Johnson & Johnson (JNJ) Q3 2026 Earnings Call Transcript

Good morning, and welcome to Johnson & Johnson's third quarter 2026 earnings conference call. All participants will be in the listen-only mode until the question-and-answer session of the conference. This call is being recorded. If anyone has any objections, you may disconnect at this time. If you've experienced any technical difficulties during the conference, you may press star zero to reach the operator. I will now turn the conference call over to Johnson & Johnson. You may begin.

This is Ryan Coors 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 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 Diwato, our Chairman and CEO, will discuss our business performance and growth drivers. I will then review the third quarter sales and P&L results. We'll then close by sharing an overview of our capital allocation priorities and updated guidance for 2026. Tom Cavanaugh, 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 analyst consensus, an increased sequential growth compared to the second quarter. 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. The powerful combination of innovative medicine and medtech expertise, 29 of our products and platforms now generate at least $1 billion. Our marketed portfolio continues to perform. Our launches are gaining significant traction, and we are advancing our new product pipeline this decade. With sales in the quarter of more than $25 billion, 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 digit growth by... In innovative medicine, we delivered operational sales growth of 7.9. 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 TechBiley plus e-merged innovation for Inhibitor to generate EBIT-3 Inhibitor free 2026 sales results.

Worldwide sales were $25.4 billion for the quarter, increasing 6%. Growth in the U.S. was 9.1% and 1.8% outside the U.S. Acquisitions and divestitures had a net negative impact on worldwide growth of 10 basis points. Now turning to earnings. For the quarter, net earnings were $210 million, and diluted earnings per share were $0.09 versus $2.12 a year ago. Results in the quarter were impacted by the proposed talc litigation resolution, as well as expenses associated with the Firefly Biotransaction and Sale Biomedicines Collaboration, amounting to approximately $7 billion. Adjusted net earnings for the quarter were $6.3 billion, and adjusted diluted earnings per share were $2.59, representing a decrease of 6.8% and 7.5% respectively, compared to the third quarter of 2025. Adjusted earnings in the quarter were also impacted by expenses associated with the Firefly Biotransaction and Sale Biomedicine's collaboration. I will now comment on business sales results in the quarter, focusing on the six key areas where meaningful innovation and strong commercial execution are driving our performance and fueling long-term growth. Beginning with innovative medicine, where our financial results reflect the depth of our expertise and innovation in areas of high unmet need across oncology, immunology, and neuroscience. worldwide sales of sixteen point eight billion dollars increase seven point nine percent which underscores the continued strength of our key brands and new launches growth in the u.s. was eleven point one percent and three percent outside the u.s. divestitures had a negative impact of ten basis points on worldwide growth in oncology starting with multiple myeloma darzilex growth was 15.6%, primarily driven by strong share gains of 5 points across all lines of therapy with 10 points in the front-line setting, as well as continued market growth, partially offset by OUS pricing headwinds. Parvicti achieved growth of 35.2%, driven by share gains across earlier lines of therapy and continued site expansion. Share gains across approval in the U.S. protect daily plus Darzilex FastPro with U.S. growth greater than 100%. Talve growth was 42.1%, driven by share gains due to increased depth of prescribing in the community setting. In lung cancer, Ribervant plus Lasklues delivered growth of 63.5%, with strong share gains in the first and second lines driven by continued launch uptake in all regions, along with rapid uptake in Ribervant FastPro. In prostate cancer, Erlita delivered growth of 9.4%, with continued share gains and market growth, partially offset by unfavorable patient mix. Within immunology, Trimphia delivered impressive growth of 68.2 percent, driven by continued momentum from the IBD launch, with four points of share growth in both ulcerative colitis and Crohn's disease, alongside continued market growth. Stelara declined 54 percent, which reflects continued