Item 1. Financial statements

Johnson & Johnson and subsidiaries consolidated balance sheets

(Unaudited; Dollars in Millions Except Share and Per Share Data)


	September 29, 2024	December 31, 2023
Assets
Current assets:
Cash and cash equivalents (Note 4)	$19,980	21,859

Marketable securities	317	1,068
Accounts receivable, trade, less allowances $153 (2023, $166)	16,174	14,873
Inventories (Note 2)	12,603	11,181
Prepaid expenses and other	4,175	4,514

Total current assets	53,249	53,495
Property, plant and equipment at cost	49,274	47,776
Less: accumulated depreciation	(28,795)	(27,878)
Property, plant and equipment, net	20,479	19,898
Intangible assets, net (Note 3)	39,490	34,175
Goodwill (Note 3)	44,799	36,558
Deferred taxes on income (Note 5)	9,349	9,279
Other assets	10,921	14,153

Total assets	$178,287	167,558
Liabilities and shareholders’ equity
Current liabilities:
Loans and notes payable	$4,462	3,451
Accounts payable	8,954	9,632
Accrued liabilities	11,450	10,212
Accrued rebates, returns and promotions	18,439	16,001
Accrued compensation and employee related obligations	3,620	3,993
Accrued taxes on income (Note 5)	4,834	2,993

Total current liabilities	51,759	46,282
Long-term debt (Note 4)	31,289	25,881
Deferred taxes on income (Note 5)	2,952	3,193
Employee related obligations (Note 6)	6,852	7,149
Long-term taxes payable (Note 5)	354	2,881
Other liabilities	14,923	13,398

Total liabilities	$108,129	98,784
Commitments and Contingencies (Note 11)
Shareholders’ equity:
Common stock — par value $1.00 per share (authorized 4,320,000,000 shares; issued 3,119,843,000 shares)	$3,120	3,120
Accumulated other comprehensive income (loss) (Note 7)	(12,522)	(12,527)
Retained earnings and Additional paid-in capital	155,179	153,843
Less: common stock held in treasury, at cost (712,545,000 and 712,765,000 shares)	75,619	75,662
Total shareholders’ equity	$70,158	68,774
Total liabilities and shareholders’ equity	$178,287	167,558

See Notes to Consolidated Financial Statements


Form 10-Q			1

Johnson & Johnson and subsidiaries consolidated statements of earnings

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


	Fiscal Third Quarter Ended
	September 29, 2024	Percent to Sales		October 1, 2023	Percent to Sales
Sales to customers (Note 9)	$22,471	100.0	%	$21,351	100.0	%
Cost of products sold	6,963	31.0		6,606	30.9
Gross profit	15,508	69.0		14,745	69.1
Selling, marketing and administrative expenses	5,478	24.3		5,400	25.3
Research and development expense	4,952	22.0		3,447	16.2
In-process research and development impairments	—	—		206	1.0
Interest income	(292)	(1.3)		(374)	(1.7)
Interest expense, net of portion capitalized	193	0.9		192	0.9
Other (income) expense, net	1,798	8.0		499	2.3
Restructuring (Note 12)	41	0.2		158	0.7
Earnings before provision for taxes on income	3,338	14.9		5,217	24.4
Provision for taxes on income (Note 5)	644	2.9		908	4.2
Net earnings from continuing operations	2,694	12.0	%	4,309	20.2	%
Net earnings from discontinued operations, net of tax (Note 13)	—			21,719
Net earnings	$2,694			$26,028
Net earnings per share (Note 8)
Continuing operations - basic	$1.12			$1.71
Discontinued operations - basic	—			8.61
Total net earnings per share - basic	$1.12			$10.32
Continuing operations - diluted	$1.11			$1.69
Discontinued operations - diluted	—			8.52
Total net earnings per share - diluted	$1.11			$10.21
Avg. shares outstanding
Basic	2,407.2			2,522.9
Diluted	2,427.9			2,549.7

See Notes to Consolidated Financial Statements

Prior year results have been recast to reflect the continuing operations of Johnson & Johnson


2

Johnson & Johnson and subsidiaries consolidated statements of earnings

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



	Fiscal Nine Months Ended
	September 29, 2024	Percent to Sales		October 1, 2023	Percent to Sales
Sales to customers (Note 9)	$66,301	100.0	%	$63,764	100.0	%
Cost of products sold	20,343	30.7		19,755	31.0
Gross profit	45,958	69.3		44,009	69.0
Selling, marketing and administrative expenses	16,416	24.8		15,702	24.6
Research and development expense	11,934	18.0		10,605	16.6
In-process research and development impairments	194	0.3		255	0.4
Interest income	(1,051)	(1.6)		(898)	(1.4)
Interest expense, net of portion capitalized	618	0.9		621	1.0
Other (income) expense, net	4,855	7.3		7,055	11.1
Restructuring (Note 12)	192	0.3		433	0.6
Earnings before provision for taxes on income	12,800	19.3		10,236	16.1
Provision for taxes on income (Note 5)	2,165	3.3		1,042	1.7
Net earnings from continuing operations	10,635	16.0	%	9,194	14.4	%
Net earnings from discontinued operations, net of tax (Note 13)	—			21,910
Net earnings	$10,635			$31,104
Net earnings per share (Note 8)
Continuing operations - basic	$4.42			$3.57
Discontinued operations - basic	—			$8.51
Total net earnings per share - basic	$4.42			$12.08
Continuing operations - diluted	$4.38			$3.53
Discontinued operations - diluted	—			$8.42
Total net earnings per share - diluted	$4.38			$11.95
Avg. shares outstanding
Basic	2,407.4			2,575.6
Diluted	2,429.5			2,603.4

See Notes to Consolidated Financial Statements

Prior year results have been recast to reflect the continuing operations of Johnson & Johnson


Form 10-Q			3

Johnson & Johnson and subsidiaries consolidated statements of comprehensive income

(Unaudited; Dollars in Millions)


	Fiscal Third Quarter Ended		Fiscal Nine Months Ended
	September 29, 2024	October 1, 2023	September 29, 2024	October 1, 2023

Net earnings	$2,694	26,028	$10,635	31,104

Other comprehensive income (loss), net of tax
Foreign currency translation	(1,537)	448	197	(448)

Securities:
Unrealized holding gain (loss) arising during period	1	4	2	25


Net change	1	4	2	25

Employee benefit plans:
Prior service cost amortization during period	(40)	(36)	(90)	(107)
Gain (loss) amortization during period	49	(34)	160	(101)
Consumer settlement/curtailment	—	33	—	33
Net change	9	(37)	70	(175)

Derivatives & hedges:
Unrealized gain (loss) arising during period	405	(513)	313	(80)
Reclassifications to earnings	(147)	(180)	(577)	(316)
Net change	258	(693)	(264)	(396)

Other comprehensive income (loss)	(1,269)	(278)	5	(994)





Comprehensive income	$1,425	25,750	$10,640	30,110

See Notes to Consolidated Financial Statements

Amounts presented have not been recast to exclude discontinued operations.


The tax effects in other comprehensive income/(loss) for the fiscal third quarter were as follows for 2024 and 2023, respectively: Foreign Currency Translation: $735 million and $335 million; Securities: $1 million and $1 million; Employee Benefit Plans: $1 million and $8 million; Derivatives & Hedges: $69 million and $185 million.

The tax effects in other comprehensive income/(loss) for the fiscal nine months were as follows for 2024 and 2023, respectively: Foreign Currency Translation: $51 million and $69 million; Securities: $1 million and $7 million; Employee Benefit Plans: $40 million and $51 million; Derivatives & Hedges: $70 million and $105 million.


4

Johnson & Johnson and subsidiaries consolidated statements of equity

(Unaudited; Dollars in Millions)

Fiscal Third Quarter Ended September 29, 2024


	Total	Retained Earnings and Additional Paid-in Capital	Accumulated Other Comprehensive Income (AOCI)	Common Stock Issued Amount	Treasury Stock Amount
Balance, June 30, 2024	$71,538	155,360	(11,253)	3,120	(75,689)
Net earnings	2,694	2,694	—	—	—
Cash dividends paid ($1.24 per share)	(2,985)	(2,985)	—	—	—
Employee compensation and stock option plans	717	110	—	—	607
Repurchase of common stock	(539)		—	—	(539)
Other	2	—	—	—	2


Other comprehensive income (loss), net of tax	(1,269)	—	(1,269)	—	—
Balance, September 29, 2024	$70,158	155,179	(12,522)	3,120	(75,619)

Fiscal Nine Months Ended September 29, 2024



	Total	Retained Earnings and Additional Paid-in Capital	Accumulated Other Comprehensive Income (AOCI)	Common Stock Issued Amount	Treasury Stock Amount
Balance, December 31, 2023	$68,774	153,843	(12,527)	3,120	(75,662)
Net earnings	10,635	10,635	—	—	—
Cash dividends paid ($3.67 per share)	(8,839)	(8,839)	—	—	—
Employee compensation and stock option plans	1,732	(460)	—	—	2,192
Repurchase of common stock	(2,150)	—	—	—	(2,150)
Other	1	—	—	—	1


Other comprehensive income (loss), net of tax	5	—	5	—	—
Balance, September 29, 2024	$70,158	155,179	(12,522)	3,120	(75,619)


Form 10-Q			5

Fiscal Third Quarter Ended October 1, 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, July 2, 2023	$76,409	129,381	(13,135)	3,120	(44,217)	1,260

Net earnings	26,028	26,028	—	—	—	—
Cash dividends paid ($1.19 per share)	(2,871)	(2,871)	—	—	—	—
Employee compensation and stock option plans	948	41	—	—	907	—
Repurchase of common stock	(920)	—	—	—	(920)	—

Kenvue Separation	(28,088)	(43)	4,633		(31,418)	(1,260)
Other comprehensive income (loss), net of tax	(278)	—	(278)	—	—	—
Balance, October 1, 2023	$71,228	152,536	(8,780)	3,120	(75,648)	—

Fiscal Nine Months Ended October 1, 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	$76,804	128,345	(12,967)	3,120	(41,694)	—

Net earnings	31,104	31,104	—	—	—	—
Cash dividends paid ($3.51 per share)	(8,905)	(8,905)	—	—	—	—
Employee compensation and stock option plans	1,892	(435)	—	—	2,327	—
Repurchase of common stock	(4,838)	—	—	—	(4,838)	—
Other	(25)	—	—	—	(25)	—
Kenvue Separation / IPO	(23,810)	2,427	5,181		(31,418)	—

Other comprehensive income (loss), net of tax	(994)	—	(994)	—	—
Balance, October 1, 2023	$71,228	152,536	(8,780)	3,120	(75,648)	—

See Notes to Consolidated Financial Statements


6

Johnson & Johnson and subsidiaries consolidated statements of cash flows

(Unaudited; Dollars in Millions)


	Fiscal Nine Months Ended
	September 29, 2024	October 1, 2023
Cash flows from operating activities
Net earnings	$10,635	31,104
Adjustments to reconcile net earnings to cash flows from operating activities:
Depreciation and amortization of property and intangibles	5,443	5,643
Stock based compensation	938	984


Asset write-downs	379	820

Charge for purchase of in-process research and development assets	1,252	—
Gain on Kenvue separation	—	(20,984)
Net gain on sale of assets/businesses	(225)	(117)

Deferred tax provision	(2,167)	(1,782)
Credit losses and accounts receivable allowances	(11)	—
Changes in assets and liabilities, net of effects from acquisitions and divestitures:
Increase in accounts receivable	(1,259)	(851)
Increase in inventories	(1,038)	(1,447)
Increase in accounts payable and accrued liabilities	2,713	664
Decrease/(Increase) in other current and non-current assets	949	(1,366)
(Decrease)/Increase in other current and non-current liabilities	(326)	2,260

Net cash flows from operating activities	17,283	14,928

Cash flows from investing activities
Additions to property, plant and equipment	(2,812)	(2,954)
Proceeds from the disposal of assets/businesses, net (Note 10)	623	237
Acquisitions, net of cash acquired (Note 10)	(15,145)	—
Purchases of in-process research and development assets (Note 10)	(1,250)	—
Purchases of investments	(1,464)	(9,981)
Sales of investments	2,172	15,787
Credit support agreements activity, net	699	(917)
Other (including capitalized licenses and milestones)	(102)	(92)

Net cash (used by) / from investing activities	(17,279)	2,080

Cash flows from financing activities
Dividends to shareholders	(8,839)	(8,905)
Repurchase of common stock	(2,150)	(4,838)
Proceeds from short-term debt, net	11,984	12,462
Repayment of short-term debt, net	(8,354)	(21,645)
Proceeds from long-term debt, net of issuance costs	6,660	—
Repayment of long-term debt	(804)	(502)
Proceeds from the exercise of stock options/employee withholding tax on stock awards, net	714	907
Credit support agreements activity, net	5	62
Settlement of convertible debt acquired from Shockwave	(970)	—
Proceeds of short and long-term debt, net of issuance cost, related to the debt that transferred to Kenvue at separation	—	8,047
Proceeds from Kenvue initial public offering	—	4,241
Cash transferred to Kenvue at separation	—	(1,114)


Form 10-Q			7


	Fiscal Nine Months Ended
	September 29, 2024	October 1, 2023
Other	(38)	115

Net cash used by financing activities	(1,792)	(11,170)


Effect of exchange rate changes on cash and cash equivalents	(91)	(237)
(Decrease) / Increase in cash and cash equivalents	(1,879)	5,601
Cash and cash equivalents from continuing operations, beginning of period	21,859	12,889
Cash and cash equivalents from discontinued operations, beginning of period	—	1,238
Cash and Cash equivalents beginning of period	21,859	14,127

Cash and cash equivalents from continuing operations, end of period	19,980	19,728
Cash and cash equivalents from discontinued operations, end of period	—	—
Cash and cash equivalents, end of period	$19,980	19,728





Acquisitions (Note 10)
Fair value of assets acquired	$16,092	—
Fair value of liabilities assumed	(1,634)	—
Net cash paid for acquisitions	$14,458	—

See Notes to Consolidated Financial Statements

Amounts presented have not been recast to exclude discontinued operations.


