Johnson & Johnson (JNJ) Q2 2027 Earnings Call Transcript

Good morning, and welcome to Johnson & Johnson's second quarter 2026 earnings conference call. All participants will be in a listen-only mood 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 conference call over to Johnson & Johnson. You may begin.

Brian Kors, and to lead the Investor Relations Order of 2026 and our financial outlook for the full year. First, a few logistics 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. Forward-looking statements of future events using the information available as they are subject to certain risk 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 second quarter sales and P&L results, though we'll then close by sharing an overview of our capital allocation priorities and updated guidance for 2026. Executive Vice President, Worldwide Chairman, Innovative Medicine, will be joining us for Q&A. To ensure we provide enough time to address your questions, we anticipate the wait 60 minutes. to Joaquin.

We said 2026 would be a year of accelerated growth and impact for Johnson & Johnson and with our Q2 bid on the top and bottom line and raised guidance, we are delivering. Acrosoncology, immunology, neuroscience, cardiovascular surgery and vision, the strength of our business is built on our unique combination of scientific expertise, portfolio and pipeline in our 140-year history, with 28 products and platforms that each deliver more than a billion dollars in annual. In Q2, we reported 0.6%, double digits in the quarter of more than $25 billion. We are on track to meet our 2026 target of more than $100 billion in in annual revenue for the first time in our company's 140-year history. With the progress of our new launches, including IcoTide in Lexo, confidence that momentum will accelerate into 2027 and beyond, with line of sight to double-digit growth by the end. IcoTide, in particular, has significant early launch momentum, with uptake-accelerating competitors scoring their met need for them with a unique combination. Innovative medicine we delivered oncology, our commitment to transfer patient outcomes has never been stronger. We are on track to be the number one oncology company by 2030 with sales projected to a leading the way in Q2 is Darcelex, the foundational treatment for multiple myeloma which continues to be our about the depth of our portfolio. Nowhere is that more evidence for medicines during the treatment journey. Victi, Tecvili, and Talvei continue to deliver a high double-digit growth. And we are not standing still. With the new data this quarter showing the combination of Talvei and Darsalex delivered deep and durable response session-free at two years, totally tumors, we continue to see strong performance from Erlida and Ribremant, and we shared important clinical practice. We opened the ASCO plenary with our phase 3 protetid treatment before and after surgery significantly reduces the risk. Nearly one in three eligible patients started on an Elexo regimen. A new patient insertions grew approximately 75%. And building on our recent acquisition of Halda Therapeutics, We also announced plans to acquire Firefly Bio, adding another antibody platform in next-generation oncology innovation. We expect in immunology, we have been one of the deepest areas in the industry. Trenfaya remains the therapy in both chronic colitis, delivering 21% in the court, with the dual powerhouse of Trenfaya and IcoTite in psoriasis, we now have, we continue to see, to transform KR4Cology, our post-field ablation platform for A3 continues to build momentum for our dual energy thermocool smart touch.