competitive pressures from biosimilars and the ongoing shift towards novel classes. Growth in other immunology is driven by Amave and IcoTide launch uptake in the U.S., and continued share gains reflecting strong physician adoption and increased patient demand. Kapliida showed significant growth of six, driven by strong continued launch momentum in adjunctive major depressive disorder and continued demand increases across bipolar disorder and schizophrenia. Now moving to MedTech, $8.6 billion increased 2.5%, with growth of 4.8% in the U.S. and 0.1% outside the U.S. Overall cardiovascular grew 4.1%, including 20 basis points related to acquisition. Electrophysiology delivered growth of 4.4%, driven by procedure expansion, commercial execution, and new product performance, partially offset by competitive PFA pressures, which were more pronounced than ASPAC this quarter, as well as a lapping of prior year OUS inventory dynamics. ABIM ED saw a decline of 1.5% due to lower patient volume. There are encouraging signals in the U.S. performance with improvement in the quarter, supported by acute myocardial infarction, cardiogenic shock, and Impella 5.5, continuing to gain adoption. Rockwave grew double digits at 17.2% in peripheral products as well as new product launches, and the reimbursement in the office-based LASOL decline of 1%, including a negative impact of approximately 30 basis points. It's fine is more notably driven by ongoing expansion of VBP in China, surgery transformation program outcomes across the portfolio, and Middle East disruption, which impacted tender timing and ordering patterns, partially offset by portfolio strength, driven by recent innovations such as Ethicon 4000 and Dualto, as well as commercial execution and biosurgery. It's 5.1% execution and global reach. Contact lenses and other products grew 4.3%, driven by strong performance in the AccuView Oasis one-day family of products, further solidifying our leadership position, partially offset by U.S. inventory dynamics, for growth of 7.1%, driven by new product innovations, real commercial execution, partially offset by market-specific factors, such as disruptions in the Middle East. Orthopedics growth for the quarter was 3.4%, primarily driven by new product launches such as Volt and Trauma and Emphasis and Hips, including strong commercial execution and vellus pull-through and knees. Now turning to our consolidated statement of earnings for the third quarter of 2026. I'd like to highlight a few noteworthy items that have changed compared to the same quarter of last year. Cost of goods sold deleveraged by 150 basis points, driven by unfavorable product sales mix and increased intangible asset amortization expense in the innovative medicine segment for intracellular, partially offset by the impact of tariff recoveries in the medtech business. Marketing and administrative expenses were flat as a percent of sales, reflecting consistent commercial investments in the innovative medicine business. We continue to invest strategically in research and development, deploying approximately $4.7 billion or 18.3% of sales, which includes $1 billion related to the acquisition of Firefly Bio. In process, research and development impairment costs of $339 million in the quarter. A non-core asset other income and expense was a net expense of $5.8 billion as compared to $478 million of income in the third quarter of 2025. with the change primarily driven by the proposed talc litigation resolution and orthopedic separation-related costs. The tax rate was a small net benefit in the quarter, primarily related to the positive tax effect associated with the accrual for the proposed talc litigation resolution. More information can be found in our upcoming 10-Q for changes in taxes. Lastly, I'll direct your attention to the box section of the slide where we have also provided our income before tax, net earnings, and earnings per share adjusted to exclude the impact of intangible amortization expense and special items. Now let's look at the adjusted income before tax by segment for the quarter. Innovative medicine margin declined from 44.3% to 35.4%, primarily due to acquired in-process research and development expense of approximately $1 billion related to the acquisition of Firefly bio, transaction costs for sale biomedicine, and unfavorable product sales mix and cost of products sold. MedTech margin increased from 21% to 22.9%, driven by the impact of tariff recoveries, partially offset by increased strategic investments in commercial capabilities. Adjusted income before tax from 35.2% portion of the call, and I will now turn the call over to Joe.

