Johnson & Johnson JNJ
A medicines and devices group replacing its biggest lost patent with newer drugs. The open question is whether the replacement keeps pace once US price setting and the orthopaedics split land. Seven questions that follow the money through the business, the price and the tape. Every number comes from SEC filings and market data, and every score from a rule printed next to it.
What this File stands on. Annual figures: FY2025 10-K (year to 2025-12-28, filed 2026-02-11). "Last 12 months" figures add the quarters through 2026-09-27 (10-Q, filed 2026-10-21). Prices to 2026-10-21. The numbers rebuild every Monday, so each new 10-Q or 10-K appears within a week of filing. The written parts (business, defences, risks, the read) are from the FY2025 10-K, and the terminal read is dated 2026-10-17.
64 cents of every revenue dollar come from Innovative Medicine, up 6% on the year.
What it does
Discovers and sells prescription medicines, and makes the devices surgeons and heart doctors use in the operating room.
How it charges
Two businesses. Innovative Medicine sells drugs for cancer, immune diseases and the brain, and is about two thirds of sales. MedTech sells heart, surgery, orthopaedic and eye-care devices to hospitals.
Who buys, and why
Hospitals, surgeons, pharmacies and drug wholesalers, paid mostly by insurers and governments. Doctors pick the drug or device; patents and surgeon training keep them there.
Of every $100 of sales, $19 is left for owners once staff stock pay is counted as a cost.
Owner earnings = operating cash flow minus capital spending minus stock-based pay. Stock pay is a real cost: it is paid in shares instead of cash.
What it is building Harvesting
It spends little on growth. The business is being run for cash, not built.
R&D is treated as an investment written off over 5 years. Capital spending up to depreciation keeps the business standing; anything above it is growth spending. A company that puts more than 10% of sales into R&D and growth capex is building; it is paying off when after-tax profit has grown by at least 12 cents for every extra dollar of capital it put in.
The share count is shrinking 3.0% a year, so each share owns a little more of the business every year.
CEO Joaquin Duato, in the seat since 2022.
The strongest defence is switching costs. Gross margin has been steady, within 3 points over 6 periods.
Surgeons train on one maker's devices and doctors stay with a drug that works, but a medicine loses that hold once cheaper copies arrive.
A drug or device is no more useful because other patients use the same one.
A research budget and sales force in the tens of billions few can match, though Pfizer, Merck, Roche and Medtronic work at the same scale.
Patents are the real asset, and they run out one product at a time, as Stelara is showing now.
Sources are rated from the annual report (notes file). The two evidence checks are computed: margins that hold and high returns on capital are what a real defence looks like in the numbers.
A reverse discounted cash flow: the growth today's price requires, set against what the business has actually delivered, and how that changes if you demand a different return.
The IVT terminal read on the weekly and daily charts: bias, money flow, strength, whether the entry window is open, and the sharp captures.
The worst fall of the last five years, the balance sheet, the pressure points and the specific conditions that would break the case.
Where the business sits on quality against price, the quality score line by line, and the conclusion.
The rest of the JNJ File
Chapters 5 to 8: the growth today\'s price assumes, the full IVT terminal read with sharp captures, what would break the case, and the final read.
Where every number comes from 14 figures, each linked to its SEC filing
| Figure | Value | Period | Filing |
|---|---|---|---|
| Revenue | $94.2B | FY25 | 10-K, filed 2026-02-11RevenueFromContractWithCustomerExcludingAssessedTax |
| Gross profit | $63.9B | FY25 | 10-K, filed 2026-02-11GrossProfit |
| Cost of sales | $30.3B | FY25 | 10-K, filed 2026-02-11CostOfGoodsAndServicesSold |
| Net income | $26.8B | FY25 | 10-K, filed 2026-02-11NetIncomeLoss |
| Operating cash flow | $24.5B | FY25 | 10-K, filed 2026-02-11NetCashProvidedByUsedInOperatingActivities |
| Capital spending | $4.8B | FY25 | 10-K, filed 2026-02-11PaymentsToAcquirePropertyPlantAndEquipment |
| Stock-based pay | $1.4B | FY25 | 10-K, filed 2026-02-11ShareBasedCompensation |
| Buybacks | $6.0B | FY25 | 10-K, filed 2026-02-11PaymentsForRepurchaseOfCommonStock |
| Diluted shares | 2,429M | FY25 | 10-K, filed 2026-02-11WeightedAverageNumberOfDilutedSharesOutstanding |
| Cash and investments | $17.2B | 2026-09-27 | 10-Q, filed 2026-10-21CashCashEquivalentsAndShortTermInvestments |
| Debt due within a year | $2.0B | 2025-12-28 | 10-K, filed 2026-02-11LongTermDebtCurrent |
| Long-term debt | $35.8B | 2026-09-27 | 10-Q, filed 2026-10-21LongTermDebtNoncurrent |
| Short-term borrowings | $8.9B | 2026-09-27 | 10-Q, filed 2026-10-21ShortTermBorrowings |
| Shareholders' equity | $81.5B | 2026-09-27 | 10-Q, filed 2026-10-21StockholdersEquity |
Educational research, not investment advice and not a recommendation to buy or sell any security. Scores are mechanical and reproducible from public filings; the notes are the author's judgment. Author position in JNJ: none. Sources: SEC EDGAR XBRL company facts (filings to 2026-09-27), daily prices to 2026-10-21. Past performance does not predict future returns.