Quoted represent operational results and therefore exclude the impact of currency translation. Starting with Q2 2026 sales results. Worldwide sales were $25.3 billion for the quarter. Sales increased 5.6% despite an approximate 460 basis point headwind from Stellara. Excluding Stellara, Johnson & Johnson grew double digits for the quarter. Growth in the U.S. was 7.3% and 3.4% outside of 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 $5.5 billion, and diluted earnings per share were $2.27 versus $2.29 a year ago. Adjusted net earnings for the quarter were $7.1 billion, and adjusted diluted earnings per share were $2.90, representing an increase of 5.7% and 4.7% respectively, compared to the second quarter of 2025. Focusing on the six key commercial execution are driving our performance and fueling long-term collect the depth of expertise and innovation in areas of oncology, immunology, and neuroscience. $4.4 billion increased 6.8% and 60 basis point head scores, the continued strength of our key brands and new launches. Growth in the U.S. was 8.9% and 3.6% outside of the U.S. Divestitures had a negative impact of 10 basis points on worldwide growth. Growth was 17.6%, primarily driven by strong share gains of five points across all lines of therapy, with nearly 11 points in the front-line setting, as well as continued market growth. Carvicti achieved growth of 47.7%, driven by share gains and continued site expansion. Techvely growth was 56.1%, with worldwide sequential growth of 29.2%, and impressive U.S. sequential growth of 46.2%, driven by launch uptake and share gains across earlier lines of therapy, following Starzilex FastPro, and from expansion in the community setting. 62.6% thriving in the community setting. In lung cancer, ribbing 61.6%, driven by continued launch uptake in all regions, rapid uptake in prostate cancer, early to deliver growth of 7.6%, with continued share gains and market growth. By unfavorable patient immunology, Trimphia delivered impressive growth of 71%, as the IBD launch is driving significant momentum and we continue to see share gains across all indications, as well as continued market growth. Alara declined 55.7%, driven by share loss due to biosimilar competition. Increasing adoption of non-immunology is driven by U.S. new product launches, Amave and Icotide. In neuroscience, Bravado grew 40%, driven by continued strong demand from physicians 24.8%, 70.9%, driven by strong continued launch momentum and adjunctive major depressive. across each of our key focus areas, cardio worldwide sales of $8.9 billion increased 3.6% in the U.S. and 3.2% outside the U.S. Net negative impact of 10 basis points on worldwide growth. Vascular grew 3.1% and primarily due to headwinds in electrophysiology and abimid. In electrophysiology, growth of 3.1% was driven by procedure growth, commercial execution, and new product performance, partially offset by competitive PFA pressures. There was also a negative impact from China inventory, which we estimate to be 400 basis points. Abiy Ahmed saw a decline of 2% due to pressures on U.S. procedures driven by usage patterns. The downturn came as physicians evaluated the results of a recent external clinical trial, which increased selectivity within the quarter, particularly in the U.S. The decline was partially offset by continued OUS growth, including sustained adoption of Impella 5.5. Shockwave grew double digits at 14.7% in peripheral products as well as new product launches. We grew 2.3%, including a negative impact of a problem by strength of the portfolio and commercial execution in biosurgery and wound closure, partially offset by VBP in China, as well as competitive pressures in energy and endocutters. Envision growth was vibration, strong execution, and global reach. Contact lenses and other products had a strong quarter with 6% growth, driven by strong performance in the AccuView Oasis one-day family of products, further solidifying our leadership position. Surgical vision grew 4.7%, driven by new product innovations, robust demand for premium execution, partially offset by competitive pressures. Orthopedics growth for the quarter was 4.2%, primarily driven by new product launches such as Voltan Trauma and strong commercial execution across the pile. Turning to our consolidated statement of earnings for the second quarter of 2026, I highlight a few noteworthy items that have changed compared to the same quarter of last year. Cost of goods sold leveraged by 30 basis points driven by favorable operational drivers and currency, partially offset by unfavorable product mix in the innovative medicine business, as well as the impact of tariffs in the medtech business. Marketing and administrative expenses deleveraged by increased investments in our new product launches. Research and development leveraged by 40 basis points, primarily driven by expense phasing in the innovative medicine business, partially offset by increased investment in medtech. Interest, income, and expense was a net expense of $62 million, as compared to $48 million of expense in the second quarter of 2025. Other income and expense was a net expense of $331 million, as compared to $107 million of expense in the second quarter of 2025. With a change primarily driven by higher litigation expense, restructuring-related asset impairments, and orthopedics partially offset by higher gains on security. On a gap basis, the effective rate in the second quarter of 2026 was 18%, compared to 14.7% in the second quarter of 2025. More information can be found in our upcoming 10Q for changes in taxes. Lastly, I'll direct your attention to the box section of the slide where we also have provided our income before tax, net earnings, and earnings per share adjusted to exclude the impact of intangible amortization expense. Now let's look at adjusted income before tax by segment for the course from 42.7% to 42.5%, primarily driven by unfavorable mix and heavier investments in new product launches, partially offset by expense phasing and research and development. MedTech margin declined from 22.2% to 22%, primarily driven by commercial investments, increased research and development, and the increased impact of tariffs, partially offset by favorable operational drivers in currency and cost of products sold. As a result, adjusted income before tax for the enterprise, as a percentage of sales, decreased from 34.5% to 34.2%. This is the next portion of the call, and I will now turn the call over to Joe.