Thank you for joining us. Third quarter results were driven by the strength of our innovative medicine business. This performance more than offset headwinds in certain areas of MedTech, enabling us to exceed expectations on both the top and bottom line, while continuing to invest in our pipeline and future growth. This needs to improve, specifically cardiovascular and surgery outside the U.S., and are taking action to strengthen results. While disappointing, the underlying fundamentals of the MedTech business remain strong, supporting our confidence in the long term for that business. Across Johnson & Johnson, the domain firmly in place. As a result, we are raising our guidance for 2026 versus our most recent update in July. Momentum from new product launches and upcoming pipeline catalysts further reinforce our conviction in achieving double-digit growth by the end of this decade with sustainable growth beyond. Turning to financial metrics and our cash position. We ended the third quarter with approximately $17 billion of cash, approximately $45 billion of debt for a net debt for a full year free cash flow guidance of approximately $21 billion. Oncology with next generation antibody engineering to address complex tumor biology. We also entered into a collaboration with SAIL Biomedicines for immune-mediated diseases, prioritizing investments that support key commercial launches, accelerating future innovation, increasing our annual dividend, and strengthening our pipeline through strategic value-creating inorganic opportunity, $0.5 billion, which is reflected in our third-quarter gap results. The agreement is conditioned upon the express participation of at least 95% of the remaining ovarian claims. We are trending to meet the 95% to full year 2026 guidance. As always, our outlook reflects what we know today regarding foreign exchange rates, but based on our year-to-date performance, we are raising the midpoint and tightening the range of our operational sales guidance. We now expect full-year operational sales growth in the range of 6.7% to 7.1%, which represents operational sales of $100.7 billion at the midpoint or growth of 6.9%. Speculate on future currency movements. As of last week, the euro spot rate to the U.S. dollar was 1.12. However, the average rate for the fiscal year stands at 1.15. That rate holds into next year, you could expect currency to be a headwind. Starting operating margin, approximately 60 basis points. This is an improvement from the 75 basis points decline reflected in our updated July guidance that included the impact of the Firefly Bio and Sail Biomedicine's transactions, which had an unfavorable impact of 150 basis points. Absent those deals, we continue to deliver payment with the U.S. government $200 million. dollars based on our year-to-date results we now expect a full year effective tax rate of seventeen point zero percent to seventeen point five percent given those updates adjusted operational earnings per share in the range of ten dollars and ninety-five cents to eleven dollars and five cents or two percent at the midst reported adjusted earnings per share of eleven dollars and five cents to eleven dollars and fifteen cents with a midpoint of eleven dollars and ten cents or growth of 2.9%. Firefly Bio and Sail Biomedicines transactions of $0.64, reported EPS growth would approach 9%. As a reminder for your 2027 modeling, we expect Firefly Bio and Sail Biomedicines to have a combined dilutive impact of $1.36 per share on a full year adjusted earnings per share next year. We will provide more details on our 2027 out of the year. Important data readouts in the fourth quarter. These include data first-in-class bispecific antibody in patients with advanced prostate cancer who have progressed after multiple lines of therapy. That's once-daily oral therapy for only 200 million dollars and expect to build on that momentum with this non-muscle invasive bladder cancer later this year. We also expect US approval of riboranology as Joaquin referenced earlier. Expect US approval they're complementing last week's approval in Japan. The results from the HRPCI PROTECT4 trial in 2027. The trial will have 1,252 patients, four times more than the CHIP-BCI. This large-scale study will evaluate the safety and efficacy of Abiomed's Impella CP pump during high-risk percutaneous coronary intervention. In surgery, we are focused on commercializing Otava following its recent FDA, with the goal of establishing Otava as a significant pillar of our surgery portfolio by the end of the decade. Planned separation of the Pew Synthes by mid-2027. I'm really proud of the team working to evaluate all separation vehicles, long-term value for Johnson & Johnson shareholders. That has always been our base plan and we are confident that it can be successful. We will provide additional finally, I am really looking forward to and hope you join us for the Enterprise Business Review on December and our 2027 outlook and the key drivers that reinforce our conviction in achieving double-digit growth by the end of the decade. Perhaps more importantly, we will highlight our earlier stage pipeline and how it represents the next wave of growth into the next decade. We also have the opportunity. 2026 is on track for another successful year, exceeding expectations set at the beginning of the year. We look forward to closing out 2026 strong, and setting up 2027 for continued success. Thank you to our colleagues whose dedication and commitment continue to advance innovation and long-term value for shareholders. Kevin, can you please open the call for Q&A?

We'll now be conducting a question and answer session. Ladies and gentlemen, if you'd like to ask a question at this time, please press star then 1 on your telephone keypad. If you'd like to withdraw your question, please press star then 2. We ask you, please limit yourselves to one question only. Our first question today is coming from Asad Hader from Goldman Sachs. Real line is now live.

