Johnson & Johnson 2026 Q3 Earnings Call

You may begin. Hello, everyone.

This is Ryan Koors, Vice President of Investor Relations for Johnson & Johnson. Welcome to our company's review of business results for the third quarter of 2026 and our financial outlook for the full year. First, a few logistics. As a reminder, today's presentation and associated schedules are available on the Investor Relations section of the Johnson & Johnson website at investor.jnj.com. Please note that this presentation contains forward-looking statements regarding, among other things, the company's future operating and financial performance, market position, and business strategy. You are cautioned not to rely on these forward-looking statements, which are based on the current expectations of future events using the information available as of the date of this recording. They are subject to certain risks and uncertainties that may cause the company's actual results to differ materially from those projected.

The description of these risks, uncertainties, and other factors can be found in our SEC filings, including our 2025 Form 10-K, which is available at investor.jnj.com and on the SEC's website. Additionally, several of the products and compounds discussed today are being developed in collaboration with strategic partners or licensed from other companies. This slide acknowledges those relationships. Moving to today's agenda. Joaquin Duato, our Chairman and CEO, will discuss our business performance and growth drivers. I will then review the third quarter sales and P&L results. Joe Wolk, our CFO, will then close by sharing an overview of our capital allocation priorities and updated guidance for 2026. Tom Cavanagh, Executive Vice President, Worldwide Chairman, Innovative Medicine, John Reed, Executive Vice President, Innovative Medicine Research and Development, and Tim Schmid, Executive Vice President, Worldwide Chairman, MedTech, will be joining us for Q&A.

To ensure we provide enough time to address your questions, we anticipate the webcast will last approximately 60 minutes. With that, I will now turn the call over to Joaquin.

Thank you, Ryan, and good morning, everyone. Our strong performance in the third quarter reinforces our confidence in 2026 as a year of accelerated growth and impact for Johnson & Johnson. In Q3, we reported operational sales growth of 6% ahead of analyst consensus and increased sequential growth compared to the second quarter. With six strategic focus areas, oncology, immunology, neuroscience, cardiovascular surgery, and vision, we are leading in areas of higher med need where innovation can make the greatest difference for patients. Our powerful combination of innovative medicine and MedTech expertise strengthens our competitiveness. 29 of our products and platforms now generate at least $1 billion in annual sales. Our marketed portfolio continued to perform. Our launches are gaining significant traction, and we are advancing our new product pipeline that will sustain our growth into the next decade.

With sales in the quarter of more than $25 billion, we are on track to meet our guidance and exceed $100 billion in annual revenue for the first time in our company's 140-year history. As we advance our differentiated portfolio and pipeline, we have a clear path to double-digit growth by the end of the decade. In innovative medicine, we delivered operational sales growth of 7.9% with eight brands growing double digits. Let's start with oncology. We are making progress to redefine cancer care from treatment to cure. In the third quarter, our oncology business grew approximately 17%. Our multiple myeloma portfolio and pipeline are a match with 80% of patients receiving a Johnson & Johnson therapy as part of their treatment journey. We continue to strengthen the body of evidence supporting our recently launched multiple myeloma therapies and combination regimens.

New phase III results announced in July demonstrated that the combination of TECVAYLI plus TALVEY reduced the risk of disease progression or death by 89% as early as the second line of treatment. In solid tumors, sales of RYBREVANT increased by 64%, reflecting its strength in lung cancer. By the end of the year, we expect to receive U.S. FDA approval for RYBREVANT FASPRO in advanced head and neck cancer, a disease with significant unmet needs. In bladder cancer, INLEXZO has rapidly emerged as a market leader for new patient share just one year after its launch. Nearly one in three eligible patients started on an INLEXZO regimen in the third quarter, demonstrating its growing role in transforming care in high-risk, non-muscle invasive disease. During the quarter, we also invested to bolster our oncology pipeline.

We completed our acquisition of Firefly Bio, adding a promising new degrader antibody conjugate platform that targets drivers of difficult-to-treat cancers, including KRAS. Our ambition is to become the number one oncology company by 2030, with sales projected to exceed $50 billion. Turning to immunology, we are building on our 25-year legacy to drive industry-leading innovation for patients. TREMFYA delivered exceptional sales growth of 68% in the quarter, reflecting strong momentum across its indications. In the U.S., it is now the number one IL-23 inhibitor in new to brand share in Crohn's disease, ulcerative colitis, and psoriatic arthritis. We continue to generate evidence that reinforces TREMFYA's clinical differentiation. Based on the landmark STAR study, TREMFYA is the first and only IL-23 inhibitor to demonstrate positive outcomes in axial disease clinical trials, including significant improvement in spinal pain, stiffness, and inflammation in patients with psoriatic arthritis.