Thank you, Ryan, and congrats to all parts of Johnson & Johnson's business. We'll be a real asset to our company as well as the investment community. We're glad you're in the role. Hello, everyone, and thank you for joining us today. As Joaquin highlighted earlier, we delivered a solid quarter, supported by the depth of our in-market portfolio and strong execution across our new product launches with particularly good growth in innovative medicine. To our standards in cardiovascular, that. However, we remain confident in our long-term projections for the MedTech business. I believe underscores the strength of Johnson & Johnson. Even with a notable headwind, we still delivered performance that exceeded your expectations and enabled us to confidently raise our full year 2026 financial outlook. We are not dependent on one or two products. We have a broad, durable portfolio that has 28 platforms, each generating more than $1 billion in annual revenue that we are intent on adding to in the coming years to double-digit growth by the end of the decade turning to results with our cap we ended the second quarter with approximately 21 billion dollars of cash and marketable securities and approximately 49 billion dollars of debt only 28 billion dollars you won that free cash flow was light but as expected we had significant with year to date totaling approximately 8.7 billion dollars and are on track for our full year free cash flow outlook approaching $21 billion. Our capital allocation priorities remain unchanged. We continue to prioritize investments with a focus on supporting our commercial launches and advancing future innovation. As stated previously, acquisitions are on our near and long-term objectives. Our financial strength allows us to continue investing in R&D while pursuing opportunities where our scientific and commercial capabilities can accelerate innovation and create differentiated value. A good example of that is the recently announced agreement to acquire Firefly Bio. The planned acquisition, expected to close in the third quarter of 2026, will add a proprietary platform designed to target KRAS-driven solid tumors, which are typically more difficult to treat and further diversifies our oncology pipeline. We also remain committed to returning capital directly to shareholders, primarily through our dividend. Turning to full year guidance for 2026. As always, our outlook reflects what we know today regarding foreign exchange rates, tariffs, the broader macroeconomic environment, and other external performance and uptake of new product launches. We are increasing operational sales growth by $400 million. Now expecting operational sales growth for the full year to be in the range of 6.5% to 7.1%, with a midpoint of 100 in 2026 includes a 53rd week, which provides a benefit in 2026. We do not speculate on future currency movements. Last quarter, we utilized a euro spot rate to the U.S. dollar of 1.17. As of last week, the euro spot rate to the U.S. dollar was 1.14. Based on all major currency movements, we estimate a negative total foreign currency impact of $100 million versus prior guidance. As a result, we now expect reported sales growth of 7.0% to 7.6%, with a midpoint of $101.1 billion, or 7.3%. ...of the year, based on year-to-date performance and updated guidance half of the year. And as a reminder, fourth quarter growth should be higher due to the benefit, turning to other notable items on the P&L. At the beginning of the year, we guided to more than a 50 basis point improvement in the just 75 basis operating efficiencies and anticipated reduction and recoupment of certain tariff related costs based on the latest ruling. It also considers the expected costs from the 53rd week of operation with the U.S. government costs to the U.S. patient from $50 million to $300 million, slightly lower than 17.0% to 18.0% for the full year based on year-to-date results. Earning to earnings per share. We are pleased to increase our adjusted operational earnings per share range to $11.50 to $11.65, which equates to an increase of $0.18 at the midpoint. This represents year-on-year adjusted operational EPS growth of 7.3%. Reported earnings per share is projected to be $11.60 to $11.75, or $11.68 at the midpoint, which represents an 8.2% increase over the updated earnings per share guidance range includes a five-cent reduction of favorable currency when it does not include the impact of any pending acquisitions. Several meaningful pipeline catalysts in the second half of the year. We anticipate ever treatment for patients with warm autoimmune hemolytic anemia, a rare and serious autoantibody disease. We have important data readouts across our innovative medicine pipeline, including Tecveli, in combatory multiple myeloma, who have received one to four prior lines of therapy. Asritamig, a first-in-class bispecific antibody in patients with advanced prostate cancer who have progressed after multiple lines of therapy. Or three, an investigational first-in-class once-daily oral therapy for metastatic castration-resistant prostate cancer. This will be the first clinical readout from an ongoing study from our recent HALDA. data readouts for Inlexo in high-risk non-muscle invasive bladder cancer, capillita, and by turning to MedTech, there are several important catalysts that we expect to generate momentum. Expect launches for the dual-energy ThermoCool SmartTouch SF platform, as well as the Shockwave C2 Aero and AeroFly IVL catheters. In electrophysiology, we expect Continued adoption of CardoSound Sonata cardio mapping in the U.S. And Varipulse Pro. Anticipated approval of Varipulse Pro in the U.S. later than surgery. We anticipate FDA approval surgical system and the EMAO launch of Ethicon 4000. And Envision, we continue to expand availability of Technus Pure C interocular lens for cataract and presbyopia while driving adoption of AccuVue Oasis Max lenses. Finally, the orthopedics business under Numaal Nuwana's leadership had another quarter of improvement. We continue to evaluate all separation options that create shareholder value and long-term. We are pleased with the progress made, are on track for a mid-2027 separation, and look forward to sharing updates later this year. The momentum we are building behind our needs, we are making across our pipeline. and financial flexibility to invest in opportunities we believe will create the greatest value for patients should translate into meaningful value for shareholders. We look forward to sharing more on strategy, growth catalysts, and a longer-term outlook at our enterprise business review on December 8th. To our colleagues around the world, thank you. Your dedication and disciplined execution are what make our performance possible, and you continue to deliver meaningful innovation to more patients, improve outcomes, and raise the standard of care. Kevin, can you please open the call for Q&A?