Thanks for taking the question, and congrats on all the progress. Just one point of clarification. On the double-digit growth by the end of the decade, the vocabulary in the press release references the progress in the underlying business, quote, together with strategic investments. Just want to be clear that that refers to internal investments and not M&A. That's a question we're getting this morning. And then, Joe, on your comments that you aren't satisfied with MedTech performance and are taking action to strengthen that growth. Is the implication there that you now feel more urgency to add to higher growth areas via M&A and MedTech, or do you think that you have the product portfolio today to drive the improved performance you're looking for?

Thank you for your questions. On the patient of that being internal strategic investments is what will propel us to double-digit growth by the end of this decade in the coming years with increasing performance. So that is the correct interpretation. It does not assume any inorganic additions at this moment in time. We always are on the lookout for strategic drivers that could complement our business to be in our hands versus where the asset would currently reside, but also creates value for the risk we're bearing on behalf of shareholders. With respect to the urgency, it's an urgency to fix what we currently have. We like the portfolio and the construct that currently exists with the three focus areas of vision care. of surgery as well as cardiovascular. I think you're very familiar, and maybe I'll even hand it over to Tim to talk about some of the things we're doing in heart recovery specifically to address that, what I would say is now a stable business, but we want to catalyze back to double-digit growth. We're very excited at what's on the horizon for surgery with the addition of Otava. Over time, that will be a significant contributor to growth by the end of the decade. And then, as I mentioned earlier, vision seems to be functioning well, both on the surgery side as well as the contact lens side, where we are the market leader. But, Tim, maybe you want to offer a comment or two around abiomed?

Sure, Joe. So, Asad, ultimately, abiomed remained in a temporary headwind, as you saw in Q3, but our conviction in the long-term opportunity has not changed at all. You know, the slowdown we're seeing continues to be the same issue we highlighted in the quarter before, which is this study outside of the U.S. focused on high-risk PCI. And importantly, we do not view these challenges as structural in nature and ones that will drive a long-term impact on the business. We're not seeing any changes in the patient's need, nor to reimbursement access or any meaningful competitive pressures. We also have highlighted some questions we have around the study as to whether best practices were used in the study. And so our focus today is really on education and advancing the clinical evidence base to show the incredible impact that Impella has in both saving and improving lives. And so we believe it's a short-term headwind. It's important to recognize that in any emerging area of science, there's always going to be debate and discussion, and our responsibility is to continue to advance the evidence base to support what's in the best interest of patients. And in the case of Abiumet, we're doing exactly that. And so a short-term headwind, but we are very confident this is going to be a strong platform for growth for Johnson & Johnson for the future. Thank you.

Thanks, Joe. Next question today is coming from Larry Beigelson from Wells Fargo. Your line is now live.

Good morning. Thanks for taking the question. Joe, I wanted to ask about the 2027 comments you made at Deutsche Bank. On the top line, you said you expect reported sales growth to be similar to 2026. after adjusting 100 basis points for the extra week in both years, which I think would mean about 5.4% reported growth next year. And on EPS, how should we think about your ability to grow earnings excluding IPR&D and just remind us of how much the Firefly and Sale dilution is IPR&D this year and next year? Thank you.

For this year, the IPR&D dilution is 64% of those deals. The way I would think about that, Larry, And you've covered us long enough where you know that typically our income growth or EPS growth will be a little bit better than our sales growth. That's how you can think about that next year after adjusting for the $1.36 adjustment. So we'll continue to look at margin improvement as part of the orthopedic separation, looking more holistically at our business, some of the advances we're getting with technology and getting us more efficient across all parts of our business. But that's probably a good way to kind of frame in your thinking now for 2027. But we'll be a little bit more explicit on December 8th at our Investor Day. We'll outline specifically kind of the components to that and then even probably provide a pro forma with respect to the orthopedic separation should that occur at some point next year as well as a longer-term outlook.

Thank you. Our next question is coming from Chris Schott from JPMorgan Chase. Your line is not live.

