Johnson & Johnson Q3 2026: EPS $0.09, adjusted $2.59, guide raised

Johnson & Johnson now reports two businesses: Innovative Medicine, its prescription-drug arm, and MedTech, its surgical, cardiovascular, orthopaedic and vision devices. In the fiscal quarter ended September 27, 2026 the two together sold $25,399 million, up 5.9% on the year, and management raised its full-year outlook. On the same page the company reported diluted earnings per share of $0.09.

Both statements are accurate, and the distance between them is the story of this quarter. Most of it is one line in the reconciliation schedule — a litigation charge booked in the quarter J&J proposed resolving its ovarian talc cases — and a smaller, less-discussed piece sits inside the adjusted number, where two July deals were deliberately left in.

The results

	Q3 2026	Q3 2025	Change
Reported sales	$25,399M	$23,993M	+5.9%
Operational sales growth	6.0%	—	—
Adjusted operational sales growth	6.1%	—	—
Net earnings	$210M	$5,152M	−95.9%
Diluted EPS	$0.09	$2.12	−95.8%
Adjusted net earnings	$6,339M	$6,801M	−6.8%
Adjusted diluted EPS	$2.59	$2.80	−7.5%
Adjusted effective tax rate	17.4%	19.4%	—

Currency barely mattered this quarter: it cost 0.1 point of sales growth, and adjusted EPS on an operational basis — excluding translational currency — was $2.61, two cents above the reported adjusted figure. Diluted share count rose to 2,448.6 million from 2,428.6 million.

Did Johnson & Johnson issue guidance for Q3 2026?

No. Johnson & Johnson does not issue quarterly sales or EPS guidance; its July 15, 2026 second-quarter release and its July 29, 2026 8-K give full-year 2026 figures only. Against the year-ago quarter, reported sales rose 5.9% and adjusted EPS fell 7.5% to $2.59. What the company does guide, the full year, moved up: adjusted EPS to $11.05–$11.15 from the $10.96–$11.11 range in the July 29 8-K, and estimated reported sales to $101.0–$101.4 billion from $100.8–$101.4 billion. The guidance section further down sets out the full sequence, including the July cut for two deals.

Why J&J’s GAAP EPS was only $0.09

The reconciliation in Exhibit 99.2 walks from $210 million of reported net earnings to $6,339 million of adjusted net earnings. Every line is in the filing:

GAAP → adjusted net earnings	Q3 2026
Net earnings, as reported	$210M
+ Litigation related	$5,519M
+ Intangible asset amortization	$1,240M
+ Orthopaedics separation related	$369M
+ IPR&D impairments	$339M
+ Restructuring related	$195M
+ Losses on securities	$10M
− Acquisition, integration and divestiture related	−$34M
− Tax impact on special item adjustments	−$1,677M
+ Tax legislation and other tax related	$168M
Adjusted net earnings	$6,339M

The pre-tax adjustments total $7,638 million (our arithmetic), which is the gap between GAAP pre-tax earnings of $34 million and adjusted pre-tax earnings of $7,672 million. The litigation line alone is 72% of that bridge and equal to roughly $2.25 per diluted share before tax (our arithmetic on 2,448.6 million shares). On the income statement, “other (income) expense, net” swung to a $5,780 million expense from $478 million of income a year earlier. With pre-tax earnings near zero, the GAAP effective tax rate printed as (517.6)% — a tax benefit of $176 million — a figure that reflects the tiny denominator rather than anything about the company’s tax position.

