Johnson & Johnson Q4 FY2026 Earnings Call

Good morning, and welcome to Johnson & Johnson's first 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 experience technical difficulties during the conference, you may press star zero to reach the operator. I will now turn the call over to Johnson & Johnson. You may begin.

Our associated schedule would be a year. You can see we are delivering on that promise of the year. We delivered operational sales growth, innovation, higher med need, and high growth. It's delivered ecology, immunology, differentiated assets, competitive advances. It's fueled by the strong line in the history. Our unique community in annual digit growth accelerated in Q1 with the FDA approval of Take Viley plus Darsalek FASPRO three multiple myeloma, second line. In solid tumors, Riberband FASPRO received FDA approval for subcutaneous monthly dosing for patients with EGFR mutated. Riberband also received FDA breakthrough therapy designation in advanced head and neck cancer with new data showing 56 static head and neck cancer and in high risk non-muscle invasive bladder cancer in Lexo we could more than three decades happy in the u.s. has the potential to fundamentally change how psoriatic disease is treated by offering IcoTide to patients receiving treatment that very day IcoTide and Trenfaya create a complementary category shaping portfolio IcoTide is the first choice systemic treatment to deliver more than our key we are investing in the growing need for complex interventions johnson and johnson is the market leader in heart recovery circulatory restoration and electrophysiology and we continue to delete in heart recovery a biomed had another strong in circular electrophysiology body pulse our post field ablation plus leadership in electrophysiology and improved body pure to a long safety profile We finally announced Poutcom's no safety events and a 100% procedural success rate. In surgery, our strong performance reflects the deep levels of thrusters in the operating room. In Q1, we made progress in the robotic surgical system. De novo filing with expanded max disposal astigmatism in the U.S. and growth throughout the year and for the balance of the decade. The depth of our portfolio and pipeline has never been stronger, and I'm confident we'll continue to deliver on our commitments for 2026 and beyond. And with that, I will turn the call back.

Thank you, Joaquin. Exclude the impact of currency translation. 2026 sales results, 0.3%, and 3.9% oncology in 20 basis points. of our key brands, starting with multiple 1.8%, nearly 12 points to achieve sales with continued site at 14.2%, community setting at 1.2%. Due to continued share gain, Fire delivered impressive growth of 63.8%. Our IBD launch is 2025 of our key focus area in the U.S., strong adoption of the Impala Tech, 18.1%, 0.2%, commercial execution in biosurgery and wound closure. partially offset by planned surgery transformation impacts, as well as VBP and employee equity 26. Lastly, L25.

Appreciate you joining us to industry-leading portfolio outcomes and fortify future performance, giving us a clear line of sight to double-digit growth by the end of the decade. We ended the first quarter with approximately $22 billion of cash, $5 billion of debt, $5 billion, as Q1 reflects payment-increased U.S. capital flow outlook of approximately $21 billion. dollars enabling us to maintain technology and early 2029 the 12 billion dollars or 22 percent of the 55 billion already underway in 2026 value a growing dividend 3.1 percent of five dollars and 36 consecutive year of dividend growth 2026 guidance 0.9 percent with a midpoint of 100.2 lies the euro spot rate relative to the u.s dollar of 1.17 as of last week the euro spot rate to the The U.S. dollar has stayed relatively 0.5% with 0.8 billion 50 basis points in 2026 pipeline. A reminder, with the U.S. government for the full year, increasing our guidance by 2 cents to a range of $11.30 and 50 cents, representing 5.7% growth, 0.1% on phasing for your model throughout the year from the 53rd week contributions from technology and neuroscience to increase throughout the year. Launch of IcaTide with $30 million in the quarter. On April 1st, we received a permanent J-code for an elect FDA approval launched in the U.S. in 2025 and is expected to launch in Europe's short list, launch of Tecnus Pure C interop procedure by 85%. We do anticipate some success under the leadership of cross-key platforms. Coming to our pipeline, we have many important catalysts for the inhibition of structural joint damage for biology, immunology, and neuroscience, and locally advanced high-risk prostate cancer, 4804, and Kaplita in Biosurgical System, Pro in the U.S. Thermo Cool, Smart Touch Pipeline, and Deliver on our strong financial foundation position us to drive accelerating and sustainable growth while creating near- and long-term value for shareholders. We're forward to providing an in-depth look at our long-term strategy and the driving forces behind our path. Please mark your calendars for December 8th. I'm happy to take your questions.