This momentum reinforces our conviction in TREMFYA as a foundational medicine in inflammatory bowel and psoriatic diseases, and our belief that it can grow into a $10 billion-plus franchise. Icotyde, our first-in-class targeted oral peptide for plaque psoriasis, continues to outpace the recent competitors' launches. More than 20,000 patients have initiated therapy through nearly 9,000 prescribers since Icotyde's launch in the U.S. We continue to make strong progress on commercial access, with Icotyde now broadly covered across all national plans. Also this quarter, IMAAVY was approved as the first advanced treatment specifically for warm autoimmune hemolytic anemia, a rare life-threatening disease that causes severe anemia and fatigue. This new indication builds on IMAAVY's momentum in generalized myasthenia gravis and reflects its broad potential across autoantibody diseases. We continue to pursue next-generation therapies.

In July, we announced a collaboration with Sail Biomedicines to advance in vivo CAR-T approaches for immune-mediated diseases. Next, in neuroscience, we aim to transform the future of brain health by addressing complex nervous system disorders. Today, we are the definitive leader in neuropsychiatry. CAPLYTA reached $1 billion in year-to-date sales, making it our 29th billion-dollar platform. Driven by strong uptake as an adjunctive treatment for major depressive disorder, CAPLYTA is now the fastest-growing oral branded therapy in this space. Last month, we presented pivotal phase III data that show CAPLYTA significantly and rapidly improves symptoms of bipolar mania. SPRAVATO also delivered impressive growth of 36% this quarter, reflecting strong demand in treatment-resistant depression. Now, let's turn to MedTech, where we delivered Q3 operational sales growth of 2.5%. While we fell short of our expectations for the segment, our conviction in our future direction has not changed.

Starting with cardiovascular, we continue to invest in heart recovery, circulatory restoration, and heart rhythm disorders to address the leading global cause of death. This was another strong quarter for Shockwave, our circulatory restoration business, which grew 17%. The ongoing global launch of Shockwave C2 Aero continues to broaden the reach of our intravascular lithotripsy platforms. VARIPULSE, our pulsed field ablation platform, reached a major milestone this quarter with more than 100,000 AFib patients treated worldwide. VARIPULSE Pro, which delivers five times faster ablation speed, has been very well received in Europe, where it is driving double-digit growth. Just last week, we received approval for VARIPULSE Pro in Japan. With increasing clinical experience, we are seeing differentiated benefits from VARIPULSE. In a recent retrospective analysis, VARIPULSE demonstrated a 68% lower risk of adverse cardiac events compared to a competing pulsed field ablation platform.

In heart recovery, while physician selectivity continued to affect Abiomed performance, we remain confident in the technology and focused on supporting appropriate patient selection. In surgery, we're poised to shape the next era of care through robotics, digital innovation, and advanced instrumentation. In July, the U.S. FDA granted De Novo authorization for OTTAVA, the world's first table integrated soft tissue robotic system. This is one of the most significant MedTech innovations we will bring to market this decade. OTTAVA's unique architecture, automated features, and next-generation robotic instruments help address surgeon needs for operating room space and better surgical workflows. Its connection to our open digital ecosystem, Polyphonic, turns procedure data into actionable insights for clinicians. We already signed our first commercial customer for OTTAVA, and we are progressing our development program.

Our investigational device exemption trial is already underway in inguinal hernia repair, with future plans for indication expansion into urology and gynecology. Finally, in vision, we are advancing lifelong eye health to bring better sight to more than 40 million people each year. The recent U.S. launch of TECNIS PureSee further strengthened our portfolio of intraocular lenses. During the quarter, TECNIS PureSee and TECNIS Odyssey surpassed 1 million implants worldwide, reflecting continued surgeon adoption and our leadership in personalized vision solutions. We also received CE marking for ACUVUE OASYS MAX 2-week reusable lenses, expanding our ACUVUE portfolio in Europe. Overall, this quarter's strong results demonstrate the impact of the choices we have made to build a foundation for durable growth. We sharpened our portfolio to focus on innovation with the greatest potential to change lives. We proved our ability to grow through a significant loss of exclusivity.