Johnson & Johnson

Johnson & Johnson operates as a global healthcare conglomerate generating revenue through pharmaceuticals and medical devices, with Q1 2026 sales of $24.06 billion driven by minimally invasive interventional offerings and broad therapeutic coverage.

The company is classified in the Pharmaceuticals industry within the Healthcare economic sector with a rule-based confidence of 0.93.

Johnson & Johnson maintains a capital structure defined by $37.53 billion in long-term debt and $17.46 billion in short-term debt against $21.69 billion in cash and equivalents, resulting in a net cash position that is negative after subtracting total debt. The current ratio stands at 1.03, which is close to the minimum comfort range for liquidity, while the debt-to-equity ratio is 0.68. The company generated $2.51 billion in operating cash flow and $1.47 billion in free cash flow in Q1 2026, supporting its ability to service obligations despite the tight current ratio.

Profitability metrics show a gross margin of 66.3% and a net income margin of 21.8% for Q1 2026, with net income reaching $5.24 billion. Return on equity is 6.45% and return on assets is 2.61%, reflecting the capital-intensive nature of the business and the impact of recent earnings volatility. The price-to-earnings ratio is elevated at 118.71, and EV-to-revenue is 27.2, indicating high market expectations relative to current earnings power.

Revenue concentration is not explicitly detailed by segment in the provided data, but the company operates globally with significant exposure to international markets. The filing observations highlight risks associated with global operations, including foreign government regulations, currency exchange rate fluctuations, and potential trade restrictions or tariffs that could impact raw material prices and supply chains. The company’s products are delivered through minimally invasive, catheter-based approaches used by interventional cardiologists, electrophysiologists, and neurointerventional specialists.

Growth trajectory shows Q1 2026 revenue of $24.06 billion, up from $21.89 billion in Q1 2025, representing a year-over-year increase. However, net earnings declined significantly from $10.99 billion in Q1 2025 to $5.24 billion in Q1 2026, largely due to a reversal of other income/expense items that contributed $7.32 billion in the prior year. The nine-month period ended September 2025 showed revenue of $69.63 billion, up from $66.30 billion in the same period the previous year, with net earnings of $21.69 billion compared to $10.64 billion, driven by significant other income.

Risk factors include high liquidity risk due to the current ratio being near the minimum comfort range and medium dilution risk, with source documents mentioning dilution or offering risk. The company faces operational risks from global public health crises, climate change, extreme weather, and geopolitical tensions, including armed conflicts and terrorist attacks that could disrupt financial markets and supply chains. Inflation and interest rate fluctuations also pose risks to revenues, expenses, and margins.

Recent events include an index reconstitution event affecting the company’s constituent status, and management signals indicate stock received from issuance to a bank in the settlement of an accelerated share repurchase agreement. The company adopted new accounting standards for derivatives and hedging effective fiscal year 2026.

Key takeaways

• Q1 2026 revenue grew to $24.06 billion, but net income fell to $5.24 billion from $10.99 billion in Q1 2025 due to non-recurring other income in the prior year.
• Liquidity is tight with a current ratio of 1.03 and negative net cash after debt, though operating cash flow remains positive at $2.51 billion.
• Valuation multiples are high, with a P/E of 118.71 and EV/Revenue of 27.2, reflecting market pricing for stability despite earnings volatility.
• Dilution risk is medium, with disclosures mentioning offering risk and recent accelerated share repurchase settlements.
• Global operational risks are significant, including exposure to trade restrictions, currency fluctuations, and geopolitical instability.
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• # RATIONALES
• margin_outlook_rationale: Gross margins remain stable at 66.3%, but net margins are pressured by one-time items and R&D expenses.

• Current ratio is close to the minimum comfort range.
• Net cash is negative after subtracting total debt.
• Source documents mention dilution or offering risk.