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.

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)

June 30, 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 Second Quarter Ended

June 30,
2024

Percent
to Sales

July 2,
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 (loss) from discontinued operations, net of tax (Note 13)

()

Net earnings

Net earnings (loss) per share (Note 8)

Continuing operations - basic

Discontinued operations - basic

()

Total net earnings (loss) per share - basic

Continuing operations - diluted

Discontinued operations - diluted

()

Total net earnings (loss) 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

Table of Contents

Johnson & Johnson and subsidiaries consolidated statements of earnings

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

Fiscal Six Months Ended

June 30,
2024

Percent
to Sales

July 2,
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 Second Quarter Ended

Fiscal Six Months Ended

June 30, 2024

July 2, 2023

June 30, 2024

July 2, 2023

Net earnings

Other comprehensive income (loss), net of tax

Foreign currency translation

()

Securities:

Unrealized holding gain (loss) arising during period

()

Reclassifications to earnings

Net change

()

Employee benefit plans:

Prior service cost amortization during period

()

Gain (loss) amortization during period

()

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 Second Quarter Ended July 2, 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, April 2, 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, January 1, 2023

()

Net earnings

—

Cash dividends paid ($ per share)

()

—

Employee compensation and stock option plans

()

—

Repurchase of common stock

()

—

()

—

Other

()

—

()

—

Kenvue IPO

Other comprehensive income (loss), net of tax

()

—

()

—

Balance, July 2, 2023

()

* Includes $ million recorded in net earnings related to the % non-controlling interest in Kenvue.

See Notes to Consolidated Financial Statements


6

Table of Contents

Johnson & Johnson and subsidiaries consolidated statements of cash flows

(Unaudited; Dollars in Millions)

Fiscal Six Months Ended

June 30,
2024

July 2,
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

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/(Decrease) 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 investments

()

Sales of investments

Credit support agreements activity, net

()

Other (including capitalized licenses and milestones)

()

Net cash used by investing activities

()

Cash flows from financing activities

Dividends to shareholders

()

Repurchase of common stock

()

Proceeds from short-term debt

Repayment of short-term debt

()

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 from Kenvue initial public offering

Other

()

Net cash flows from financing activities


Form 10-Q			7

Table of Contents

Fiscal Six Months Ended

June 30,
2024

July 2,
2023

Effect of exchange rate changes on cash and cash equivalents

()

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 second quarters ended June 30, 2024 and July 2, 2023, respectively. The amortization expense of amortizable intangible assets included in the cost of products sold was $ billion and $ billion for the fiscal six months ended June 30, 2024 and July 2, 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 June 30, 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 June 30, 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

()() Derivatives designated as hedging instrumentsGain (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$()()


12

Table of Contents

()() Derivatives designated as hedging instrumentsGain (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$()()(Dollars in Millions)June 30, 2024December 31, 2023June 30, 2024December 31, 2023Long-term Debt$()()Gain/(Loss)
Recognized In
Income on DerivativeGain/(Loss)
Recognized In
Income on Derivative(Dollars in Millions)

Location of

Gain /(Loss)

Recognized in

Income on Derivative

Fiscal Second Quarter EndedFiscal Six Months EndedDerivatives Not Designated as Hedging InstrumentsJune 30, 2024July 2, 2023June 30, 2024July 2, 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 six months ended in 2024 and 2023:

Gain/(Loss)
Recognized In
Accumulated OCI

Location of Gain or (Loss)

Reclassified from Accumulated

Other Comprehensive

Income Into Income

Gain/(Loss) Reclassified From
Accumulated OCI
Into Income

(Dollars in Millions)

June 30, 2024

July 2, 2023

June 30, 2024

July 2, 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 to 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 2025

% 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.


18

Table of Contents

The excess of the carrying value over the estimated fair value of debt was $ 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 a charge of $ billion in the fiscal six months of 2023 and a charge of $ billion in the fiscal six months of 2024, 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).

Additionally in the fiscal six 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 as well as tax audit expenses incurred in the fiscal second quarter of 2024 related to multi-year transfer pricing agreements with the IRS and certain other foreign jurisdictions.

As of June 30, 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 in the fiscal first quarter of 2024 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 second 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.

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)$()()()()


Form 10-Q			19

Table of Contents

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()June 30, 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.

Details on reclassifications out of Accumulated Other Comprehensive Income:

Gain/(Loss) On Securities - reclassifications released to Other (income) expense, net.

Employee Benefit Plans - reclassifications are included in net periodic benefit cost. See Note 6 for additional details.


20

Table of Contents

Note 8 —

Basic net earnings (loss) 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 (loss) per share from discontinuing 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. The segment results have been recast for all periods to reflect the continuing operations of the Company.

