Johnson & Johnson (JNJ) Q2 2024 earnings summary

Executive summary

• Q2 2024 worldwide sales reached $22.4B, up 4.3% year-over-year (6.6% operationally), with U.S. sales up 7.8% and international sales up 5.1% operationally; adjusted operational growth excluding COVID-19 vaccine was 7.2%.

• Net earnings for Q2 were $4.7B, impacted by a $3.0B talc litigation charge; adjusted net earnings were $6.8B, with adjusted EPS up 10.2% to $2.82, while reported EPS fell 5.9% to $1.93.

• Innovative Medicine delivered $14.5B in sales, up 7.8% operationally, led by double-digit growth in key assets; MedTech sales reached $8B, up 4.4% operationally, with cardiovascular and electrophysiology franchises posting double-digit growth.

• Major acquisitions included Shockwave Medical ($13.1B), Proteologix ($0.8B), and Yellow Jersey Therapeutics, strengthening MedTech and Innovative Medicine portfolios.

• Announced significant pipeline milestones, including FDA and EMA filings, positive clinical data in oncology and immunology, and new product launches such as ACUVUE OASYS MAX 1-Day and VARIPULSE.

Financial highlights

• Adjusted net earnings rose 1.6% year-over-year; adjusted EPS increased 10.2% to $2.82; reported net earnings from continuing operations were $4.7B, down 12.8% year-over-year.

• Gross margin for Q2 was 69.4%, slightly down from 70.0% in Q2 2023.

• Free cash flow for Q2 was ~$7.5B; cash and marketable securities totaled $25B at quarter-end; net debt was $16B.

• Effective tax rate from continuing operations increased to 18.5% from 14.7% year-over-year, mainly due to one-time international audit settlements and Pillar Two impacts.

• Q2 2024 operating margin was 25.6% (reported), 37.4% (adjusted); adjusted net margin was 30.5%.

Outlook and guidance

• Full-year 2024 adjusted operational EPS guidance raised to $10.05, reflecting improved performance and recent acquisitions.

• Updated operational sales growth guidance to 5.5%–6.6% (midpoint $89.4B); reported sales growth expected at 4.7%–5.2% (midpoint $88.2B), impacted by FX and acquisitions.

• MedTech growth expected to accelerate in H2 2024, driven by recovery in Vision, new product launches, and Shockwave integration.

• Innovative Medicine sales growth to moderate in H2 due to STELARA biosimilar entry in Europe; no COVID-19 vaccine revenue anticipated for the remainder of 2024.

• Management expects the 2024 effective tax rate to increase by 1.0–1.5% due to global tax law changes.