What the talc resolution is. The Q3 release says GAAP EPS of $0.09 “reflects a one-time special charge for the proposed talc litigation resolution, the acquisition of Firefly Bio, Inc., and the strategic collaboration with Sail Biomedicines.” The terms of the resolution are in the company’s July 27 announcement, filed on Form 8-K: J&J said it had reached an agreement for a comprehensive resolution of the remaining ovarian talc litigation with the plaintiff firms leading the federal multi-district litigation and related state proceedings. The agreement is conditioned on, among other things, the participation of at least 95% of the remaining claims; it calls for per-claim payments, with a $5.5 billion commitment by the company, a first payment of no more than $3 billion in 2027, and no additional payments due before 2028. The same release referred to 76,000 remaining ovarian talc claims. It is a proposed resolution: the company’s own filing says it cannot predict the timing, ultimate outcome or financial impact of the matter, and this piece makes no assumption about whether the participation threshold is met. Note also that the Q3 reconciliation labels the $5,519 million as “litigation related” without breaking out talc separately, and neither filing reconciles that line to the $5.5 billion commitment; this piece does not treat the two figures as the same thing.

The part of the gap that adjusted EPS keeps

Adjusted EPS fell 7.5% while sales grew 5.9%, and the reason is not in the bridge above — it is what the bridge leaves in. The release states that adjusted EPS “also reflects the impact of these M&A deals,” meaning the costs of the Firefly Bio acquisition and the Sail Biomedicines collaboration were not excluded as special items.

The July 29 filings size them:

• Firefly Bio — acquired for $1 billion in cash, accounted for as an asset acquisition, “resulting in an in-process research and development charge of approximately $1 billion in the third quarter of 2026.” Expected to reduce 2026 adjusted EPS by about $0.46 and 2027 by about $0.08.
• Sail Biomedicines — total initial payments of $785 million, including a $465 million equity investment, plus $140 million of contingent milestone payments and an exclusive option to acquire Sail for $2.58 billion. Assuming the option is exercised, expected to reduce adjusted EPS by about $0.18 in 2026 and about $1.28 in 2027.

Together, J&J estimated a hit of about $0.64 to 2026 adjusted EPS. The Q3 release does not say how much of that landed in the third quarter. What the income statement does show is that research and development expense rose $980 million, or 26.7%, to $4,652 million — 18.3% of sales against 15.3% a year earlier — and that adjusted pre-tax margin fell to 30.2% from 35.2% (adjusted pre-tax earnings of $7,672 million against $8,436 million). The R&D increase is close in size to the roughly $1 billion Firefly charge the company flagged for the quarter, but the filing does not attribute the increase line by line, so we do not either.

Innovative Medicine vs MedTech

Segment	Q3 2026	Q3 2025	Reported	Operational
Innovative Medicine	$16,757M	$15,563M	+7.7%	+7.9%
MedTech	$8,642M	$8,430M	+2.5%	+2.5%
Total	$25,399M	$23,993M	+5.9%	+6.0%

Innovative Medicine is 66% of sales and supplied $1,194 million of the $1,406 million year-over-year increase — about 85% of the growth (our arithmetic). It did so while absorbing the loss of exclusivity on STELARA, whose worldwide sales fell 54.4% to $716 million from $1,570 million; the release puts STELARA’s drag on segment operational growth at approximately 690 basis points. Excluding STELARA from both years, segment sales grew about 14.6% (our arithmetic).

The replacements are visible in the product schedule:

• TREMFYA: $2,396 million, up 68.3% — a $972 million increase that more than covers STELARA’s $854 million decline on its own.
• Oncology: $7,602 million, up 16.4%, led by DARZALEX at $4,239 million (+15.4%), CARVYKTI at $710 million (+35.5%), RYBREVANT/LAZCLUZE at $320 million (+62.3%) and TECVAYLI at $312 million (+76.6%). IMBRUVICA fell 18.8% to $563 million.
• Neuroscience: $2,375 million, up 17.3%, with SPRAVATO at $624 million (+36.1%) and CAPLYTA at $398 million (+66.1%).
• Pulmonary hypertension: $897 million, down 19.5%, with OPSUMIT/OPSYNVI down 35.7%.