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

()()


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.**InternationalWorldwide**

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

(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 six months of 2024, worldwide sales were $43.8 billion, a total increase of 3.3%, including an operational (which excludes translational currency) increase of 5.2% as compared to 2023 fiscal six months sales of $42.4 billion. Currency fluctuations had a negative impact of 1.9% for the fiscal six months of 2024. In the fiscal six months of 2024, acquisitions and divestitures had no net impact on the worldwide operational sales growth. In the fiscal six months of 2024, the impact of the Covid-19 Vaccine sales decline on the worldwide operational sales was a negative 2.2%.

Sales by U.S. companies were $24.2 billion in the fiscal six months of 2024, which represented an increase of 7.8% as compared to the prior year. In the fiscal six months of 2024, acquisitions and divestitures had no net impact on the U.S. operational sales growth. Sales by international companies were $19.6 billion, a decrease of 1.7%, including an operational increase of 2.4%, offset by a negative currency impact of 4.1% as compared to the fiscal six months sales of 2023. In the fiscal six months of 2024, the net impact of acquisitions and divestitures on the international operational sales growth was a negative 0.1%. In the fiscal six months of 2024, the impact of the Covid-19 Vaccine sales decline on the international operational sales was a negative 4.5%.

In the fiscal six months of 2024, sales by companies in Europe experienced a decline of 3.2%, which included an operational decline of 2.4% and a negative currency impact of 0.8%. In the fiscal six months of 2024, the impact of the Covid-19 Vaccine sales decline on the European region operational sales was a negative 8.4%. Sales by companies in the Western Hemisphere, excluding the U.S., achieved growth of 8.8%, which included an operational increase of 21.9%, and a negative currency impact of 13.1%. Sales by companies in the Asia-Pacific, Africa region experienced a decline of 2.6%, including an operational increase of 3.4% offset by a negative currency impact of 6.0%.

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

Fiscal six months 2024
sales by segment (in billions)

Note: values may have been rounded


42

Table of Contents

For the fiscal second quarter of 2024, worldwide sales were $22.4 billion, a total increase of 4.3%, which included operational growth of 6.6% and a negative currency impact of 2.3% as compared to 2023 fiscal second quarter sales of $21.5 billion. In the fiscal second quarter of 2024, the net impact of acquisitions and divestitures on worldwide operational sales growth was a positive 0.1%. In the fiscal second quarter of 2024, the impact of the Covid-19 Vaccine sales decline on the worldwide operational sales was a negative 0.6%.

Sales by U.S. companies were $12.6 billion in the fiscal second quarter of 2024, which represented an increase of 7.8% as compared to the prior year. In the fiscal second quarter of 2024, the net impact of acquisitions and divestitures on the U.S. operational sales growth was a positive 0.2%. Sales by international companies were $9.9 billion, a total increase of 0.2%, which included operational growth of 5.1% and a negative currency impact of 4.9%. In the fiscal second quarter of 2024, the net impact of acquisitions and divestitures on international operational sales growth was a negative 0.2%. In the fiscal second quarter of 2024, the impact of the Covid-19 Vaccine sales decline on the international operational sales was a negative 1.3%.

In the fiscal second quarter of 2024, sales by companies in Europe achieved growth of 1.6%, which included a operational growth of 3.4% and a negative currency impact of 1.8%. In the fiscal second quarter of 2024, the impact of the Covid-19 Vaccine sales decline on the European region operational sales was a negative 2.6%. Sales by companies in the Western Hemisphere, excluding the U.S., achieved growth of 6.7%, including operational growth of 22.6% and a negative currency impact of 15.9%. Sales by companies in the Asia-Pacific, Africa region experienced a decline of 4.0%, which included operational growth of 1.9% offset by a negative currency impact of 5.9%.

Q2 2024
Sales by Geographic Region (in billions)

Q2 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 six months of 2024 were $28.1 billion, an increase of 3.3% as compared to the same period a year ago, with an operational increase of 5.2% and a negative currency impact of 1.9%. In the fiscal six months of 2024, the impact of the Covid-19 Vaccine sales decline on the Innovative Medicine segment operational sales was a negative 3.4%. U.S. Innovative Medicine sales increased 8.6% as compared to the same period a year ago. International Innovative Medicine sales decreased by 3.0%, including operational growth of 1.0% offset by a negative currency impact of 4.0%. In the fiscal six months of 2024, the impact of the Covid-19 Vaccine sales decline on the international Innovative Medicine segment operational sales was a negative 7.5%. In the fiscal six 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 Six Months Ended