8

Notes to consolidated financial statements

Note 1 — The accompanying unaudited interim consolidated financial statements and related notes should be read in conjunction with the audited Consolidated Financial Statements of Johnson & Johnson and its subsidiaries (the Company) and related notes as contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023. The unaudited interim financial statements include all adjustments (consisting only of normal recurring adjustments) and accruals necessary in the judgment of management for a fair statement of the results for the periods presented.

Columns and rows within tables may not add due to rounding. Percentages have been calculated using actual, non-rounded figures.

New accounting standards

The Company assesses the adoption impacts of recently issued accounting standards by the Financial Accounting Standards Board on the Company's financial statements as well as material updates to previous assessments, if any, from the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023.

Recently adopted accounting standards

There were no new material accounting standards adopted in the fiscal nine months in 2024.

Recently issued accounting standards

Not adopted as of September 29, 2024

ASU 2023-07: Segment Reporting (Topic 280) – Improvements to Reportable Segment Disclosures

This update requires expanded annual and interim disclosures for significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss. This update will be effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. This standard is to be applied retrospectively to all periods presented in the financial statements. Early adoption is permitted. While this accounting standard will increase disclosures, it will not have a material impact on the Company’s Consolidated Financial Statement results.

ASU 2023-09: Income Taxes (Topic 740) - Improvements to Income Tax Disclosures

This update standardizes categories for the effective tax rate reconciliation, requires disaggregation of income taxes and additional income tax-related disclosures. This update is required to be effective for the Company for fiscal periods beginning after December 15, 2024. While this accounting standard will increase disclosures, it will not have a material impact on the Company’s Consolidated Financial Statement results.

There were no new material accounting standards issued in the fiscal third quarter of 2024.

Supplier finance program obligations

The Company has agreements for supplier finance programs with third-party financial institutions. These programs provide participating suppliers the ability to finance payment obligations from the Company with the third-party financial institutions. The Company is not a party to the arrangements between the suppliers and the third-party financial institutions. The Company’s obligations to its suppliers, including amounts due, and scheduled payment dates (which have general payment terms of 90 days), are not affected by a participating supplier’s decision to participate in the program.

As of September 29, 2024, and December 31, 2023, $0.6 billion and $0.7 billion, respectively, were valid obligations under the program. The obligations are presented as Accounts payable on the Consolidated Balance Sheets.


Form 10-Q			9

Note 2 — Inventories


(Dollars in Millions)	September 29, 2024	December 31, 2023
Raw materials and supplies	$2,545	2,355
Goods in process	2,989	1,952
Finished goods	7,069	6,874
Total inventories	$12,603	11,181

Note 3 — Intangible assets and goodwill

Intangible assets that have finite useful lives are amortized over their estimated useful lives. The latest annual impairment assessment of goodwill and indefinite lived intangible assets was completed in the fiscal fourth quarter of 2023. Future impairment tests for goodwill and indefinite lived intangible assets will be performed annually in the fiscal fourth quarter, or sooner, if warranted.


(Dollars in Millions)	September 29, 2024	December 31, 2023
Intangible assets with definite lives:
Patents and trademarks — gross	$44,926	40,417
Less accumulated amortization	(26,699)	(24,808)
Patents and trademarks — net	18,227	15,609
Customer relationships and other intangibles — gross	20,715	20,322
Less accumulated amortization	(13,506)	(12,685)
Customer relationships and other intangibles — net(1)	7,209	7,637
Intangible assets with indefinite lives:
Trademarks	1,704	1,714
Purchased in-process research and development	12,350	9,215
Total intangible assets with indefinite lives	14,054	10,929
Total intangible assets — net	$39,490	34,175

(1)The majority is comprised of customer relationships

Goodwill as of September 29, 2024 was allocated by segment of business as follows:


(Dollars in Millions)	Innovative Medicine	MedTech	Total
Goodwill at December 31, 2023	$10,407	26,151	36,558
Goodwill, related to acquisitions	620	7,567	8,187
Goodwill, related to divestitures	—	(56)	(56)
Currency translation/Other	85	25	110
Goodwill at September 29, 2024	$11,112	33,687	44,799

The weighted average amortization period for patents and trademarks is approximately 12 years. The weighted average amortization period for customer relationships and other intangible assets is approximately 18 years. The amortization expense of amortizable intangible assets included in the cost of products sold was $1.2 billion and $1.1 billion for the fiscal third quarters ended September 29, 2024 and October 1, 2023, respectively. The amortization expense of amortizable intangible assets included in the cost of products sold was $3.4 billion for both the fiscal nine months ended September 29, 2024 and October 1, 2023, respectively. Intangible asset write-downs are included in Other (income) expense, net.


10

The estimated amortization expense for approved products, before tax, for the five succeeding years is approximately:


(Dollars in Millions)
2024	2025	2026	2027	2028
$4,500	3,900	3,300	2,700	2,000

See Note 10 to the Consolidated Financial Statements for additional details related to acquisitions and divestitures.

Note 4 — Fair value measurements

The Company uses forward foreign exchange contracts to manage its exposure to the variability of cash flows, primarily related to the foreign exchange rate changes of future intercompany product and third-party purchases of materials denominated in a foreign currency. The Company uses cross currency interest rate swaps to manage currency risk primarily related to borrowings. Both types of derivatives are designated as cash flow hedges.

Additionally, the Company uses interest rate swaps as an instrument to manage interest rate risk related to fixed rate borrowings. These derivatives are designated as fair value hedges. The Company uses cross currency interest rate swaps and forward foreign exchange contracts designated as net investment hedges. Additionally, the Company uses forward foreign exchange contracts to offset its exposure to certain foreign currency assets and liabilities. These forward foreign exchange contracts are not designated as hedges, and therefore, changes in the fair values of these derivatives are recognized in earnings, thereby offsetting the current earnings effect of the related foreign currency assets and liabilities.

The Company does not enter into derivative financial instruments for trading or speculative purposes, or that contain credit risk related contingent features. The Company maintains credit support agreements (CSA) with certain derivative counterparties establishing collateral thresholds based on respective credit ratings and netting agreements. As of September 29, 2024, the cumulative amount of cash collateral paid by the Company under the CSA amounted to $3.3 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 September 29, 2024, the Company had notional amounts outstanding for forward foreign exchange contracts, cross currency interest rate swaps and interest rate swaps of $46.9 billion, $40.4 billion and $9.0 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 $42.9 billion, $39.7 billion and $10.0 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 September 29, 2024, the balance of deferred net loss on derivatives included in accumulated other comprehensive income was $641 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 18 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

The following table is a summary of the activity related to derivatives and hedges for the fiscal third quarters ended September 29, 2024 and October 1, 2023, net of tax:


	September 29, 2024					October 1, 2023
(Dollars in Millions)	Sales	Cost of Products Sold	R&D Expense	Interest (Income) Expense	Other (Income) Expense	Sales	Cost of Products Sold	R&D Expense	Interest (Income) Expense	Other (Income) Expense


The effects of fair value, net investment and cash flow hedging:
Gain (Loss) on fair value hedging relationship:
Interest rate swaps contracts:
Hedged items	$—	—	—	343	—	—	—	—	(61)	—
Derivatives designated as hedging instruments	—	—	—	(343)	—	—	—	—	61	—

Gain (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	—	—	—	35	—	—	—	—	31	—
Amount of gain or (loss) recognized in AOCI	—	—	—	35	—	—	—	—	31	—

Gain (Loss) on cash flow hedging relationship:
Forward foreign exchange contracts:
Amount of gain or (loss) reclassified from AOCI into income	1	44	—	—	(4)	6	102	(5)	—	4



Amount of gain or (loss) recognized in AOCI	—	(30)	(21)	—	1	(11)	(166)	49	—	38

Cross currency interest rate swaps contracts:
Amount of gain or (loss) reclassified from AOCI into income	—	—	—	72	—	—	—	—	41	—

Amount of gain or (loss) recognized in AOCI	$—	—	—	420	—	—	—	—	(454)	—


12

The following table is a summary of the activity related to derivatives and hedges for the fiscal nine months ended September 29, 2024 and October 1, 2023, net of tax:


	September 29, 2024					October 1, 2023
(Dollars in Millions)	Sales	Cost of Products Sold	R&D Expense	Interest (Income) Expense	Other (Income) Expense	Sales	Cost of Products Sold	R&D Expense	Interest (Income) Expense	Other (Income) Expense


The effects of fair value, net investment and cash flow hedging:
Gain (Loss) on fair value hedging relationship:
Interest rate swaps contracts:
Hedged items	$—	—	—	298	—	—	—	—	(67)	—
Derivatives designated as hedging instruments	—	—	—	(298)	—	—	—	—	67	—

Gain (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	—	—	—	102	—	—	—	—	98	—
Amount of gain or (loss) recognized in AOCI	—	—	—	102	—	—	—	—	98	—

Gain (Loss) on cash flow hedging relationship:
Forward foreign exchange contracts:
Amount of gain or (loss) reclassified from AOCI into income	1	303	12	—	(3)	3	12	(30)	—	9



Amount of gain or (loss) recognized in AOCI	(1)	17	12	—	6	(1)	230	20	—	42

Cross currency interest rate swaps contracts:
Amount of gain or (loss) reclassified from AOCI into income	—	—	—	162	—	—	—	—	223	—

Amount of gain or (loss) recognized in AOCI	$—	—	—	177	—	—	—	—	(469)	—


Form 10-Q			13

As of September 29, 2024, and December 31, 2023, the following amounts were recorded on the Consolidated Balance Sheet related to cumulative basis adjustment for fair value hedges:


Line item in the Consolidated Balance Sheet in which the hedged item is included	Carrying Amount of the Hedged Liability		Cumulative Amount of Fair Value Hedging Gain/ (Loss) Included in the Carrying Amount of the Hedged Liability

(Dollars in Millions)	September 29, 2024	December 31, 2023	September 29, 2024	December 31, 2023

Long-term Debt	$8,202	8,862	(829)	(1,216)

The following table is the effect of derivatives not designated as hedging instruments for the fiscal third quarters ended 2024 and 2023:



		Gain/(Loss) Recognized In Income on Derivative		Gain/(Loss) Recognized In Income on Derivative
(Dollars in Millions)	Location of Gain /(Loss) Recognized in Income on Derivative	Fiscal Third Quarter Ended		Fiscal Nine Months Ended
Derivatives Not Designated as Hedging Instruments		September 29, 2024	October 1, 2023	September 29, 2024	October 1, 2023
Foreign Exchange Contracts	Other (income) expense	$(21)	—	24	2

The following table is the effect of net investment hedges for the fiscal third quarters ended in 2024 and 2023:



	Gain/(Loss) Recognized In Accumulated OCI		Location of Gain or (Loss) Reclassified from Accumulated OCI Into Income	Gain/(Loss) Reclassified From Accumulated OCI Into Income
(Dollars in Millions)	September 29, 2024	October 1, 2023		September 29, 2024	October 1, 2023
Debt	$(199)	101	Interest (income) expense	—	—
Cross Currency interest rate swaps	$(251)	214	Interest (income) expense	—	—

The following table is the effect of net investment hedges for the fiscal nine months ended in 2024 and 2023:



	Gain/(Loss) Recognized In Accumulated OCI		Location of Gain or (Loss) Reclassified from Accumulated OCI Into Income	Gain/(Loss) Reclassified From Accumulated OCI Into Income
(Dollars in Millions)	September 29, 2024	October 1, 2023		September 29, 2024	October 1, 2023
Debt	$(69)	35	Interest (income) expense	—	—
Cross Currency interest rate swaps	$569	880	Interest (income) expense	—	—


14

The Company holds equity investments with readily determinable fair values and equity investments without readily determinable fair values. The Company has elected to measure equity investments that do not have readily determinable fair values at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer.

The following table is a summary of the activity related to equity investments:


	December 31, 2023			September 29, 2024
(Dollars in Millions)	Carrying Value	Changes in Fair Value Reflected in Net Income (1)	(Sales)/ Purchases/Other (2)	Carrying Value	Non Current Other Assets
Equity Investments with readily determinable value*	$4,473	36	(4,004)	505	505

Equity Investments without readily determinable value	$696	2	74	772	772

(1)Recorded in Other (income)/expense, net

(2)Other includes impact of currency

The December 31, 2023 balance includes the 9.5% remaining stake in Kenvue. A debt-for-equity exchange was completed in the fiscal second quarter of 2024.

On May 15, 2024, the Company issued $3.6 billion aggregate principal amount of commercial paper and received $3.6 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 182,329,550 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 $0.4 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

The Company’s significant financial assets and liabilities measured at fair value as of September 29, 2024 and December 31, 2023 were as follows:


	September 29, 2024				December 31, 2023
(Dollars in Millions)	Level 1	Level 2	Level 3	Total	Total(1)
Derivatives designated as hedging instruments:
Assets:
Forward foreign exchange contracts	$—	472	—	472	539
Interest rate contracts(2)	—	985	—	985	988

Total	—	1,457	—	1,457	1,527
Liabilities:
Forward foreign exchange contracts	—	461	—	461	624
Interest rate contracts(2)	—	4,487	—	4,487	5,338

Total	—	4,948	—	4,948	5,962
Derivatives not designated as hedging instruments:
Assets:
Forward foreign exchange contracts	—	34	—	34	64
Liabilities:
Forward foreign exchange contracts	—	32	—	32	75
Other Investments:
Equity investments(3)	505	—	—	505	4,473
Debt securities(4)	—	3,818	—	3,818	8,874
Other Liabilities
Contingent consideration(5)	$—	—	1,222	1,222	1,092


Gross to Net Derivative Reconciliation	September 29, 2024	December 31, 2023
(Dollars in Millions)
Total Gross Assets	$1,491	1,591
Credit Support Agreement (CSA)	(1,482)	(1,575)
Total Net Asset	9	16

Total Gross Liabilities	4,980	6,037
Credit Support Agreement (CSA)	(4,808)	(5,604)
Total Net Liabilities	$172	433

Summarized information about changes in liabilities for contingent consideration for the fiscal third quarters ended September 29, 2024 and October 1, 2023 is as follows:



	September 29, 2024	October 1, 2023
(Dollars in Millions)
Beginning Balance	$1,092	1,120
Changes in estimated fair value(6)	93	62
Additions	112	—
Payments	(75)	(4)
Ending Balance	$1,222	1,178

(1)2023 assets and liabilities are all classified as Level 2 with the exception of equity investments of $4,473 million, which are classified as Level 1 and contingent consideration of $1,092 million, classified as Level 3.

