — Quantitative and qualitative disclosures about market risk

There has been no material change in the Company’s assessment of its sensitivity to market risk since its presentation set forth in Item 7A, “Quantitative and Qualitative Disclosures About Market Risk,” in its Annual Report on Form 10-K for the fiscal year ended December 31, 2023.

Item 4 — Controls and procedures

Disclosure controls and procedures. At the end of the period covered by this report, the Company evaluated the effectiveness of the design and operation of its disclosure controls and procedures. The Company’s disclosure controls and procedures are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure. Joaquin Duato, Chief Executive Officer; Chairman, Executive Committee and Joseph J. Wolk, Executive Vice President, Chief Financial Officer, reviewed and participated in this evaluation. Based on this evaluation, Messrs. Duato and Wolk concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures were effective.

Internal control. During the period covered by this report, there were no changes in the Company’s internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. The Company continues to monitor and assess the effectiveness of the design and operation of its disclosure controls and procedures.

The Company is implementing a multi-year, enterprise-wide initiative to integrate, simplify and standardize processes and

systems for the human resources, information technology, procurement, supply chain and finance functions. These are

enhancements to support the growth of the Company’s financial shared service capabilities and standardize financial systems.

This initiative is not in response to any identified deficiency or weakness in the Company’s internal control over financial

reporting. In response to this initiative, the Company has and will continue to align and streamline the design and operation of

its financial control environment.


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Part II — Other information

Item 1 — Legal proceedings

The information called for by this item is incorporated herein by reference to Note 11 included in Part I, Item 1, Financial Statements (unaudited) — Notes to Consolidated Financial Statements.

Item 2 — Unregistered sales of equity securities and use of proceeds

The following table provides information with respect to Common Stock purchases by the Company during the fiscal third quarter of 2024. Common stock purchases on the open market are made as part of a systematic plan to meet the needs of the Company's compensation programs. The repurchases below also include the stock-for-stock option exercises that settled in the fiscal third quarter.


Fiscal Month Period	Total Number of Shares Purchased(1)	Avg. Price Per Share	Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
July 1, 2024 through July 28, 2024	616,933	154.43	—	—
July 29, 2024 through August 25, 2024	1,388,645	160.71	—	—
August 26, 2024 through September 29, 2024	1,328,274	166.10	—	—
Total	3,333,852	161.69	—	—

(1)During the fiscal third quarter of 2024, the Company repurchased an aggregate of 3,333,852 shares of Johnson & Johnson Common Stock in open-market transactions, all of which were purchased as part of a systematic plan to meet the needs of the Company’s compensation programs.


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Item 5 — Other information

Securities trading plans of Directors and Executive Officers. During the fiscal third quarter of 2024, none of our directors or officers (as defined in Rule 16a-1(f) of the Exchange Act) informed us of the or of a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” each as defined in Item 408 of Regulation S-K.

Item 6 — Exhibits

Exhibit 31.1 Certification of Chief Executive Officer under Rule 13a-14(a) of the Securities Exchange Act pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 — Filed with this document.

Exhibit 31.2 Certification of Chief Financial Officer under Rule 13a-14(a) of the Securities Exchange Act pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 — Filed with this document.

Exhibit 32.1 Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 — Furnished with this document.

Exhibit 32.2 Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 — Furnished with this document.

Exhibit 101:


EX-101.INS						Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
EX-101.SCH						Inline XBRL Taxonomy Extension Schema
EX-101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase
EX-101.LAB						Inline XBRL Taxonomy Extension Label Linkbase
EX-101.PRE						Inline XBRL Taxonomy Extension Presentation Linkbase
EX-101.DEF						Inline XBRL Taxonomy Extension Definition Document

Exhibit 104:						Cover Page Interactive Data File––the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.


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Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


Date: October 23, 2024


Date: October 23, 2024


JOHNSON & JOHNSON
(Registrant)


By			/s/ J. J. Wolk
			J. J. Wolk, Executive Vice President, Chief Financial Officer (Principal Financial Officer)


By			/s/ R. J. Decker Jr.
			R. J. Decker Jr., Controller (Principal Accounting Officer)


Form 10-Q			61

JOHNSON & JOHNSON - Quarter Report: 2024 September (Form 10-Q)

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