(Dollars in Millions)	June 30, 2024	July 2, 2023	Total Change		Operations Change		Currency Change
Immunology	$8,969	$8,608	4.2	%	6.0	%	(1.8)	%
REMICADE	827	949	(12.9)		(11.6)		(1.3)
SIMPONI/ SIMPONI ARIA	1,091	1,066	2.3		7.0		(4.7)
STELARA	5,336	5,241	1.8		3.1		(1.3)
TREMFYA	1,714	1,346	27.3		29.2		(1.9)
Other Immunology	2	7	(75.4)		(75.4)		—
Infectious Diseases	1,786	2,707	(34.0)		(33.7)		(0.3)
COVID-19 VACCINE	197	1,032	(80.9)		(80.9)		0.0
EDURANT/rilpivirine	620	546	13.4		13.7		(0.3)
PREZISTA/ PREZCOBIX/ REZOLSTA/ SYMTUZA	856	968	(11.6)		(11.2)		(0.4)
Other Infectious Diseases	114	161	(29.3)		(26.2)		(3.1)
Neuroscience	3,585	3,597	(0.3)		1.9		(2.2)
CONCERTA/methylphenidate	340	414	(17.8)		(14.5)		(3.3)
INVEGA SUSTENNA/ XEPLION/ INVEGA TRINZA/ TREVICTA	2,110	2,075	1.7		2.8		(1.1)
SPRAVATO	496	300	65.5		65.7		(0.2)
Other Neuroscience	639	809	(21.0)		(15.8)		(5.2)
Oncology	9,904	8,510	16.4		18.7		(2.3)
CARVYKTI	343	189	81.5		81.5		0.0
DARZALEX	5,570	4,695	18.6		21.2		(2.6)
ERLEADA	1,425	1,109	28.4		30.5		(2.1)
IMBRUVICA	1,554	1,668	(6.9)		(5.1)		(1.8)
TECVAYLI	268	157	70.2		70.2		0.0
ZYTIGA/ abiraterone acetate	346	472	(26.8)		(22.0)		(4.8)
Other Oncology	399	219	82.4		84.2		(1.8)
Pulmonary Hypertension	2,088	1,844	13.2		15.5		(2.3)
OPSUMIT	1,068	947	12.7		14.4		(1.7)
UPTRAVI	894	761	17.4		18.7		(1.3)
Other Pulmonary Hypertension	127	136	(6.5)		5.3		(11.8)
Cardiovascular / Metabolism / Other	1,721	1,877	(8.3)		(8.0)		(0.3)
XARELTO	1,105	1,215	(9.1)		(9.1)		—
Other	616	662	(7.0)		(6.0)		(1.0)
Total Innovative Medicine Sales	$28,052	$27,144	3.3	%	5.2	%	(1.9)	%


44

Table of Contents

Innovative Medicine segment sales in the fiscal second quarter of 2024 were $14.5 billion, an increase of 5.5% as compared to the same period a year ago, including an operational increase of 7.8% and a negative currency impact of 2.3%. In the fiscal second quarter of 2024, the impact of the Covid-19 Vaccine sales decline on the Innovative Medicine segment operational sales was a negative 1.0%. U.S. Innovative Medicine sales increased 8.9% as compared to the same period a year ago. International Innovative Medicine sales increased by 1.1%, including an operational increase of 6.4% partially offset by a negative currency impact of 5.3%. In the fiscal second quarter of 2024, the impact of the Covid-19 Vaccine sales decline on the international Innovative Medicine operational sales was a negative 2.3%. In the fiscal second quarter of 2024, the net impact of acquisitions and divestitures on the Innovative Medicine segment operational sales growth was a negative 0.2%.