Certainly. 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, you can press star, then 2. Please limit your questions to one question only. Our first question is coming from Chris Schott from J.P. Morgan. Your line is now live.

Thanks so much for the question, and congrats on all the progress. Maybe just, Joe, if you could dive a little bit more into the $400 million increase in operational sales guidance. I was just looking for a little bit more color of the balance of pharma versus the medtech components to this. I guess just bigger picture, is it fair to think about pharma moving higher here, maybe partially offset by a bit lower medtech growth assumptions? Just any directional color there would be helpful.

We've had a little bit better revenue growth projected in the second half of the year, irrespective of the extra week, fourth quarter, are really in their infancy. We need to do well with the IBD indications. To the heart of your question is we do expect med as well. We have tempered expectations around the Abiomed business recovery happening, but probably as we leave this year, it declines. but more modest growth until our Protect4 data comes out, which I'm sure Tim will have an answer to in a future question to expand upon. Hopefully that helps, Chris.

Today is coming from Asad Hader from Goldman Sachs from Now Live.

Great. Thanks for taking the question. Maybe for Jennifer, John, and Iketide, just the launch seems to be progressing well. You noted 10,000 patients have now initiated therapy. Just wondering if you can provide any update on prescriber count relative to the last update of 4,500 prescribers that you called out in June. What can you tell us about sampling and free drug that you're providing and where you are with formulary negotiations? And when can we expect to see you break out sales? And then maybe just a second part on that, you know, how are you positioning from FHIA and IcoTite together to the dermatologist community and psoriasis? Are there any synergies or advantages that you're seeing emerge from having both options?

Well, thanks, Asad. This is Jennifer. And good morning, everybody. and I really want to start with a big thank you to all of our innovative medicine colleagues around the world for an outstanding quarter of delivering for patients. So over $16 billion in sales, our first $16 billion quarter, 6.8% operational growth, and it's also worth noting Stellara was only 4% of our innovative medicine business in the second quarter, and if you exclude that, the 96% of our business, 96%, actually grew over 14%. And this really based on the strong growth across our main key brands as well as our must-win launches. And the team has really done an outstanding job around the world on that. So glad to have the opportunity to talk about Iketide because we are really thrilled with the launch and how it's progressing. I think as we noted last time, we feel really good about the differentiated label that we got. Iketide is the first and only targeted oral peptide that precisely blocks the IL-23 inhibitor. If we talk about the U.S. launch and get into some of the details that you asked, it's really off to a strong start. As a reminder, we were ready day one, and, in fact, the first patient prescribed received Iketide on that launch day, and the early physician and patient enthusiasm has been really great. If we get into numbers on it, to date, over 18,000 prescriptions have been written for a total of now 11,000 patients. So that's an update from the 10 just shortly. There are 6,000 unique prescribers, and if you take a look at those, over 50% are actually advanced practice providers. About 40% are dermatologists, and the rest are our primary care physicians and others. And so that tells us that there's really good confidence in the product, in both the efficacy and safety profile, as well as the simplicity of the simple once daily pill. We're already seeing a number of riders who are repeat. We're seeing patients getting repeat prescriptions. As we take a look at the payer coverage, within 90 days, we already have over 50% of commercial coverage, and so we think that's great. That's actually a little bit ahead of our projections, so teams making really great progress on the payer coverage there. And so in total, we think the launch is going very well. You asked about Iketide and Tromphia, and I think really, really important to note, we've got this great uptick in Iketide. This has not slowed down Tromphia and psoriatic disease at all. So Tromphia and psoriatic disease, psoriasis and PSA, that growth in market share gains has actually continued well above the market and notable in the second quarter that we got approval for inhibition of structural damage for Tromphia. in psoria and PSA. And then in terms of really co-positioning, Iketide is the first choice systemic treatment. All those patients who've been cycling on topicals who really need to have advanced therapy, we think Iketide fits right in that sweet spot as that first choice systemic. For Tremphia, we think it's the first choice biologic, particularly for patients that have potential for or have any psoriatic arthritis involvement. And many, many patients, a significant percentage with psoriasis actually progressed to psoriatic arthritis as well. So we think really distinct and unique positions for both and well reflected in the results that we saw in the quarter with both products doing really well. Additionally, we are investing to win on Iketide. This is one of our must-win launches, and so in addition to what you've seen, we actually also started our direct-to-consumer advertising yesterday. Those of you who are watching World Cup or baseball had a chance to see that, and so we think this is even going to further bring more patients in to talk to their providers about new options for psoriasis.

