In three years, JNJ shed its consumer-health business (2023), used the freed-up capacity to spend aggressively on acquisitions at the cost of short-term earnings (2024), then watched that bet convert into new-drug revenue and restored confidence (2025-2026) — and is now applying the same pattern again by exploring an Orthopaedics spinoff.
The story
Late 2023: freshly independent
In Q3 2023, JNJ had just spun off its consumer-health business (Johnson's Baby, Tylenol, and others) into Kenvue. In the spinoff, JNJ swapped Kenvue stock for its own shares, reducing outstanding shares by 191 million (about 7%) without spending a dollar of cash — management spoke of it proudly. Tone on earnings calls was steady, and the company described itself as reborn: "pure-play pharmaceutical and medical device."
2024: multiple headwinds converge
Through 2024, several pressures hit at once: Stelara biosimilars entered Europe, China faced ongoing government-led drug-price cuts (VBP) and an anti-corruption campaign, the Vision (contact lens) business dealt with U.S. channel-inventory issues, and cardiac ablation devices (PFA) faced intensifying competition. Compounding it all, an FDA inquiry into the newly launched VARIPULSE cardiac ablation device surfaced, and the term was mentioned 13 times on the Q4 2024 earnings call alone — more than any other quarter that year. Words like "headwind," "challenging," and "cautious" nearly doubled in frequency compared to late 2023.
Management's response: emphasize the underlying business, spend anyway
Interestingly, every quarter management stressed that "excluding M&A, underlying business guidance was raised for three consecutive quarters." In reality, the company spent about $18 billion on Shockwave ($13B), V-Wave, and Yellow Jersey (NM26 antibody) in 2024, and the dilution from those deals pulled the initial $10.55-10.75 adjusted EPS guidance down to a final $9.93 over the year. Actual 2024 results landed at $9.98 — clearly below the original target, but this reflected a deliberate choice to reinvest outperformance into M&A, not a business shortfall. The filings tracked the shift too: a one-line hypothetical about "potential trade restrictions" in the FY2023 10-K expanded into a paragraph in the FY2024 10-K naming China, Mexico, and Canada specifically.
Mid-2025 onward: the tone shifted decisively
By mid-2025, the picture changed clearly. Tremfya's new inflammatory bowel disease indication, strong growth from Carvykti, Talvey, and Tecvayli, and early momentum from newly launched ICOTYDE began outweighing Stelara's decline. Confidence-signaling words ("confident," "strong," "record," "momentum") roughly doubled in frequency, and guidance was raised multiple times through 2025. Tariff-related disclosures moved a step further too — no longer framed as a risk factor, but appearing directly in cost-of-goods-sold commentary ("tariffs, currency, and macroeconomic factors reflected in cost of products sold"), and the FY2025 10-K introduced an entirely new topic: a review of spinning off the Orthopaedics business. The raising trend continued into 2026, with guidance lifted in both Q1 and Q2, targeting the company's first-ever $100 billion revenue year in its 140-year history — though the Q2 FY2026 call also saw tariff costs (about $500 million annually, sharply higher year over year) and MedTech margin pressure resurface slightly.
Guidance scorecard
| Fiscal year | Initial guidance | Path during the year | Actual result | Result |
|---|---|---|---|---|
| FY2024 | Revenue +5-6%; adjusted EPS $10.55-10.75 (+7.4%) | Slight raise to $10.68 (Q1) → cut to $10-10.10 on Shockwave dilution (Q2) → $9.93 final on further V-Wave dilution (Q3) | Revenue $88.8B; adjusted EPS $9.98 | Revenue met; EPS missed (by design — reinvested into M&A) |
| FY2025 | Revenue midpoint $89.6B; adjusted EPS $10.75-10.95 (+8.7%), excluding Intra-Cellular acquisition | Multiple raises through the year (Q2 +$2B/EPS, Q3 +$0.3B, and more) | Revenue $94.2B; adjusted EPS $10.79 (+8.1%) | Beat on both revenue and EPS |
| FY2026 (in progress) | Revenue midpoint $100.5B; adjusted EPS $11.28-11.48 | Raised in Q1 (revenue midpoint $100.8B) and Q2 (midpoint $100.6B, adjusted for currency) | In progress | 2 consecutive raises |
The pattern is clear: JNJ's core business almost always beats its own targets. The 2024 EPS "miss" wasn't business weakness — it was management's deliberate choice to reinvest the outperformance into acquisitions.
