KVUE 10-K & 10-Q changes, risk factors and insider trading
Kenvue Inc. · NYSE · Perfumes, Cosmetics & Other Toilet Preparations · CIK 1944048 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “Risks Related to the Proposed Transaction with K-C”
New heading “Risks Related to the Proposed Transaction with K-C”
New heading “If the Proposed Transaction is consummated, the combined company may not perform as we or the market expects and may fail to realize the projected benefits and cost savings of the Proposed Transaction, which could adversely affect the value of K-C common stock, which our shareholders will own following the completion of the Proposed Transaction.”
New heading “Failure to consummate the Proposed Transaction, or a delay in the consummation of the Proposed Transaction, could negatively impact our business, results of operations, financial condition, and stock price.”
New heading “Uncertainties associated with the Proposed Transaction may cause a loss of our or K-C’s management and other key employees, which could adversely affect the future business and operations of the combined company following the Proposed Transaction.”
New heading “Holders of our common stock will have a significantly reduced ownership and voting interest in the combined company after the Proposed Transaction and will therefore have less voting influence over the combined company.”
New heading “Litigation against us or K-C, or the members of our or K-C’s board of directors, could prevent or delay the completion of the Proposed Transaction.”
New heading “The Merger Agreement restricts our ability to pursue alternatives to the Proposed Transaction.”
New heading “The need for regulatory approvals may delay the date of completion of the Proposed Transaction or may diminish the benefits of the Proposed Transaction.”
New heading “The number of shares of K-C common stock issuable in the First Merger in respect of one share of our common stock is fixed and will not be adjusted. Because the market price of K-C common stock may fluctuate, our shareholders cannot be sure of the market value of the stock consideration they will receive in exchange for their shares in connection with the Proposed Transaction.”
New heading “If the Proposed Transaction fails to qualify as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended, our shareholders may be required to pay additional U.S. federal income taxes.”
New heading “Our business operations may be subject to disruption due to uncertainties associated with the Proposed Transaction, which could adversely affect our or the combined company’s business, financial condition, cash flows, and results of operations pending and following the Proposed Transaction.”
New heading “If the Proposed Transaction is consummated, its completion is expected to trigger change-in-control or other provisions in certain agreements to which we or K-C is a party.”
New heading “Failure to integrate our and K-C’s businesses and operations successfully in the expected time frame may adversely affect the future results of the combined company.”
New heading “The Merger Agreement subjects us to restrictions on our business activities prior to the effective time of the Proposed Transaction.”
New heading “We have incurred, and will continue to incur, significant costs in connection with the Proposed Transaction, which may be in excess of those we anticipated.”
New heading “The Proposed Transaction may result in a loss of customers, distributors, service providers, suppliers, vendors, joint venture participants, and other business counterparties and may result in the termination of existing contracts.”
New heading “Our amended and restated Certificate of Incorporation provides exclusive forum provisions, which could limit our shareholders’ abilities to obtain a favorable judicial forum and may impose additional costs on shareholders in pursuing certain claims against us and discourage lawsuits with respect to such claims.”
Removed heading “We may be affected by significant restrictions, including on our ability to engage in certain corporate transactions, for a two-year period after the Exchange Offer, in order to avoid triggering significant tax-related liabilities.”
Removed heading “We cannot be certain that an active trading market for our common stock will be sustained.”
Removed heading “Certain provisions in our amended and restated certificate of incorporation and our amended and restated bylaws, and of Delaware law, may prevent or delay an acquisition of us, which could decrease the trading price of our common stock.”
Largest changes
Acts of war, military actions, terrorist attacks, or civil unrest may adversely affect prevailing economic conditions and our business, results of operations, or financial condition. These events could result in reduced consumer spending, reduced demand for our products, suspension of the supply of our products, disruptions to our global supply chain, increased costs of materials and other inputs for our products and suppliers, foreign currency volatility, sanctions, export controls, and other trade restrictions, work stoppages, and diminished protection for our intellectual property.see in full comparisonFor example, the ongoing Russia-Ukraine War has provoked strong reactions from the United States, the United Kingdom, the EU, and various other countries and economic and political organizations around the world. Actions taken in response to the Russia-Ukraine War include the imposition of export controls and broad financial and economic sanctions against Russia, Belarus, and specific Russian-occupied areas of Ukraine. Additional sanctions or other measures may continue to be imposed by the global community, and counteractive measures may continue to be taken by the Russian government, other entities in Russia, or governments or other entities outside of Russia.
In addition, we are subject to laws and regulations pertaining to sanctions imposed by the United States and other authorities that may prohibit us or our affiliates from doing business in certain countries or restrict the type of business that may be conducted by us or our affiliates.see in full comparisonFor example, actions taken in response to the Russia-Ukraine War have included the imposition of export controls and broad financial and economic sanctions against Russia, Belarus, and specific areas of Ukraine.See “—Risks Related to Financial and Economic Market Conditions—Acts of war, military actions, terrorist attacks, or civil unrest could adversely affect us.” Any violation or alleged violation of these laws and regulations, even if prohibited by our policies, could result in criminal or civil sanctions, reputational damage, or other substantial costs and penalties, any of which could adversely affect our business, results of operations, or financial condition.
see in full comparisonInWeconnectionhavewithpreviouslythe Separation, we hiredundertaken, andintegratedare currently undertaking, restructuring initiatives, including asignificantrecentlynumberannouncedofinitiativeemployeesthatonaimsantoexpeditedoptimizebasis,our operating model, transform our supply chain, reduce complexity, andthedriveSeparationoperationalhasefficiencies, while strengthening core capabilities. These have resultedin newin, and likely will continue to result in, increased demands on our management team and other employees. Currentor prospectiveemployees could experience uncertainty about their future roles at our company as a result of theSeparationbusiness reorganization or otherstrategic, organizational, or operationalstrategic changes in thefuture.future, especially given the pendency and uncertainty created by the Proposed Transaction. As a result, we may lose key personnel or we may be unable to attract, integrate, retain, or motivate qualified individuals, or the costs associated with attracting, integrating, retaining, or motivating key personnel may increase. In addition, these restructuring initiatives and related workforce and strategic changes could increase the risk of employment-related litigation. See “Risks Related to the Proposed Transaction with K-C—Uncertainties associated with the Proposed Transaction may cause a loss of our or K-C’s management and other key employees, which could adversely affect the future business and operations of the combined company following the Proposed Transaction.”
“Our amended and restated Certificate of Incorporation provides exclusive forum provisions, which could limit our shareholders’ abilities to obtain a favorable judicial forum and may impose additional costs on shareholders in pursuing certain claims against us and discourage lawsuits with respect to such claims.”see in full comparison
•Concerns about the reliability,see in full comparisonsafetysafety, and efficacy of our products and their ingredients,whichincluding acetaminophen, talc, and phenylephrine, have resulted and could in the future result in litigation,including personal injury or class action litigation,regulatory action, governmental investigations, reputational damage, product recalls, product reformulations, or productwithdrawals.withdrawals, whether or not such concerns are based on scientific or factual evidence we believe is sound.
Cyberattacks and other cybersecurity incidents are of ever-increasing levels of sophistication and are made by groups and individuals with a wide range of motives (including industrial espionage) and expertise. Our Technology Systems and those of third-party partners have been, and likely will continue to be, subject to advanced computer attacks, including viruses or other malicious code, ransomware, unauthorized access attempts, denial of service attacks, phishing, social engineering, hacking, and other cyberattacks. In addition, the global threat of cyberattacks has increased in response to globalsee in full comparisonconflicts, including the Russia-Ukraine War.conflicts. See “—Risks Related to Financial and Economic Market Conditions—Acts of war, military actions, terrorist attacks, or civil unrest could adversely affect us.” Moreover, accelerating adoption of artificial intelligence within the Company and by adversaries increases the probability of an attempted attack or other cybersecurity incident.
Full comparison: every changed paragraph (213)
Risks Related to the Proposed Transaction with K-C
•If the Proposed Transaction is consummated, the combined company may not perform as expected and may fail to realize the projected benefits and cost savings of the Proposed Transaction, which could adversely affect the value of K-C common stock, which our current shareholders will own following the completion of the Proposed Transaction.
•Failure to consummate, or a delay in the consummation of, the Proposed Transaction.
•Uncertainties associated with the Proposed Transaction may cause a loss of management and other key employees.
•Our shareholders will have a significantly reduced ownership and voting interest in the combined company.
•Litigation against us or K-C, or the members of our or K-C’s board of directors.
•The Merger Agreement restricts our ability to pursue alternatives to the Proposed Transaction.
•Regulatory approvals may delay the Proposed Transaction or may diminish its benefits.
•The number of shares of K-C common stock issuable in the First Merger in respect of one share of our common stock is fixed and will not be adjusted. Because the market price of K-C common stock may fluctuate, our shareholders cannot be sure of the market value of the stock consideration they will receive in exchange for their shares.
•If the Proposed Transaction fails to qualify as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”), our shareholders may pay additional U.S. federal income taxes.
•Uncertainties associated with the Proposed Transaction may disrupt our business.
•The Proposed Transaction’s consummation is expected to trigger change-in-control or other provisions.
•Failure to integrate our and K-C’s businesses and operations successfully in the expected time frame.
•The Merger Agreement restricts certain business activities prior to the effective time of the Proposed Transaction.
•We have incurred, and will continue to incur, significant costs in connection with the Proposed Transaction.
•The Proposed Transaction may result in a loss of customers, distributors, service providers, suppliers, vendors, joint venture participants, and other business counterparties and may result in the termination of existing contracts.
•Damage to our reputation and the reputation ofor our brands,brands’ including as a result of negative publicity,reputation could impact our brand loyalty with consumers, customers, and third-partythird partners.parties.
•We face substantialintense competitive pressures,competition, including from multinational corporations, smaller regional companies, private-label brands, and generic non-branded products, in each of our reportable business segments and product lines and across all geographic markets in which we operate.
•Our marketing efforts may be costly and inefficient,inefficient and may not successfully defend, maintain, or improve our reputation, our brands, or our market share positions in existing or new markets.
•We may face challenges in implementing our digital strategy across all aspects of our operations, and our digital strategy may lead us to pursue new offerings that are outside of our historical competencies and expose us to digital-related risks.
•The failureFailure to realize the intended benefits of acquisitions and divestitures we have pursued or may pursue.pursue could adversely affect us.
•The threats of counterfeit products, infringement of our intellectual propertyproperty, and other unauthorized versions of our products, which pose a risk to consumer health and safety and could damage our reputation.
•Information security incidents, including cybersecurity breaches, interruption, breakdown, corruption, destruction, breachbreach, or failure of Technology Systems (as defined below) operated by us or a third party, which could result in reputational damage, operational disruption, and significant associated costs.
•Our ability to attract and retain a skilled workforce, reflecting our consumers, and to implement succession plans for our senior management.plans.