MedTech grew 2.5% with no currency effect. Electrophysiology ($1,487 million, +4.9%) and Shockwave ($325 million, +16.8%) carried Cardiovascular to $2,307 million (+4.3%); Orthopaedics grew 3.2% to $2,345 million, with trauma up 6.4%; Vision grew 4.4% to $1,461 million. Surgery, the largest MedTech franchise at $2,528 million, declined 0.6%, and Abiomed fell 2.3% to $412 million. International MedTech sales were essentially flat, up 0.1%.

Geography tells the same story as the segments. U.S. sales rose 9.1% to $14,959 million — 59% of the total — while international sales rose 1.5% to $10,440 million (1.8% operationally). U.S. Innovative Medicine alone grew 11.1%.

Did Johnson & Johnson raise its 2026 guidance?

Yes, modestly, and from a base the company had already cut in July for the two deals.

FY2026 guidance (midpoints)	October 2026	July 29, 2026
Adjusted operational sales growth	6.6%	6.5%
Operational sales	$100.7B (6.9%)	$100.6B (6.8%)
Estimated reported sales	$101.2B (7.4%)	$101.1B (7.3%)
Adjusted operational EPS	$11.00 (2.0%)	$10.94 (1.4%)
Adjusted EPS	$11.10 (2.9%)	$11.04 (2.3%)

The sequence matters for reading the “raise.” On July 15, with second-quarter results, adjusted EPS guidance was $11.60–$11.75, midpoint $11.68. On July 29, the Firefly and Sail transactions cut that by $0.64 to $10.96–$11.11, midpoint $11.04. October’s $11.05–$11.15, midpoint $11.10, lifts the post-deal figure by $0.06 but remains $0.58 below the pre-deal midpoint (our arithmetic). The underlying business outlook improved; the headline EPS guide is lower than it was three months ago because J&J chose to spend on pipeline. The company does not provide GAAP guidance, citing its inability to predict legal outcomes and acquisition-related items.

Nine-month figures put the full-year targets in context: sales of $74,771 million (+7.4%) and adjusted EPS of $8.19 (against $8.33). Subtracting those from the midpoints implies roughly $26.4 billion of fourth-quarter sales and about $2.91 of fourth-quarter adjusted EPS (our arithmetic; per-share figures across periods with different share counts do not subtract exactly, so treat this as approximate).

Other items in the release

The release lists the U.S. market authorization of OTTAVA, which it describes as the world’s first table-integrated soft-tissue robotic system; FDA approval of IMAAVY (nipocalimab) for warm autoimmune hemolytic anemia; and FDA priority review for RYBREVANT FASPRO in advanced head and neck cancer. The release also reports an estimated ~$15.1 billion of free cash flow for the first nine months of 2026, against $14,226 million a year earlier, and $369 million of costs tied to the planned separation of the Orthopaedics business in the quarter.

What to watch in Q4

• Whether the talc resolution reaches its 95% participation condition. The Q3 charge reflects a proposed agreement; the filing does not say it is final.
• The timing of the $0.64 deal drag. The release does not split the Firefly and Sail cost by quarter, so the implied Q4 figure absorbs whatever has not yet been recognized; the company has also said Sail would cost about $1.28 of 2027 adjusted EPS if the option is exercised.
• STELARA’s run-rate against TREMFYA’s growth. STELARA is down to $716 million a quarter; the smaller the base, the less a further decline can subtract from segment growth (our observation, not company guidance).
• MedTech outside the U.S. International MedTech grew 0.1%, and Surgery declined; OTTAVA’s launch is the item to track there.
• The Orthopaedics separation, which added $369 million of separation-related costs this quarter and $746 million year to date.

Quick answers

Why was Johnson & Johnson’s Q3 2026 EPS only $0.09?

The release attributes it to a one-time special charge for the proposed talc litigation resolution and to the Firefly Bio and Sail Biomedicines deals. The largest reconciling item is $5,519 million of pre-tax litigation-related charges; excluding special items and intangible amortization, adjusted EPS was $2.59, which still includes the deal costs.

How much is the proposed talc settlement?

