Johnson & Johnson (NYSE: JNJ) Q3 2025 Earnings Call | 10/14/2025

Overview:

• Speakers: Darren Snellgrove (VP Investor Relations), Joaquin Duarte (Chairman & CEO), Joe Wok (CFO), Jennifer Talbot (EVP, Innovative Medicine), John Reed (EVP, R&D Innovative Medicine), Tim Schmid (EVP, MedTech), Operator, and analysts from Wolf Research, UBS, J.P. Morgan, Wells Fargo, Goldman Sachs, RBC, Morgan Stanley, Raymond James, Guggenheim Securities, Barclays, and Lyric.
• Focus: Strong Q3 performance with 5.4% operational sales growth, driven by innovative medicine and MedTech. Announced planned separation of orthopedics business (DePuy Synthes) to sharpen focus on high-growth areas. Updated 2025 guidance and provided preliminary 2026 outlook.

Key Points from Joaquin Duarte (CEO):

1. Business Performance:
   • Operational sales growth: 5.4% despite Stelara loss of exclusivity (LOE) headwind (~640 bps).
   • Innovative Medicine: 5.3% growth, $15B+ sales for second consecutive quarter; 11 brands with double-digit growth (e.g., Darzalex, Carvicti, Tremfya).
   • MedTech: 5.6% growth across all businesses; orthopedics separation to focus on high-growth areas (cardiovascular, robotic surgery).
   • Six priority areas driving growth: oncology, immunology, neuroscience, cardiovascular, surgery, and vision.
2. Oncology:
   • Q3 sales up ~20%; leadership in multiple myeloma with Darzalex (20% growth, >50% market share) and Carvicti (81% growth, >8,500 patients treated, $5B peak sales potential).
   • Inlexa (bladder cancer): FDA-approved, first drug-releasing system for local delivery; $5B peak sales potential.
   • Rybrevant + Lazcluz (lung cancer): >100% growth, $5B peak sales potential; recent New England Journal of Medicine data shows reduced mortality risk.
3. Immunology:
   • Tremfya: 40% growth, driven by new IBD indications (ulcerative colitis, Crohn’s); ~50% new patient starts for IL-23 in colitis; $10B+ peak sales potential.
   • Icotrokinra: Oral IL-23 inhibitor for plaque psoriasis (FDA submitted July 2025); potential to revolutionize treatment; also in Phase II for ulcerative colitis.
4. Neuroscience:
   • Spravato: 61% growth, treated >180,000 patients for treatment-resistant depression; only approved therapy for major depressive disorder with suicidal ideation.
   • Caplyta (via Intracellular acquisition): $240M sales, FDA approval expected for adjunctive major depressive disorder; $5B peak sales potential.
5. MedTech:
   • Cardiovascular: 12% growth; Shockwave (20% growth, 1M patients treated, $1B platform by year-end); Abiomed (15% growth, Impella CP reduces mortality by 16.3%); electrophysiology (10% growth, 99.7% effectiveness with Varipulse).
   • Surgery: 9% biosurgery, 7% wound closure growth; Otava robotic system FDA submission expected early 2026.
   • Vision: 6% growth; Tecnis IOLs (13.8% growth); Acuvue Oasys Max multifocal for astigmatism launched in U.S./Europe/Korea.
6. Orthopedics Separation:
   • DePuy Synthes to become standalone company led by Namal Nawana, targeting $50B+ market.
   • Enhances J&J’s focus on high-growth MedTech (cardiovascular, surgery, vision); expected to improve MedTech revenue growth and margins by ~75 bps.
   • Timeline: 18-24 months, likely tax-free spinoff; no dividend change expected.

Financial Highlights (Darren Snellgrove, VP Investor Relations):

• Worldwide Sales: $24B, +5.4% operational (+6.2% U.S., +4.4% ex-U.S.); acquisitions/divestitures +100 bps (Intracellular).
• Innovative Medicine Sales: $15.6B, +5.3% despite Stelara LOE (~1,070 bps headwind); +6% U.S., +4.3% ex-U.S.
  • Key drivers: Darzalex (+19.9%), Carvicti (+81.4%), Tecvayli (+29.9%), Talvey (+59.1%), Erleada (+15.3%), Rybrevant + Lazcluz (>100%), Tremfya (+40.1%), Spravato (+60.8%), Caplyta ($240M).
  • Stelara: -42% due to biosimilars/Part D redesign.
• MedTech Sales: $8.4B, +5.6% (+6.6% U.S., +4.5% ex-U.S.); acquisitions/divestitures -10 bps.
  • Cardiovascular: +12% (electrophysiology +9.7%, Abiomed +15.6%, Shockwave +20.9%).
  • Surgery: +3.3% (biosurgery +9%, wound closure +7%); orthopedics +2.4% (hips +5.1%, knees +5.6%).
  • Vision: +6% (contact lenses +3.5%, surgical vision +13.8%).
• Earnings: Net earnings $5.2B, diluted EPS $2.12 (vs. $1.11 Q3 2024). Adjusted net earnings $6.8B, adjusted EPS $2.80 (+15.7%).