Major Innovative Medicine therapeutic area sales — Fiscal Second Quarter Ended


(Dollars in Millions)	June 30, 2024	July 2, 2023	Total Change		Operations Change		Currency Change
Immunology	$4,722	$4,496	5.0	%	7.3	%	(2.3)	%
REMICADE	393	462	(14.9)		(13.4)		(1.5)
SIMPONI/ SIMPONI ARIA	537	529	1.6		7.1		(5.5)
STELARA	2,885	2,797	3.1		4.9		(1.8)
TREMFYA	906	706	28.3		30.7		(2.4)
Other Immunology	2	4	(51.5)		(51.5)		—
Infectious Diseases	965	1,121	(13.9)		(12.9)		(1.0)
COVID-19 VACCINE	172	285	(39.7)		(39.7)		0.0
EDURANT/rilpivirine	297	266	11.0		12.5		(1.5)
PREZISTA/ PREZCOBIX/ REZOLSTA/ SYMTUZA	438	491	(11.0)		(10.3)		(0.7)
Other Infectious Diseases	61	79	(23.1)		(18.8)		(4.3)
Neuroscience	1,782	1,793	(0.6)		1.5		(2.1)
CONCERTA/ methylphenidate	163	208	(21.5)		(17.9)		(3.6)
INVEGA SUSTENNA/ XEPLION/ INVEGA TRINZA/ TREVICTA	1,054	1,031	2.2		3.5		(1.3)
SPRAVATO	271	169	60.2		60.8		(0.6)
Other Neuroscience	294	386	(23.7)		(19.1)		(4.6)
Oncology	5,090	4,398	15.7		18.6		(2.9)
CARVYKTI	186	117	59.8		59.9		(0.1)
DARZALEX	2,878	2,431	18.4		21.3		(2.9)
ERLEADA	736	567	29.8		32.5		(2.7)
IMBRUVICA	770	841	(8.5)		(5.9)		(2.6)
TECVAYLI	135	94	42.9		43.5		(0.6)
ZYTIGA/ abiraterone acetate	165	227	(27.7)		(21.9)		(5.8)
Other Oncology	221	120	84.2		87.2		(3.0)
Pulmonary Hypertension	1,039	972	6.9		9.4		(2.5)
OPSUMIT	544	507	7.1		9.1		(2.0)
UPTRAVI	426	399	6.6		8.1		(1.5)
Other Pulmonary Hypertension	71	66	7.2		20.4		(13.2)
Cardiovascular / Metabolism / Other	892	950	(6.2)		(5.5)		(0.7)
XARELTO	587	637	(7.9)		(7.9)		—

Other	305	313	(2.5)		(0.6)		(1.9)
Total Innovative Medicine Sales	$14,490	$13,731	5.5	%	7.8	%	(2.3)	%


Form 10-Q			45

Table of Contents

Immunology products achieved operational growth of 7.3% as compared to the same period a year ago. Sales of STELARA (ustekinumab) were driven by market growth partially offset by net unfavorable patient mix. Growth of TREMFYA (guselkumab) was due to market growth, share gains and favorable patient mix. Additionally, SIMPONI/SIMPONI ARIA growth was driven by growth outside the U.S. Lower sales of REMICADE (infliximab) were 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 12.9% 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 1.5% as compared to the same period a year ago. The growth of SPRAVATO (esketamine) was driven by increased physician and patient demand and ongoing launches. Growth was partially offset by declines in Other Neuroscience.

Oncology products achieved operational sales growth of 18.6% 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 market growth. 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) 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 9.4% as compared to the same period a year ago. Sales growth of OPSUMIT (macitentan) was driven by share gains and market growth partially offset by unfavorable mix in the European Union. Sales growth of UPTRAVI (selexipag) was driven by market growth and share gains partially offset by inventory dynamics in the U.S.

Cardiovascular / Metabolism / Other products experienced an operational decline of 5.5% 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 six months of 2024 were $15.8 billion, an increase of 3.3% as compared to the same period a year ago, with an operational increase of 5.4% and a negative currency impact of 2.1%. U.S. MedTech sales increased 6.2%. International MedTech sales increased by 0.5%, including an operational increase of 4.6% and a negative currency impact of 4.1%. In the fiscal six months of 2024, the net impact of acquisitions and divestitures on the MedTech segment operational sales growth was a positive 0.2%.

Major MedTech franchise sales — Fiscal Six Months Ended



(Dollars in Millions)	June 30, 2024	July 2, 2023	Total Change		Operations Change		Currency Change
Surgery	$4,904	$5,028	(2.5	%)	0.3	%	(2.8)	%
Advanced	2,228	2,340	(4.8)		(2.2)		(2.6)
General	2,676	2,688	(0.5)		2.4		(2.9)
Orthopaedics	4,652	4,510	3.2		4.0		(0.8)
Hips	839	787	6.5		7.4		(0.9)
Knees	795	731	8.7		9.4		(0.7)
Trauma	1,524	1,496	1.9		2.6		(0.7)
Spine, Sports & Other	1,495	1,495	0.0		1.1		(1.1)
Cardiovascular(1)	3,679	3,123	17.8		20.2		(2.4)
Electrophysiology	2,667	2,288	16.5		19.4		(2.9)
Abiomed	750	655	14.5		15.2		(0.7)
Shockwave (2)	77	—	*		*		—
Other Cardiovascular(1)	185	180	2.9		5.7		(2.8)
Vision	2,543	2,608	(2.5)		(0.3)		(2.2)
Contact Lenses/Other	1,828	1,892	(3.4)		(0.8)		(2.6)
Surgical	715	716	(0.1)		1.1		(1.2)
Total MedTech Sales	$15,778	$15,269	3.3	%	5.4	%	(2.1)	%

(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 second quarter of 2024 were $8.0 billion, an increase of 2.2% as compared to the same period a year ago, which included operational growth of 4.4% and a negative currency impact of 2.2%. U.S. MedTech sales increased 5.7%. International MedTech sales decreased by 1.3%, including operational growth of 3.2% and a negative currency impact of 4.5%. In the fiscal second quarter of 2024, the net impact of acquisitions and divestitures on the MedTech segment operational sales growth was a positive 0.4%.