(2)Includes cross currency interest rate swaps and interest rate swaps.


16

(3)Classified as non-current other assets.

(4)Classified within cash equivalents and current marketable securities.

(5)Classified as non-current other liabilities as of September 29, 2024 and December 31, 2023, respectively.

(6)Ongoing fair value adjustment amounts are primarily recorded in Research and Development expense.

The Company's cash, cash equivalents and current marketable securities as of September 29, 2024 comprised:


(Dollars in Millions)	Carrying Amount	Unrealized Gain	Estimated Fair Value	Cash & Cash Equivalents	Current Marketable Securities
Cash	$3,328	—	3,328	3,328	—
U.S. Gov't securities	—	—	—	—	—
Non-U.S. sovereign securities	267	—	267	149	118
U.S. reverse repurchase agreements	6,853	—	6,853	6,853	—

Corporate debt securities(1)	—	—	—	—	—
Money market funds	4,848	—	4,848	4,848	—
Time deposits(1)	1,183	—	1,183	1,183	—
Subtotal	16,479	—	16,479	16,361	118


U.S. Gov’t securities	3,596	—	3,596	3,581	15
U.S. Gov’t Agencies	6	—	6	—	6
Other sovereign securities	2	—	2	—	2
Corporate debt securities	214	—	214	38	176
Subtotal available for sale debt(2)	$3,818	—	3,818	3,619	199
Total cash, cash equivalents and current marketable securities	$20,297	—	20,297	19,980	317

(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.

The Company classifies all highly liquid investments with stated maturities of three months or less from date of purchase as cash equivalents and all highly liquid investments with stated maturities of greater than three months from the date of purchase as current marketable securities. Available for sale securities with stated maturities of greater than one year from the date of purchase are available to fund current operations and are classified as either cash equivalents or current marketable securities.

The contractual maturities of the available for sale securities as of September 29, 2024 are as follows:


(Dollars in Millions)	Cost Basis	Fair Value
Due within one year	$3,805	3,805
Due after one year through five years	13	13
Due after five years through ten years	—	—
Total debt securities	$3,818	3,818


Form 10-Q			17

Financial instruments not measured at fair value

The following financial liabilities are held at carrying amount on the consolidated balance sheet as of September 29, 2024:


(Dollars in Millions)	Carrying Amount	Estimated Fair Value

Financial Liabilities

Current Debt	$4,462	4,429

Non-Current Debt






2.46% Notes due 2026	1,998	1,962
2.95% Notes due 2027	943	984

0.95% Notes due 2027	1,463	1,389
2.90% Notes due 2028	1,497	1,465
1.150% Notes due 2028 (750MM Euro 1.1141)	832	797
4.80% Notes due 2029 (1)	1,146	1,198
6.95% Notes due 2029	298	344
1.30% Notes due 2030	1,671	1,522
4.90% Notes due 2031(1)	1,146	1,215
3.20% Notes due 2032 (700MM Euro 1.1141)(1)	776	805
4.95% Notes due 2033	499	536
4.375% Notes due 2033	854	879
4.95% Notes due 2034(1)	846	904
1.650% Notes due 2035 (1.5B Euro 1.1141)	1,660	1,492
3.35% Notes due 2036 (800MM Euro 1.1141)(1)	886	914
3.587% Notes due 2036	902	936
5.95% Notes due 2037	994	1,157
3.625% Notes due 2037	1,395	1,393
3.40% Notes due 2038	993	897
5.85% Notes due 2038	697	804
4.50% Notes due 2040	541	553
2.10% Notes due 2040	885	726
4.85% Notes due 2041	297	313
4.50% Notes due 2043	496	501
3.55% Notes due 2044 (1.0B Euro 1.1141)(1)	1,104	1,140
3.73% Notes due 2046	1,978	1,747
3.75% Notes due 2047	868	873
3.50% Notes due 2048	744	628
2.25% Notes due 2050	859	648
5.25% Notes due 2054(1)	843	921
2.45% Notes due 2060	1,107	782
Other	71	71
Total Non-Current Debt	$31,289	30,496

(1) In the fiscal second quarter of 2024, the Company issued senior unsecured notes for a total of $6.7 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.

The weighted average effective interest rate on non-current debt is 3.35%.


18

The excess of the carrying value over the estimated fair value of debt was $1.0 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.

The current debt balance as of September 29, 2024, includes $2.0 billion of commercial paper which has a weighted average interest rate of 5.10% and a weighted average maturity of approximately two months.

Note 5 — Income taxes

The worldwide effective income tax rates for the fiscal nine months of 2024 and 2023 were 16.9% and 10.2%, respectively. The change in the consolidated tax rate as compared to the prior year is primarily due to charges of approximately $5.1 billion in the fiscal nine months of 2024 and approximately $7.0 billion in the fiscal nine months of 2023, both related to talc matters. Both charges were recorded at an effective U.S. federal and state tax rate of approximately 23% (for further information see Note 11 to the Consolidated Financial Statements). Further, the Company acquired Yellow Jersey Therapeutics AG (Yellow Jersey), a demerged subsidiary of Numab Therapeutics AG, to secure the global rights to NM26, a bispecific antibody compound and recorded a related $1.25 billion non-tax-deductible expense associated with the acquisition in the fiscal third quarter of 2024 (for further information see Note 10 to the Consolidated Financial Statement).

Additionally in the fiscal nine 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 which were partially offset by an increase in available U.S. foreign tax credits. The Company incurred tax audit expenses in the fiscal second quarter of 2024 related to multi-year transfer pricing agreements with the IRS and certain other foreign jurisdictions.

As of September 29, 2024, the Company had approximately $2.4 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 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 $0.4 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 third 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.


Form 10-Q			19

Note 6 — Pensions and other benefit plans

Components of net periodic benefit cost

Net periodic benefit costs for the Company’s defined benefit retirement plans and other benefit plans include the following components:


	Fiscal Third Quarter Ended				Fiscal Nine Months Ended
	Retirement Plans		Other Benefit Plans		Retirement Plans		Other Benefit Plans
(Dollars in Millions)	September 29, 2024	October 1, 2023	September 29, 2024	October 1, 2023	September 29, 2024	October 1, 2023	September 29, 2024	October 1, 2023
Service cost	$225	209	69	61	671	634	207	198
Interest cost	351	361	53	51	1,054	1,084	157	160
Expected return on plan assets	(643)	(680)	(2)	(1)	(1,924)	(2,042)	(5)	(4)
Amortization of prior service cost/(credit)	(46)	(47)	—	—	(138)	(139)	(1)	(1)

Recognized actuarial (gains)/losses	43	(50)	13	4	130	(150)	39	17
Curtailments and settlements	6	109	—	(4)	(2)	109	—	(4)
Net periodic benefit cost/(credit)	$(64)	(98)	133	111	(209)	(504)	397	366

The service cost component of net periodic benefit cost is presented in the same line items on the Consolidated Statement of Earnings where other employee compensation costs are reported, including Cost of products sold, Research and development expense, Selling, marketing and administrative expenses, and in the fiscal third quarter and fiscal nine months of 2023, Net earnings from discontinued operations, net of taxes if related to the separation of Kenvue. All other components of net periodic benefit cost are presented as part of Other (income) expense, net on the Consolidated Statement of Earnings.

Company contributions

For the fiscal nine months ended September 29, 2024, the Company contributed $94 million and $10 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 — Accumulated other comprehensive income

Components of other comprehensive income/(loss) consist of the following:



(Dollars in Millions)	Foreign Currency Translation	Gain/ (Loss) On Securities	Employee Benefit Plans	Gain/ (Loss) On Derivatives & Hedges	Total Accumulated Other Comprehensive Income/(Loss)

December 31, 2023	$(10,149)	(1)	(2,000)	(377)	(12,527)



Net change	197	2	70	(264)	5
September 29, 2024	(9,952)	1	(1,930)	(641)	(12,522)

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.


20

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.

Gain/(Loss) On Derivatives & Hedges - reclassifications to earnings are recorded in the same account as the underlying transaction. See Note 4 for additional details.

Note 8 — Earnings per share

The following is a reconciliation of basic net earnings per share to diluted net earnings per share:


	Fiscal Third Quarter Ended		Fiscal Nine Months Ended
(Shares in Millions)	September 29, 2024	October 1, 2023	September 29, 2024	October 1, 2023
Basic net earnings per share from continuing operations	$1.12	1.71	4.42	3.57
Basic net earnings per share from discontinued operations	—	8.61	—	8.51
Total net earnings per share - basic	1.12	10.32	4.42	12.08
Average shares outstanding — basic	2,407.2	2,522.9	2,407.4	2,575.6
Potential shares exercisable under stock option plans	89.1	119.2	78.8	96.9
Less: shares which could be repurchased under treasury stock method	(68.4)	(92.4)	(56.7)	(69.1)

Average shares outstanding — diluted	2,427.9	2,549.7	2,429.5	2,603.4
Diluted net earnings per share from continuing operations	1.11	1.69	4.38	3.53
Diluted net earnings per share from discontinued operations	—	8.52	—	8.42
Total net earnings per share - diluted	$1.11	10.21	4.38	11.95

(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.	43.0	16.4	54.2	42.9


Form 10-Q			21

Note 9 — Segments of business and geographic areas

Following the separation of the Consumer Health business in the fiscal third quarter of 2023, the Company is now organized into two business segments: Innovative Medicine and MedTech.

Sales by segment of business


	Fiscal Third Quarter Ended				Fiscal Nine Months Ended
(Dollars in Millions)	September 29, 2024	October 1, 2023	Percent Change		September 29, 2024	October 1, 2023	Percent Change

INNOVATIVE MEDICINE
Immunology
U.S.	$3,068	3,193	(3.9)	%	$8,499	8,506	(0.1)	%
International	1,552	1,656	(6.2)		5,090	4,951	2.8
Worldwide	4,621	4,849	(4.7)		13,590	13,457	1.0
REMICADE
U.S.	281	296	(5.4)		778	849	(8.5)
U.S. Exports	27	38	(28.9)		89	112	(20.5)
International	112	127	(11.5)		380	449	(15.4)
Worldwide	419	461	(9.1)		1,246	1,410	(11.6)
SIMPONI / SIMPONI ARIA
U.S.	299	310	(3.7)		820	866	(5.3)
International	218	319	(31.8)		787	829	(5.1)
Worldwide	516	629	(18.0)		1,607	1,695	(5.2)
STELARA
U.S.	1,770	1,912	(7.5)		5,021	5,180	(3.1)
International	906	951	(4.8)		2,991	2,925	2.2
Worldwide	2,676	2,864	(6.6)		8,012	8,105	(1.2)
TREMFYA
U.S.	691	634	9.1		1,789	1,490	20.1
International	316	258	22.6		932	747	24.7
Worldwide	1,007	891	13.0		2,721	2,237	21.6
OTHER IMMUNOLOGY
U.S.	1	2	(45.6)		3	9	(66.8)
International	0	0	—		0	0	—
Worldwide	1	2	(45.6)		3	9	(66.8)

Infectious Diseases
U.S.	365	360	1.5		1,023	1,147	(10.8)
International	471	500	(5.7)		1,599	2,420	(33.9)
Worldwide	836	859	(2.7)		2,622	3,566	(26.5)
COVID-19 VACCINE
U.S.	0	0	—		0	0	—
International	1	41	(97.7)		198	1,073	(81.6)
Worldwide	1	41	(97.7)		198	1,073	(81.6)

EDURANT / rilpivirine


22


	Fiscal Third Quarter Ended			Fiscal Nine Months Ended
(Dollars in Millions)	September 29, 2024	October 1, 2023	Percent Change	September 29, 2024	October 1, 2023	Percent Change
U.S.	8	9	(15.8)	24	26	(10.0)
International	323	287	12.3	926	816	13.5
Worldwide	330	297	11.5	950	843	12.7
PREZISTA / PREZCOBIX / REZOLSTA / SYMTUZA
U.S.	355	345	2.8	990	1,105	(10.5)
International	94	102	(6.9)	315	310	1.8
Worldwide	449	447	0.6	1,305	1,415	(7.8)
OTHER INFECTIOUS DISEASES
U.S.	3	5	(52.2)	10	15	(37.7)
International	53	69	(23.2)	160	220	(27.4)
Worldwide	55	74	(25.4)	169	235	(28.0)

Neuroscience
U.S.	1,094	1,036	5.6	3,250	3,043	6.8
International	662	706	(6.2)	2,090	2,296	(8.9)
Worldwide	1,755	1,742	0.8	5,340	5,339	0.0
CONCERTA / methylphenidate
U.S.	26	57	(55.0)	101	191	(47.5)
International	117	133	(11.9)	382	412	(7.3)
Worldwide	142	189	(24.8)	482	603	(20.0)
INVEGA SUSTENNA / XEPLION / INVEGA TRINZA / TREVICTA
U.S.	780	730	6.8	2,329	2,164	7.6
International	269	299	(10.1)	830	940	(11.7)
Worldwide	1,049	1,029	1.9	3,159	3,104	1.8
SPRAVATO
U.S.	243	154	56.8	660	409	61.2
International	42	29	44.6	120	74	62.9
Worldwide	284	183	54.9	780	483	61.5
OTHER NEUROSCIENCE
U.S.	46	94	(51.4)	161	278	(42.1)
International	235	245	(4.4)	759	870	(12.8)