Great. Thanks so much. I just wanted to touch base on Iketide. So just a two-part question here. First, can you just give us an update in terms of what you're – as we think about new to biologic versus double switches, and then bigger picture for the drug. You're talking about this as a $10 billion-plus asset, but when you think about this very strong launch we've seen so far in psoriasis, you've got a number of additional indications pending. I guess, how do you think about – could this be a much larger asset than $10 billion as you think about the peak sales opportunity for Iketide?

Thanks, Tom. good to hear from you. First, I do want to start by recognizing Jennifer Talbert and thanking her for her tremendous leadership and partnership. Jennifer leaves Innovative Medicine incredibly well positioned, as you see from our quarterly earnings, with strong momentum, outstanding portfolio and pipeline, and most importantly, a great team. We're fortunate to build on that foundation she established, and I'm excited about what's ahead. And really what I'm excited about is what you're touching on right now is Icotide. We do foresee Icotide to be one of our biggest assets in innovative medicine, and it is off to an incredibly great start, as you highlighted, as Joaquin highlighted on the call this morning. I think getting into some of the launch performance, you heard it from Joaquin, 20,000 patients initiated on therapy with over 8,000 prescribers, or nearly 9 trends is what you wanted to get at kind of as we think about it, and we are expanding the systemic marketplace. approximately 60% of the patients are systemic naive, so they haven't received any systemic therapy. And roughly the 40 remaining, 20% are sourced from orals and 20% are sourced from other treatments, most likely biologics, as we dig into the data. So I can say, as you're seeing with regards to the launch performance, earlier a bit expansion of the marketplace and absolutely an opportunity to continue to drive that. Highlighted as well, as Joaquin highlighted earlier, I think it's important to point out, we do have broad commercial access now and preferred access and plans are actively engaged to expand that to the Medicare population. So I would say we're fairly, very excited about the launch to date, as equally as excited about the future. And we do foresee this to be, you know, one of our largest assets, as I pointed out. We're excited about the upcoming data readouts, both with a PSA and Phase III data as well as the head-to-head Stellar data for Ascend that we should be releasing in the coming months. And as we look to expand beyond that, and we'll get into more of this at the EBR and IBD and expansions into UC and CD, expecting similar results with regards to launch performance as we go into those other indications.

Thank you. Our next question is coming from Joanne Winsch from City. Your line is now live.

Good morning, and thank you for taking the question. I want to focus a little bit on MedTech here. When you use the phrase underlying fundamentals in MedTech are solid, I want to confirm that you're thinking about all the good stuff, the patient volumes, the CapEx spending from the hospitals, and then what you're seeing in terms of just general flows. And then as a sister question to that, how do you or what do you think needs to be done to improve the J&J franchise?

Thank you. below the expectations we previously communicated to investors simply put we can do better and we absolutely will and right now we are focused solely on the actions needed to deliver stronger results in the fourth quarter and beyond and that said when took your question here when we break down our results you will see that the pressure was primarily concentrated actually in two very distinct performance outside of the u.s. and secondly abiumed globally which we were already And to put it in perspective, growth in the U.S., which, as you know, is the most important market, was in fact robust in the quarter and accelerated to almost 5%. Our performance outside of the U.S. was a challenge, and it reflected a combination of mostly known headwinds, which we have discussed previously. For example, in surgery, the expected and the ongoing expansion of volume-based procurement in China. And in electrophysiology, competitive intensity, especially in Asia-Pacific, which is a region that you know is still relatively early in the adoption of PFA. We did introduce a new headwind, which is really the incremental pressure that we're seeing on the business due to the conflict in the Middle East. But when you actually step back and you look deeper into these results, we're seeing several encouraging indicators which give us confidence in a stronger Q4 and outlook beyond that. For example, in electrophysiology, in markets like Europe, where we've already launched VariPulse Pro, which, by the way, is a faster and easier-to-use catheter, and we will launch VariPulse Pro in Japan shortly after receiving regulatory approval last week. You can also anticipate a U.S. launch by the end of this year. I think at Abiumid, we've already touched on the study in Iris PCI, a study where we actually believe that the methodology employed did not follow well-established practices, an issue which we're addressing through education. We think we're going to get through that because the evidence base is so solid, especially in areas like AMI cardiogenic shock, and we're still seeing tremendous performance of 5.5. We did, by the way, already see some improvement sequentially throughout the quarter, and we do believe that that business will be back to growth. Now, while Q3 for MedTech was not a strong quarter, this should not distort. The issues are primarily concentrated in the two areas I mentioned. It's also worth reinforcing to your question that the underlying procedure environment, remain stable across our key markets. I know there's been a lot of debate about that. Our job now is to make sure that we convert that demand to more consistent performance. And so we remain confident in the combination of the momentum we're seeing in the U.S. and the moderation of these near-term headwinds, which will support improved performance in Q4 while positioning us for stronger performances in 2027 and beyond. And as you've already heard from Joaquin and Joe, we'll share more detail around what that looks like for 2027 and beyond specifically with a focus on new innovations like Otava when we come together on December 8th.