•Our ability to comply with a broad range of national and sub-national laws and regulations, and other stakeholder requirements imposed by stakeholders, in the United States and around the world,globally, including rapidly evolving requirements related to tax, trade, tariffs, manufacturing, ingredients, climate change, ESG,sustainability, the environment, privacy, data protection, anti-corruptionartificial intelligence, anti-corruption, and human rights.
•We are, and could become, subject to legal proceedings and governmental or regulatory investigations that may result in significant expenses, liabilities (potentially in excess of accruals), and reputational damage.
•Concerns about the reliability, safetysafety, and efficacy of our products and their ingredients, whichincluding acetaminophen, talc, and phenylephrine, have resulted and could in the future result in litigation, including personal injury or class action litigation, regulatory action, governmental investigations, reputational damage, product recalls, product reformulations, or product withdrawals.withdrawals, whether or not such concerns are based on scientific or factual evidence we believe is sound.
•Legal proceedings related to talc or talc-containing products, such as Johnson’s® Baby Powder, sold outside the United States and Canada (pursuant to the Separation Agreement, J&J has retained the Talc-Related Liabilities (as defined below) for products sold in the United States and Canada), including personal injury claims alleging that talc causes cancer, and other risks and uncertainties related to our historic sale of talc or talc-containing products (talc-based Johnson’s® Baby Powder was discontinued globally in 2023).
•Our ability to successfully establish, maintain, protect, and enforce intellectual property rights that are, in the aggregate, material to our business, and our ability to successfully avoid violation of the intellectual property rights of others.
•We may not achieve some or all of the expected benefits of the Separation.
•We are subject to potential tax-related liabilities to J&J for taxes attributable to our business.
•We may not achieve some or all of the expected benefits of the Separation, including because our business will experience a loss of corporate brand identity, historical market reputation, purchasing power, and access to certain resources from which we benefited as part of J&J.
•We are subject to restrictions on our business, potential tax-related liabilities (such as joint and several liability with J&J for its U.S. federal consolidated group tax return for periods prior to the date of the completion of the Exchange Offer) and potential tax-related indemnification obligations to J&J for taxes attributable to our business and, under certain circumstances, taxes arising in connection with the Separation and the subsequent distribution or other disposition by J&J of the shares of Kenvue common stock owned by J&J following the Kenvue IPO.
•The failure to realize the intended benefits of our rebranding strategy in connection with the Separation and ourOur continued use of legacy J&J branding, including ongoing use of the “Johnson’s®” brand.
•J&J has agreed to indemnify us for certain liabilities, including the Talc-Related Liabilities,Liabilities (as defined below) for products sold in the United States and Canada, but such indemnity may not be sufficient to protect us against the full amount of such liabilities or J&J may be unable to satisfy its indemnification obligations.
•We cannot be certain that an active trading market for our common stock will be sustained.
•The stock price of our common stock may fluctuate significantly, including as a result of future sales by us or the perceptionProposed that such sales may occur.Transaction.
An investment in our securities involves risks and uncertainties. In addition to the other information in this Annual Report on Form 10-K, you should consider carefully the factors set forth below. We seek to identify, manage, and mitigate risks to our business, but risks and uncertainties are difficult to predict and many are outside of our control and therefore cannot be eliminated. You should be aware that it is not possible to predict or identify all of these factors and that the following is not meant to be a complete discussion of all potential risks or uncertainties. If known or unknown risks or uncertainties materialize, our business, results of operations, or financial condition could be adversely affected, potentially in a material way, which could adversely affect our business, results of operations, or financial condition.way.
Risks Related to the Proposed Transaction with K-C
If the Proposed Transaction is consummated, the combined company may not perform as we or the market expects and may fail to realize the projected benefits and cost savings of the Proposed Transaction, which could adversely affect the value of K-C common stock, which our shareholders will own following the completion of the Proposed Transaction.
The success of the Proposed Transaction will depend, in part, on K-C’s ability to realize the anticipated benefits and cost savings from combining our and K-C’s respective businesses, including operational and other synergies that we believe the combined company will be able to achieve. The anticipated benefits and cost savings of the Proposed Transaction may not be realized fully or at all, may take longer to realize than expected, or could have other adverse effects that we do not currently foresee. Risks associated with the combined company following the Proposed Transaction include:
•the integration process will require significant time and focus from management following the Proposed Transaction and may, for the combined company, result in the loss of key employees, the disruption of ongoing businesses, or inconsistencies in standards, controls, procedures, and policies;
•key employees might decide not to remain with the combined company after the Proposed Transaction is completed, and the loss of key personnel could adversely affect the combined company’s results of operations, financial condition, and growth prospects;
•the results of operations of the combined company and the market price of the combined company’s common stock after the completion of the Proposed Transaction may be affected by factors different from those currently affecting each of our and K-C’s independent results of operations;
•there could be potential unknown liabilities and unforeseen expenses associated with the Proposed Transaction that were not discovered in the course of performing due diligence; and
•the issuance of shares of the K-C common stock in the Proposed Transaction could depress the market price for the combined company’s common stock.
In addition, in connection with the Proposed Transaction, K-C is expected to incur significant additional indebtedness to finance the Cash Consideration (as defined in Note 1, “Description of the Company and Summary of Significant Accounting Policies—Proposed Transaction with Kimberly-Clark” to the Consolidated Financial Statements included herein) and pay fees and expenses relating to the Proposed Transaction. This increased indebtedness will reduce the amount of cash flow available to service K-C’s debt, including any of our debt assumed by K-C in connection with the Proposed Transaction, in future periods. If the combined company’s cash flows and capital resources are insufficient to fund debt service obligations, it could face substantial liquidity problems and could be forced to reduce or delay investments and capital expenditures or to dispose of material assets or operations, seek additional debt or equity capital, or restructure or refinance its indebtedness.
Failure to consummate the Proposed Transaction, or a delay in the consummation of the Proposed Transaction, could negatively impact our business, results of operations, financial condition, and stock price.
The Merger Agreement is subject to a number of conditions that must be fulfilled to complete the Proposed Transaction. Those conditions include, among others, certain regulatory approvals, the absence of government restraints or prohibitions preventing the completion of the Proposed Transaction, the approval of the stock portion of the Merger Consideration (as defined in Note 1, “Description of the Company and Summary of Significant Accounting Policies—Proposed Transaction with Kimberly-Clark,” to the Consolidated Financial Statements included herein) for listing on Nasdaq, the continued accuracy of the representations and warranties by both parties, and the performance in all material respects by both parties of their obligations under the Merger Agreement. A number of the conditions are not within our control and may prevent, delay, or otherwise materially adversely affect the consummation of the Proposed Transaction. We cannot predict with certainty whether and when any of the required closing conditions will be satisfied or if another uncertainty may arise and cannot assure you that we will be able to timely consummate the Proposed Transaction as currently contemplated under the Merger Agreement or at all. Our business, results of operations, financial condition, or stock price could be adversely affected, potentially in a material way, by the failure to complete the Proposed Transaction or by a delay in the completion of the Proposed Transaction, including as a result of the following:
•the combined company may not realize any or all of the potential benefits of the Proposed Transaction, including any synergies that could result from combining our financial and business resources with those of K-C;
•matters relating to the Proposed Transaction will require substantial commitments of time and resources by our management which would otherwise have been devoted to day-to-day operations and other opportunities that may have been beneficial to us as an independent company;
•we have incurred and will incur further substantial expenses in connection with the Proposed Transaction, including legal, financial advisory, accounting, consulting and other advisory fees, severance/employee benefit-related costs, public company filing fees and other regulatory fees, and other costs relating to the Proposed Transaction regardless of whether the Proposed Transaction is consummated;
•we may be subject to legal proceedings related to the potential delay of, or failure to consummate, the Proposed Transaction;
•we may experience disruptions to our business resulting from the announcement and pendency of the Proposed Transaction, including adverse changes in our relationships with, or loss of, our customers, business partners, and employees, which may not be reversible and may continue or even intensify in the event the Proposed Transaction is delayed or not consummated;
•under the Merger Agreement, we are subject to certain restrictions on the conduct of our business prior to completing the Proposed Transaction, which restrictions could adversely affect our ability to conduct our business as we otherwise would have done if we were not subject to these restrictions;
•we may experience negative reactions to the Proposed Transaction from the financial markets, including negative impacts on the market price of our common stock; and
•if the Proposed Transaction is not consummated, we may suffer from negative publicity and a negative impression of us in the investment community, and a failure to close the Proposed Transaction may have a negative impact on the market price of our common stock.
Uncertainties associated with the Proposed Transaction may cause a loss of our or K-C’s management and other key employees, which could adversely affect the future business and operations of the combined company following the Proposed Transaction.
We depend on the experience and industry knowledge of our management personnel and other key employees to execute our business plans. The success of the combined company after the Proposed Transaction will depend, in part, on its ability to retain or attract key management personnel and other key employees. During the pendency or following the consummation of the Proposed Transaction, our current and prospective employees may experience uncertainty or have concerns regarding their roles within the combined company, the timing and consummation of the Proposed Transaction, or the operations of the combined company, any of which may have an adverse effect on our ability to retain or attract key management and other key personnel. If we are unable to retain personnel, including our key management, who are critical to the future operations of the combined company, we or the combined company could face disruptions in our operations, loss of existing customers, loss of key information, expertise, or know-how, and unanticipated additional recruitment and training costs. In addition, the loss of key personnel could diminish the anticipated benefits of the Proposed Transaction. No assurance can be given that the combined company, following the Proposed Transaction, will be able to retain or attract our key management personnel and other key employees to the same extent that we have previously been able to retain or attract our own employees.
Holders of our common stock will have a significantly reduced ownership and voting interest in the combined company after the Proposed Transaction and will therefore have less voting influence over the combined company.
Management's Discussion & Analysis (MD&A)
New heading “Recent Developments”
New heading “Strategic Review and Proposed Transaction with K-C”
New heading “Acetaminophen Regulatory Developments”
New heading “Macroeconomic Developments”
Removed heading “Supply Chain Optimization Initiatives”
Removed heading “Russia-Ukraine War”
Removed heading “Other Expense, Net”
Removed heading “Facility Agreement”
Removed heading “Distribution to J&J”
Removed heading “Baby Powder Transition”
Largest changes
“We and/or certain of our subsidiaries are involved from time to time in various lawsuits and claims relating to product liability, labeling, marketing, advertising, pricing, intellectual property, commercial contracts, foreign exchange controls, antitrust and trade regulation, labor and employment, indemnification, data privacy and cybersecurity, environmental, health and safety, and tax matters, governmental investigations, and other legal proceedings that arise in the ordinary course of our business. …”see in full comparison
Cost of sales weresee in full comparison$6.5$6.3 billion and$6.8$6.5 billion for the fiscal twelve months ended December29,28,20242025 and December31,29,2023,2024, respectively, a decrease of$305$164 million, or4.5%.2.5%. Gross profit margin expanded20010 basis points to 58.1% for the fiscal twelve months ended December 28, 2025 as compared to 58.0% for the fiscal twelve months ended December 29,20242024.asChangescomparedin Cost of sales were primarily due to56.0%volume-relatedforNetthesalesfiscal twelve months ended December 31, 2023.decreases. Changes in both Cost of sales and gross profit margin wereprimarilyalsoduedriventoby gains attributable to the realization of benefits associated with our supply chain optimizationinitiatives.initiatives,Grosspartially offset by net input cost inflation and the impact of tariffs imposed on goods imported into the United States. Changes in both Cost of sales and gross profit margin were alsoincreasedimpacteddueby a reduction in stock-based compensation expense attributable tovaluearealization.refinement to the methodology of our stock-based compensation expense allocations, forfeitures of unvested stock-based awards, and the vesting of stock-based awards.
