J&J(JNJ) - 2026 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - In Q1 2026, worldwide sales reached $24.1 billion, reflecting a 6.4% increase, despite a 540 basis point headwind from Stelara [15][16] - Net earnings for the quarter were $5.2 billion, with diluted earnings per share at $2.14, compared to $4.54 a year ago [15] - Adjusted net earnings were $6.6 billion, with adjusted diluted earnings per share at $2.70, representing a decrease of 1.4% and 2.5% respectively compared to Q1 2025 [15][16] Business Line Data and Key Metrics Changes - Innovative Medicine reported operational sales growth of 7.4%, with worldwide sales of $15.4 billion [16] - MedTech achieved operational sales growth of 4.6%, with worldwide sales of $8.6 billion [19] - In oncology, DARZALEX sales were $4 billion, with operational growth of 18% [7] - Tremfya in immunology grew by 63.8%, while Stelara declined by 61.7% due to biosimilar competition [18] Market Data and Key Metrics Changes - U.S. sales growth was 8.3%, while growth outside the U.S. was 3.9% [15] - Acquisitions and divestitures positively impacted worldwide growth by 110 basis points, primarily from the Intra-Cellular acquisition [15][16] Company Strategy and Development Direction - The company aims for accelerated growth in 2026, targeting $100 billion in annual revenue for the first time [6] - Focus areas include oncology, immunology, neuroscience, cardiovascular, surgery, and vision, with a strong emphasis on innovation [5][6] - The company plans to invest $55 billion in U.S.-based manufacturing technology and R&D through early 2029 [26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving double-digit growth by the end of the decade, supported by a strong product portfolio and pipeline [25][56] - The company anticipates continued operational sales growth throughout 2026, with a higher fourth quarter due to a 53rd week benefit [30] Other Important Information - The company announced a 3.1% increase in the annual dividend rate to $5.36 per share, marking the 64th consecutive year of dividend growth [27] - The effective tax rate for Q1 2026 was 12.6%, compared to 19.3% in Q1 2025, influenced by the reversal of a talc settlement accrual [23] Q&A Session Summary Question: Positioning of ikotide in the market - Management highlighted ikotide's differentiated label as the first and only targeted oral peptide, with strong early enthusiasm from physicians and patients [36][38] - Early uptake showed 1,500 prescriptions written, with ongoing positive conversations with payers for broad access [39] Question: Sentiment in the medical device space - Management acknowledged low sentiment but emphasized solid operational growth and confidence in end markets despite some procedural softness early in the quarter [43][46] - The company noted that Q1 performance reflected underlying operational execution rather than benefits from prior one-time items [47] Question: Growth drivers within the medical device business - Management expressed excitement about the acquisitions of Abiomed and Shockwave, which are expected to drive future growth [67] - The company emphasized its leadership position in the IVL market and plans to continue launching innovative products [72]