Thank you. Our next question is coming from Larry Bielsen from Wells Fargo. Your line is now live.

Good morning. Thanks for taking the question. it. Tim, I'm sure you know there continue to be concerns about procedure growth in the U.S. What did you see in Q2, and how are you thinking about procedure growth the rest of the year? And regarding J&J, I heard Joe say the second half J&J MedTech growth would be better than the first half, which was 4.2%, I believe. Do you still expect MedTech to grow faster in 26, excluding the extra week? Thank you.

Certainly, given the hospital providers, our second quarter performance in context for you and for others. When we step back in the portfolio, the underlying picture remains solid. Procedure volumes continue to be stable, and we're not seeing evidence of a broad-based slowdown in demand. And to be clear, Larry, three of our four businesses, Surgery, Vision, and Orthopedics, all accelerated in the quarter and performed above expectations. Surgery growth was driven by continued strong performance in wound closure and almost double-digit growth in biosurgery. Vision, you would have noticed, delivered meaningful acceleration in contact lens and continued momentum in IOLs. And in orthopedics, as you heard already from Joe, we continue to see that business go from strength to strength, reflecting stronger execution and the impact of multiple new products. I would like to turn quickly to CV, and let me first acknowledge that our Q2 growth is not where you wanted it, and frankly, it's not where we wanted it. That said, we know what happened, and we know exactly what we're doing. CV growth was more muted this quarter in both EP and heart recovery by continued double-digit growth in shockwave. In EP, as you already heard, we continue to see strong underlying demand. However, we did have an inventory dynamic in China, which impacted our growth by about 400 basis points. That would have taken global growth up to north of 7%. And in heart recovery, due to a recent neutral clinical trial in the U.K., impeller usage has slowed. We see this as a near-term dynamic, and we're actively engaging physicians and their teams to reinforce appropriate patient selection, leveraging the significant depth of our clinical evidence base. So, again, to put it all in context, three out of our four businesses performed well, and we're confidently addressing the fourth, and nothing we see changes our conviction in the long-term growth thesis for both our CV business as well as J&J MedTech at large. To your question about procedure volumes, when we look across the breadth of our portfolio, we see that volumes are generally in line with market trends, and we're not currently seeing any evidence of a broad-based slowdown in consistent with what we would expect, given the fundamentals of these markets, which, as you know, continue to be driven by themes such as aging populations, increasing disease prevalence, and ongoing innovation that is expanding our access to more patients. We are acutely aware of the recent data that has been provided by a number of large U.S. hospital operators highlighting pressure on certain procedure volumes, particularly in more elective areas of care. And while we're monitoring these trends very closely, they are not reflected in what we're seeing across our portfolio today. As you know, our business is diversified across a broad range of categories, many of which are less dependent on discretionary elective procedures. And from our perspective, overall procedure trends remain consistent in the quarter with our expectations. I will also point to there has been a bunch of chatter about the potential impact of the ACA subsidy removals based on what we're seeing procedure volumes across our portfolio related to the ACA. And while we expect that the expiration of the Affordable Care Act subsidies may create some affordability pressures for a small cohort of patients, we do not expect this to translate into a material impact on demand for medtech and procedures. And so to be clear, we would not attribute our medtech performance in Q2 to a systemic slowdown in procedures. As already mentioned, we do expect an acceleration of our performance in the continued performance of our businesses in vision, in orthopedics, and certainly improvement on the back of our efforts to drive greater performance within cardiovascular. Thanks, Larry. I'm looking forward to seeing you next week at SRS.