“A decline in forecasted Net sales or net income, or adverse macroeconomic developments such as rising interest rates, could significantly reduce the excess between fair value and carrying value. We will continue to monitor the performance of the Skin Health and Beauty business; further deterioration of market conditions or an inability to execute on our strategies could lead to an impairment charge of the goodwill associated with the Skin Health and Beauty reporting unit in the future.”see in full comparison
“We estimate the fair value of a reporting unit using a combination of a discounted cash flow model and a market-based approach. The discounted cash flow model relies on assumptions regarding revenue and net income growth rates, projected working capital needs, capital expenditures, and discount rates. Forecasted cash flows are discounted to present value to estimate the fair value. Under the market-based approach, we utilize the guideline public company method and market transaction method. …”see in full comparison
“The Merger Agreement contains customary representations, warranties, covenants, and termination rights. The Proposed Transaction is expected to close in the second half of 2026 and is conditioned on the satisfaction or waiver of other customary closing conditions, including the receipt of antitrust clearance in the United States and a number of foreign regulatory approvals. …”see in full comparison
Full comparison: every changed paragraph (131)
At Kenvue, our purpose is to realize the extraordinary power of everyday care. As a global leader at the intersection of healthcare and consumer goods, we are the world’s largest pure-play consumer health company by revenue with $15.5$15.1 billion in Net sales in the fiscal year 2024.2025. By combining the power of science with meaningful humanconsumer insights and our digital strategy, we empower consumers to live healthier lives every day. Built on more than a century of heritage and trusted by generations, our differentiated portfolio of iconic brands—including Tylenol®, Neutrogena®, Listerine®, Johnson’sAveeno®, BAND-AID® Brand, AveenoJohnson’s®, ZyrtecListerine®, Neutrogena®, Nicorette®, Tylenol®, and NicoretteZyrtec®—is backed by science and recommended by healthcare professionals, which further reinforces our consumers’ connections to our brands.
Our portfolio includes Self Care, Skin Health and Beauty, and Essential Health products, allowing us to connect with consumers globally— in their daily rituals and the moments that matter most.
With a sole focus on consumer health, our marketing organization operates efficiently by leveraging our precision marketing, e-commerce, and broader digital capabilities to develop unique consumer insights and further enhance the relevance of our brands. Similarly, our research and development organization combines these consumer insights with deep, multi-disciplinary scientific expertise, and active engagement with healthcare professionals, to drive innovative new products, solutions, and experiences centered around consumer health.
•Self Care. Our Self Care product categories include: Pain Care; Cough, Cold, and Allergy; Pain Care; and Other Self Care (Digestive Health, Smoking Cessation, Eye Care, and Other). Major brands in the segment include TylenolBenadryl®, Calpol®, Motrin®, Nicorette®, BenadrylRhinocort®, ZyrtecTylenol®, Zarbee’s®, ORSLTM, Rhinocort®, and CalpolZyrtec®.
•Skin Health and Beauty. Our Skin Health and Beauty product categories include: Face and Body Care; and Hair, Sun, and Other. Major brands in the segment include Neutrogena®, Aveeno®, Dr.Ci:Labo®, OGX®, Le Petit Marseillais®, Lubriderm®, Neutrogena®, OGX®, and Rogaine®.
•Essential Health. Our Essential Health product categories include: Oral Care; Baby Care; and Other Essential Health (Women’s Health, Wound Care, and Other). Major brands in the segment include ListerineBAND-AID® Brand, Carefree®, Desitin®, Johnson’s®, BAND-AID® Brand, StayfreeListerine®, o.b.® tampons, Carefree®, and DesitinStayfree®.
For additional information about our three reportable business segments, see “—Key Factors Affecting Our Results—Our Brands and Product Portfolio” and Note 18, “Segments of Business and Geographic Areas,” to the Consolidated Financial Statements included herein.
In November 2021, J&J, our former parent company, announced its intention to separate its Consumer Health segment into an independent publicly traded company. Kenvue was incorporated in Delaware in February 2022, as a wholly owned subsidiary of J&J, to serve as the ultimate parent company of J&J’s Consumer Health Business. In April 2023, J&J completed the transfer of substantially all of the assets and liabilities of the Consumer Health Business to us and our subsidiaries. In May 2023, we completed an initial public offering of approximately 10.4% of our outstanding common stock and began trading on the NYSE under the ticker symbol “KVUE.” Following the Kenvue IPO, J&J owned approximately 89.6% of our outstanding common stock. In July 2023, J&J announced an exchange offer under which its shareholders could exchange shares of J&J common stock for shares of our common stock owned by J&J. In August 2023, J&J completed the Exchange Offer and exchanged shares representing approximately 80.1% of our common stock,Offer, completing the Separation fromand J&J andour transition to being a fully independent public company. In May 2024, J&J completed an additional exchange offer through which J&J exchanged indebtedness of J&J for shares of our common stock owned by J&J. Following the completion of the Debt for EquityDebt-for-Equity Exchange, J&J nodid longernot ownedown any shares of our common stock.
See Note 1, “Description of the Company and Summary of Significant Accounting Policies—Description of the Company and Business Segments,” to the Consolidated Financial Statements for additional information.
We are incurring certain non-recurring separation-related costs in connection with our establishment as a standalone public company (the “Separation-related costs”). We expect the Separation-related costs willassociated with information technology and other activities, primarily related to the disentanglement of systems and the discontinuance of certain information technology assets, are substantially completed. However, costs related to legal entity name changes and certain other separation-related activities are expected to continue throughfor approximatelya thelonger firstperiod halfthan oforiginally fiscal year 2025.anticipated. For additional information about the Separation, see Note 1, “Description of the Company and Summary of Significant Accounting Policies,” and Note 12, “Relationship with J&J,” to the Consolidated Financial Statements included herein.
Kenvue Global and North America Headquarters
On April 20, 2023, we entered into a long-term lease for a newly renovated global and North America corporate headquarters building and a newly constructed research and development building in Summit, New Jersey. WeIn expectMarch to2025, officiallywe openbegan ouroperating out of the new global and North America corporate headquarters in March 2025.headquarters. The relocation to our new campus from multiple U.S.- based locations will continue through 2026 when the new research and development building is expected to be complete. When construction is completed, the campus will encompass approximately 290,000 square feet. The Global and North America Headquarters Lease collectively includes the lease associated with the global and North America corporate headquarters building, the lease associated with the land where the research and development building is under construction, and the lease associated with land to be used for amenities.
On February 21, 2024, we listed our interimformer corporate headquarters in Skillman, New JerseyJersey, for sale, which met the criteria to be classified as held for sale at that date. For the fiscal three months ended March 31, 2024, an impairment charge of $68 million was recorded on the held for sale asset associated with the interimformer corporate headquarters in Skillman. During the fiscal three months ended December 28, 2025, we completed the sale of the Skillman, New Jersey, facility and recognized a gain of $17 million. See Note 1, “Description of the Company and Summary of Significant Accounting Policies—Impairment of Long-Lived Assets—Assets Held for Sale,” to the Consolidated Financial Statements included herein for more information.
Recent Developments
Restructuring
See Note 20, “Subsequent Events,” to the Consolidated Financial Statements included herein for information about our restructuring initiative approved by our Board on February 17, 2026.
Strategic Review and Proposed Transaction with K-C
In July 2025, we announced that our Board had previously initiated a comprehensive review of strategic alternatives and has established a strategic review committee (the “Strategic Review Committee”) to oversee the ongoing process, which was discontinued effective February 18, 2026. On November 2, 2025, following our Board’s review of strategic alternatives, our Board unanimously approved the execution of the Merger Agreement pursuant to which K-C will acquire all of the outstanding shares of the Company for a combination of stock and cash in a series of transactions, as described in Note 1, “Description of the Company and Summary of Significant Accounting Policies—Proposed Transaction with Kimberly-Clark,” to the Consolidated Financial Statements included herein. Pursuant to the terms and subject to the conditions of the Merger Agreement, Company shareholders will receive the Merger Consideration consisting of 1) 0.14625 shares of K-C common stock and 2) $3.50 in cash for each share of the Company they own. Upon completion of the Proposed Transaction, current K-C shareholders are expected to own approximately 54%, and current Company shareholders are expected to own approximately 46% of the combined company on a fully diluted basis.
The Merger Agreement contains customary representations, warranties, covenants, and termination rights. The Proposed Transaction is expected to close in the second half of 2026 and is conditioned on the satisfaction or waiver of other customary closing conditions, including the receipt of antitrust clearance in the United States and a number of foreign regulatory approvals. On January 29, 2026, our shareholders approved the adoption of the Merger Agreement and K-C’s shareholders approved the issuance of K-C common stock in connection with the Proposed Transaction, in each case at a special meeting of shareholders held for that purpose. Additionally, the waiting period applicable to the Proposed Transaction under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, expired on February 4, 2026.
We are incurring costs, which primarily consist of expenses incurred in connection with the Proposed Transaction, including advisory fees, legal costs, and other professional service costs (the “Proposed Transaction costs”).
Acetaminophen Regulatory Developments
In September 2025, officials in the U.S. federal government alleged that in utero exposure to acetaminophen (the active ingredient in Tylenol®, an over-the-counter pain medication) may be associated with an increased risk of neurological conditions such as autism spectrum disorder and attention-deficit/hyperactivity disorder in children and cautioned against the use of Tylenol® by pregnant women. The FDA also stated it initiated the process for a label change for acetaminophen and issued a notice to physicians. A third party, Informed Consent Action Network, filed a citizen petition in September 2025 regarding safety-related labeling changes for the use of over-the-counter acetaminophen-containing drug products during pregnancy. Our subsidiary, Kenvue Brands LLC, submitted its response to the citizen petition in October 2025, requesting that the FDA deny the petition. In November 2025, a second citizen petition was filed by a third party, the Americans for Scientific Integrity, requesting the FDA update the labeling of OTC acetaminophen-containing drug products to reflect a potential risk of neurodevelopmental harm, including autism spectrum disorder, from exposure during early childhood. The foregoing actions may depress sales of acetaminophen and could result in an increased risk of future litigation containing similar claims. See Note 17, “Commitments and Contingencies,” to the Consolidated Financial Statements included herein for details regarding certain litigation matters that are currently pending related to acetaminophen.