Ladies and gentlemen, if you'd like to ask a question at this time, please press star to the number 1 on your telephone keypad. If you'd like to withdraw your question, please press star to the number two. Please let me your questions to one question only. Our first question today is coming from Terrence Flynn from Morgan Stanley. Your line is now live.

Thanks for taking that question, and congrats on all the progress. I had a two-part one on Iketide. I was just wondering if you can remind us of how you're positioning that drug in the market now that we have full details on the label and pricing, and also how should we think about the ramp of reimbursement coverage there and any sampling plans? Thank you.

Good morning, Terrence. Hello, everyone. And just wanted to start with a big thanks to the entire innovative medicine team throughout the world. Really strong results in the first quarter with over $15 billion in net sales, 7.4% operational growth. Really importantly, 11 key brands delivering double-digit growth. And if you take a look at what is now 96% of our business, that is not including Stellara, we actually grew at 16.6%. So really nice, accelerating growth across the portfolio. So I'm thrilled to talk about Iketide, really one of our outstanding products. And I've got to tell you, it's off to a very fast start. The product was approved back in March, and we're really, really happy with what we believe is a very differentiated label for the product as the first and only targeted oral peptide that precisely blocks the IL-23 receptor. Iketide, maybe as a reminder, delivers complete skin clearance, favorable safety, and the simplicity of a once-daily pill, and we think it's got the potential to become one of our biggest products. So we were day one launch ready for the product. And, in fact, first patient was actually on medication within 24 hours of approval. We're seeing very strong early enthusiasm from both physicians and patients that reinforce our confidence in the potential for this product. A number of us were out at the AAD meeting as well. And the KOL receptivity to the strength and the simplicity of the label has been really encouraging. things like no lab monitoring, the TV language that reflects the physician clinical judgment, you know, no black box or drug interactions really is giving us good confidence that this is going to be really the preferred choice and first choice for systemic therapy. In terms of early uptake, we're seeing so far about 1,500 patients already that prescriptions have been written for that are going into our access and patient support service center. so already 1,500, and already over 1,000 unique customers that are writing. In terms of payers, our goal is to have both early and broad access, and we're in the middle of very, very positive conversations with them to try to drive that early and very broad access, so more to come on that. In terms of the positioning, I can't think of a better portfolio than being able to have both Iketide and Trumphia for our folks and really for patients. So with Iketide being the first and only targeted oral peptide, it is really going to become the preferred first-line systemic therapy. We know there are so many patients that keep cycling and cycling and cycling on topical therapies. Now the International Psoriasis Foundation guidelines have changed so that patients after two topicals and trials of four weeks each really become eligible for systemic and advanced therapies. And so we think Iketide fits right in this sweet spot as that first-choice systemic. Likewise, Tromphia holds a really unique and distinct position as well, and that really is the first-choice biologic. And so Tromphia is both structurally and functionally different from the other IL-23s. We've been able to demonstrate really durable, complete skin clearance. And in our case here, it's the first and only IL-23 that's got significant intubation of structural damage. So we think it's really the first choice biologic, especially in patients that have active or suspected PSA or psoriatic arthritis. So we think that with that one-two punch, we have got the portfolio for psoriatic disease in patients and are really excited about both agents going forward.

Maybe we'll just add one other thing, John Reed here, our study of...

Our next question today is coming from Larry Beegelson from Wells Fargo. Your line is now live.

Good morning. Thanks for taking the question, and congrats on a nice start to the year here. Tim, sentiment in the medical device space is relatively low right now because of a number of headwinds and concerns. You posted a respectable growth rate this quarter, but it was slightly below the Q4 growth rate, And, you know, the comp in Q1 was relatively easy. So, you know, my question is, what are you seeing in your end markets? And, you know, how are you thinking about the remainder of the year? Thanks for taking the question.