Source: earnings calls Q4 FY2023 (FY24 initial guidance), Q1-Q4 FY2024, Q4 FY2024 (FY25 initial guidance), Q1-Q4 FY2025, Q4 FY2025 (FY26 initial guidance), Q1-Q2 FY2026.
Timeline
- Aug 2023Kenvue spinoff completes; ~191M shares (7%) retired via stock-for-debt exchange.
- 2023-2024Two talc-litigation bankruptcy filings (LTL) both rejected by courts.
- 2024~$18B in aggressive acquisitions (Shockwave, V-Wave, Yellow Jersey) accepted short-term EPS dilution.
- Sep 2024Talc subsidiary Red River files new "pre-packaged" bankruptcy plan in Texas.
- Q4 2024VARIPULSE (cardiac ablation device) U.S. investigation mentions peak at 13 on the earnings call.
- Apr 2025Intra-Cellular Therapeutics acquisition closes (~$14.5B, secures CAPLYTA).
- Q1 2025~$7.0B in talc litigation reserves reversed — the core driver of the net income surge.
- Jul 2025Talc Texas lawsuit dismissed, returning to ordinary MDL litigation.
- Oct 2025Orthopaedics spinoff review announced, targeting completion within 18-24 months.
- Jul 2026Q2 results raise guidance again; reaffirms target of first-ever $100B revenue year; Firefly Bio acquisition announced.
Our read
JNJ's last three years trace a deliberate cycle rather than a single crisis: shed a slower-growth business, redeploy that capacity into aggressive bets at the cost of near-term earnings, then watch those bets convert into new growth and restored market confidence. The company appears to be repeating the exact same cycle again with the planned Orthopaedics spinoff. The next real test is whether Darzalex and Tremfya — JNJ's next big revenue drivers — can survive the same patent-cliff dynamic currently devastating Stelara.
What we still don't know
- How the VARIPULSE investigation was actually resolved — mentions dropped sharply from 13 (Q4 2024) to 1-2 per quarter in 2025, but whether that reflects genuine resolution or simply reduced public disclosure can't be determined from this data alone.
- Whether the Orthopaedics spinoff will be a spinoff or a sale, and at what valuation — no specific structure has been disclosed since the October 2025 announcement.
- Whether the 2026 guidance-raising streak continues into the back half of the year — tariff and MedTech margin pressures resurfaced starting the Q2 call, so the trend needs confirmation from Q3-Q4 results.
Frequently asked questions
Why did JNJ miss its 2024 EPS guidance?
JNJ's core business actually beat its own targets every quarter (excluding M&A) in 2024, but roughly $18 billion spent on acquisitions like Shockwave, V-Wave, and Yellow Jersey diluted earnings, pulling adjusted EPS guidance down from an initial $10.55-10.75 to a final $9.93 — a deliberate tradeoff of near-term earnings for long-term growth assets, not a sign of underlying business weakness.
What turned JNJ's confidence around in 2025?
New-drug momentum — Tremfya's expanded IBD approval, strong growth from Carvykti, Talvey, and Tecvayli, and early traction from newly launched ICOTYDE — began outweighing the decline in Stelara sales, driving multiple guidance raises through 2025 and into 2026.
What sources does this analysis draw from?
This piece is built from JNJ's 10-K filings for FY2023 through FY2025 and 12 quarters of earnings call transcripts from October 2023 to August 2026.