Goodwill
For the fiscal twelve months ended December 28, 2025, we performed a qualitative assessment on each of our reporting units on the annual test date and concluded that no impairment to goodwill was necessary as it was more likely than not that the estimated fair value of each reporting unit was in excess of its respective carrying value.
In addition to the qualitative assessment performed as of the annual test date for the fiscal twelve months ended December 28, 2025, there was a reassessment of the long-term outlook for the Skin Health and Beauty business during the fiscal three months ended September 28, 2025. The revised outlook aimed to address slower growth in the broader skincare categories, as well as the recent decline in profitability of the Skin Health and Beauty reporting unit. We revised the internal forecasts to reflect the updated outlook. These changes in circumstances were determined to be a triggering event, which resulted in a quantitative interim impairment assessment of the fair value of the Skin Health and Beauty reporting unit. We also elected to perform a quantitative interim impairment assessment for the Self Care and Essential Health reporting units in conjunction with the assessment performed for the Skin Health and Beauty reporting unit.
We estimate the fair value of a reporting unit using a combination of a discounted cash flow model and a market-based approach. The discounted cash flow model relies on assumptions regarding revenue and net income growth rates, projected working capital needs, capital expenditures, and discount rates. Forecasted cash flows are discounted to present value to estimate the fair value. Under the market-based approach, we utilize the guideline public company method and market transaction method. These methods utilize valuation multiples derived from comparable publicly traded companies and relevant industry transactions, which are then applied to the reporting unit’s operating performance metrics. Based on the results of the assessment, the estimated fair value of the Skin Health and Beauty reporting unit exceeded the carrying value by approximately 10%; therefore, no impairment charge was recorded for the fiscal three months ended September 28, 2025. If all other assumptions were held constant, an increase of approximately 100 basis points in the selected discount rate would have resulted in an impairment charge. No impairment to goodwill was necessary for any of the reporting units, as the estimated fair value of each reporting unit exceeded its respective carrying value.
A decline in forecasted Net sales or net income, or adverse macroeconomic developments such as rising interest rates, could significantly reduce the excess between fair value and carrying value. We will continue to monitor the performance of the Skin Health and Beauty business; further deterioration of market conditions or an inability to execute on our strategies could lead to an impairment charge of the goodwill associated with the Skin Health and Beauty reporting unit in the future.
Macroeconomic Developments
Macroeconomic developments, including changes in global trade policies, may adversely affect prevailing economic conditions and our business, results of operations, or financial condition. In 2025, the U.S. government issued executive orders imposing tariffs on goods imported into the United States. These actions, as well as retaliatory tariffs imposed by other countries on U.S. exports, are expected to increase supply chain costs in certain geographies and create economic uncertainty for consumers. While the situation is fluid, based on our current analysis of the effects of the tariffs that have been implemented by the United States and retaliatory measures that are in effect as of the reporting date, we estimate gross tariff exposure of approximately $130 million annualized. We continue to monitor the potential impacts that the increased tariffs and other trade restrictions may have on our business, and we continue to focus on internal mitigating actions to partially offset the impact.
We believe that our performance and future success depend on a number of factors that present significant opportunities for us but also pose risks and challenges, including those discussed below andbelow, in Part I, Item 1A, “Risk Factors,” ofand thisthe Annualsection Reporttitled on“Cautionary FormNote 10-K.Regarding Forward-Looking Statements” included herein.
We have a world-class, global portfolio of iconic and modern brands, and for over 135 years, we have been making and investing in consumer products that are trusted by generations of consumers. Our business is balanced and resilient with leading brands across categories and geographic markets. Our brands are widely recognized and represent a combination of global powerhouses and regional brands, many of which hold leading positions in their respective categories. Our brands are built for moments that uniquely matter; these moments of care create an emotional connection to our productsproducts, that createsenabling deep bonds between consumers and our brands.
Everyday care has never been a more essential part of the consumer health journey. Globally, preferences and expectations for consumer health products continue to evolve, with a heightened focus on preventative care and science-backed solutions. Consumers are also shifting the paradigm of beauty towards health. Other recent trends that have affected consumer preferences include an aging population, premiumization (where consumers switch their purchases to premium alternatives), a growing middle class in emerging markets, and the rise of digital ecosystems that create new opportunities for personalized health solutions. We expect these trends to continue andso that consumers will continue to seek solutions that meet their health goals, creating growth opportunities across our product portfolio.
Our products are sold in a highly competitive global marketplace, which, in recent years, has experienced increased retail trade concentration, the emergence of retail buying alliances, including the consolidation of bargaining strength across multiple partners, the rapid growth of e-commerce, the rise of agentic shopping, and the integration of traditional and digital operations at key customers. One of our customers accounted for approximately 12%, 12%, and 13%12% of total Net sales forin each of the fiscal twelve months ended December 28, 2025, December 29, 2024, and December 31, 2023, and January 1, 2023, respectively.2023. Our top 10 customers represented approximately 41%, 41%, and 42%41% of total Net sales forin each of the fiscal twelve months ended December 28, 2025, December 29, 2024, and December 31, 2023, and January 1, 2023, respectively.2023. As a result of these trends, certain large-format customers have significant bargaining strength and represent a significant portion of our total Net sales.
Our ability to meet the needs of our consumers and customers depends on the proper functioning of our manufacturing and supplier operations. Our manufacturing operations require the timely delivery of sufficient amounts of complex, high-quality components and materials. We have built our supply chain network to deploy resources across the globe where they are most needed. OurWe optimize our sourcing, manufacturing, and demand planning capabilities are continuously optimized to meet evolving market dynamics. Our extensive distribution network and sales organization enable us to establish strategic partnerships with key suppliers and retailers across multiple markets and channels, where we further leverage our scale to drive flexible manufacturing capacity and supply chain optimization. We believe this approach builds and supports our resilience across economic cycles and allows us to prioritize or expand our geographic focus based on our strategic priorities.
As part of our continued transformation to a fit-for-purpose consumer company, during the fiscal year 2024, we began strategic initiatives intended to enhance organizational efficiencies and better position us for future growth (“Our Vue Forward”). To further Our Vue Forward, on May 6, 2024, our Board approved a multi-year initiative (the “2024 Multi-Year Restructuring Initiative”) to build on our strengths, improve our underlying information technology infrastructure, and optimize our cost structure by rebalancing resources to better position us for future growth. The 2024 Multi-Year Restructuring Initiative primarily includes global workforce reductions, changes in management structure, and the transition to centralized shared-service functions in lower-cost locations. As of the end of fiscal year 2025, we have substantially completed all actions under the 2024 Multi-Year Restructuring Initiative. See Note 19, “Restructuring Expenses and Operating Model Optimization Initiatives,” to the Consolidated Financial Statements included herein for further information.
Supply Chain Optimization Initiatives
Since 2019, we have taken significant steps to meet consumer demand and mitigate supply chain constraints. We have redesigned our manufacturing and distribution network, optimizing both in-house and external manufacturing and distribution footprints to improve lead time and reliability across the globe. We selectively invested in specific technologies and expanded our capacity in different geographic markets with the intent to increase competitiveness by improving cost, speed, compliance, and customer service. As a result, our historical results of operations reflect savings delivered through these end-to-end supply chain optimization initiatives.
Russia-Ukraine War
Although the long-term implications of the Russia-Ukraine War are difficult to predict at this time, the financial impact of the conflict during the fiscal twelve months ended December 29, 2024, December 31, 2023, and January 1, 2023 was not significant to our results of operations. For the fiscal twelve months ended December 29, 2024, December 31, 2023, and January 1, 2023, our Ukrainian business represented 0.2%, 0.2%, and 0.1% of our Net sales, respectively. As of both December 29, 2024 and December 31, 2023, our Ukrainian business represented 0.1% of our assets. For the fiscal twelve months ended December 29, 2024, December 31, 2023, and January 1, 2023, our Russian business represented 1.1%, 1.0%, and 1.4% of our Net sales, respectively. As of both December 29, 2024 and December 31, 2023, our Russian business represented 0.7% of our assets.
In the fiscal three months ended April 3, 2022, we announced our decision to suspend supply of all of our products into Russia other than our OTC medicines within our Self Care segment, which we continued to supply as patients rely on many of these products for healthcare purposes. Supply of the suspended products terminated during the fiscal three months ended July 3, 2022. We also suspended branded advertising, clinical trials, and additional investment in Russia. We will continue to monitor the geopolitical situation in Russia and evaluate our activities and future operations in Russia.
We continually assess and refine our portfolio through acquisitions of businesses as well as divestitures of assets that we do not believe are well integrated into our product portfolio and strategic direction. We believe our strong balance sheet will allow us to strategically make acquisitions and divestitures while maintaining our disciplined approach to capital allocation.
We did not complete any significant acquisitions or divestitures during the fiscal twelve months ended December 28, 2025, December 29, 2024, and December 31, 2023, and January 1, 2023.
See Note 17, “Commitments and Contingencies,” to the Consolidated Financial Statements included herein for additional information regarding legal proceedings.
We and/or certain of our subsidiaries are involved from time to time in various lawsuits and claims relating to product liability, labeling, marketing, advertising, pricing, intellectual property, commercial contracts, foreign exchange controls, antitrust and trade regulation, labor and employment, indemnification, data privacy and cybersecurity, environmental, health and safety, and tax matters, governmental investigations, and other legal proceedings that arise in the ordinary course of our business. See Note 17, “Commitments and Contingencies,” to the Consolidated Financial Statements included herein for additional information regarding our current legal proceedings.
A significant number of personal injury claims alleging that talc causes cancer were made against J&J and certain of its affiliates arising out of the use of body powders containing talc, primarily Johnson’s® Baby Powder. These personal injury suits were filed primarily in state and federal courts in the United States and in Canada.
Pursuant to the Separation Agreement, J&J has retained the Talc-Related Liabilities and, as a result, has agreed to indemnify us for the Talc-Related Liabilities in the United States and Canada and any costs associated with resolving such claims. We will, however, remain responsible for all liabilities on account of or relating to harm arising out of, based upon or resulting from, directly or indirectly, the presence of or exposure to talc or talc-containing products sold outside the United States or Canada.
Except for the Talc-Related Liabilities and certain other liabilities for which the Company was indemnified by J&J, the Company generally remains responsible for liabilities relating to, arising out of, or resulting from the past or current operation or conduct of the Company’s business.