Form 10-Q			23


	Fiscal Third Quarter Ended			Fiscal Nine Months Ended
(Dollars in Millions)	September 29, 2024	October 1, 2023	Percent Change	September 29, 2024	October 1, 2023	Percent Change
Worldwide	281	340	(17.4)	920	1,149	(19.9)

Oncology
U.S.	2,816	2,219	26.9	7,835	6,177	26.8
International	2,565	2,313	10.9	7,450	6,865	8.5
Worldwide	5,380	4,533	18.7	15,284	13,043	17.2
CARVYKTI
U.S.	258	140	84.9	565	324	74.6
International	27	12	*	63	17	*
Worldwide	286	152	87.7	629	341	84.3
DARZALEX
U.S.	1,684	1,369	23.0	4,789	3,882	23.4
International	1,332	1,130	17.9	3,797	3,312	14.6
Worldwide	3,016	2,499	20.7	8,586	7,194	19.3
ERLEADA
U.S.	337	288	17.1	940	778	20.8
International	453	342	32.4	1,275	961	32.6
Worldwide	790	631	25.4	2,215	1,740	27.3
IMBRUVICA
U.S.	259	264	(1.9)	770	796	(3.2)
International	494	545	(9.2)	1,537	1,681	(8.5)
Worldwide	753	808	(6.8)	2,307	2,476	(6.8)
TECVAYLI
U.S.	105	93	13.5	310	232	34.0
International	30	19	54.2	93	37	*
Worldwide	135	112	20.6	403	269	49.6
ZYTIGA / abiraterone acetate
U.S.	5	16	(66.0)	25	41	(38.0)
International	144	199	(27.1)	470	646	(27.1)
Worldwide	150	214	(30.0)	496	686	(27.8)
OTHER ONCOLOGY
U.S.	168	50	*	435	125	*
International	83	67	24.8	214	211	2.0
Worldwide	250	117	*	649	336	93.4

Pulmonary Hypertension
U.S.	815	680	20.0	2,324	1,964	18.4
International	287	274	4.5	866	835	3.7
Worldwide	1,102	954	15.6	3,190	2,798	14.0
OPSUMIT
U.S.	406	323	25.4	1,135	924	22.8
International	165	166	(0.2)	504	512	(1.6)
Worldwide	571	490	16.8	1,639	1,437	14.1
UPTRAVI


24


	Fiscal Third Quarter Ended			Fiscal Nine Months Ended
(Dollars in Millions)	September 29, 2024	October 1, 2023	Percent Change	September 29, 2024	October 1, 2023	Percent Change
U.S.	379	336	12.7	1,120	978	14.5
International	80	66	21.8	232	185	25.5
Worldwide	458	402	14.2	1,352	1,163	16.3
OTHER PULMONARY HYPERTENSION
U.S.	32	20	54.0	70	61	14.0
International	40	42	(3.9)	129	137	(5.8)
Worldwide	72	63	15.0	199	199	0.3

Cardiovascular / Metabolism / Other
U.S.	713	763	(6.5)	2,061	2,254	(8.5)
International	170	194	(11.9)	543	580	(6.4)
Worldwide	884	957	(7.6)	2,605	2,834	(8.1)
XARELTO
U.S.	592	625	(5.2)	1,697	1,840	(7.8)
International	—	—	—	—	—	—
Worldwide	592	625	(5.2)	1,697	1,840	(7.8)








OTHER
U.S.	121	139	(12.2)	364	414	(11.9)
International	170	194	(11.9)	543	580	(6.4)
Worldwide	292	332	(12.0)	908	994	(8.7)

TOTAL INNOVATIVE MEDICINE
U.S.	8,871	8,249	7.5	24,993	23,090	8.2
International	5,709	5,644	1.2	17,639	17,947	(1.7)
Worldwide	14,580	13,893	4.9	42,632	41,037	3.9

MEDTECH








Cardiovascular(1)
U.S.	1,148	891	28.6	3,292	2,662	23.6
International	819	667	22.8	2,353	2,019	16.5
Worldwide	1,966	1,558	26.2	5,645	4,681	20.6
ELECTROPHYSIOLOGY
U.S.	660	611	7.9	2,057	1,791	14.8
International	619	549	12.7	1,889	1,658	14.0
Worldwide	1,279	1,161	10.2	3,946	3,449	14.4
ABIOMED
U.S.	293	254	15.4	905	790	14.5
International	68	57	20.1	207	176	17.7
Worldwide	362	311	16.3	1,112	966	15.1
SHOCKWAVE(2)
U.S.	163	—	*	240	—	*
International	66	—	*	66	—	*
Worldwide	229	—	*	306	—	*
OTHER CARDIOVASCULAR(1)
U.S.	30	26	16.7	89	81	10.6


Form 10-Q			25


	Fiscal Third Quarter Ended			Fiscal Nine Months Ended
(Dollars in Millions)	September 29, 2024	October 1, 2023	Percent Change	September 29, 2024	October 1, 2023	Percent Change
International	66	61	7.7	192	186	3.0
Worldwide	96	87	10.4	281	267	5.3
Orthopaedics
U.S.	1,359	1,349	0.7	4,229	4,100	3.2
International	832	815	2.0	2,614	2,574	1.5
Worldwide	2,191	2,164	1.2	6,843	6,674	2.5
HIPS
U.S.	250	239	4.8	785	730	7.5
International	131	136	(3.6)	435	432	0.6
Worldwide	381	375	1.7	1,220	1,162	5.0
KNEES
U.S.	212	207	2.2	684	654	4.5
International	140	131	6.9	463	415	11.5
Worldwide	352	338	4.0	1,147	1,069	7.2
TRAUMA
U.S.	497	488	1.8	1,499	1,462	2.5
International	265	253	4.2	786	775	1.4
Worldwide	761	742	2.6	2,285	2,238	2.1
SPINE, SPORTS & OTHER
U.S.	400	415	(3.6)	1,262	1,254	0.6
International	296	295	0.4	930	952	(2.3)
Worldwide	696	710	(1.9)	2,191	2,205	(0.6)
Surgery
U.S.	983	994	(1.1)	2,965	2,984	(0.6)
International	1,451	1,483	(2.2)	4,373	4,522	(3.3)
Worldwide	2,434	2,479	(1.8)	7,338	7,507	(2.2)
ADVANCED
U.S.	448	455	(1.4)	1,360	1,365	(0.4)
International	661	709	(6.8)	1,977	2,139	(7.6)
Worldwide	1,109	1,164	(4.7)	3,337	3,504	(4.8)
GENERAL
U.S.	535	540	(0.9)	1,605	1,619	(0.9)
International	791	775	2.1	2,397	2,383	0.6
Worldwide	1,325	1,314	0.8	4,001	4,002	0.0
Vision
U.S.	549	512	7.2	1,619	1,599	1.3
International	751	744	0.9	2,224	2,265	(1.8)
Worldwide	1,300	1,256	3.5	3,843	3,864	(0.5)
CONTACT LENSES / OTHER
U.S.	441	399	10.2	1,288	1,252	2.8


26


	Fiscal Third Quarter Ended				Fiscal Nine Months Ended
(Dollars in Millions)	September 29, 2024	October 1, 2023	Percent Change		September 29, 2024	October 1, 2023	Percent Change
International	527	529	(0.3)		1,508	1,568	(3.8)
Worldwide	968	928	4.2		2,796	2,820	(0.9)
SURGICAL
U.S.	108	112	(3.6)		331	346	(4.4)
International	225	216	3.9		717	698	2.7
Worldwide	333	328	1.3		1,048	1,044	0.3

TOTAL MEDTECH
U.S.	4,038	3,747	7.8		12,105	11,345	6.7
International	3,853	3,711	3.9		11,564	11,382	1.6
Worldwide	7,891	7,458	5.8		23,669	22,727	4.1

WORLDWIDE
U.S.	12,909	11,996	7.6		37,098	34,435	7.7
International	9,562	9,355	2.2		29,203	29,329	(0.4)
Worldwide	$22,471	21,351	5.2	%	$66,301	63,764	4.0	%

Percentage greater than 100% or not meaningful

(1) Previously referred to as Interventional Solutions

(2) Acquired on May 31, 2024

Earnings before provision for taxes by segment


	Fiscal Third Quarter Ended				Fiscal Nine Months Ended
(Dollars in Millions)	September 29, 2024	October 1, 2023	Percent Change		September 29, 2024	October 1, 2023	Percent Change

Innovative Medicine(1)	$4,482	4,794	(6.5)	%	$14,910	14,008	6.4	%
MedTech(2)	1,059	1,185	(10.6)		3,668	4,265	(14.0)
Segment earnings before provision for taxes	5,541	5,979	(7.3)		18,578	18,273	1.7
Less: Expense not allocated to segments (3)	2,203	762			5,778	8,037
Worldwide income (loss) before tax	$3,338	5,217	(36.0)	%	$12,800	10,236	25.0	%

(1) Innovative Medicine includes:

Intangible amortization expense of $0.7 billion in both the fiscal third quarter of 2024 and 2023. Intangible amortization expense of $2.1 billion and $2.2 billion in the fiscal nine months of 2024 and 2023, respectively.
Expense of $1.25 billion to secure the global rights to the NM26 bispecific antibody (Yellow Jersey acquisition) in the fiscal third quarter and fiscal nine months of 2024.
One-time COVID-19 Vaccine related exit costs of $0.1 billion and $0.7 billion in the fiscal nine months of 2024 and 2023, respectively.
Monetization of royalty rights of $0.3 billion in the fiscal third quarter and fiscal nine months of 2024.
A restructuring related charge of $0.1 billion in the fiscal nine months of 2024. A restructuring related charge of $0.1 billion and $0.4 billion in the fiscal third quarter and fiscal nine months of 2023, respectively. Refer to Note 12 for additional details.
An In-process research and development impairment of $0.2 billion in the fiscal nine months of 2024 and $0.2 billion in the fiscal third quarter and fiscal nine months of 2023 associated with the M710 (biosimilar) asset acquired as part of the acquisition of Momenta Pharmaceuticals in 2020.
Unfavorable changes in the fair value of securities of $0.4 billion and $0.5 billion in the fiscal third quarter and fiscal nine months of 2023, respectively.
Litigation expense of $0.4 billion in both the fiscal third quarter and fiscal nine months of 2024, primarily related to Risperdal Gynecomastia. Favorable litigation related items of $0.1 billion in the fiscal nine months of 2023.


Form 10-Q			27

(2) MedTech includes:

Intangible amortization expense of $0.5 billion and $0.4 billion in the fiscal third quarter of 2024 and 2023, respectively. Intangible amortization expense of $1.3 billion and $1.1 billion in the fiscal nine months of 2024 and 2023, respectively.
Acquisition and integration related expense of $0.3 billion and $0.9 billion, primarily driven by the Shockwave acquisition, in the fiscal third quarter and fiscal nine months of 2024, respectively. Acquisition and integration related expense of $0.1 billion in the fiscal nine months of 2023.
A gain of $0.2 billion related to the Acclarent divestiture is included in the fiscal nine months of 2024.
A restructuring related charge of $0.1 billion in the fiscal nine months of 2024. A restructuring related charge of $0.2 billion in the fiscal third quarter and fiscal nine months of 2023, respectively.

(3) Amounts not allocated to segments include interest (income)/expense and general corporate (income)/expense. The fiscal third quarter of 2024 includes charges for talc matters of $2.0 billion. The fiscal nine months of 2024 and 2023 include charges for talc matters of approximately $5.1 billion and $7.0 billion, respectively (See Note 11, Legal Proceedings, for additional details). The fiscal nine 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. The fiscal third quarter and fiscal nine months of 2023 include $0.6 billion related to the unfavorable change in the fair value of Kenvue shares.

Sales by geographic area


	Fiscal Third Quarter Ended				Fiscal Nine Months Ended
(Dollars in Millions)	September 29, 2024	October 1, 2023	Percent Change		September 29, 2024	October 1, 2023	Percent Change
United States	$12,909	11,996	7.6	%	$37,098	34,435	7.7	%
Europe	4,914	4,727	4.0		15,291	15,448	(1.0)
Western Hemisphere, excluding U.S.	1,173	1,171	0.3		3,579	3,383	5.8
Asia-Pacific, Africa	3,475	3,457	0.5		10,333	10,498	(1.6)
Total	$22,471	21,351	5.2	%	$66,301	63,764	4.0	%

Note 10 — Acquisitions and divestitures

Subsequent to the quarter, on October 8, 2024, the Company completed the acquisition of V-Wave Ltd, a privately-held company focused on developing innovative treatment options for patients with heart failure, for an upfront payment of $0.6 billion with the potential for additional regulatory and commercial milestone payments up to approximately $1.1 billion. The transaction will be accounted for as an asset acquisition, and result in an in-process research and development (IPR&D) charge of approximately $0.6 billion recorded as part of research and development expense. The results of operations will be included in the MedTech segment as of the acquisition date.

During the fiscal third quarter of 2024, on July 11, 2024, the Company completed the acquisition of Yellow Jersey, a demerged subsidiary of Numab Therapeutics AG, to secure the global rights to NM26, a novel, investigational first-in-class bispecific antibody targeting two clinically proven pathways in atopic dermatitis (AD), in an all-cash transaction for approximately $1.25 billion. The transaction is being accounted for as an asset acquisition, resulting in an in-process research and development (IPR&D) charge of approximately $1.25 billion recorded as part of research and development expense and the results of operations is included in the Innovative Medicine segment as of the acquisition date. Remaining acquisitions in fiscal third quarter of 2024 were not material.