Thank you. Next question today is coming from Jason Gerberry from Bank of America. Your line is now live.

This is Richard Wagner for Jason. I had a question regarding the Icotide psoriasis launch. Are there lessons that can be learned that would be useful when Iketide launches in IBD. Specifically in IBD, competitors are developing high-efficacy combination programs and wondering how that could affect the efficacy perception by physicians of Iketide. Thank you.

Now, and I'd obviously turn it through cards. So I'll say a couple of things. We absolutely know the space very well, whether to be in psoriasis or IBD. And you can tell by the launch that we had with Trimphia and IBD, it's off to an incredibly great start. As you can see, over 70% growth year over year and heavily penetrated and becoming actually the fastest growing biologic across all indications, in particular in IBD, new patient starts. Significant unmet need in a large amount of patients that are untreated or not treated, that are diseases. And we do see that to be a great opportunity for not only market expansion, as we're seeing in psoriatic disease or psoriasis with icotide, but the profile of the product fits beautifully in that spot, I would say. Obviously, the data will depend on how we look at it in the positioning once it becomes on the marketplace, but I'll tell you we'll have early access as one of the other keys, and we'll see rapid uptake once we get the data results.

Yeah, maybe just a big reason that we've had such a great start in psoriasis This is because of that trifecta of biologics-like efficacy, coupled with placebo-like safety, combined with the convenience of a once-a-day pill, and we think that'll play very well across all indications, including IBD, whereas Tom referenced still a large percentage of patients are not on an advanced therapy. The data in our Phase II study were quite encouraging and looked like Ikotide can deliver on par with the current monotherapies. Of course, we're very aware that some patients need something more, that they need a combination therapy, and that's why we're developing 4804, which pairs our goselcumab, our IL-23 inhibitor, with galimumab, our TNF inhibitor, and that is in phase three studies now after really compelling phase two data that showed that in that refractory population that have failed two or more prior advanced therapies, this really delivers superior efficacy to the monotherapy. So we're actively pursuing that for those patients where a monotherapy is not enough and could see then, you know, that opportunity to migrate patients if needed beyond the monotherapies to the dual therapies with our co-antibody therapeutic 4804.

Thank you. Our next question is coming from Vamo Devon from Guggenheim Securities. Your line is now live.

Great. Thanks for taking the question. Maybe one just follow-up and then one actual question. Following up on the IcoTide, I appreciate the comments you've made so far. Just curious if you would be willing to provide any commentary around the actual net sales in the quarter or kind of how it compares to where consensus was. We're just getting some questions from investors on that specifically. And then my other question is just around Inlexo, so I appreciate the comments there you made around the sales so far. I'm wondering if you can just quantify, I know you have the data coming up later this year as well, how you see the market opportunity for that expanding based on the current indication and then what sort of the Sunrise 5 data, what the size of that opportunity is relative to what you have currently.