J&J’s July 27, 2026 filing describes per-claim payments with a $5.5 billion company commitment, the first payment no more than $3 billion in 2027, conditioned on participation of at least 95% of remaining claims.

Did J&J raise its 2026 guidance?

Yes. Estimated reported sales rose to a $101.2 billion midpoint (7.4% growth) and adjusted EPS to $11.10, up $0.06 from the July 29 guidance — which had itself been cut by $0.64 for the Firefly Bio and Sail Biomedicines deals.

Which segment grew faster?

Innovative Medicine, up 7.7% to $16,757 million, versus MedTech up 2.5% to $8,642 million.

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Sources and method. Company figures — sales of $25,399 million against $23,993 million (U.S. $14,959 million and international $10,440 million; Innovative Medicine $16,757 million and MedTech $8,642 million) with the reported, operational and adjusted operational growth rates; net earnings of $210 million against $5,152 million; diluted EPS of $0.09 against $2.12 on 2,448.6 million and 2,428.6 million diluted shares; adjusted net earnings of $6,339 million and adjusted EPS of $2.59 against $6,801 million and $2.80; operational adjusted EPS of $2.61; the statement-of-earnings lines (research and development of $4,652 million against $3,672 million, other (income) expense, net of $5,780 million against $(478) million, pre-tax earnings of $34 million, a $176 million tax benefit, the (517.6)% GAAP and 17.4% adjusted effective tax rates, adjusted pre-tax earnings of $7,672 million against $8,436 million); every line of the non-GAAP reconciliation including the $5,519 million litigation-related adjustment; the nine-month figures; all franchise and product sales; the ~690 basis-point STELARA impact; the estimated ~$15.1 billion year-to-date free cash flow against $14,226 million; and the October and July 29 guidance tables — are Johnson & Johnson’s own disclosures in Exhibits 99.1 and 99.2 to the Form 8-K filed 2026-10-13 for the fiscal quarter ended 2026-09-27, read directly from SEC EDGAR. The talc resolution terms ($5.5 billion commitment, first payment of no more than $3 billion in 2027, no further payments before 2028, 95% participation condition, 76,000 remaining claims) come from the company’s July 27, 2026 release filed as Exhibit 99.1 to a Form 8-K. The Firefly Bio and Sail Biomedicines terms and EPS effects ($1 billion purchase price and ~$1 billion IPR&D charge; $785 million initial payments including a $465 million equity investment, $140 million contingent payments, $2.58 billion option; $0.46, $0.18 and $0.64 for 2026; $0.08 and $1.28 for 2027) and the July 15 guidance of $11.60–$11.75 come from the company’s Form 8-K and exhibits filed 2026-07-29. No consensus estimate is included. Whether the quarter beat or missed is judged only against the year-ago quarter, because Johnson & Johnson issued no quarterly guidance (it guides only the full year; its second-quarter release, Form 8-K filed 2026-07-15, and its Form 8-K filed 2026-07-29 were checked); the October full-year outlook is compared with the July 29 figures. This piece makes no claim about the share-price reaction. No earnings-call remarks are quoted.

Our arithmetic, labelled as such: the $7,638 million total of pre-tax adjustments; the litigation line at 72% of that total and about $2.25 per diluted share before tax; segment shares of sales (66% Innovative Medicine) and of growth (about 85%); STELARA’s $854 million decline and TREMFYA’s $972 million increase; the ~14.6% Innovative Medicine growth excluding STELARA; the U.S. share of sales (59%); the $980 million R&D increase; the $0.58 gap between the October and pre-deal July 15 adjusted EPS midpoints; and the implied Q4 sales of about $26.4 billion and adjusted EPS of about $2.91. These are approximations built on the disclosed figures, not reported figures. The interpretation — that the GAAP gap is a litigation event while the adjusted-EPS decline reflects a deliberate pipeline spend the company chose not to exclude — is our analysis, not a company statement, and not a forecast.

Related: UnitedHealth Q3 2026, the payer side of U.S. health care; and JPMorgan Chase Q3 2026.

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