The strategy is working. As we referenced in Q1 of last year, which you will recall was entirely related to the items that occurred in 2024, year-over-year growth rate, creating a lighter comparator. So we've got a thing that we would define really as material. Here in the U.S., you will recall, we experienced some periods of severe weather in late January and early February.

It's coming from Asad Haider from Goldman Sachs.

Great, thanks, and congrats on yet another solid quarter. For Joaquin, just going back to the goal of double-digit top-line growth towards the end of the decade, that's still not something that's getting reflected in consensus models, and in light of your comment earlier that IcoTite could be one of your largest products ever, that would suggest an opportunity of at least $10 billion. So any updated views on what you see as the key product variances versus the street? Looking towards the end of the decade and related, how important is the BD lever in that growth algorithm? Thanks.

Look, again, as you can see, we are starting with momentum that will accelerate throughout the year in 2027. And as you mentioned, with line of sight to double-digit growth by the end of the decade. And I think it's a fair question. How is that possible for a company that this year in 2026 is going to deliver more than $100 billion? dollars. This is grounded in reality. As a matter of fact, it's already happening today. If you look at the 2026, we're already delivering double-digit growth as total Johnson & Johnson when you exclude Stellara. So it's already happening today. And it's based on the pipeline, the strongest in our history. And also, as the decade progresses, we are going to see increasing impact in our revenue of our new product launches that are largely the risk. In particular, as you mentioned, there's still an underestimation cotide in psoriasis, psoriatic arthritis, and IBD, the potential of ribavent in non-small cell lung cancer, head and neck, where we got breakthrough resignation and colorectal cancer, And finally, the potential of Inlexo in high-risk non-muscle invasive bladder cancer. By the way, Inlexo got the J-code earlier. I believe those are three particular products that remain underestimated that are already marketed. Launches, especially in cardiovascular, including our next generation PFA catheters and Impela ECP, along with Otava in robotic surgery are not yet fully reflected, as well as the fact that the separation of orthopedics will further lift our growth rates. So I think when you take into consideration all those factors, you are going to get into a similar conclusion of double-digit growth by the end of the decade. Further, I would say that the strong sales growth will also drive operating leverage that will be further amplified when the U.S. Darthalex royalties roll off in 2020. Taking together, this creates what some of you have called the cleanest, and we are going to be providing additional details in our enterprising review that will take place in December as we have announced today. Do not include business development. This is based on confidence in our ability to get capital allocation. As a matter of fact, I would say we have been ahead of the curve in our investments in M&A with the acquisitions during the last two and a half years of Biomed, Showwave, and Intracellular. As I have commented multiple times, you know, our sweet spot remains early stage deals, like the one we did earlier this year with Halda Therapeutics, which brings a new platform in our oncology business. And at the same time, I have to say that given the situation that I just described, our priority from a capital allocation perspective, our priority is to invest behind our portfolio of new product launches and our promising pipeline program. So that's our priority today. We remain opportunistic from a business development standpoint, But we do not depend on M&A to be able to deliver on that promise. So in summary, you know, we see both revenue growth and operating margins improving, and we reaffirmed that we have line of sight to double-digit growth by the end of the decade.

Your next question today is coming from Chris Schott from JPMorgan. Your line is now live.

Great. Thanks so much for the question, and congrats on the progress. I just had a two-parter coming back to Icotide. Maybe the first one, you mentioned 1,500 prescriptions so far. Is there any color on where those customers are coming from as we think about new patients versus those switching off orals versus those switching off injectables? And then just on the bigger picture view of Iketide, as you mentioned, potential for the drug to become one of the company's largest ever. The pathway to get there, should we think about this as a similar dynamic to Trimphia that skews more towards IBD versus psoriasis? Or is this one that could have more balanced sales by indication, given, as you mentioned, the frontline potential of the drug in the psoriasis setting?