A detailed discussion of the period-over-period changes in the results for the fiscal twelve months ended December 28, 2025 and the fiscal twelve months ended December 29, 2024 is presented below. A detailed discussion of the period-over-period changes in the results for the fiscal twelve months ended December 29, 2024 and the fiscal twelve months ended December 31, 2023 is presented below. A detailed discussion of the period-over-period changes in the results for the fiscal twelve months ended December 31, 2023 and the fiscal twelve months ended January 1, 2023 can be found under the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II.,II, Item 7 of thisthe Annual Report on Form 10-K for the fiscal twelve months ended December 31,29, 20232024 filed on MarchFebruary 1,24, 20242025 with the SEC (the “20232024 Annual Report”).
Net Sales
Net sales were $15.5$15.1 billion and $15.4$15.5 billion for the fiscal twelve months ended December 29,28, 20242025 and December 31,29, 2023,2024, respectively, ana increasedecrease of $11$331 million, or 0.1%.2.1%. Excluding the impact of unfavorablefavorable changes in foreign currency exchange rates of $2190.2% million,and orthe 1.4%,reduction in Net sales related to divestitures of 0.1%, Organic sales (a non-GAAP financial measure as defined in “Segment Results—Organic Sales Change” below) growthdecreased was $230 million, or 1.5%. Organic sales growth was2.2% driven by volume-related decreases of 2.3% partially offset by favorable value realization (defined as price, including mix) of 2.7%,0.1%. partiallyVolume-related offsetdecreases across segments were impacted by volume-relatedtrade decreasesinventory ofreductions 1.2%.driven Theby increaseretailer inventory management in year-over-yearthe valueUnited realizationStates wasand primarilychanges duein shipment timing as compared to carryover price increases from the prior fiscal year in China, as well as lower seasonal incidences impacting Allergy Care, pediatric Pain Care, and Cough and Cold. Favorable value realization was driven by new pricing actions, while the volume-related decrease was primarily driven by Skin Health and Beauty and Self Care. Organic sales growth was primarily driven by growth in Essential Health across all product categories, led by Oral Care, as well as growth in Self Care, partially offset by declinesstrategic price investments, primarily in Skin Health and Beauty due to volume-related decreases in the United States attributable to the carryover effects from prior fiscal year execution challenges and current fiscal year competitive pressures.Beauty. For additional information about the Net sales of our three reportable business segments, see “—Segment Results” below.
The following tablestable presentpresents a reconciliation of the change in U.S. GAAP Net sales to the change in Organic sales for the fiscal twelve months ended December 29,28, 20242025 as compared to the fiscal twelve months ended December 31,29, 20232024:
(1) Acquisitions and divestitures did not materially impact Net sales for the fiscal twelve months ended December 29, 2024 or December 31, 2023.
Cost of Sales
Cost of sales were $6.5$6.3 billion and $6.8$6.5 billion for the fiscal twelve months ended December 29,28, 20242025 and December 31,29, 2023,2024, respectively, a decrease of $305$164 million, or 4.5%.2.5%. Gross profit margin expanded 20010 basis points to 58.1% for the fiscal twelve months ended December 28, 2025 as compared to 58.0% for the fiscal twelve months ended December 29, 20242024. asChanges comparedin Cost of sales were primarily due to 56.0%volume-related forNet thesales fiscal twelve months ended December 31, 2023.decreases. Changes in both Cost of sales and gross profit margin were primarilyalso duedriven toby gains attributable to the realization of benefits associated with our supply chain optimization initiatives.initiatives, Grosspartially offset by net input cost inflation and the impact of tariffs imposed on goods imported into the United States. Changes in both Cost of sales and gross profit margin were also increasedimpacted dueby a reduction in stock-based compensation expense attributable to valuea realization.refinement to the methodology of our stock-based compensation expense allocations, forfeitures of unvested stock-based awards, and the vesting of stock-based awards.
Selling, general, and administrative expenses were $6.1 billion and $6.3 billion for the fiscal twelve months ended December 28, 2025 and December 29, 2024, respectively, a decrease of $241 million, or 3.8%. Selling, general, and administrative expenses as a percentage of Net sales decreased 70 basis points to 40.3% for the fiscal twelve months ended December 28, 2025, as compared to 41.0% for the fiscal twelve months ended December 29, 2024. The decrease in Selling, general, and administrative expenses was primarily attributable to a $187 million decrease in Separation-related costs and savings from Our Vue Forward, partially offset by higher expenses related to brand support and Proposed Transaction costs incurred in the fiscal twelve months ended December 28, 2025. The decrease was also driven by a reduction in stock-based compensation expense attributable to forfeitures of unvested stock-based awards as well as the vesting of stock-based awards, partially offset by a refinement to the methodology of our stock-based compensation expense allocations.
Selling, general, and administrative expenses were $6.3 billion and $6.1 billion for the fiscal twelve months ended December 29, 2024 and December 31, 2023, respectively, an increase of $188 million, or 3.1%. Selling, general, and administrative expenses as a percentage of Net sales increased 120 basis points to 41.0% for the fiscal twelve months ended December 29, 2024, as compared to 39.8% for the fiscal twelve months ended December 31, 2023, primarily attributable to higher expenses related to brand support, including advertising and healthcare professional engagement, as we increased our investment to further support sales across segments and geographies, and an additional quarter of incremental ongoing public company costs not incurred last year. These cost increases were partially offset by savings from Our Vue Forward and a $217 million decrease in Separation-related costs.
Restructuring expenses were $290 million and $185 million for the fiscal twelve months ended December 28, 2025 and December 29, 2024, drivenrespectively, byan increase of $105 million. Restructuring expenses relate to costs incurred under Our Vue Forward related to global workforce reductions, changes in management structure,Forward, and the transitionincrease towas centralizeddriven shared-serviceby functions in lower-cost locations, as we began strategic initiatives intended to enhance organizational efficiencies and better position Kenvue for future growth. This includes employee-related costs,higher information technology and project-related costs, and other implementation costs. See Note 19, “Restructuring Expenses and Operating Model Optimization Initiatives,” to the Consolidated Financial Statements included herein for additional information.
Impairment charges were $23 million and $578 million for the fiscal twelve months ended December 28, 2025 and December 29, 2024, whichrespectively, primarilya includeddecrease of $555 million. Impairment charges for the fiscal twelve months ended December 28, 2025 were driven by a non-cash impairment charge of $23 million related to the ORSL® trade name following regulatory changes in India. Impairment charges for the fiscal twelve months ended December 29, 2024 were driven by a non-cash charge of $488 million ($337 million after-tax) to adjust the carrying value of intangible assets and property, plant, and equipment related to the Dr.Ci:Labo® skin health business. The impairment was due primarily to revisions to internal forecasts for the business as a result of updates in our strategy to reach more consumers and appropriately address evolving market dynamics, including shifts in consumer sentiment in ChinaChina, as well as changing shopping patterns in the region. TheImpairment increasecharges for the fiscal twelve months ended December 29, 2024 were also includeddriven by the impact of a $68 million non-cash impairment charge related to our interimformer corporate headquarters in Skillman, New Jersey, which was classified as held for sale on February 21, 2024. Additionally, we recognized a non-cash impairment charge of $22 million related to certain software development assets. See Note 1, “Description of the Company and Summary of Significant Accounting Policies—Impairment of Long-Lived Assets,” to the Consolidated Financial Statements included herein for additional information.
Other Operating Expense (Income), Expense, Net
Other operating expense (income), expense, net was $26$(23) million and $(10)$26 million for the fiscal twelve months ended December 29,28, 20242025 and December 31,29, 2023,2024, respectively, a change of $36$49 million. ExpenseOther operating (income) expense, net for the fiscal twelve months ended December 28, 2025 and December 29, 2024 was driven by the $38 million and $59 million accountingimpact, impactrespectively, of net economic benefit arrangements with J&J in connection with the Deferred Local Businesses (see Note 1, “Description of the Company and Summary of Significant Accounting Policies,Policies—Variable Interest Entities and Net Economic Benefit Arrangements,” to the Consolidated Financial Statements included herein for additional information), partially offset by $37 million and $34 millionmillion, respectively, of royalty income. IncomeOther operating (income) expense, net for the fiscal twelve months ended December 31,28, 20232025 was also driven by the prior period reversal of a $45 million contingent liability that was no longer considered to be probable, $35 million of royalty income, and a $9$17 million gain recognized on the sale of a manufacturing facility in Lancaster, Pennsylvania in the fiscalSkillman, twelveNew monthsJersey, ended December 31, 2023, partially offset by the $28 million accounting impact of net economic benefit arrangements with J&J in connection with the Deferred Local Businesses, and $26 million of litigation expense.facility. See Note 13, “Other Operating Expense (Income), Expense, Net and Other Expense, Net,” to the Consolidated Financial Statements included herein for additional information.
What changed in the latest 10-Q
Risk Factors
In addition to the other information set forth in this Quarterly Report on Form 10-Q, the reader should carefully consider the factors in Part I, Item 1A, “Risk Factors,” included in our Annual Report.
No wording changes found in this section.
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Management's Discussion & Analysis (MD&A)
New heading “Results of Operations”
New heading “Fiscal Six Months Ended June 28, 2026 Compared with Fiscal Six Months Ended June 29, 2025”
New heading “Selling, General, and Administrative Expenses”
New heading “Restructuring Expenses”
New heading “Other Operating Expense, Net”
New heading “Interest Expense, Net”
New heading “Provision for Taxes”
New heading “Segment Results”
New heading “Fiscal Six Months Ended June 28, 2026 Compared with Fiscal Six Months Ended June 29, 2025”
New heading “Organic Sales Change”
New heading “Self Care Segment”
New heading “Self Care Segment Net Sales”
New heading “Self Care Segment Adjusted Operating Income”
New heading “Skin Health and Beauty Segment”
New heading “Skin Health and Beauty Segment Net Sales”
New heading “Skin Health and Beauty Segment Adjusted Operating Income”
New heading “Essential Health Segment”
New heading “Essential Health Segment Net Sales”
New heading “Essential Health Segment Adjusted Operating Income”
Removed heading “Other Expense, Net”
Largest changes
“Cost of sales were $3.3 billion and $3.2 billion for the fiscal six months ended June 28, 2026 and June 29, 2025, respectively, an increase of $110 million, or 3.5%. Gross profit margin expanded 10 basis points to 58.5% for the fiscal six months ended June 28, 2026 as compared to 58.4% for the fiscal six months ended June 29, 2025. …”see in full comparison
“The Skin Health and Beauty Segment adjusted operating income increased by $113 million, or 46.9%, to $354 million for the fiscal six months ended June 28, 2026 as compared to the fiscal six months ended June 29, 2025. …”see in full comparison
“The Self Care Segment adjusted operating income increased by $44 million, or 4.0%, to $1,137 million for the fiscal six months ended June 28, 2026 as compared to the fiscal six months ended June 29, 2025. …”see in full comparison
“The Essential Health Segment adjusted operating income increased by $24 million, or 4.1%, to $614 million for the fiscal six months ended June 28, 2026 as compared to the fiscal six months ended June 29, 2025. The increase was primarily driven by volume-related Net sales increases and the benefits associated with our supply chain optimization initiatives, partially offset by net input cost inflation, the impact of tariffs imposed on goods imported into the United States, and unfavorable changes in foreign currency exchange rates.”see in full comparison
Net sales weresee in full comparison$3.9$4.0 billion and$3.7$3.8 billion for the fiscal three months endedMarchJune29,28, 2026 andMarchJune30,29, 2025, respectively, an increase of$168$116 million, or4.5%.3.0%. Excluding the impact of favorable changes in foreign currency exchange rates of3.8%,1.4%, Organic sales (a non-GAAP financial measure as defined in “Segment Results—Organic Sales Change” below) increased0.7%1.6% driven by both favorable value realization (defined as price, including mix) of1.0%,0.9%partially offset byand volume-relateddecreasesincreases of0.3%.0.7%. Favorable value realization was driven primarily by new pricingactions.actions in Latin America, Europe, Middle East, and Africa (“EMEA”), and Asia Pacific. Volume-relateddecreasesincreases were driven by the impact oflowerproductincidences of illnesses primarily affecting pediatric Pain Care as well as Coughinnovation andCold,strongpartiallye-commerceoffset by the impact of product innovationperformance across all three reportable business segments. For additional information about the Net sales of our three reportable business segments, see “—Segment Results” below.