That we're nearly, for a year to date, worth of $90 million. So this quarter, we saw new patient inserts grow 45% versus the previous quarter. And I wanted to point out that this is in a population in non-muscle invasive bladder cancer, high risk with carcinoma in situ. It represents roughly 4,000 patients in totality, so relatively small in nature. And we're still seeing one in three patients being put on in Lexo in this patient population. You touch on Sunrise 5, which is a broader patient population, roughly 15,000 patients, and what we call Sunrise 3, which is the BCG-naive population, roughly 50,000. This is where we absolutely see a greater opportunity for us to live into the number of 5 billion plus for the platform, and I do believe we will do just that. In medical need, the simplicity of Inlexo delivers and the high response, high durable complete remission rates that we are delivering with Inlexo as we look to expand in the population. Maybe I'll turn it to John to touch on a little bit of the clinical development program.

Indeed. As you know, the approval currently is for the bladder cancer, which spreads laterally, but the more common is the papillary, and in our so-called Sunrise I study, we had a cohort of papillary cancers where those lesions which project outward from the bladder wall are excised by the urologist and then Inlexo is applied and one tries to prevent recurrence. And we showed nearly 75% of patients had no recurrence after one year and that over 95% had no progression of their disease. In other words, they did not progress the disease. So based on that, the use of Inlexo in that papillary form of the disease, which is by far the more common and is already in the NCCN guidelines and the FDA has invited us to submit for an expansion of our label into that population.

Both IcoTide and Ilexo are going to be, together with Ribobank, key drivers of our growth acceleration driving to double-digit growth, so they will become one of our largest products, both of Thank you.

Our next question is coming from Michael Yee from UBS Securities. Your line is now live.

For the questions, maybe two pipeline science questions. On IcoTide, obviously you have great data and psoriasis is a little bit lower than biologics, but great data. In IBD, the UC data was quite strong. And just wondering if you think that would be replicated to biologic-like efficacy as an oral, and that differentiation there due to the release in the gut is a reason for the potentially stronger data in IBD, which could be a bigger driver. Second part question is on Meldexian. I know you share in that partnership, but SSP data is coming up, and I just wanted to check in on your confidence that that should be similar to Ascendexian, and that should be a fairly de-risked indication as a factor of lemon. Thank you.

John Reed here. Thanks for your questions I'll start off and then maybe Tom will want to supplement but on icotide and IBD we get that question all the time asking might we see even greater efficacy with an oral because of the gut absorption I all I can say is to be determined we were quite pleased with the phase two data and ulcerative colitis I would also tell you the phase three studies as we saw with our psoriasis and psoriatic arthritis studies are enrolling briskly in the prior role in those indications reflecting, I think, the real enthusiasm that both that theory about to be determined by the data. Moving to Movexian, we remain confident in the studies underway, particularly with the secondary stroke vitro for 11. We also have been able to have a margin that allows us to be confident in the results and data will be available even this year. It's event-driven, the study. The atrial fibrillation, the larger population, will be next year. It'll be exciting for us if we can prevail in both those indications because about 25% of patients who are candidates for secondary stroke have atrial fibrillation. That's probably why they had the stroke in the first place. And so if we can benefit both of those populations. That'll be exciting. We are confident in atrial fibrillations study as well. There we were able to push the dose four times higher given our safety margin in the drug and feel from monitoring of the anticoagulation status of the blood with laboratories that we're in the right range to prevent thrombosis. So thank you for the question.

Yeah I just reinforce what John has said. There's an absolute need for highly effective oral anticoagulation therapy with a reduced bleeding risk. In AFib alone, approximately 40% of the patients eligible for oral anticoagulants are not receiving oral anticoagulants, typically due to the concerns on potential safety and the bleeding risk associated with the current ODACs.

Thank you. Our next question is coming from Jason Bedford from Raymond James. Your line is now live.

Good morning. Thanks for taking the question. I want to go back to the international medtech business. Is there any way to quantify the impact of the dynamics in the Mideast and VBP? And then Tim, I wanted to ask about international surgery. First, just to confirm your view, is that there's been no change to the underlying demand profile internationally? And then second, I think Joe mentioned taking actions internationally for surgery. What are those actions?