Chris, thanks so much for the question. So in terms of the early information on Iketide, obviously it is really early, so we're still getting information in. I can tell you that there's a broad range of prescribers for Iketide as we look across the medical community. We don't yet have data that is specific to exactly where that's coming from, what is exactly new, what they're switching off of, et cetera. So hopefully we'll have greater granularity on that at our next call next quarter. So obviously it's pretty new and hot off the press. I think as we take a look at Iketide, Iketide is going to fit in psoriasis really firmly in that systemic first-line therapy area. And there's also a great opportunity there for market expansion. If you think there are so many patients that are cycling on topicals, they are resistant to moving into biologics for a number of reasons, whether it's needle phobia, perceptions around safety profile and things. We think not only given the size of the current systemic market and having significant impact there, but really being able to expand that broader is going to be key for Iketide success. I also think when you think about IBD and having an oral agent, we've got to see the studies pan out, but based on our goals there, we think that that's going to be a similar, very, very large opportunity. I think here we're going to see maybe more of a balanced scenario, given the strength that we really anticipate having in psoriasis, but I think both segments, both psoriatic disease and inflammatory bowel diseases are going to be very big, offer a lot of potential and promise for Iketide.

Autoimmune diseases, about 70 to 80% of patients who are eligible for a biologic are not taking one, and so that's why we really think about this market expansion opportunity to offer patients the convenience of a highly once-a-day pill.

Thank you. Our next question today is coming from Shudun Singh from RBC Capital Markets. The live is now live.

Thank you so much. I wanted to touch on some of your growth drivers within the medical device business. You know, Abiomed post-ACC, you know, some of our checks were suggesting that within the high-risk population, we could see up to a 30 percent reduction. How does that compare with your expectation? and it looks like the IDL space is looking to get increasingly more competitive. So, you know, how do you manage your market leadership position in that space? And then overall, as I think about all the drivers that you mentioned within medical devices, should we think about MedTech as a high single-digit growth contributor towards the double-digit growth that you've called out for total company by the end of the decade?

Thanks for taking the question. for the future 14 almost 15 percent an absolute mortality reduction of 60 you know when can compelling cp patients gain an average of six while you're always going to see we believe that we don't have line of sight to any significant combat performance in our future and the first thing really is our portfolio seven years knowledge reputation of ivl in new indications and new disease states a point around long-term prospects we have to continue to accelerate med tech from a surgery business. Surgery is one of our larger portfolios. We are a dominant leader both in the open and laparoscopic phase. As you know we've submitted Otago for approval and assuming everything planned this year we will be launching not one but robotic programs for urology to be the back half of the decade. So another good example of an important catalyst that will take us from a mid single digit player into a higher. Thank you.

Our next question is It's coming from Alexandria Hammond from Wolf Research. Her line is now live.

Good morning and thanks for taking the question. A few more on Iketide. Can you walk us through the investments you guys are making on prescriber and patient education and how important do you think advertising will be to kind of engage those new patients who might be nervous to start on a systemic therapy? And then just as a follow-up as well, with iconic ASCEND trials set to read out imminently, how important could this result be to those ongoing commercial discussions?

The study you mentioned in the head-to-head against the TIC-2.

It's safe to say that we are investing big in IcaTide to make sure that this brand can do all that it can do for patients. I think that the ease and the simplicity, when you combine the clinical profile, the safety, the efficacy, and then the ease of the product, we really believe that we've got a winner. And so we're investing to really get off to a very strong launch that's with all of the appropriate field teams. Additionally, we've invested and built out what we believe are really best-in-class patient access and support services to help patients get on the medicine, you know, both get on and be able to stay on. And then we're continuing to evaluate the best way to make sure that both, you know, the clinicians, All the appropriate health care providers and patients are aware of this important offering. So probably more to come on that, but please know that we're investing what we believe. We're investing to win in this area.

Our next question is coming from Joanne Wench from Citibank. Your line is now live.

Good morning. Thanks for taking the question and a very nice stretch of the year. I'm going to pause for a moment on the ophthalmology franchise, in particular your views on the U.S. surgical and U.S. contact lens market. I'm curious in particular about the almost 3% decline in U.S. surgical in the quarter and how to think about that recovery throughout the remainder of the year. Thank you.