Thank you. Our next question today is coming from Terrence Flynn from Morgan Stanley. Your line is now live.

Great. Thanks so much for taking the questions. Congrats on the quarter. I was just wondering, Jennifer, if you could expand on what you're seeing with Tech Valley. Obviously, you know, some important new data that's been added to the label recently. So just wondering how that's impacting the growth dynamics. And then maybe you could expand on what you're seeing in terms of academic versus community use.

For TechValey with sales of $260 million, up 56% versus prior year. And really that was driven by significant launch uptake and share gains across the earlier lines of therapy based on the approval that we got in the U.S. for TechValey plus Darzilex and also continued expansion in the community setting. So we're real excited about the approval of the combination regimen there. It's the first and only steroid-free, readily available, immediate immunotherapy option that really has that best-in-class efficacy and the potential for cure for patients in that second-line setting. As a reminder on that data, because we think it's truly extraordinary, at three years, 83% of patients remained alive and progression-free. And so this is really resonating with physicians. In terms of U.S. uptake, we're seeing really strong early U.S. demand following the rapid approval that we had for Tech Daily plus Darzilex. And so if you take a look quarter to quarter, like first quarter to second quarter, we saw a 29% increase in sequential growth there. And that's in terms of patients that were initiated in tech, and this is really due to new account adoption and increasing depth of prescribing. So furthermore, the vast majority of patients now with Tecdera are starting in that second to third line setting. And we continue to see increases in community site really set up and expansion. In the U.S., they had a 25 percent quarter over quarter increase in community sites expansion there. And so we're feeling really good about what we're seeing in terms of TechValley and TechValley growth along with Darzalex in that second and third line setting.

This question today is coming from Joanne Wensch from Citibank. Your mind is now live.

Good morning, and thank you for taking the question. You have a fairly robust robotics portfolio that should be rolling out over the next couple of quarters, and you did mention SRS. Could you please sort of give us an update of the lay of the land and what we might expect next week? Thank you.

Certainly, your interest, you know, we have been worldwide leaders in open and laparoscopic surgery and certain, I think you know that we are eagerly awaiting approval, which we submitted late last year. We are actively working on our second clinical trial, specifically focused on inguinal hernia, and we will provide much more detail around our exciting launch plans once approvals have That said, we are committed to the launch of two, assuming approvals come our way, which we're very confident about. We are committed to two large robotic launches this year, both the launch of Otava, which we believe is truly differentiated against the existing incumbent, and, of course, the launch of Monarch for Urology, which will be a first-of-kind opportunity in that particular area. And so we will provide more information about those two launches. Some more information next week. We'll also provide some updates certainly on the Forte trial, which was our clinical trial, which was actually presented at the ASMBS conference about a month and a half ago. And I actually had the opportunity to attend a meeting out in California with about 70 world-renowned robotic surgeons and got to see firsthand our surgeons not only listen to the specialists about the trial, but also to actually drive the robot. And frankly, just seeing the looks on their faces, the feedback we received gives me even more confidence that we have a device that will absolutely compete against the current incumbent. And so more to come on that. Thank you again, Joanne.

And to be clear, Joanne, this is Joaquin. We see our robotics platform, both Otava and Monarch, being a meaningful contributor to net tech growth by the end of the decade.

Thank you. Our next question today is coming from Vamal Devan from Guggenheim Security. Your line is now live.

Great. Thanks for taking my question. Maybe following up on similar to my question on IcoTide, I was hoping to get a little more color on Inlexo and the progress you're making there. I know you said sort of one in three eligible patients now receiving it, and inflation's up. I think you said 75%. Maybe you're going to get a little more color on sort of where you're seeing the utilization sort of differentiate between the community setting, academics setting, what sorts of patients are getting the products, and I don't know if you can share anything around patient numbers or prescriber numbers. And then the other part was just around you have the Sunrise 5 data coming out later this year. Maybe you can just sort of set expectations on what you're hoping to see from that data.