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This discussion contains forward-looking statements that involve risks and uncertainties. The forward-looking statements are not historical facts, but rather are based on current expectations, estimates, assumptions, and projections about our industry, business, and future financial results. Our actual results could differ materially from the results contemplated by these forward-looking statements due to a number of factors, including those discussed in Part I, Item 1A, “Risk Factors,” in our Annual Report on Form 10-K for the fiscal twelve months ended December 28, 2025, filed on February 20, 2026 with the SEC (the “Annual Report”), Part II, Item 1A, “Risk Factors,” included herein, and the section titled “Cautionary Note Regarding Forward-Looking Statements” included herein.
This discussion should be read in conjunction with our accompanying Condensed Consolidated Financial Statements for the fiscal three and six months ended MarchJune 29,28, 2026, which have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and the rules and regulations of the SEC for interim financial statements, and our audited consolidated financial statements for the fiscal twelve months ended December 28, 2025, which are included in the Annual Report. In our opinion, the Condensed Consolidated Financial Statements reflect all adjustments, consisting of normal and recurring adjustments, necessary for a fair statement of the financial condition, results of operations, and cash flows for the periods indicated. All currency amounts are expressed in U.S. dollars unless otherwise noted.
On November 2, 2025, our Board of Directors (the “Board”) unanimously approved the execution of an Agreement and Plan of Merger (the “Merger Agreement”) pursuant to which K-C will acquire all of the outstanding shares of the Company for a combination of stock and cash in a series of transactions (the “Pending Transaction”). Pursuant to the terms and subject to the conditions of the Merger Agreement, Company shareholders will receive 1) 0.14625 shares of K-C Common Stock and 2) $3.50 in cash for each share of the Company they own. Upon completion of the Pending Transaction, current Company shareholders are expected to own approximately 46% and current K-C shareholders are expected to own approximately 54% of the combined company on a fully diluted basis.
The Merger Agreement contains customary representations, warranties, covenants, and termination rights. The Pending Transaction is expected to close in the secondfourth halfquarter of 2026 and is conditioned on the satisfaction or waiver of other customary closing conditions, including the receipt of antitrust clearance in the United States and a number of foreign regulatory approvals. On January 29, 2026, our shareholders approved the adoption of the Merger Agreement and K-C’s shareholders approved the issuance of K-C Common Stock in connection with the Pending Transaction, in each case at a special meeting of shareholders held for that purpose. Additionally, the waiting period applicable to the Pending Transaction under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, expired on February 4, 2026.
In connection with our establishment as a standalone public company, we are incurring certain non-recurring separation-related costs (the “Separation-related costs”). Separation-related costs associated with information technology and other activities, primarily related to the disentanglement of systems and the discontinuance of certain information technology assets, are substantially completed. Costs related to legal entity name changechanges, as well as minimal costs related to other activitiesactivities, are expected to continue for a longer period than originally anticipated.
Economic challenges, including the impact from acts of war, military actions, terrorist attacks, or civil unrest, such as the conflict in the Middle East, may continue to cause economic uncertainty and volatility. The conflict in the Middle East has resulted in volatility in the cost or availability of raw materials, commodities, logistics, transportation, and other inputs for our products due to the increased cost of oil.products. There is significant uncertainty regarding the duration and potential escalation of this conflict, as well as the risk of further economic disruptions that could impact global trade and supply chains. GivenWe have taken, and continue to take, actions intended to mitigate the impact of these disruptions; however, given the dynamic nature of these conditions, we expect continued variability in the macroeconomic environment. The impact of these issues may adversely affect prevailing economic conditions and our business, results of operations, or financial condition.
In 2025, the U.S. government issued executive orders imposing tariffs on goods imported into the United States. These actions, as well as retaliatory tariffs imposed by other countries on U.S. exports, are expected to increase supply chain costs in certain geographies and create economic uncertainty for consumers. While the situation is fluid, based on our current analysis of the effects of the tariffs that have been implemented by the United States and retaliatory measures that are in effect as of the reporting date, we estimate gross tariff exposure of approximately $90$80 million annualized. In February 2026, the U.S. Supreme Court issued a ruling striking down tariffs previously imposed under the International Emergency EconomicsEconomic Powers Act (“IEEPA”). The ultimate availability, timing, and amount of potential refunds of such tariffs remain uncertain and could be subject to further legal, regulatory, and administrative developments or actions. Following the Supreme Court’s decision, the U.S. government announced in February 2026 that it would impose additional baseline tariffs on imports under a different statutory authority, in addition to any existing non-IEEPA tariffs. Upon expiration of the baseline tariffs in July 2026, the U.S. government imposed new tariffs. We continue to monitor the potential impacts that the increased tariffs and other trade restrictions may have on our business, and we continue to focus on internal mitigating actions to partially offset the impact.
Fiscal Three Months Ended MarchJune 29,28, 2026 Compared with Fiscal Three Months Ended MarchJune 30,29, 2025
Our results for the fiscal three months ended MarchJune 29,28, 2026 and MarchJune 30,29, 2025 were as follows:
Net Sales
Net sales were $3.9$4.0 billion and $3.7$3.8 billion for the fiscal three months ended MarchJune 29,28, 2026 and MarchJune 30,29, 2025, respectively, an increase of $168$116 million, or 4.5%.3.0%. Excluding the impact of favorable changes in foreign currency exchange rates of 3.8%,1.4%, Organic sales (a non-GAAP financial measure as defined in “Segment Results—Organic Sales Change” below) increased 0.7%1.6% driven by both favorable value realization (defined as price, including mix) of 1.0%,0.9% partially offset byand volume-related decreasesincreases of 0.3%.0.7%. Favorable value realization was driven primarily by new pricing actions.actions in Latin America, Europe, Middle East, and Africa (“EMEA”), and Asia Pacific. Volume-related decreasesincreases were driven by the impact of lowerproduct incidences of illnesses primarily affecting pediatric Pain Care as well as Coughinnovation and Cold,strong partiallye-commerce offset by the impact of product innovationperformance across all three reportable business segments. For additional information about the Net sales of our three reportable business segments, see “—Segment Results” below.
The following table presents a reconciliation of the change in U.S. GAAP Net sales to the change in Organic sales for the fiscal three months ended MarchJune 29,28, 2026 as compared to the fiscal three months ended MarchJune 30,29, 2025:
(1) Acquisitions and divestitures did not impact Net sales for the fiscal three months ended MarchJune 29,28, 2026 or MarchJune 30,29, 2025.
(2) Also referred to as value realization.
Cost of Sales
Cost of sales were $1.7 billion and $1.6 billion for both the fiscal three months ended MarchJune 29,28, 2026 and MarchJune 30,29, 2025.2025, Forrespectively, an increase of $76 million, or 4.8%. Gross profit margin declined 70 basis points to 58.2% for the fiscal three months ended MarchJune 29,28, 2026,2026 Costas of sales increased $34 million, or 2.2%. Gross profit margin expanded 90 basis pointscompared to 58.9% for the fiscal three months ended MarchJune 29, 2026 as compared to 58.0% for the fiscal three months ended March 30, 2025. Changes in both Cost of sales and gross profit margin were driven by benefits associated with our supply chain optimization initiatives, partially offset by net input cost inflation andinflation, the impact of tariffs imposed on goods imported into the United States.States, and unfavorable changes in transactional foreign currency exchange rates, partially offset by benefits associated with our supply chain optimization initiatives. Cost of sales was also impacted by unfavorable changes in translational foreign currency exchange rates and volume-related Net sales decreases,increases. and grossGross profit margin was also impacted by favorable value realization.
Selling, general, and administrative expenses were $1.5 billion for botheach of the fiscal three months ended MarchJune 29,28, 2026 and MarchJune 30,29, 2025. For the fiscal three months ended MarchJune 29,28, 2026, Selling, general, and administrative expenses decreasedincreased $84$33 million, or 5.5%. Selling, general, and administrative expenses2.2% as a percentage of Net sales decreased 390 basis pointscompared to 37.2% for the fiscal three months ended MarchJune 29, 2026, as compared to 41.1% for the fiscal three months ended March 30, 2025. The decreaseincrease in Selling, general, and administrative expenses was primarily attributable to higher expenses related to brand support, unfavorable changes in translational foreign currency exchange rates, and Pending Transaction and other related costs incurred in the fiscal three months ended June 28, 2026, partially offset by savings from our restructuring initiatives (as described in Note 15, “Restructuring Expenses and Operating Model Optimization Initiatives,” to the Condensed Consolidated Financial Statements included herein), and a $30$16 million decrease in Separation-related costs,costs. Selling, general, and loweradministrative expenses relatedas a percentage of Net sales decreased 30 basis points to brand38.9% support attributable to media cost improvements, offset by unfavorable changes in translational foreign currency exchange rates and Pending Transaction and other related costs incurred infor the fiscal three months ended MarchJune 28, 2026, as compared to 39.2% for the fiscal three months ended June 29, 2026.2025.
Restructuring expenses were $71$59 million and $60 million for the fiscal three months ended MarchJune 29,28, 2026 and MarchJune 30,29, 2025, respectively, ana increasedecrease of $11$1 million. Restructuring expenses for the fiscal three months ended MarchJune 29,28, 2026 related to costs incurred under the 2026 Restructuring Initiative, and restructuring expenses for the fiscal three months ended MarchJune 30,29, 2025 related to costs incurred under Our Vue Forward. Costs incurred under each of the initiatives primarily included employee-related costs and information technology and project-related costs. See Note 15, “Restructuring Expenses and Operating Model Optimization Initiatives,” to the Condensed Consolidated Financial Statements included herein for additional information.