The AcuOasis one-day family, and especially, as you heard earlier from Joaquin, the Max Multifocal products, and these latest launches really complete our family of daily disposables and are solidifying our leadership in the category with exceptional comfort, which is not unexpected. In our business, Odyssey is coming from David Reisinger from Leering Partners.

Rewind is now live.

Yes, thanks so much. So my question is on J&J 4804, the co-antibody. Could you talk about your vision for its role in IBD treatment paradigms and the readouts that we should be focused on? And then since others have asked multiple questions, Joe, could you just share the M of A sales like you did in the first quarter for Inlexo? Thank you.

No question today. Someone from Matt Mixick from Barclays. Your line is now live.

Oh, great. Thanks so much for squeezing me in. And congrats again on a really impressive quarter and start to the year. So you mentioned Inlexo a couple of times. I know you've talked at length about it in the past. Just wondering if you could give us a sense of what the commercialization plan and rollout looks like for that, given it's a slightly different delivery mechanism than many of your other therapeutics and kind of where you are with that, any metrics you can provide. It would be great. And thanks again.

Sure. Thanks. So maybe as a reminder, you know, despite recent advances in bladder cancer, the unmet need in that area really remains significant, and this is for bladder sparing options. There's almost 600,000 new patients diagnosed each year and another 400,000 that are recurrent, so really, really big market opportunity. We've launched Inlexo into the BCG unresponsive population and are really excited to be able to move forward in the coming years and to be able to broaden that population. As a reminder, we really designed the product to fit seamlessly into urology practice so that, relatively speaking, you know, easy to insert and to retrieve and fits very, very nicely into practice. So how's the product doing? So Nlexo's outperforming all the recent launches in the non-muscle invasive bladder cancer space, and that's based on kind of the unique patients that were treated in our first six months post-approval. One in five eligible patients are starting on an Alexo regimen during the first quarter, and then what I think you really want to know is following our J-code approval, which came at the beginning of April. What we saw in the first week was actually an over 50% increase in new patient insertions. And the second week that we have under our bill, we actually saw that jump up to almost 90% increase in new patient insertions. So consistent with what we've articulated on our expectations for this product, once there's certainty on reimbursement following the J code, we're seeing play out in practice so far in the first couple of weeks. So very, very excited in the BCG unresponsive space and look to broaden that into broader populations.

Yeah, just to remind within Lexo, we achieved the highest complete response rates ever seen for a therapy for non-muscle invasive bladder cancer, achieved breakthrough designation from the FDA as well as the rapid review from FDA. And in Japan, the PDMA accepted our submission alarm data. They have never previously accepted a submission based on single-arm data, just showing how exciting these data are. I would also draw your attention to Inlexo at just the beginning. Right behind that we have intravascular drug-releasing system. This has ertifitinib, targeted therapy, intermediate risk, non-muscle invasive bladder cancer population of 90%.

And then in terms of our go-to-market model, this really represents the best of Johnson & Johnson and something that only a company like Johnson & Johnson with both an innovative medicine and a medtech business can do and bring to market. So in addition to the product that we've developed and the reimbursement and access support and the sort of excellence that's coming out of the innovative medicine business, we've really been able to tap into medtech and their world-class training institutes, They're modular training that can literally go to the site of care, and so we're deploying that throughout the United States to make sure that urologists and their practices are up to speed on in Lexo and fully trained to begin insertion for their patients as they deem fit. So really bringing the best of Johnson & Johnson to bear for this product.

Okay, thanks, Matt, and thanks to everyone for your questions and your continued interest in our company. I'll now turn the call over to Joaquim for some brief closing remarks.

Thank you, everybody, for joining Pipeline in our history, and we are relentlessly focused on innovation that is delivering real impact for patients. With our Q1 performance, we are off to a strong start, reinforcing our confidence in the year ahead and our ability to raise the standard of care in our six key focus areas. Thank you for your interest in Johnson & Johnson. We'll see you at our EBR late December, too, to give you more details on these new products that you were asking, and enjoy the rest of your day.