Major MedTech franchise sales — Fiscal Second Quarter Ended


(Dollars in Millions)	June 30, 2024	July 2, 2023	Total Change		Operations Change		Currency Change
Surgery	$2,488	$2,594	(4.1)	%	(1.2	%)	(2.9)	%
Advanced	1,141	1,222	(6.7)		(3.9)		(2.8)
General	1,346	1,372	(1.9)		1.2		(3.1)
Orthopaedics	2,312	2,265	2.1		3.3		(1.2)
Hips	417	397	4.9		6.2		(1.3)
Knees	394	363	8.4		9.5		(1.1)
Trauma	759	739	2.8		3.8		(1.0)
Spine, Sports & Other	743	766	(3.1)		(1.7)		(1.4)
Cardiovascular(1)	1,873	1,620	15.6		18.0		(2.4)
Electrophysiology	1,323	1,196	10.6		13.4		(2.8)
Abiomed	379	331	14.5		15.4		(0.9)
Shockwave(2)	77	—	*		*		—
Other Cardiovascular(1)	93	93	0.3		2.8		(2.5)
Vision	1,285	1,308	(1.7)		0.8		(2.5)
Contact Lenses/Other	918	939	(2.2)		0.7		(2.9)
Surgical	367	369	(0.5)		1.2		(1.7)
Total MedTech Sales	$7,957	$7,788	2.2	%	4.4	%	(2.2)	%

(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 1.2% as compared to the prior year fiscal second quarter. The decline in Advanced Surgery was primarily driven by competitive pressures in Energy and Endocutters, China volume-based procurement impacts and EMEA tender timing. All Advanced Surgery platforms were impacted by prior year China recovery. This was partially offset by the strength of the portfolio and commercial execution in Biosurgery as well as the strength of new products. The operational growth in General Surgery was primarily driven by increased procedures coupled with technology penetration and upgrades within the differentiated Wound Closure portfolio. The growth was partially offset by the impact of the Acclarent divestiture, prior year China recovery and supply constraints.

The Orthopaedics franchise achieved operational sales growth of 3.3% as compared to the prior year fiscal second quarter. The operational growth in Hips reflects global procedure growth and continued strength of the portfolio. 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 and tender timing outside the U.S. The operational growth in Trauma was driven by the continued adoption of recently launched products partially offset by U.S. competitive dynamics. The operational sales decline in Spine, Sports & Other was primarily driven by spine competitive pressures and China volume-based procurement impacts partially offset by growth in Digital Solutions, Craniomaxillofacial and Shoulders.

The Cardiovascular franchise, which includes sales from Shockwave Medical (Shockwave) acquired on May 31, 2024, achieved operational sales growth of 18.0% as compared to the prior year fiscal second quarter. Electrophysiology grew by double digits due to global procedure growth, new product uptake and commercial execution partially offset by the impact of 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.


48

Table of Contents

The Vision franchise achieved operational sales growth of 0.8% as compared to the prior year fiscal second quarter. The Contact Lenses/Other operational growth was primarily driven by the continued strong performance in the ACUVUE OASYS 1-Day family of products (including recent launches) partially offset by the impact of the Blink divestiture, U.S. distributor stocking dynamics, competitive pressures and Japan macroeconomic pressures. 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 second quarter of 2024 was $5.7 billion representing 25.6% of sales as compared to $6.3 billion in the fiscal second quarter of 2023, representing 29.3% of sales.

Consolidated earnings before provision for taxes on income for the fiscal six months of 2024 was $9.5 billion representing 21.6% of sales as compared to $5.0 billion in the fiscal six months of 2023, representing 11.8% of sales.

Cost of products sold

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

Fiscal six months Q2 2024 versus Fiscal six months Q2 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

•Macroeconomic factors in both the Innovative Medicine and MedTech businesses

The intangible asset amortization expense included in cost of products sold for the fiscal six months of 2024 and 2023 was $2.2 billion in both periods.

Q2 2024 versus Q2 2023

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

•Product mix in the Innovative Medicine business

•Macroeconomic factors in both the Innovative Medicine and MedTech businesses

The intangible asset amortization expense included in cost of products sold for the fiscal second quarters of 2024 and 2023 was $1.1 billion in both periods.