During the fiscal second quarter of 2024, on June 20, 2024, the Company completed the acquisition of Proteologix, Inc., a privately held biotechnology company focused on bispecific antibodies for immune-mediated diseases, for approximately $0.8 billion net of cash acquired, with potential for an additional milestone payment. The transaction was accounted for as a business combination and the results of operations were included in the Innovative Medicine segment as of the acquisition date. The fair value of the acquisition was allocated to assets acquired of $1.2 billion, primarily non-amortizable intangible assets, inclusive of purchased IPR&D, for $0.9 billion, goodwill for $0.3 billion, and $0.3 billion of liabilities acquired which included $0.1 billion related to a contingent consideration. The preliminary purchase price allocation is subject to any subsequent valuation adjustments within the measurement period. A probability of success factor ranging from 30% to 45% was used in the fair value calculation to reflect inherent regulatory and commercial risk of the IPR&D. The discount rate applied was approximately 16%. The goodwill is primarily attributable to synergies expected to arise from the business acquisition and is not expected to be deductible for tax purposes. Acquisition related costs before tax for the fiscal third quarter and nine months of 2024 were not material.

During the fiscal second quarter of 2024, on May 31, 2024, the Company completed the acquisition of Shockwave Medical Inc. (SWAV)(Shockwave), a leading, first-to-market provider of innovative intravascular lithotripsy (IVL) technology for the treatment of calcified coronary artery disease (CAD) and peripheral artery disease (PAD) in an all-cash merger transaction. The Company acquired all the outstanding shares of Shockwave’s common stock for $335.00 per share through a merger of Shockwave with a subsidiary of the Company. The transaction was accounted for as a business combination and the results of operations were included in the MedTech segment as of the acquisition date.


28

Details of the fair value amounts recognized for assets acquired and liabilities assumed as of the purchase date and as of September 29, 2024, which includes measurement period adjustments :


(Dollars in Billions)	May 31, 2024	September 29, 2024
Assets acquired:
Cash	$1.1	$1.1
Goodwill	7.5	7.6
Amortizable intangibles	5.3	5.3
IPR&D	0.6	0.6
Inventory	0.5	0.5
Other assets	0.5	0.4
Total assets acquired	$15.5	$15.5

Liabilities assumed:
Deferred taxes	$1.5	$1.5
Notes payable*	1.0	1.0
Accrued liabilities**	0.4	0.4
Total liabilities assumed	$2.9	$2.9

Net assets acquired	$12.6	$12.6

Net assets acquired as of May 31, 2024	$12.6
Less: Cash acquired	1.1
Equity awards settled	0.6
Settlement of Note payable*	1.0
Total enterprise value as of June 30, 2024	$13.1

*Represents the convertible debt which was subsequently paid in the fiscal second quarter of 2024.

** Includes $0.2 billion of equity awards

The preliminary purchase price allocation is subject to any subsequent valuation adjustments within the measurement period. The goodwill is primarily attributable to synergies expected to arise from the business acquisition and is not expected to be deductible for tax purposes. Acquisition related costs before tax for the fiscal third quarter were $0.2 billion primarily related to the fair value of the inventory step-up and was recorded in Cost of products sold. The fiscal nine months were $0.7 billion of which $0.4 billion related to equity awards and was recorded in Other (income) expense. The amortizable intangible assets were primarily comprised of already in-market CAD and PAD IVL products with the average weighted lives of 14 years. The IPR&D assets were valued for technology programs for unapproved products. The value of the IPR&D was calculated using a probability-adjusted cash flow projection discounted for the risk inherent in such projects with the weighted average probability of success factors of approximately 50%. The discount rate applied was 9.0%.

During the fiscal first quarter of 2024, on March 7, 2024, the Company completed the acquisition of Ambrx Biopharma, Inc., (Ambrx), a clinical-stage biopharmaceutical company with a proprietary synthetic biology technology platform to design and develop next-generation antibody drug conjugates (ADCs), in an all-cash merger transaction for a total equity value of approximately $2.0 billion, or $1.8 billion net of cash acquired. The Company acquired all of the outstanding shares of Ambrx’s common stock for $28.00 per share through a merger of Ambrx with a subsidiary of the Company. The transaction was accounted for as a business combination and the results of operations were included in the Innovative Medicine segment as of the acquisition date. The fair value of the acquisition was allocated to assets acquired of $2.3 billion, primarily non-amortizable intangible assets, inclusive of purchased IPR&D, for $1.9 billion, goodwill for $0.3 billion and liabilities assumed of $0.5 billion, which includes deferred taxes of $0.4 billion. The preliminary purchase price allocation is subject to any subsequent valuation adjustments within the measurement period. A probability of success factor ranging from 40% to 70% was used in the fair value calculation to reflect inherent regulatory and commercial risk of the IPR&D. The discount rate applied was approximately 17%. The goodwill is primarily attributable to synergies expected to arise from the business acquisition and is not expected to be deductible for tax purposes. Acquisition related costs before tax for the fiscal nine months of 2024 were not material.


Form 10-Q			29

Divestitures

In the fiscal third quarter of 2024, the Company divestitures were not material. In the fiscal second quarter of 2024, the Company completed the divestiture of Acclarent resulting in approximately $0.3 billion in proceeds. In the fiscal first quarter of 2024, the Company completed the divestiture of Ponvory outside of the U.S. resulting in approximately $0.2 billion in proceeds.

There were no material acquisitions or divestitures in the fiscal first, second or third quarter of 2023.

Note 11 — Legal Proceedings

Johnson & Johnson and certain of its subsidiaries are involved in various lawsuits and claims regarding product liability; intellectual property; commercial; indemnification and other matters; governmental investigations; and other legal proceedings that arise from time to time in the ordinary course of their business.

The Company records accruals for loss contingencies associated with these legal matters when it is probable that a liability will be incurred, and the amount of the loss can be reasonably estimated. As of September 29, 2024, the Company has determined that the liabilities associated with certain litigation matters are probable and can be reasonably estimated. The Company has accrued for these matters and will continue to monitor each related legal issue and adjust accruals as might be warranted based on new information and further developments in accordance with ASC 450-20-25. For these and other litigation and regulatory matters discussed below for which a loss is probable or reasonably possible, the Company is unable to estimate the possible loss or range of loss beyond the amounts accrued. Amounts accrued for legal contingencies often result from a complex series of judgments about future events and uncertainties that rely heavily on estimates and assumptions including timing of related payments. The ability to make such estimates and judgments can be affected by various factors including, among other things, whether damages sought in the proceedings are unsubstantiated or indeterminate; scientific and legal discovery has not commenced or is not complete; proceedings are in early stages; matters present legal uncertainties; there are significant facts in dispute; procedural or jurisdictional issues; the uncertainty and unpredictability of the number of potential claims; ability to achieve comprehensive multi-party settlements; complexity of related cross-claims and counterclaims; and/or there are numerous parties involved. To the extent adverse awards, judgments or verdicts have been rendered against the Company, the Company does not record an accrual until a loss is determined to be probable and can be reasonably estimated.

In the Company’s opinion, based on its examination of these matters, its experience to date and discussions with counsel, the ultimate outcome of legal proceedings, net of liabilities accrued in the Company’s balance sheet, is not expected to have a material adverse effect on the Company’s financial position. However, the resolution of, or increase in accruals for, one or more of these matters in any reporting period may have a material adverse effect on the Company’s results of operations and cash flows for that period.

Matters concerning talc

A significant number of personal injury claims alleging that talc causes cancer have been asserted against the Company and its affiliates arising out of the use of body powders containing talc, primarily JOHNSON’S Baby Powder.

In talc cases that have gone to trial, the Company has obtained a number of defense verdicts, but there also have been verdicts against the Company, many of which have been reversed on appeal. In June 2020, the Missouri Court of Appeals reversed in part and affirmed in part a July 2018 verdict of $4.7 billion in Ingham v. Johnson & Johnson, et al., No. ED 207476 (Mo. App.), reducing the overall award to $2.1 billion. An application for transfer of the case to the Missouri Supreme Court was subsequently denied, and in June 2021, a petition for certiorari, seeking a review of the Ingham decision by the United States Supreme Court, was denied. In June 2021, the Company paid the award, which, including interest, totaled approximately $2.5 billion. The facts and circumstances, including the terms of the award, were unique to the Ingham decision and not representative of other claims brought against the Company. The Company continues to believe that it has strong legal grounds to contest the other talc verdicts that it has appealed. Notwithstanding the Company’s confidence in the safety of its talc products, in certain circumstances the Company has settled cases.

In June 2014, the Mississippi Attorney General filed a complaint against the Company alleging violation of the Mississippi Consumer Protection Act by failing to disclose alleged health risks associated with female consumers’ use of talc contained in JOHNSON’S Baby Powder and JOHNSON’S Shower to Shower (a product divested in 2012). The Company has reached an agreement to resolve this matter.

In January 2020, the State of New Mexico filed a consumer protection case alleging that the Company deceptively marketed and sold its talcum powder products by making misrepresentations about the safety of the products and the presence of carcinogens, including asbestos. The Company has reached an agreement to resolve this matter.


30

Forty-two states and the District of Columbia commenced a joint investigation into the Company’s marketing of its talcum powder products. In January 2024, the Company reached an agreement in principle with the multi-state group of state Attorneys General, subject to ongoing negotiation of non-monetary terms. In June 2024, the settlements were finalized.

In October 2021, Johnson & Johnson Consumer Inc. (Old JJCI) implemented a corporate restructuring (the 2021 Corporate Restructuring). As a result of that restructuring, Old JJCI ceased to exist and three new entities were created: (a) LTL Management LLC, a North Carolina limited liability company (LTL or Debtor); (b) Royalty A&M LLC, a North Carolina limited liability company and a direct subsidiary of LTL (RAM); and (c) the Debtor’s direct parent, Johnson & Johnson Consumer Inc., a New Jersey company (New JJCI). The Debtor received certain of Old JJCI’s assets and became solely responsible for the talc-related liabilities of Old JJCI, including all liabilities related in any way to injury or damage, or alleged injury or damage, sustained or incurred in the purchase or use of, or exposure to, talc, including talc contained in any product, or to the risk of, or responsibility for, any such damage or injury, except for any liabilities for which the exclusive remedy is provided under a workers’ compensation statute or act (the Talc-Related Liabilities).

In October 2021, notwithstanding the Company’s confidence in the safety of its talc products, the Debtor filed a voluntary petition with the United States Bankruptcy Court for the Western District of North Carolina, Charlotte Division, seeking relief under chapter 11 of the Bankruptcy Code (the LTL Bankruptcy Case). All litigation against LTL, Old JJCI, New JJCI, the Company, other of their corporate affiliates, identified retailers, insurance companies, and certain other parties (the Protected Parties) was stayed. The LTL Bankruptcy Case was transferred to the United States Bankruptcy Court for the District of New Jersey. Claimants filed motions to dismiss the LTL Bankruptcy Case and, following a multiple day hearing, the New Jersey Bankruptcy Court denied those motions in March 2022.

The claimants subsequently filed notices of appeal as to the denial of the motions to dismiss the LTL Bankruptcy Case and the extension of the stay to the Protected Parties. On January 30, 2023, the Third Circuit reversed the Bankruptcy Court’s ruling and remanded to the Bankruptcy Court to dismiss the LTL bankruptcy.

In April 2023, the New Jersey Bankruptcy Court dismissed the LTL Bankruptcy Case, effectively lifting the stay as to all parties and returning the talc litigation to the tort system. LTL re-filed in the United States Bankruptcy Court for the District of New Jersey seeking relief under chapter 11 of the Bankruptcy Code (the LTL 2 Bankruptcy Case). As a result of the new filing, all talc claims against LTL were again automatically stayed pursuant to section 362 of the Bankruptcy Code. Additionally, the New Jersey Bankruptcy Court issued a temporary restraining order staying all litigation as to LTL, Old JJCI, New JJCI, the Company, identified retailers, and certain other parties (the New Protected Parties).

Also in April 2023, the New Jersey Bankruptcy Court issued a decision that granted limited injunctive relief to the Company and the New Protected Parties (the LTL 2 Preliminary Injunction). The LTL 2 Preliminary Injunction remained in force until late August 2023, following the Bankruptcy Court’s extension of the initial LTL 2 Preliminary Injunction in June 2023. Under the LTL 2 Preliminary Injunction, except for those cases filed in the federal court ovarian cancer multi-district litigation, discovery in all personal injury and wrongful death matters was permitted to proceed.

Furthermore, in April 2023, the Talc Claimants' Committee filed a motion to dismiss the LTL 2 Bankruptcy followed by similar motions from other claimants. Hearings on the motions to dismiss occurred in June 2023. In July 2023, the court dismissed the LTL 2 Bankruptcy case and, the same day, the Company stated its intent to appeal the decision and to continue its efforts to obtain a resolution of the talc claims. In September 2023, the Bankruptcy Court entered an order granting LTL leave to seek a direct appeal to the Third Circuit Court of Appeals. In October 2023, the Third Circuit granted LTL’s petition for a direct appeal. In July 2024, the Third Circuit issued a non-precedential opinion affirming the Bankruptcy Court's decision to dismiss the LTL Bankruptcy case.

In October 2023, the Company stated that it was pursuing the following four parallel and alternative pathways to achieve a comprehensive and final resolution of the talc claims: (i) the appeal of the LTL 2 dismissal decision; (ii) pursuing a consensual “prepackaged” bankruptcy case, as “strongly encouraged” by the Bankruptcy Court in its dismissal decision; (iii) aggressively litigating the talc claims in the tort system; and (iv) pursuing affirmative claims against experts for false and defamatory narratives regarding the Company’s talc powder products. In December 2023, LTL changed its state of formation to Texas and its name to LLT Management LLC ("LLT").

Following the dismissal of LTL 2, new lawsuits were filed, cases across the country that had been stayed were reactivated, and trials have commenced. The majority of the cases are pending in federal court, organized in a multi-district litigation (MDL) in the United States District Court for the District of New Jersey. In the MDL, case-specific discovery is proceeding, and a trial is scheduled to occur in December 2024. In March 2024, the court granted the Company's motion for a renewed Daubert hearing prior to the trial. The briefing on the renewed Daubert issues was completed in August 2024.