Thanks for the question, Anand, Lexo. You know, as a reminder, bladder cancer is the sixth most common type of cancer. There's over 600,000 new patients that are diagnosed globally each year and another 400,000 that are recurrent, so for a total of a million patients. And so this really helps us have great confidence this is an extraordinary opportunity for us with Inlexo and then ultimately with our ertifitinib device as well. So the launch of Inlexo is going really well in the U.S. We have got the J-code now, and so I think that's probably what you're interested in, and hearing how it's going post-J-code. In the U.S., Inlexo is outperforming all of the recent competitive launches. And as you noted, one in three eligible patients are now starting on an Alexa regimen. And this is an uptick versus first quarter. It was one in four last quarter. It's now one in three. And it's leading all of the novel agents in terms of new patient share. In terms of new patients and new patient insertions, those grew 75% quarter over quarter. And this was post the permanent J-code, so giving a lot of confidence to providers in terms of that reimbursement. Importantly, NLEXO is included in the CCN guidelines with a Category 2A designation. And they've been updated to expand the opportunity to include the papillary population, which represents about 80% of the BCG unresponsive patients. While we don't report sales on this yet, please know that we confidently beat consensus for the quarter, and we more than doubled sales in second quarter versus first quarter. So we believe that we're really on a very, very good track with this. You mentioned, I'll turn to John in a second, we do have our Sunrise program right now, and Lexo is based on the Sunrise 1 population and BCG unresponsive patients. That's about 3,000 patients in the U.S. Sunrise 5 is the BCG experienced patients, largely high-risk papillary. That's about 10,000 to 15,000 patients. And then the biggest opportunity is the Sunrise 3 population. That's the BCG naive. That's about 40,000 to 50,000 patients in the U.S. So that's our program, and that's before we even get to the Ertafitinib piece. So, John.

Yeah, and I think Jennifer covered the Sunrise program well, recognized that the approval with three months of – and that's being positioned for the intermediate risk non-muscle invasive bladder cancer, which is a very large population, is the most common genetic lesion in bladder cancer. So really excited about other devices, cancer, to keep their bladder. So I'm very excited for that million patients a year that are diagnosed with non-muscle invasive bladder cancer.

Thank you. Our next question today is coming from Alex Hammond from Wolf Research. Your line is now live.

Thanks for taking the question. A few on the vaccine. So can you remind us of your confidence level in AFib? I guess given the size and breadth of the labrexia program, it seems like there's potentially a wide set of outcomes between a clean win and miss. And is the trial still on track for later this year? I did not see it on the side deck. Thank you.

Towards the end of this year, beginning of next year, but because the careful work done continues to look at the data, they keep saying about the

mill vaccine opportunity. We think there is significant opportunity in the market for a product that's got the better bleeding profile than the current anticoagulants that are out there today. So maybe as a reminder, about 40% of ACID patients who are eligible are currently not receiving oral anticoagulants as they should or at the right level because there's concerns about potential bleeding. And so we think that a product that represents the potential of the Milvexian profile and what we're hoping to demonstrate really could be a game changer for patients and significant opportunity in the market. So we're really excited to see the results of the study when they come. And as John noted, it's event-driven studies, so we're going to have to wait and see what they are. But once we know, you guys will know too, right? At the right time, you'll know.

Yeah, maybe it's really quick on that. It's estimated that in this country alone who are taking an oral anticoagulant, but it's thought that there may be as many as 18 of the bleeding risk.

The next question today is coming from Jason Bedford from Raymond James. Your line is now live.

Good morning, and thanks for taking the question. Maybe just for Tim, on the abumed business. Sounds like the softness was in reaction to the data presented at ACC. I'm still just a little unclear as to what you're doing to reverse the 2Q softness outside of just waiting for Protect 4. And I think prior view was this was a mid-teens grower. What is the new growth expectation for the AbiumEd business? Thanks.