Other operating expense, net was $11$6 million and $13$5 million for the fiscal three months ended MarchJune 29,28, 2026 and MarchJune 30,29, 2025, respectively, aan decreaseincrease of $2$1 million. Other operating expense, net for the fiscal three months ended MarchJune 29,28, 2026 and MarchJune 30,29, 2025 was driven by the $6$15 million and $12$16 million impact, respectively, of net economic benefit arrangements with J&J in connection with the Deferred Local Businesses (see Note 1, “Description of the Company and Summary of Significant Accounting Policies—Net Economic Benefit Arrangements,” to the Condensed Consolidated Financial Statements included herein for additional information), partially offset by $5$7 million and $4$14 million, respectively, of royalty income. See Note 9, “Other Operating Expense, Net and Other Expense, Net,” to the Condensed Consolidated Financial Statements included herein for additional information.
Other Expense, Net
Other expense, net was $0$11 million and $6$10 million for the fiscal three months ended MarchJune 29,28, 2026 and MarchJune 30,29, 2025, respectively, aan decreaseincrease of $6$1 million. Other expense, net for the fiscal three months ended MarchJune 30,28, 2026 and June 29, 2025 was driven by $6$12 million and $11 million, respectively, of currency losses on transactions. See Note 9, “Other Operating Expense, Net and Other Expense, Net,” to the Condensed Consolidated Financial Statements included herein for additional information.
Interest expense, net was $95$90 million and $94 million for the fiscal three months ended MarchJune 29,28, 2026 and MarchJune 30,29, 2025, respectively, ana increasedecrease of $1$4 million. Interest expense, net in botheach of the fiscal periods primarily consisted of interest expense, including amortization of discounts and debt issuance costs, recognized on the Senior Notes (as defined in Note 4, “Borrowings,” to the Condensed Consolidated Financial Statements included herein) and notes issued under our commercial paper program. See Note 4, “Borrowings,” to the Condensed Consolidated Financial Statements included herein for additional information.
Provision for taxes was $198$142 million and $136$168 million for the fiscal three months ended MarchJune 29,28, 2026 and MarchJune 30,29, 2025, respectively, ana increasedecrease of $62$26 million. The increasedecrease in Provision for taxes was primarily the result of higherthe year-to-daterelease pre-tax income, an increase in unfavorable return-to-provision adjustments, andof a shortfallvaluation onallowance stock-based compensation recorded duringin the fiscal three months ended MarchJune 29,28, 20262026, as comparedwell as changes to athe windfalljurisdictional mix of income and favorable impacts to U.S. tax on stock-basedforeign compensationearnings recordedattributable duringto the fiscalprior threeyear monthsenactment endedof Marchthe 30,One 2025.Big Beautiful Bill Act, which became effective in the current year. In addition, the worldwide effective income tax rates for the fiscal three months ended MarchJune 29,28, 2026 and MarchJune 30,29, 2025 were 29.5%23.7% and 29.7%,28.6%, respectively. See Note 10, “Income Taxes,” to the Condensed Consolidated Financial Statements included herein for additional information.
Fiscal Three Months Ended MarchJune 29,28, 2026 Compared with Fiscal Three Months Ended MarchJune 30,29, 2025
The following tables present Segment net sales and Segment adjusted operating income and the period-over-period changes in Segment net sales and Segment adjusted operating income for the fiscal three months ended MarchJune 29,28, 2026 and MarchJune 30,29, 2025. See Note 14, “Segments of Business,” to the Condensed Consolidated Financial Statements included herein for further details regarding Segment net sales and Segment adjusted operating income.
(1) We define Segment adjusted cost of sales as Cost of sales adjusted for amortization of intangible assets, operating model optimization initiatives, Separation-related costs, Pending Transaction and other related costs, Founder Shares (as defined below), conversion of stock-based awards, and general corporate/unallocated expenses.
(6) Restructuring expenses and operating model optimization initiatives relate to the 2026 Restructuring Initiative for the fiscal three months ended MarchJune 29,28, 2026 and the 2024 Multi-Year Restructuring Initiative for the fiscal three months ended MarchJune 30,29, 2025. See Note 15, “Restructuring Expenses and Operating Model Optimization Initiatives,” to the Condensed Consolidated Financial Statements included herein for additional information. Restructuring expenses and operating model optimization initiatives include accelerated depreciation expense on assets related to the 2026 Restructuring Initiative for the fiscal three months ended June 28, 2026.
(7) Segment adjusted operating income excludes the impact of the conversion of stock-based awards that occurred on August 23, 2023. The adjustment represents the net impact of the gain on reversal of previously recognized stock-based compensation expense, offset by stock-based compensation expense recognized in the fiscal three months ended MarchJune 29,28, 2026 and MarchJune 30,29, 2025 relating to employee services provided prior to the Separation.
(8) On August 25, 2023, our Compensation & Human Capital Committee approved equity grants to individuals employed by Kenvue as of October 2, 2023 (the “Founder Shares”). On October 2, 2023, the Founder Shares were granted to all Kenvue employees in the form of stock options and performance stock units (“PSUs”) to executive officers and either stock options and performance stock unitsPSUs or restricted stock units (“RSUs”) to non-executive individuals.
The following table presents a reconciliation of the change in U.S. GAAP Net sales to the change in Organic sales for the fiscal three months ended MarchJune 29,28, 2026 as compared to the fiscal three months ended MarchJune 30,29, 2025:
(1) Acquisitions and divestitures did not impact Net sales for the fiscal three months ended MarchJune 29,28, 2026 or MarchJune 30,29, 2025.
(2) Also referred to as value realization.
The Self Care Segment Net sales were $1.7$1.6 billion for botheach of the fiscal three months ended MarchJune 29,28, 2026 and MarchJune 30,29, 2025. For the fiscal three months ended MarchJune 29,28, 2026, Net sales increased $32$34 million, or 1.9%.2.2%, as compared to the fiscal three months ended June 29, 2025. Excluding the impact of favorable changes in foreign currency exchange rates of 4.2%,1.6%, Organic sales decreasedincreased 2.3%0.6% driven by volume-related decreases of 3.9%, partially offset by favorable value realization of 1.6%.1.2%, partially offset by volume-related decreases of 0.6%. Favorable value realization was primarily attributable to new pricing actions in EMEA and prior fiscal year carry-over pricing actions in North America. Volume-related decreases were primarily attributable to the impact of lower incidences of illnesses affecting Allergy Care, pediatric Pain CareCare, and Cough and Cold as well as Coughdecreases in Digestive Health in EMEA and Cold.Asia Volume-related decreases werePacific, partially offset by strong e-commerce performance; effective promotional strategies in Allergy Care; and product innovation andin growthDigestive Health in Smokingthe Cessation.United Favorable value realization was primarily attributable to new and prior fiscal year carry-over pricing actions.States.
The Self Care Segment adjusted operating income increaseddecreased by $59$15 million, or 10.4%,2.8%, to $625$512 million for the fiscal three months ended MarchJune 29,28, 2026 as compared to the fiscal three months ended MarchJune 30,29, 2025. The increasedecrease was primarily driven by favorablehigher valueexpenses realization,related theto benefitsbrand associated with our supply chain optimization initiatives, and decreased administrative expenses, partially offset by volume-related Net sales decreases,support, net input cost inflation, unfavorable changes in foreign currency exchange rates, and the impact of tariffs imposed on goods imported into the United States.States, partially offset by favorable value realization and the benefits associated with our supply chain optimization initiatives.
The Skin Health and Beauty Segment Net sales were $1.1 billion andfor $1.0each billion forof the fiscal three months ended MarchJune 29,28, 2026 and MarchJune 30,29, 2025,2025. respectively,For anthe increasefiscal ofthree $82months ended June 28, 2026, Net sales increased $54 million, or 8.4%.5.1% as compared to the fiscal three months ended June 29, 2025. Excluding the impact of favorable changes in foreign currency exchange rates of 3.4%,1.4%, Organic sales increased 5.0%,3.7% driven by both volume-related increases of 4.2% and favorable value realization of 0.8%.2.7% and volume-related increases of 1.0%. Favorable value realization was primarily attributable to new pricing actions in Latin America and lower strategic price investments in North America and Latin America. Volume-related increases were primarily attributable to strong e-commerce performance, product innovation across major need states primarily in North America and Europe, Middle East,EMEA, and Africa, increases in hair regrowth products, and a strong sun season in Latin America. Volume-related increases were partially offset by current fiscal year competitive pressures in the United States. Favorable value realization was attributable to new pricing actions and lower strategic price investments.products.
The Skin Health and Beauty Segment adjusted operating income increased by $76$37 million, or 82.6%,24.8%, to $168$186 million for the fiscal three months ended MarchJune 29,28, 2026 as compared to the fiscal three months ended MarchJune 30,29, 2025. The increase was primarily driven by volume-related Net sales increases, favorable value realization, lower expenses related to brand support in part attributable to media cost improvements, and the benefits associated with our supply chain optimization initiatives, and decreased administrative expenses, partially offset by net input cost inflation, the impact of tariffs imposed on goods imported into the United StatesStates, and unfavorable changes in foreign currency exchange rates.
The Essential Health Segment Net sales were $1.2$1.3 billion and $1.1$1.2 billion for the fiscal three months ended MarchJune 29,28, 2026 and MarchJune 30,29, 2025, respectively, an increase of $54$28 million, or 4.9%.2.3%. Excluding the impact of favorable changes in foreign currency exchange rates of 3.4%,1.2%, Organic sales increased 1.5%1.1% driven by both volume-related increases of 1.4%1.9%, andpartially favorableoffset by unfavorable value realization of 0.1%.0.8%. Volume-related increases were primarily driven by distribution gains and strong e-commerce performance in Baby Care as well as; product innovation primarilyand distribution gains in Wound Care largely attributable to Oralthe CareUnited States; and Woundeffective promotional strategies in Baby Care. Volume-related increases were partially offset by Women’s Healthdecreases in Europe,Oral MiddleCare East,largely attributable to competitive pressures. Unfavorable value realization was primarily attributable to increased strategic price investments across all regions, partially offset by new pricing actions in Latin America, Asia Pacific, and Africa.EMEA.
The Essential Health Segment adjusted operating income increaseddecreased by $60$36 million, or 25.1%,10.3%, to $299$315 million for the fiscal three months ended MarchJune 29,28, 2026 as compared to the fiscal three months ended MarchJune 30,29, 2025. The increasedecrease was primarily driven by volume-related Net sales increases, lowerhigher expenses related to brand supportsupport, attributablenet to mediainput cost improvements, and the benefits associated with our supply chain improvement programs, partially offset byinflation, the impact of tariffs imposed on goods imported into the United States, net input cost inflation, and unfavorable changes in foreign currency exchange rates.rates, partially offset by the benefits associated with our supply chain optimization initiatives and volume-related Net sales increases.