Thanks. ...disruption, unfortunately, and we've also seen governments and healthcare systems become become more cautious in their spending priorities with some funding and procurement decisions taking longer than what we normally would expect. That has created a more meaningful impact on purchasing behavior than we saw earlier in the year. That said, I think it's important, I mean, the underlying issues have not changed, the clinical need remains intact, and we would expect many of these opportunities to be deferred rather than permanently lost. I think that's an important factor as it relates to any form of conflict and certainly what we're seeing in the in the Middle East you know on surgery as I mentioned we were actually really excited about the performance of the business in the US our issue really was outside of the US and as you know primarily driven by factors we've discussed before such as the transformation program and volume based procurement and then of course the incremental pressure that we've just mentioned are out the Middle East I will say that despite those headwinds you know we're focused on where we can have an impact and we have a lot of opportunities. You know, wound closure growth continued to benefit. This is a category where we absolutely dominate, and that growth has been driven by innovation such as Stratafix and Plus Sutures. Biosurgery, another north of billion-dollar platform, delivered solid growth driven by key brands like Surgiflo, Surgicel, and VistaSeal. And we continue to see good traction with our endomechanical innovation such as Epicon 4000 and Dualto. And so we are confident that we will see continued growth in the U.S. And to your question, we will see acceleration in EMEA and return to growth overall in the fourth quarter. I do think it's also worth mentioning our confidence in this business going forward. This was the core to how we started Johnson & Johnson MedTech, and we are absolutely committed to it for the long term. I'd say the biggest reason for confidence is the fact that we will be entering the surgical robots. Our leadership positions across wound closure, biosurgery and advanced instrumentation, we believe that Otava gives us an opportunity to participate more fully in one of the most attractive and under-penetrated areas of surgery. And so, you know, as we continue to execute our portfolio transformation, advanced innovation across the existing business and prepare in the long-term trajectory of the surgery franchise. We do get a lot of questions on Otava and rest assured that when you come together for the meeting on December 8th, we will provide perspective on the outlook for that innovation and further build your confidence in what we believe will be a material contributor to Johnson & Johnson's growth.

We have time for one last question.

Certainly. Our final question today is coming from Alex Hammond from Wolf Research. Your line is now live.

Thanks for squeezing me in. So I guess as the CARTITUDE 5 and 6 trials advance in newly diagnosed multiple myeloma, how is J&J preparing to educate physicians and treatment centers for the potential shift to use earlier into the treatment journey? And I guess how should investors think about potential to capture share from these existing frontline regimens? Thank you.

VICTI is available in over 20 markets, and we're seeing 50% of the utilization out of CARTITUDE lies in lines 2 and 3. So there's becoming more familiarity with the product, predominantly due to the unmatched over line two of therapy that we see in versus standard of care. So we're already educating health care providers on the product and how they can utilize it earlier. Some of the education that is centered around is appropriate patient selection, and the earlier the better, as well as proper bridging, getting the patients to the highest level of MRD negativity to be effectively treated with Carvix.

Maybe just to remind, on top of that, that at the recent myeloma meetings, We showed five-year follow-up data, complete remission out to five years with no further treatment, so a one and done in five years of continued disease-free survival, so very exciting data.

Great. Thank you, John, and thank you, Alex, for the question, and thanks to everyone for your questions and continued interest in our company. I will now turn the call over to Joaquin for some brief closing remarks.

Thank you for your questions and your engagements in today's call. As you can see, we continue to build momentum. Growth improves sequentially in the third quarter, and we expect further acceleration in 2027 with a clear path to double-digit growth by the end of the decade. In innovative medicine, growth will come from both our existing portfolio, including Darsalex and Trenfaya, and newer products such as Icotide, Ribreban, and Ilexo as they begin to contribute more meaningfully. We see similar opportunities in MedTech, the potential from our cardiovascular launches, including next-generation PFA and IVL catheters, additional data supporting Impella and Otava in robotic surgery are not yet fully reflected in our growth. Taken together, these drivers position Johnson & Johnson as one of the cleanest growth stories in healthcare. We will provide more details about our portfolio and late-stage pipeline at our Enterprise Business Review later in December. Thank you very much, and enjoy the rest of your day.

Thank you. This concludes today's Johnson & Johnson third quarter 2026 earnings conference call.

You may now disconnect.