On May 1, 2024, the Company commenced a three-month solicitation period of its proposed consensual “prepackaged” chapter 11 bankruptcy plan (the “Proposed Plan”) for the comprehensive and final resolution of all current and future claims related to cosmetic talc in the United States, excluding claims related to mesothelioma or State consumer protection claims, in exchange for the payment by the Company of present value of approximately $6.475 billion payable over 25 years (nominal value of approximately $8.0 billion, discounted at a rate of 4.4%). The claims encompassed by the Proposed Plan constitute 99.75% of pending lawsuits against the Company relating to its talc powder products.


Form 10-Q			31

On August 19, 2024, LLT engaged in a restructuring that resulted in the creation of three new Texas limited liability companies: (a) Red River Talc, LLC ("Red River"); (b) Pecos River Talc LLC ("Pecos River"); and (3) New Holdco (Texas) LLC. As a result of this restructuring, all claims related to ovarian and other gynecological cancers were separated and allocated to Red River, and mesothelioma, governmental unit and certain other claims were allocated to Pecos River.

On September 20, 2024, while reiterating the Company's continued confidence in the safety of its talc products, Red River filed a voluntary petition with the United States Bankruptcy Court for the Southern District of Texas, seeking relief under Chapter 11 of the Bankruptcy Code (the Red River Bankruptcy Case), in furtherance of the Company's consensual "prepackaged" Proposed Plan. Red River also filed a motion for a temporary restraining order, seeking to extend the automatic stay to additional non-debtor entities. Prior to filing, the initial proposed plan was amended to, among other things, increase the proposed resolution by $1.75 billion.

Shortly after Red River filed its Chapter 11 petition, the U.S. Trustee's office filed a motion to transfer venue in the New Jersey Bankruptcy Court, and thereafter, a motion to transfer venue in the Texas Bankruptcy Court. A coalition of six plaintiff law firms also filed a motion to transfer venue and a motion to dismiss in the Texas Bankruptcy Court. On September 23, 2024, the Texas Bankruptcy Court entered a temporary order enjoining the commencement or prosecution of all claims against Red River and certain non-debtor entities, including the Company, until October 11, 2024. On September 24, 2024, the New Jersey Bankruptcy Court denied the U.S. Trustee's motion to transfer venue without prejudice. On October 10, 2024, the Texas Bankruptcy Court denied the motion to transfer venue from Texas to New Jersey Bankruptcy Court.

Mesothelioma and State consumer protection claims are being addressed outside the Proposed Plan. The Company separately has resolved 95% of the mesothelioma lawsuits filed to date and has resolved the State claims.

To account for these settlements and the contemplated comprehensive resolution through the Proposed Plan, the Company recorded a cumulative incremental charge of approximately $5.0 billion, through the third fiscal quarter 2024. As of September 29, 2024, the total present value of the reserve is approximately $12.0 billion (or nominal value of approximately $13.9 billion), net of payments made in fiscal 2024. Approximately one-third of the reserve is recorded as a current liability. The recorded amount remains the Company's best estimate of probable loss.

In February 2019, the Company’s talc supplier, Imerys Talc America, Inc. and two of its affiliates, Imerys Talc Vermont, Inc. and Imerys Talc Canada, Inc. (collectively, Imerys) filed a voluntary petition for relief under chapter 11 of the United States Code (the Bankruptcy Code) in the United States Bankruptcy Court for the District of Delaware (Imerys Bankruptcy). The Imerys Bankruptcy relates to Imerys’s potential liability for personal injury from exposure to talcum powder sold by Imerys. In its bankruptcy, Imerys alleges it has claims against the Company for indemnification and rights to joint insurance proceeds. In its bankruptcy, Imerys proposed a chapter 11 plan (the Imerys Plan) that contemplated all talc-related claims against it being channeled to a trust along with its alleged indemnification rights against the Company. Following confirmation and consummation of the plan, the trust would pay talc claims pursuant to proposed trust distribution procedures (the TDP) and then seek indemnification from the Company.

In February 2021, Cyprus Mines Corporation (Cyprus), which had owned certain Imerys talc mines, filed a voluntary petition for relief under chapter 11 of the Bankruptcy Code and filed its Disclosure Statement and Plan (the Cyprus Plan). The Cyprus Plan contemplates a settlement with Imerys and talc claimants where Cyprus would make a monetary contribution to a trust established under the Imerys Plan in exchange for an injunction against talc claims asserted against it and certain affiliated parties.

In September 2023, Imerys and Cyprus filed amended plans of reorganization. The amended plans contemplate a similar construct as the prior Imerys and Cyprus Plans, including all talc claims against Imerys and Cyprus (and certain other protected parties) being channeled to a trust along with Imerys’s and Cyprus’s alleged indemnification rights against the Company.

In July 2024, the Company, Imerys, and Cyprus and certain of their affiliates (including their parent entities), and the tort claimants' committees and future claimants' representatives appointed in their respective Chapter 11 cases entered into a global settlement agreement (the Imerys Settlement Agreement) to resolve their ongoing disputes, including disputes raised in the Imerys and Cyprus bankruptcies. In August 2024, Imerys and Cyprus filed amended Chapter 11 plans and disclosure statements incorporating the terms of the settlement with the Company. In October 2024, the Imerys Bankruptcy Court approved the Imerys Settlement Agreement. A joint hearing to consider approval of the Imerys and Cyprus disclosure statements is scheduled for October 28, 2024.

In February 2018, a securities class action lawsuit was filed against the Company and certain named officers in the United States District Court for the District of New Jersey, alleging that the Company violated the federal securities laws by failing to disclose alleged asbestos contamination in body powders containing talc, primarily JOHNSON’S Baby Powder, and that purchasers of the Company’s shares suffered losses as a result. In April 2019, the Company moved to dismiss the complaint. In December 2019, the Court denied, in part, the motion to dismiss. The case was stayed in May 2022 pursuant to the LTL Bankruptcy Case and was reopened in May 2023. In December 2023, the Court granted Plaintiff’s motion for class certification. In January 2024, Defendants filed a petition with the Third Circuit under Federal Rule of Civil Procedure 23(f) for permission to appeal the Court’s order granting class certification, and in February 2024, the Third Circuit granted Defendants' petition. In February 2024, fact discovery closed, the Court ordered the parties to mediate, and stayed the case pending mediation. In May 2024, the parties participated in an unsuccessful mediation. In June 2024, at the parties' request, the Court lifted the stay for certain limited discovery, but otherwise kept the stay in place pending a decision from the Third Circuit on the 23(f) petition. Briefing on the 23(f) petition was completed in September 2024.


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Matters concerning opioids

Beginning in 2014 and continuing to the present, the Company and Janssen Pharmaceuticals, Inc. (JPI), along with other pharmaceutical companies, have been named in close to 3,500 lawsuits related to the marketing of opioids, including DURAGESIC, NUCYNTA and NUCYNTA ER. The majority of the cases were filed by state and local governments, which were subject to a final settlement in 2021. As of September 2024, the Company and JPI have settled or otherwise resolved the opioid claims advanced by all government entity claimants except a number of school districts and public hospital systems. Similar lawsuits have also been filed by private plaintiffs and organizations, including but not limited to the following: individual plaintiffs on behalf of children born with Neonatal Abstinence Syndrome (NAS); hospitals; and health insurers/payors.

To date, the Company and JPI have litigated two of the cases to judgment and have prevailed in both, either at trial or on appeal.

In July 2021, the Company announced finalization of an agreement to settle all remaining state and subdivision claims for up to $5.0 billion. Approximately 70% of the all-in settlement was paid by the end of fiscal third quarter 2024.

The Company and JPI continue to defend the cases brought by the remaining government entity litigants as well as the cases brought by private litigants, including NAS claimants, hospitals, and health insurers/payors. In September 2024, the Company reached an agreement to resolve the hospital cases. Counting the private litigant cases, there are approximately 20 remaining opioid cases against the Company and JPI in various state courts, 390 remaining cases in the Ohio MDL, and 3 additional cases in other federal courts. Some of these cases have been dismissed and are being appealed by the plaintiffs and certain others are scheduled for trial in 2025 or 2026.

In addition, the Province of British Columbia filed suit against the Company and its Canadian affiliate Janssen Inc., and many other industry members, in Canada, and is seeking to have that action certified as an opt in class action on behalf of other provincial/territorial and the federal governments in Canada. Additional proposed class actions have been filed in Canada against the Company and Janssen Inc., and many other industry members, by and on behalf of people who used opioids (for personal injuries), municipalities and First Nations bands. The proposed class action in Quebec on behalf of residents diagnosed with opioid use disorder was authorized to proceed against Janssen Inc. and other industry members in April 2024; leave to appeal has been sought. These actions allege a variety of claims related to opioid marketing practices, including false advertising, unfair competition, public nuisance, consumer fraud violations, deceptive acts and practices, false claims and unjust enrichment. An adverse judgment in any of these lawsuits could result in the imposition of large monetary penalties and significant damages including, punitive damages, cost of abatement, substantial fines, equitable remedies and other sanctions.

In November 2019, a shareholder filed a derivative complaint against the Company as the nominal defendant and certain current and former directors and officers as defendants in the Superior Court of New Jersey. The complaint alleges breaches of fiduciary duties related to the marketing of opioids, and that the Company has suffered damages as a result of those alleged breaches. A series of additional derivative complaints making similar allegations against the same and similar defendants were filed in New Jersey state and federal courts in 2019 and 2020. By 2022, all but two state court cases had been voluntarily dismissed. In February 2022, the state court granted the Company’s motion to dismiss one of the two cases, and the shareholder that brought the second case filed a notice of dismissal. The shareholder whose complaint was dismissed appealed the state court’s dismissal order, and briefing on the appeal concluded in October 2022. In February 2024, the appellate court affirmed the dismissal of the shareholder's amended complaint. In March 2024, the shareholder filed a notice of petition for certification with the Supreme Court of New Jersey seeking review of the appellate court's decision. In May 2024, briefing on the shareholder's petition for certification concluded. In September 2024, the New Jersey Supreme Court denied the shareholder's petition for certification.

Product liability

The Company and certain of its subsidiaries are involved in numerous product liability claims and lawsuits involving multiple products. Claimants in these cases seek substantial compensatory and, where available, punitive damages. While the Company believes it has substantial defenses, it is not feasible to predict the ultimate outcome of litigation. From time to time, even if it has substantial defenses, the Company considers isolated settlements based on a variety of circumstances. The Company has accrued for these matters and will continue to monitor each related legal issue and adjust accruals as might be warranted based on new information and further developments in accordance with ASC 450-20-25, Contingencies. The Company accrues an estimate of the legal defense costs needed to defend each matter when those costs are probable and can be reasonably estimated. For certain of these matters, the Company has accrued additional amounts such as estimated costs associated with settlements, damages and other losses. Product liability accruals can represent projected product liability for thousands of claims around the world, each in different litigation environments and with different fact patterns. Changes to the accruals may be required in the future as additional information becomes available.

The table below contains the most significant of these cases and provides the approximate number of plaintiffs in the United States with direct claims in pending lawsuits regarding injuries allegedly due to the relevant product or product category as of September 29, 2024:


Form 10-Q			33


Product or product category						Number of plaintiffs
Body powders containing talc, primarily JOHNSON’S Baby Powder						62,740
DePuy ASR XL Acetabular System and DePuy ASR Hip Resurfacing System						160
PINNACLE Acetabular Cup System						910
Pelvic meshes						6,190
ETHICON PHYSIOMESH Flexible Composite Mesh						160
RISPERDAL						10
ELMIRON						2,170

The number of pending lawsuits is expected to fluctuate as certain lawsuits are settled or dismissed and additional lawsuits are filed. There may be additional claims that have not yet been filed.

MedTech

DePuy ASR XL acetabular system and ASR Hip resurfacing system

In August 2010, DePuy Orthopaedics, Inc. (DePuy) announced a worldwide voluntary recall of its ASR XL Acetabular System and DePuy ASR Hip Resurfacing System (ASR Hip) used in hip replacement surgery. Claims for personal injury have been made against DePuy and the Company. Cases filed in federal courts in the United States have been organized as a multi-district litigation in the United States District Court for the Northern District of Ohio. Litigation has also been filed in countries outside of the United States, primarily in the United Kingdom, Canada, Australia, Ireland, Germany, India and Italy. In November 2013, DePuy reached an agreement with a Court-appointed committee of lawyers representing ASR Hip plaintiffs to establish a program to settle claims with eligible ASR Hip patients in the United States who had surgery to replace their ASR Hips, known as revision surgery, as of August 2013. DePuy reached additional agreements in February 2015 and March 2017, which further extended the settlement program to include ASR Hip patients who had revision surgeries after August 2013 and prior to February 15, 2017. This settlement program has resolved more than 10,000 claims, thereby bringing to resolution significant ASR Hip litigation activity in the United States. However, lawsuits in the United States remain, and the settlement program does not address litigation outside of the United States. In Australia, a class action settlement was reached that resolved the claims of the majority of ASR Hip patients in that country. In Canada, the Company has reached agreements to settle the class actions filed in that country. The Company continues to receive information with respect to potential additional costs associated with this recall on a worldwide basis. The Company has established accruals for the costs associated with the United States settlement program and ASR Hip-related product liability litigation.

DePuy PINNACLE Acetabular Cup System

Claims for personal injury have also been made against DePuy Orthopaedics, Inc. and the Company (collectively, DePuy) relating to the PINNACLE Acetabular Cup System used in hip replacement surgery. Product liability lawsuits continue to be filed, and the Company continues to receive information with respect to potential costs and the anticipated number of cases. Most cases filed in federal courts in the United States have been organized as a multi-district litigation in the United States District Court for the Northern District of Texas (Texas MDL). Beginning on June 1, 2022, the Judicial Panel on Multidistrict Litigation ceased transfer of new cases into the Texas MDL, and there are now cases pending in federal court outside the Texas MDL. Litigation also has been filed in state courts and in countries outside of the United States. During the first quarter of 2019, DePuy established a United States settlement program to resolve these cases. As part of the settlement program, adverse verdicts have been settled. The Company has established an accrual for product liability litigation associated with the PINNACLE Acetabular Cup System and the related settlement program.