Form 10-Q			49

Table of Contents

Selling, marketing and administrative expenses

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

Fiscal six months Q2 2024 versus Fiscal six months Q2 2023

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

•Timing of brand marketing investment in the Innovative Medicine business and timing of administrative costs due to technology investments

Q2 2024 versus Q2 2023

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

•Timing of administrative costs due to technology investments

Research and development expense

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


	Fiscal Second Quarters Ended							Fiscal Six Months Ended
	2024				2023			2024				2023
(Dollars in Millions)	Amount		% of Sales*		Amount	% of Sales*		Amount		% of Sales*		Amount	% of Sales*
Innovative Medicine	$2,722		18.8	%	$3,048	22.2	%	$5,618		20.0	%	$5,826	21.5	%
MedTech	718		9.0		655	8.4		1,364		8.6		1,332	8.7
Total research and development expense	$3,440		15.3	%	$3,703	17.2	%	$6,982		16.0	%	$7,158	16.9	%
Percent increase/(decrease) over the prior year	(7.1	%)						(2.5	%)
*As a percent to segment sales

Fiscal six months Q2 2024 versus Fiscal six months Q2 2023

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

•Lower milestone payments and portfolio prioritization in the Innovative Medicine business

Q2 2024 versus Q2 2023

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

•Lower milestone payments and portfolio prioritization in the Innovative Medicine business

partially offset by

•Phasing of expenses in the MedTech business


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

In the fiscal second quarter and fiscal six months of 2024, the Company recorded a charge of approximately $0.2 billion associated with the M710 (biosimilar) asset acquired with Momenta 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. In the fiscal six 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 in the fiscal six months of 2024 was $759 million as compared to $524 million in the fiscal six months of 2023 primarily due to higher rates of interest earned on cash balances and a higher average cash balance. Interest income in the fiscal second quarter of 2024 was $395 million as compared to $326 million in the fiscal second quarter of 2023 primarily due to a higher average cash balance. Interest expense in the fiscal six months of 2024 was $425 million and was relatively flat as compared to $429 million in the same period a year ago. Interest expense in the fiscal second quarter of 2024 was $270 million as compared to $217 million in the same period a year ago primarily due to a higher average debt rate. The balance of cash, cash equivalents and current marketable securities was $25.5 billion at the end of the fiscal second quarter of 2024 as compared to $28.5 billion (including $1.2 billion of cash related to Kenvue) at the end of the fiscal second quarter of 2023. The Company’s debt position was $41.5 billion as of June 30, 2024, as compared to $45.6 billion the same period a year ago (including $8.4 billion related to Kenvue debt).

Other (income) expense, net*

Fiscal six months Q2 2024 versus Fiscal six months Q2 2023

Other (income) expense, net for the fiscal six months of 2024 reflected less expense of $3.5 billion as compared to the prior year primarily due to the following:


Fiscal Six Months
(Dollars in Billions)(Income)/Expense	June 30, 2024		July 2, 2023	Change

Litigation related(1)	3.1		6.8	(3.7)
Acquisition, Integration and Divestiture related	0.5		0.1	0.4
Changes in the fair value of securities(2)	0.4		0.1	0.3
COVID-19 Vaccine manufacturing related exit costs	0.1		0.4	(0.3)
Employee benefit plan related	(0.5)		(0.7)	0.2
Other	(0.5)		(0.1)	(0.4)


Total Other (Income) Expense, Net	$	3.1	6.6	(3.5)

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

(2)Includes the loss on the completion of the debt for equity exchange of the retained stake in Kenvue


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Q2 2024 versus Q2 2023

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


Fiscal Second Quarter
(Dollars in Billions)(Income)/Expense	June 30, 2024		July 2, 2023	Change

Acquisition, Integration and Divestiture related	$	0.4	—	0.4
Litigation related(1)	0.4		(0.1)	0.5
Changes in the fair value of securities(2)	0.4		—	0.4
COVID-19 Vaccine manufacturing related exit costs	0.1		0.2	(0.1)
Employee benefit plan related	(0.2)		(0.4)	0.2
Other	(0.4)		(0.1)	(0.3)


Total Other (Income) Expense, Net	$	0.7	(0.4)	1.1

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

(2)Includes the loss on the completion of the debt for equity exchange of the retained stake in Kenvue

*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.