We believe that it's important, firstly, to really reinforce that the patient caution as they really interpret this new data rather than anything structural and there's no change in the underlying need, access, or reimbursement. These are the sickest patients, many of whom have very... And so we clearly see this as a near-term dynamic. We've seen this before, and we are actively engaging with physicians and their teams to really reinforce appropriate patient selection, leveraging both, you know, our capabilities, but most importantly, the depth of our clinical evidence base. And, you know, I think it's important to put this in context and recognize that the area of heart pumps is a category that Abiumid pioneered. And we are the only player today. And it remains a relatively evolving area of medicine. And with any emerging field, you know that scientific perspectives will continue to evolve. And that's exactly why we remain committed to really investing in robust clinical research, including the study you just referenced, which is PROTECT4, which is a highly powered study, almost 1,300 patients focused specifically on high-risk PCI, which we expect to read out in 2027. I do think it's also worth mentioning that Impella has supported more than 400,000 patients and appears in almost 2,600 peer-reviewed publications. And also, I think, specific to the study in the UK, which covered only 300 patients, we have studied more than 40,000 high-risk PCI patients, and that evidence base, combined with our two decades of clinical experience, continues to support the role of Impella in appropriately selected patients. So we remain very confident in the long-term potential for Impella, supported by the significant runway for growth, no current commercialized competitors, which is a key point, opportunities for further geographic expansion, and the large and growing global burden of heart disease. To your question around recovery, as already mentioned by Joe, we do expect this to take some time, but we absolutely expect that our performance in the back half will be stronger than the first, and we see gradual improvements in performance.

Thank you, Tim. It's also important to put this into context. Heart recovery is one of 28 platforms of more than a billion dollars that we have within Johnson & Johnson, and while we see this situation that Tim described as temporary and fully addressable, I have to be clear, it does not affect in any shape or fashion our growth trajectory as we have described. So as I said at the beginning, we see the second half of the year stronger. That momentum is carried into 2027, and we see and we continue to see double-digit growth by the end of the decade.

Thank you, Jason. We have time for one last question.

Thank you. Our final question today is coming from Mike Notokovic from TD Cowan. Your line is now live.

Thank you so much for the question. My question is on Trimphia. In GI, Trimphia seems to have an edge over SkyRizzi, yet SkyRizzi is holding its own. So my question is to what do you attribute SkyRizzi's ability to hold share? Thank you.

Good morning. Thanks so much for the question. I'm thrilled to have the opportunity to talk about Trimphia. So Trimphia's sales for the quarter were $2 billion. our first $2 billion quarter, and over 70% growth, which we're real proud of. I mentioned before that we continue to see growth and share gains in psoriatic disease, but I've got to tell you, the major driver here is really our performance in ulcerative colitis and in Crohn's disease. And so if you take a look at new patient starts or induction share in both ulcerative colitis and Crohn's disease, we currently are the share leader in both. So, for example, an ulcerative colitis, 58 percent share of induction or induction share for the IL-23s. That includes the other competitive IL-23s. For Crohn's disease, we've got over 50 percent share of those inductions. So, again, market leadership. And so, physicians are really seeing the profile as differentiated for Trampphia versus the other competitive set. I'll say that is even further underscored by the new data that we just released, our fusion data that was presented at DDW, which is the first positive study in over 20 years in adults with active perianal fistulitis and Crohn's. This is one of the most severe and underserved forms of IBD and Trampphia is the only IL-23 to demonstrate efficacy in this setting and that affects about a quarter of patients and so really underscores the very very strong effectiveness in this agent is the only dual acting IL-23 inhibitor so we're seeing very very strong physician receptivity and uptake we're seeing leadership and new patient starts and believe that we have got an awful lot of growth potential ahead for TRAMFIA and IBD. And as a reminder, back when we had really Stellar here, over 75% of Stellar's sales were actually in IBD. There is absolutely no reason why TRAMFIA can't do that or even more.

We're also hearing more and more about continued interest in our company.

I will now turn the call over to Joaquin for some brief closing remarks. Thank you for joining us.

Johnson & Johnson today is a medical innovation powerhouse uniquely positioned to translate breakthrough science into consistent long-term growth. When I look at our time that we are going to carry into the second half of the year, into 2027, our ambition to have double-digit growth by the end of the decade, the operating leverage that that sustained top-line growth is going to create. I see Johnson & Johnson, when I consider those factors, as one of the most compelling and transparent growth stories in healthcare today. You will hear more about that in our enterprise business review later in the year. Thank you for your continued interest in Johnson & Johnson, and enjoy the rest.

This concludes today's Johnson & Johnson second quarter 2026 earnings conference call. You may now disconnect.