Ethicon Pelvic Mesh

Claims for personal injury have been made against Ethicon, Inc. (Ethicon) and the Company arising out of Ethicon’s pelvic mesh devices used to treat stress urinary incontinence and pelvic organ prolapse. The Company continues to receive information with respect to potential costs and additional cases. Cases filed in federal courts in the United States had been organized as a multi-district litigation (MDL) in the United States District Court for the Southern District of West Virginia. In March 2021, the MDL Court entered an order closing the MDL. The MDL Court has remanded cases for trial to the jurisdictions where the case was originally filed and additional pelvic mesh lawsuits have been filed, and remain, outside of the MDL. The Company has settled or otherwise resolved the majority of the United States cases and the estimated costs associated with these settlements and the remaining cases are reflected in the Company’s accruals. In addition, class actions and individual personal injury cases or claims seeking damages for alleged injury resulting from Ethicon’s pelvic mesh devices have been commenced in various countries outside of the United States, including claims and cases in the United Kingdom, the Netherlands, and Ireland, and class actions in Israel, Australia,


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Canada and South Africa. The vast majority of these actions are now resolved. The Company has established accruals with respect to product liability litigation associated with Ethicon’s pelvic mesh products.

Ethicon Physiomesh

Following a June 2016 worldwide market withdrawal of Ethicon Physiomesh Flexible Composite Mesh (Physiomesh), claims for personal injury have been made against Ethicon, Inc. (Ethicon) and the Company alleging personal injury arising out of the use of this hernia mesh device. Cases filed in federal courts in the United States have been organized as a multi-district litigation (MDL) in the United States District Court for the Northern District of Georgia. A multi-county litigation (MCL) also has been formed in New Jersey state court and assigned to Atlantic County for cases pending in New Jersey. In addition to the matters in the MDL and MCL, there are additional lawsuits pending in the United States District Court for the Southern District of Ohio, which are part of the MDL for polypropylene mesh devices manufactured by C.R. Bard, Inc., and lawsuits pending in two New Jersey MCLs formed for Proceed/Proceed Ventral Patch and Prolene Hernia systems, and lawsuits pending outside the United States. In May 2021, Ethicon and lead counsel for the plaintiffs entered into a term sheet to resolve approximately 3,600 Physiomesh cases (covering approximately 4,300 plaintiffs) pending in the MDL and MCL at that time. A master settlement agreement (MSA) was entered into in September 2021 and includes 3,729 cases in the MDL and MCL. Other than a small number of cases still pending in the MDL, all Physiomesh matters in the United States have been resolved or are undergoing formal review for purposes of settlement.

Claims have also been filed against Ethicon and the Company alleging personal injuries arising from the PROCEED Mesh and PROCEED Ventral Patch hernia mesh products. In March 2019, the New Jersey Supreme Court entered an order consolidating these cases pending in New Jersey as an MCL in Atlantic County Superior Court. Additional cases have been filed in various federal and state courts in the United States, and in jurisdictions outside the United States.

Ethicon and the Company also have been subject to claims for personal injuries arising from the PROLENE Polypropylene Hernia System. In January 2020, the New Jersey Supreme Court created an MCL in Atlantic County Superior Court to handle such cases. Cases involving this product have also been filed in other federal and state courts in the United States.

In October 2022, an agreement in principle, subject to various conditions, was reached to settle the majority of the pending cases involving Proceed, Proceed Ventral Patch, Prolene Hernia System and related multi-layered mesh products, as well as a number of unfiled claims. All litigation activities in the two New Jersey MCLs are stayed pending effectuation of the proposed settlement. Future cases that are filed in the New Jersey MCLs will be subject to docket control orders requiring early expert reports and discovery requirements.

The Company has established accruals with respect to product liability litigation associated with Ethicon Physiomesh Flexible Composite Mesh, PROCEED Mesh and PROCEED Ventral Patch, and PROLENE Polypropylene Hernia System products.

Innovative Medicine

RISPERDAL

Claims for personal injury have been made against Janssen Pharmaceuticals, Inc. and the Company arising out of the use of RISPERDAL, and related compounds, indicated for the treatment of schizophrenia, acute manic or mixed episodes associated with bipolar I disorder and irritability associated with autism. Lawsuits primarily have been filed in state courts in Pennsylvania, California, and Missouri. Other actions are pending in various courts in the United States and Canada. The Company continues to defend RISPERDAL product liability lawsuits, and continues to evaluate potential costs related to those claims. The Company has successfully defended a number of these cases but there have been verdicts against the Company, including a verdict in October 2019 of $8.0 billion of punitive damages related to one plaintiff, which the trial judge reduced to $6.8 million in January 2020. In September 2021, the Company entered into a settlement in principle with the counsel representing plaintiffs in this matter and in substantially all of the outstanding cases in the United States. The costs associated with this and other settlements are reflected in the Company’s accruals.

ELMIRON

Claims for personal injury have been made against a number of Johnson & Johnson companies, including Janssen Pharmaceuticals, Inc. and the Company, arising out of the use of ELMIRON, a prescription medication indicated for the relief of bladder pain or discomfort associated with interstitial cystitis. These lawsuits, which allege that ELMIRON contributes to the development of permanent retinal injury and vision loss, have been filed in both state and federal courts across the United States. In December 2020, lawsuits filed in federal courts in the United States, including putative class action cases seeking medical monitoring, were organized as a multi-district litigation in the United States District Court for the District of New Jersey (MDL). In addition, cases have been filed in various state courts of New Jersey, which have been coordinated in a multi-county litigation in Bergen County, as well as the Court of Common Pleas in Philadelphia, which have been coordinated and granted mass tort designation. In addition, three class action lawsuits have been filed in Canada. The Company continues to defend ELMIRON product liability lawsuits and


Form 10-Q			35

continues to evaluate potential costs related to those claims. All U.S. based ELMIRON matters have been resolved or are undergoing formal review for purposes of settlement. The Company has established accruals for defense and indemnity costs associated with ELMIRON related product liability litigation.

Intellectual Property

Certain subsidiaries of the Company are subject, from time to time, to legal proceedings and claims related to patent, trademark and other intellectual property matters arising out of their businesses. Many of these matters involve challenges to the scope and/or validity of patents that relate to various products and allegations that certain of the Company’s products infringe the intellectual property rights of third parties. Although these subsidiaries believe that they have substantial defenses to these challenges and allegations with respect to all significant patents, there can be no assurance as to the outcome of these matters. A loss in any of these cases could adversely affect the ability of these subsidiaries to sell their products, result in loss of sales due to loss of market exclusivity, require the payment of past damages and future royalties, and may result in a non-cash impairment charge for any associated intangible asset.

Innovative Medicine - litigation against filers of abbreviated new drug applications (ANDAs)

The Company’s subsidiaries have brought lawsuits against generic companies that have filed ANDAs with the U.S. FDA (or similar lawsuits outside of the United States) seeking to market generic versions of products sold by various subsidiaries of the Company prior to expiration of the applicable patents covering those products. These lawsuits typically include allegations of non-infringement and/or invalidity of patents listed in FDA’s publication “Approved Drug Products with Therapeutic Equivalence Evaluations” (commonly known as the Orange Book). In each of these lawsuits, the Company’s subsidiaries are seeking an order enjoining the defendant from marketing a generic version of a product before the expiration of the relevant patents (Orange Book Listed Patents). In the event the Company’s subsidiaries are not successful in an action, or any automatic statutory stay expires before the court rulings are obtained, the generic companies involved would have the ability, upon regulatory approval, to introduce generic versions of their products to the market, resulting in the potential for substantial market share and revenue losses for the applicable products, and which may result in a non-cash impairment charge in any associated intangible asset. In addition, from time to time, the Company’s subsidiaries may settle these types of actions and such settlements can involve the introduction of generic versions of the products at issue to the market prior to the expiration of the relevant patents.

The Inter Partes Review (IPR) process with the United States Patent and Trademark Office (USPTO), created under the 2011 America Invents Act, is also being used at times by generic companies in conjunction with ANDAs and lawsuits to challenge the applicable patents.

XARELTO

Beginning in March 2021, Janssen Pharmaceuticals, Inc.; Bayer Pharma AG; Bayer AG; and Bayer Intellectual Property GmbH filed patent infringement lawsuits in United States district courts against generic manufacturers who have filed ANDAs seeking approval to market generic versions of XARELTO before expiration of certain Orange Book Listed Patents. The following entities are named defendants: Dr. Reddy’s Laboratories, Inc.; Dr. Reddy’s Laboratories, Ltd.; Lupin Limited; Lupin Pharmaceuticals, Inc.; Taro Pharmaceutical Industries Ltd.; Taro Pharmaceuticals U.S.A., Inc.; Teva Pharmaceuticals USA, Inc.; Mylan Pharmaceuticals Inc.; Mylan Inc.; Mankind Pharma Limited; Apotex Inc.; Apotex Corp.; Auson Pharmaceuticals Inc.; Shanghai Auson Pharmaceuticals Co. Ltd.; Cipla Ltd.; Cipla USA Inc.; InvaGen Pharmaceuticals, Inc.; Prinston Pharmaceuticals, Inc.; Ascent Pharmaceuticals, Inc.; and Hetero Labs Limited. The following U.S. patents are included in one or more cases: 9,539,218 and 10,828,310.

U.S. Patent No. 10,828,310 was also under consideration by the USPTO in an IPR proceeding. In July 2023, the USPTO issued a final written decision finding the claims of the patent invalid. In September 2023, Bayer Pharma AG filed an appeal to the U.S. Court of Appeals for the Federal Circuit.

OPSUMIT

In November 2023, Actelion Pharmaceuticals Ltd and Actelion Pharmaceuticals US, Inc. filed a patent infringement lawsuit in the United States District Court for the Northern District of West Virginia against Mylan Pharmaceuticals Inc, who filed an ANDA seeking approval to market a generic version of OPSUMIT before expiration of certain Orange Book Listed Patents. The following U.S. patents are included in the case: 7,094,781; and 10,946,015. In September 2024, the Company entered into a confidential settlement agreement with Mylan Pharmaceuticals Inc.

INVEGA SUSTENNA

Beginning in January 2018, Janssen Pharmaceutica NV and Janssen Pharmaceuticals, Inc. filed patent infringement lawsuits in United States district courts against generic manufacturers who have filed ANDAs seeking approval to market generic versions of INVEGA SUSTENNA before expiration of the Orange Book Listed Patent. The following entities are named defendants: Teva Pharmaceuticals USA, Inc.; Mylan Laboratories Limited; Pharmascience Inc.; Mallinckrodt PLC; Specgx LLC; Tolmar, Inc.; Accord


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Healthcare, Inc.; Qilu Pharmaceutical Co. Ltd.; and Qilu Pharma Inc. The following U.S. patent is included in one or more cases: 9,439,906. In October 2020, the district court issued a decision in the case against Teva Pharmaceuticals USA, Inc., finding that United States Patent No. 9,439,906 is not invalid. Teva previously stipulated to infringement. Teva appealed the decision, and, in April 2024, the United States Court of Appeals for the Federal Circuit vacated and remanded the case to the district court for further proceedings. In February 2024, the district court issued a decision in the case against Tolmar Inc. finding that United States Patent No. 9,439,906 is not invalid. Tolmar previously stipulated to infringement. Tolmar has appealed the decision.

Beginning in February 2018, Janssen Inc. and Janssen Pharmaceutica NV initiated a Statement of Claim under Section 6 of the Patented Medicines (Notice of Compliance) Regulations against generic manufacturers who have filed ANDSs seeking approval to market generic versions of INVEGA SUSTENNA before expiration of the listed patent. The following entities are named defendants: Pharmascience Inc. and Apotex Inc. The following Canadian patent is included in one or more cases: 2,655,335. In June 2024, the Supreme Court dismissed the Apotex case. In September 2024, the Supreme Court granted Pharmascience's motion to appeal the Federal Court's decision that the 2,655,335 Patent is not invalid.

INVEGA TRINZA

Beginning in September 2020, Janssen Pharmaceuticals, Inc., Janssen Pharmaceutica NV, and Janssen Research & Development, LLC filed patent infringement lawsuits in United States district courts against generic manufacturers who have filed ANDAs seeking approval to market generic versions of INVEGA TRINZA before expiration of the Orange Book Listed Patent. The following entities are named defendants: Mylan Laboratories Limited; Mylan Pharmaceuticals Inc.; and Mylan Institutional LLC. The following U.S. patent is included in one or more cases: 10,143,693. In May 2023, the District Court issued a decision finding that Mylan’s proposed generic product infringes the asserted patent and that the patent is not invalid. Mylan has appealed the decision.

SYMTUZA

Beginning in November 2021, Janssen Products, L.P., Janssen Sciences Ireland Unlimited Company, Gilead Sciences, Inc. and Gilead Sciences Ireland UC filed patent infringement lawsuits in United States district courts against generic manufacturers who have filed ANDAs seeking approval to market generic versions of SYMTUZA before expiration of certain Orange Book Listed Patents. The following entities are named defendants: Lupin Limited; Lupin Pharmaceuticals, Inc.; MSN Laboratories Private Ltd.; MSN Life Sciences Private Ltd.; MSN Pharmaceuticals Inc.; Apotex Inc.; and Apotex Corp. The following U.S. patents are included in one or more cases: 10,039,718 and 10,786,518.

ERLEADA

Beginning in May 2022, Aragon Pharmaceuticals, Inc., Janssen Biotech, Inc. (collectively, Janssen), Sloan Kettering Institute for Cancer Research (SKI) and The Regents of the University of California filed patent infringement lawsuits in United States district courts against generic manufacturers who have filed ANDAs seeking approval to market generic versions of ERLEADA before expiration of certain Orange Book Listed Patents. The following entities are named defendants: Zydus Worldwide DMCC; Zydus Pharmaceuticals (USA), Inc.; Zydus Lifesciences Limited; Sandoz Inc.; Hetero Labs Limited Unit V; and Hetero USA, Inc. The following U.S. patents are included in one or more cases: 9,481,663; 9,884,054; 10,052,314 (which reissued as RE49,353); 10,702,508; 10,849,888; 8,445,507; 8,802,689; 9,388,159; 9,987,261; RE49,353; and 11,963,952. In August 2024, Janssen and The Regents of the University of California entered into a confidential settlement agreement with Sandoz, Inc.