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Earnings before provision for taxes by segment

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


	Income Before Tax		Segment Sales		Percent of Segment Sales
(Dollars in Millions)	June 30, 2024	July 2, 2023	June 30, 2024	July 2, 2023	June 30, 2024		July 2, 2023
Innovative Medicine	$10,428	$9,214	$28,052	$27,144	37.2	%	33.9	%
MedTech	2,609	3,080	15,778	15,269	16.5		20.2
Segment earnings before tax	13,037	12,294	43,830	42,413	29.7		29.0
Less: Expenses not allocated to segments(1)	3,575	7,275
Worldwide income before tax	$9,462	$5,019	$43,830	$42,413	21.6	%	11.8	%

(1)Amounts not allocated to segments include interest (income) expense, certain litigation expenses and general corporate (income) expense. The fiscal six months of 2024 and 2023 include charges for talc matters of $3.0 billion and $7.1 billion, respectively. The fiscal six 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.

Innovative Medicine segment

The Innovative Medicine segment income before tax as a percent of sales in the fiscal six months of 2024 was 37.2% versus 33.9% for the same period a year ago. The increase in the income before tax as a percent of sales for the fiscal six 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 $0.6 billion in 2023

•Restructuring related charge of $0.1 billion in 2024 versus $0.3 billion in 2023

•Reduced milestone payments and portfolio prioritization in Research and development

•Favorable patient mix in Cost of products sold

partially offset by

•An In-process research and development impairment of $0.2 billion in 2024 related to the M710 (biosimilar) asset acquired with Momenta in 2020

MedTech segment

The MedTech segment income before tax as a percent of sales in the fiscal six months of 2024 was 16.5% versus 20.2% for the same period a year ago. The decrease in the income before tax as a percent of sales for the fiscal six months of 2024 was primarily driven by the following:

•Acquisition and integration related costs of $0.6 billion in 2024 (primarily related to the Shockwave acquisition) versus $0.1 billion in 2023

•Favorable intellectual property litigation settlements of approximately $0.3 billion in 2023

•Restructuring related charge of $0.1 billion in 2024

•Macroeconomic factors in Cost of products sold

partially offset by

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

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


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


	Income Before Tax		Segment Sales		Percent of Segment Sales
(Dollars in Millions)	June 30, 2024	July 2, 2023	June 30, 2024	July 2, 2023	June 30, 2024		July 2, 2023
Innovative Medicine	$5,459	$4,812	$14,490	$13,731	37.7	%	35.0	%
MedTech	1,089	1,671	7,957	7,788	13.7		21.5
Segment earnings before tax	6,548	6,483	22,447	21,519	29.2		30.1
Less: Expenses not allocated to segments(1)	800	177
Worldwide income (loss) before tax	$5,748	$6,306	$22,447	$21,519	25.6	%	29.3	%

(1)Amounts not allocated to segments include interest (income) expense, certain litigation expenses and general corporate (income) expense. The fiscal second quarters of 2024 and 2023 include charges for talc matters of $0.3 billion and $0.2 billion, respectively. The fiscal second quarter 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

Innovative Medicine segment

The Innovative Medicine segment income before tax as a percent of sales in the fiscal second quarter of 2024 was 37.7% versus 35.0% for the same period a year ago. The increase in the income before tax as a percent of sales for the fiscal second quarter of 2024 as compared to the prior year was primarily driven by the following:

•Lower one-time COVID-19 Vaccine related exit costs of $0.1 billion in 2024 versus $0.2 billion in 2023

•Restructuring related income from asset divestments of $0.1 billion in 2024 versus restructuring expense of $0.1 billion in 2023

•Lower milestone payments and portfolio prioritization in Research and Development

partially offset by

•An In-process research and development impairment of $0.2 billion in 2024 related to the M710 (biosimilar) asset acquired with Momenta in 2020

•Unfavorable product mix in Cost of products sold

MedTech segment

The MedTech segment income before tax as a percent of sales in the fiscal second quarter of 2024 was 13.7% versus 21.5% for the same period a year ago. The decrease in the income before tax as a percent of sales for the fiscal second quarter of 2024 as compared to the prior year was primarily driven by the following:

•Acquisition and integration related costs of $0.6 billion in 2024 (primarily related to the Shockwave acquisition)

•Favorable intellectual property litigation settlements of approximately $0.3 billion in 2023

•Restructuring related charge of $0.1 billion in 2024

•Research and development expense phasing

•Macroeconomic factors in Cost of products sold

partially offset by

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


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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 income of $0.1 billion in the fiscal second quarter of 2024 and $0.1 billion of expense in the fiscal six months of 2024, included asset divestments, the termination of partnered and non-partnered development program costs and asset impairments. The pre-tax restructuring charge of approximately $0.1 billion and $0.3 billion in the fiscal second quarter and fiscal six 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 of $0.1 billion and $0.1 billion in the fiscal second quarter and fiscal six months of 2024, respectively, primarily included costs related to market and product exits. 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 six months was 16.1% in 2024 and 2.7% 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 total 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 fiscal 2024, as well as other business events, may impact this estimate.