Results of Operations
Fiscal Six Months Ended June 28, 2026 Compared with Fiscal Six Months Ended June 29, 2025
Our results for the fiscal six months ended June 28, 2026 and June 29, 2025 were as follows:
* Calculation not meaningful.
Net sales were $7.9 billion and $7.6 billion for the fiscal six months ended June 28, 2026 and June 29, 2025, respectively, an increase of $284 million, or 3.7%. Excluding the impact of favorable changes in foreign currency exchange rates of 2.5%, Organic sales increased 1.2% driven by both favorable value realization of 1.0% and volume-related increases of 0.2%. Favorable value realization was driven primarily by new pricing actions in Latin America, EMEA, and Asia Pacific. Volume-related increases were driven by strong e-commerce performance as well as product innovation, partially offset by the impact of lower incidences of illnesses primarily affecting pediatric Pain Care as well as Cough and Cold. For additional information about the Net sales of our three reportable business segments, see “—Segment Results” below.
The following table presents a reconciliation of the change in U.S. GAAP Net sales to the change in Organic sales for the fiscal six months ended June 28, 2026 as compared to the fiscal six months ended June 29, 2025:
(1) Acquisitions and divestitures did not impact Net sales for the fiscal six months ended June 28, 2026 or June 29, 2025.
Cost of sales were $3.3 billion and $3.2 billion for the fiscal six months ended June 28, 2026 and June 29, 2025, respectively, an increase of $110 million, or 3.5%. Gross profit margin expanded 10 basis points to 58.5% for the fiscal six months ended June 28, 2026 as compared to 58.4% for the fiscal six months ended June 29, 2025. Changes in both Cost of sales and gross profit margin were driven by benefits associated with our supply chain optimization initiatives, partially offset by net input cost inflation, the impact of tariffs imposed on goods imported into the United States, and unfavorable changes in transactional foreign currency exchange rates. Cost of sales was also impacted by unfavorable changes in translational foreign currency exchange rates. Gross profit margin was also impacted by favorable value realization.
Selling, General, and Administrative Expenses
Selling, general, and administrative expenses were $3.0 billion for each of the fiscal six months ended June 28, 2026 and June 29, 2025. For the fiscal six months ended June 28, 2026, Selling, general, and administrative expenses decreased $51 million, or 1.7%. Selling, general, and administrative expenses as a percentage of Net sales decreased 210 basis points to 38.0% for the fiscal six months ended June 28, 2026, as compared to 40.1% for the fiscal six months ended June 29, 2025. The decrease in Selling, general, and administrative expenses was primarily attributable to savings from our restructuring initiatives (as described in Note 15, “Restructuring Expenses and Operating Model Optimization Initiatives,” to the Condensed Consolidated Financial Statements included herein), and a $46 million decrease in Separation-related costs, partially offset by unfavorable changes in translational foreign currency exchange rates and Pending Transaction and other related costs incurred in the fiscal six months ended June 28, 2026.
Restructuring Expenses
Restructuring expenses were $130 million and $120 million for the fiscal six months ended June 28, 2026 and June 29, 2025, respectively, an increase of $10 million. Restructuring expenses for the fiscal six months ended June 28, 2026 related to costs incurred under the 2026 Restructuring Initiative, and restructuring expenses for the fiscal six months ended June 29, 2025 related to costs incurred under Our Vue Forward. Costs incurred under each of the initiatives primarily included employee-related costs and information technology and project-related costs. See Note 15, “Restructuring Expenses and Operating Model Optimization Initiatives,” to the Condensed Consolidated Financial Statements included herein for additional information.
Other Operating Expense, Net
Other operating expense, net was $17 million and $18 million for the fiscal six months ended June 28, 2026 and June 29, 2025, respectively, a decrease of $1 million. Other operating expense, net for the fiscal six months ended June 28, 2026 and June 29, 2025 was driven by the $21 million and $28 million impact, respectively, of net economic benefit arrangements with J&J in connection with the Deferred Local Businesses (see Note 1, “Description of the Company and Summary of Significant Accounting Policies—Net Economic Benefit Arrangements,” to the Condensed Consolidated Financial Statements included herein for additional information), partially offset by $12 million and $18 million, respectively, of royalty income. See Note 9, “Other Operating Expense, Net and Other Expense, Net,” to the Condensed Consolidated Financial Statements included herein for additional information.
Other expense, net was $11 million and $16 million for the fiscal six months ended June 28, 2026 and June 29, 2025, respectively, a decrease of $5 million. Other expense, net for the fiscal six months ended June 28, 2026 and June 29, 2025 was driven by $12 million and $17 million, respectively, of currency losses on transactions. See Note 9, “Other Operating Expense, Net and Other Expense, Net,” to the Condensed Consolidated Financial Statements included herein for additional information.
Interest Expense, Net
Interest expense, net was $185 million and $188 million for the fiscal six months ended June 28, 2026 and June 29, 2025, respectively, a decrease of $3 million. Interest expense, net in each of the fiscal periods primarily consisted of interest expense, including amortization of discounts and debt issuance costs, recognized on the Senior Notes (as defined in Note 4, “Borrowings,” to the Condensed Consolidated Financial Statements included herein) and notes issued under our commercial paper program. See Note 4, “Borrowings,” to the Condensed Consolidated Financial Statements included herein for additional information.
Provision for Taxes
Provision for taxes was $340 million and $304 million for the fiscal six months ended June 28, 2026 and June 29, 2025, respectively, an increase of $36 million. The increase in Provision for taxes was primarily the result of higher year-to-date pre-tax income as well as a shortfall on stock-based compensation recorded during the fiscal six months ended June 28, 2026 as compared to a windfall on stock-based compensation recorded during the fiscal six months ended June 29, 2025. The increase was partially offset by a lower worldwide effective income tax rate resulting from changes to the jurisdictional mix of income and favorable impacts to U.S. tax on foreign earnings attributable to the prior year enactment of the One Big Beautiful Bill Act, which became effective in the current year, as well as the release of a valuation allowance in the fiscal six months ended June 28, 2026. In addition, the worldwide effective income tax rates for the fiscal six months ended June 28, 2026 and June 29, 2025 were 26.8% and 29.1%, respectively. See Note 10, “Income Taxes,” to the Condensed Consolidated Financial Statements included herein for additional information.
Segment Results
Fiscal Six Months Ended June 28, 2026 Compared with Fiscal Six Months Ended June 29, 2025
The following tables present Segment net sales and Segment adjusted operating income and the period-over-period changes in Segment net sales and Segment adjusted operating income for the fiscal six months ended June 28, 2026 and June 29, 2025. See Note 14, “Segments of Business,” to the Condensed Consolidated Financial Statements included herein for further details regarding Segment net sales and Segment adjusted operating income.
KVUE insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 0 Form 4 filings and open-market sales in 2 filings (2 insiders, 2 trade dates, 42,191 shares, about $746.8K). Net open-market shares: -42,191 (purchases minus sales); net value about -$746.8K.Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-10-02 | Lawson Carlton |
Grant/award | 36,597 | $17.20 | $629.5K |
| 2026-10-02 | Orlando Matthew |
Grant/award | 35,754 | $17.20 | $615.0K |
| 2026-10-02 | Orlando Matthew |
Shares withheld for tax | 14,749 | $17.20 | $253.7K |
| 2026-10-02 | Stevens Meredith |
Grant/award | 35,754 | $17.20 | $615.0K |
| 2026-10-02 | Stevens Meredith |
Shares withheld for tax | 15,192 | $17.20 | $261.3K |
| 2026-10-02 | Tillett Caroline |
Grant/award | 24,732 | $17.20 | $425.4K |
| 2026-10-02 | Tillett Caroline |
Shares withheld for tax | 8,471 | $17.20 | $145.7K |
| 2026-10-02 | Howlett Heather |
Grant/award | 10,881 | $17.20 | $187.2K |
| 2026-10-02 | Howlett Heather |
Shares withheld for tax | 5,566 | $17.20 | $95.7K |
| 2026-10-01 | Wondrasch Michael |
Option exercise | 66,029 | — | — |
| 2026-10-01 | Wondrasch Michael |
Shares withheld for tax | 21,031 | $17.22 | $362.2K |
| 2026-09-25 | Stevens Meredith |
Option exercise | 429 | — | — |
| 2026-09-25 | Stevens Meredith |
Option exercise | 1,032 | — | — |
| 2026-09-25 | Stevens Meredith |
Shares withheld for tax | 1,032 | $17.81 | $18.4K |
| 2026-09-25 | Stevens Meredith |
Shares withheld for tax | 429 | $17.81 | $7.6K |
| 2026-07-31 | Dasgupta Anindya |
Option exercise | 16,419 | — | — |
| 2026-06-10 | Howlett Heather |
Open-market sale | 3,700 | $18.11 | $67.0K |
| 2026-05-08 | Orlando Matthew |
Open-market sale | 38,491 | $17.66 | $679.8K |
| 2026-05-01 | Curado Gomes De Lemos Leonardo |
Option exercise | 24,248 | — | — |
| 2026-05-01 | Curado Gomes De Lemos Leonardo |
Shares withheld for tax | 7,141 | $17.43 | $124.5K |
Well-known investors holding KVUE (13F)
| Investor | Quarter | Shares | Reported value | % of their 13F | Change vs prior quarter |
|---|---|---|---|---|---|
| Millennium Management (Israel Englander) | 2026-06-30 | 36,939,026 | $705.9M | 0.48% | Added 16% |
| Starboard Value (Jeff Smith) | 2026-06-30 | 27,307,632 | $521.8M | 11.54% | No change |
| Citadel Advisors (Ken Griffin) | 2026-06-30 | 11,960,749 | $228.6M | 0.13% | Added 11% |
| Renaissance Technologies | 2026-06-30 | 9,024,812 | $172.5M | 0.24% | Added 118% |
| Yacktman Asset Management | 2026-06-30 | 8,051,004 | $153.9M | 1.9% | Added 1% |
| D. E. Shaw & Co. | 2026-06-30 | 7,616,358 | $145.5M | 0.09% | Reduced 71% |
| Soros Fund Management | 2026-06-30 | 2,746,636 | $52.5M | 0.69% | Reduced 13% |
| Gotham Asset Management (Joel Greenblatt) | 2026-06-30 | 2,590,678 | $49.5M | 0.12% | Added 16% |
| AQR Capital Management (Cliff Asness) | 2026-06-30 | 1,685,088 | $32.1M | 0.01% | Reduced 27% |
| Point72 Asset Management (Steve Cohen) | 2026-06-30 | 808,029 | $15.4M | 0.02% | Added 75% |
| Bridgewater Associates | 2026-06-30 | 311,241 | $5.9M | 0.02% | Added 149% |
| Two Sigma Investments | 2026-06-30 | 187,937 | $3.6M | 0.0% | New position |
| Tweedy, Browne | 2026-06-30 | 72,949 | $1.4M | 0.11% | Added 78% |