SPRAVATO

Beginning in May 2023, Janssen Pharmaceuticals, Inc. and Janssen Pharmaceutica NV filed patent infringement lawsuits in United States district courts against generic manufacturers who have filed ANDAs seeking approval to market generic versions of SPRAVATO before expiration of certain Orange Book Listed Patents. The following entities are named defendants: Sandoz Inc.; Hikma Pharmaceuticals Inc. USA; Hikma Pharmaceuticals PLC; and Alkem Laboratories Ltd. The following U.S. patents are included in one or more cases: 10,869,844; 11,173,134; 11,311,500; and 11,446,260.

INVOKANA

Beginning in January 2024, Janssen Inc. and Mitsubishi Tanabe Pharma Corporation initiated Statements of Claim under Section 6 of the Patented Medicines (Notice of Compliance) Regulations against generic manufacturers who filed ANDSs seeking approval to market generic versions of INVOKANA before expiration of the listed patents. The following entities are named defendants: Jamp Pharma Corporation and Apotex Inc. The following Canadian patents are included in one or more cases: 2,534,024 and 2,671,357.

MedTech

In March 2016, Abiomed, Inc. (Abiomed) filed a declaratory judgment action against Maquet Cardiovascular LLC (Maquet) in U.S. District Court for the District of Massachusetts seeking a declaration that the Impella does not infringe certain Maquet patents, currently U.S. Patent Nos. 7,022,100 (’100); 8,888,728; 9,327,068; 9,545,468; 9,561,314; and 9,597,437. Maquet counterclaimed


Form 10-Q			37

for infringement of each of those patents. After claim construction, Maquet alleged infringement of only the ’100 patent. In September 2021, the court granted Abiomed’s motion for summary judgment of non-infringement of the ’100 patent, and in September 2023, the district court entered final judgment in favor of Abiomed on all patents-in-suit. Maquet appealed.

Government proceedings

Like other companies in the pharmaceutical and medical technologies industries, the Company and certain of its subsidiaries are subject to extensive regulation by national, state and local government agencies in the United States and other countries in which they operate. Such regulation has been the basis of government investigations and litigations. The most significant litigation brought by, and investigations conducted by, government agencies are listed below. It is possible that criminal charges and substantial fines and/or civil penalties or damages could result from government investigations or litigation.

MedTech

In July 2018, the Public Prosecution Service in Rio de Janeiro and representatives from the Brazilian antitrust authority CADE inspected the offices of more than 30 companies including Johnson & Johnson do Brasil Indústria e Comércio de Produtos para Saúde Ltda. The authorities appear to be investigating allegations of possible anti-competitive behavior and possible improper payments in the medical device industry. The Company continues to respond to inquiries regarding the Foreign Corrupt Practices Act from the United States Department of Justice and the United States Securities and Exchange Commission.

In July 2023, the U.S. Department of Justice (DOJ) issued Civil Investigative Demands to the Company, Johnson & Johnson Surgical Vision, Inc., and Johnson & Johnson Vision Care, Inc. (collectively, J&J Vision) in connection with a civil investigation under the False Claims Act relating to free or discounted intraocular lenses and equipment used in eye surgery, such as phacoemulsification and laser systems. J&J Vision has begun producing documents and information responsive to the Civil Investigative Demands. J&J Vision is in ongoing discussions with the DOJ regarding its inquiry.

Innovative Medicine

In July 2016, the Company and Janssen Products, LP were served with a qui tam complaint pursuant to the False Claims Act filed in the United States District Court for the District of New Jersey alleging the off-label promotion of two HIV products, PREZISTA and INTELENCE, and anti-kickback violations in connection with the promotion of these products. The complaint was filed under seal in December 2012. The federal and state governments have declined to intervene, and the lawsuit is being prosecuted by the relators. The Court denied summary judgment on all claims in December 2021. Daubert motions were granted in part and denied in part in January 2022, and trial commenced in May 2024. On June 13, 2024, a jury found no liability regarding the anti-kickback violations but found liability for a portion of the off-label promotion claims. The Company is pursuing post-trial briefing challenging the verdict on the off-label claims.

In March 2017, Janssen Biotech, Inc. (JBI) received a Civil Investigative Demand from the United States Department of Justice regarding a False Claims Act investigation concerning management and advisory services provided to rheumatology and gastroenterology practices that purchased REMICADE or SIMPONI ARIA. In August 2019, the United States Department of Justice notified JBI that it was closing the investigation. Subsequently, the United States District Court for the District of Massachusetts unsealed a qui tam False Claims Act complaint, which was served on the Company. The Department of Justice had declined to intervene in the qui tam lawsuit in August 2019. The Company filed a motion to dismiss, which was granted in part and denied in part. Discovery is underway.

General litigation

The Company or its subsidiaries are also parties to various proceedings brought under the Comprehensive Environmental Response, Compensation, and Liability Act, commonly known as Superfund, and comparable state, local or foreign laws in which the primary relief sought is the Company’s agreement to implement remediation activities at designated hazardous waste sites or to reimburse the government or third parties for the costs they have incurred in performing remediation as such sites.

In October 2017, certain United States service members and their families brought a complaint against a number of pharmaceutical and medical devices companies, including Johnson & Johnson and certain of its subsidiaries in United States District Court for the District of Columbia, alleging that the defendants violated the United States Anti-Terrorism Act. The complaint alleges that the defendants provided funding for terrorist organizations through their sales practices pursuant to pharmaceutical and medical device contracts with the Iraqi Ministry of Health. In July 2020, the District Court dismissed the complaint. In January 2022, the United States Court of Appeals for the District of Columbia Circuit reversed the District Court’s decision. In June 2023, defendants filed a petition for a writ of certiorari to the United States Supreme Court. In June 2024, the Supreme Court vacated the D.C. Circuit's decision and remanded the case to the D.C. Circuit.


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In February 2024, a putative class action was filed against the Company, the Pension & Benefits Committee of Johnson & Johnson (Committee), and certain named officers and employees, in United States District Court for the District of New Jersey. In May 2024, the plaintiff filed an amended complaint against the Company and the Committee. The complaint alleges that defendants breached fiduciary duties under the Employee Retirement Income Security Act (ERISA) by allegedly mismanaging the Company’s prescription-drug benefits program. The complaint seeks damages and other relief. In June 2024, defendants moved to dismiss the amended complaint.

MedTech

In October 2020, Fortis Advisors LLC (Fortis), in its capacity as representative of the former stockholders of Auris Health Inc. (Auris), filed a complaint against the Company, Ethicon Inc., and certain named officers and employees (collectively, Ethicon) in the Court of Chancery of the State of Delaware. The complaint alleges breach of contract, fraud, and other causes of action against Ethicon in connection with Ethicon’s acquisition of Auris in 2019. The complaint seeks damages and other relief. In December 2021, the Court granted in part and denied in part defendants’ motion to dismiss certain causes of action. All claims against the individual defendants were dismissed. The trial occurred in January 2024. In September 2024, the court found liability with respect to certain claims and no liability with respect to other claims. The Company is appealing the decision.

In October 2019, Innovative Health, LLC filed a complaint against Biosense Webster, Inc (BWI) in the United States District Court for the Central District of California. The complaint alleges that certain of BWI's business practices and contractual terms violate the antitrust laws of the United States and the State of California by restricting competition in the sale of High Density Mapping Catheters and Ultrasound Catheters. Trial is scheduled for April 2025.

Innovative Medicine

In June 2019, the United States Federal Trade Commission (FTC) issued a Civil Investigative Demand to the Company and Janssen Biotech, Inc. (collectively, Janssen) in connection with its investigation of whether Janssen’s REMICADE contracting practices violate federal antitrust laws. The Company has produced documents and information responsive to the Civil Investigative Demand. Janssen is in ongoing discussions with the FTC staff regarding its inquiry.

In February 2022, the United States Federal Trade Commission (FTC) issued Civil Investigative Demands to Johnson & Johnson and Janssen Biotech, Inc. (collectively, Janssen) in connection with its investigation of whether advertising practices for REMICADE violate federal law. Janssen has produced documents and information responsive to the Civil Investigative Demands. Janssen is in ongoing discussions with the FTC staff regarding the inquiry.

In October 2018, two separate putative class actions were filed against Actelion Pharmaceutical Ltd., Actelion Pharmaceuticals U.S., Inc., and Actelion Clinical Research, Inc. (collectively Actelion) in United States District Court for the District of Maryland and United States District Court for the District of Columbia. The complaints allege that Actelion violated state and federal antitrust and unfair competition laws by allegedly refusing to supply generic pharmaceutical manufacturers with samples of TRACLEER. TRACLEER is subject to a Risk Evaluation and Mitigation Strategy required by the U.S. Food and Drug Administration, which imposes restrictions on distribution of the product. In January 2019, the plaintiffs dismissed the District of Columbia case and filed a consolidated complaint in the United States District Court for the District of Maryland. In September 2019, the district court granted Actelion's motion to dismiss the complaint. In April 2024, the Fourth Circuit reversed the decision of the district court. In September 2024, the district court granted plaintiff's motion for class certification and denied Actelion's motion for summary judgment.

In December 2023, a putative class action lawsuit was filed against the Company and Janssen Biotech Inc. (collectively Janssen) in the United States District Court for the Eastern District of Virginia. The complaint alleges that Janssen violated federal and state antitrust laws and other state laws by delaying biosimilar competition with STELARA through Janssen's enforcement of patent rights covering STELARA. The complaint seeks damages and other relief. In February 2024, plaintiffs filed an amended complaint, which Janssen moved to dismiss in March 2024. In August 2024, the court granted in part and denied in part Janssen's motion to dismiss.

In December 2018, Janssen Biotech, Inc., Janssen Oncology, Inc., Janssen Research & Development, LLC, and Johnson & Johnson (collectively, Janssen) were served with a qui tam complaint on behalf of the United States, certain states, and the District of Columbia. The complaint alleges that Janssen violated the federal False Claims Act and state law when providing pricing information for ZYTIGA to the government in connection with direct sales and reimbursement programs. At this time, the federal and state governments have declined to intervene. In December 2021, the United States District Court for the District of New Jersey denied Janssen's motion to dismiss.


Form 10-Q			39

Note 12 — Restructuring

In fiscal 2023, the Company completed a prioritization of its research and development (R&D) investment within its 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 certain 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 expense was immaterial in the fiscal third quarter of 2024 and was $0.1 billion of expense in the fiscal nine months of 2024. This included the termination of partnered and non-partnered development program costs, asset impairments and asset divestments. The pre-tax restructuring charge of approximately $0.1 billion and $0.4 billion in the fiscal third quarter and fiscal nine 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. The majority of this restructuring program is completed, with minor charges expected in the remainder of year.

In fiscal 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 was immaterial in the fiscal third quarter of 2024 and was $0.1 billion in the fiscal nine months of 2024, and primarily included costs related to market and product exits. The pre-tax restructuring expense of $0.2 billion in the fiscal third quarter and fiscal nine months of 2023, primarily included inventory and instrument charges related to market and product exits. Total project costs of approximately $0.4 billion have been recorded since the restructuring was announced. The estimated costs of the total program are between $0.7 billion - $0.8 billion and is expected to be completed by the end of fiscal year 2025.

The following table summarizes the restructuring expenses for 2024 and 2023:


(Pre-tax Dollars in Millions)	Q3 2024	Q3 2023	Q3 YTD 2024	Q3 YTD 2023
Innovative Medicine Segment(1)	$19	149	100	424
MedTech Segment(2)	28	235	107	235
Total Programs	$47	384	207	659

(1)Included in Restructuring on the Consolidated Statement of Earnings for the fiscal 2023 and 2024

(2)The fiscal third quarter of 2024 included $22 million in Restructuring and $6 million in Cost of products sold on the Consolidated Statement of Earnings. The fiscal nine months of 2024 included $92 million in Restructuring and $15 million in Cost of products sold on the Consolidated Statement of Earnings. The fiscal third quarter and nine months of 2023 included $9 million in Restructuring and $226 million in Cost of products sold on the Consolidated Statement of Earnings

Restructuring reserves as of September 29, 2024 and December 31, 2023 were insignificant.


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Note 13— Kenvue separation

The results of the Consumer Health business (previously reported as a separate business segment) have been reflected as discontinued operations in the Company’s consolidated statements of earnings as Net earnings from discontinued operations, net of taxes through August 23, 2023, the date of the exchange offer. Prior periods have been recast to reflect this presentation.

Details of Net Earnings from Discontinued Operations, net of taxes are as follows:


	Fiscal Third Quarter Ended	Fiscal Nine Months Ended
(Dollars in Millions)	October 1, 2023	October 1, 2023
Sales to customers	$2,173	$10,036
Cost of products sold	911	4,369
Gross profit	1,262	5,667
Selling, marketing and administrative expenses	584	3,085
Research and development expense	24	258
Interest Income	(37)	(117)
Interest expense, net of portion capitalized	67	199
Other (income) expense, net	406	1,018
Gain on separation of Kenvue	(20,984)	(20,984)

Earnings from Discontinued Operations Before Provision for Taxes on Income	21,202	22,208
(Benefit from) Provision for taxes on income	(517)	298
Net earnings from Discontinued Operations	$21,719	$21,910

The following table presents depreciation, amortization and capital expenditures of the discontinued operations related to Kenvue:


	Fiscal Third Quarter Ended	Fiscal Nine Months Ended
(Dollars in Millions)	October 1, 2023	October 1, 2023
Depreciation and Amortization	$81	$383

Capital expenditures	$23	$162


Form 10-Q			41

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