As discussed in Note 10 to the Consolidated Financial Statements, subsequent to the balance sheet date, the Company acquired Yellow Jersey, a demerged subsidiary of Numab Therapeutics, to secure the global rights to NM26, a bispecific antibody compound and will record a related $1.25 billion non-tax-deductible expense in the third fiscal quarter of 2024. Since this acquisition is not expected to be deductible for tax purposes this charge will be a factor for a higher effective tax rate for the remainder of fiscal 2024.

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

Liquidity and capital resources

Acquisitions
(net of cash acquired)

Proceeds from the disposal of assets/businesses, net

Dividends to shareholders


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Cash flows

Cash and cash equivalents were $24.9 billion at the end of the fiscal second 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 $3.0 billion increase were:


(Dollars In Billions)
21.9		Q4 2023 Cash and cash equivalents balance
9.3		net cash generated from operating activities
(14.2)		net cash used by investing activities
8.1		net cash generated from financing activities
(0.2)		effect of exchange rate changes on cash and cash equivalents
$	24.9	Q2 2024 Cash and cash equivalents

In addition, the Company had $0.6 billion in marketable securities at the end of the fiscal second quarter of 2024 and $1.1 billion at the end of fiscal year 2023.

Cash flow from operations of $9.3 billion was the result of:


(Dollars In Billions)
$	7.9	Net earnings
2.1		non-cash expenses and other adjustments primarily for depreciation and amortization, stock-based compensation, and asset write-downs partially offset by the net gain on sale of assets/businesses and the deferred tax provision
(1.9)		an increase in accounts receivable and inventories
0.4		an increase in accounts payable and accrued liabilities
3.7		a decrease in other current and non-current assets
(3.1)		a decrease in other current and non-current liabilities
0.2		Other and rounding
$	9.3	Net cash flows from operations

Cash flow used by investing activities of $14.2 billion was primarily from:


(Dollars In Billions)
$	(1.8)	additions to property, plant and equipment
0.6		proceeds from the disposal of assets/businesses, net
(14.8)		acquisitions, net of cash acquired
0.5		net sales of investments
1.4		credit support agreements activity, net
(0.1)		Other (primarily capitalized licenses and milestones)
$	(14.2)	Net cash used by investing activities


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Cash flow from financing activities of $8.1 billion was primarily from:


(Dollars In Billions)
$	(5.9)	dividends to shareholders
(1.6)		repurchase of common stock
15.9		net proceeds from short and long term debt
0.3		proceeds from stock options exercised/employee withholding tax on stock awards, net
0.3		credit support agreements activity, net
(1.0)		Settlement of convertible debt acquired from Shockwave
0.1		Other and rounding
$	8.1	Net cash from 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 September 2023, the Company secured a new 364-day Credit Facility of $10 billion (expiration on September 5, 2024) 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 June 30, 2024, the Company had cash, cash equivalents and marketable securities of approximately $25.5 billion and had approximately $41.5 billion of notes payable and long-term debt for a net debt position of $16.0 billion as compared to the prior year fiscal second quarter net debt position of $17.1 billion (which included cash of $1.2 billion and debt of $8.4 billion related to Kenvue). 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 $1.5 billion and the approximately $10.6 billion ($12.8 billion nominal) reserve remaining for the talc settlement proposal (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 second quarter of 2024, the Company paid approximately $3.1 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) and $1.1 billion primarily related to the normal estimated payment for the first six months of fiscal 2024. Additionally, the Company paid $1.1 billion in income related taxes net of refunds to foreign jurisdictions in the first six months of fiscal 2024.

Dividends

On April 16, 2024, the Board of Directors declared a regular cash dividend of $1.24 per share, payable on June 4, 2024, to shareholders of record as of May 21, 2024.

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. 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 second quarter of 2024, including accounts receivable or inventory reserves, was not material. As of the fiscal six months ending June 30, 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 second quarter of 2024, including accounts receivable or inventory reserves, was not material. As of the fiscal six months ending June 30, 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


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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 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.


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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 second 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 second 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
April 1, 2024 through April 28, 2024	281,530	145.46	—	—
April 29, 2024 through May 26, 2024	350,000	148.98	—	—
May 27, 2024 through June 30, 2024	289,994	145.27	—	—
Total	921,524	146.74	—	—

(1)During the fiscal second quarter of 2024, the Company repurchased an aggregate of 921,524 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 second 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: July 25, 2024


Date: July 25, 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			63

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

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