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WMAC 2023-Johnson and Johnson

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F500-2023-040-Johnson-and-Johnson

The health care company is best known for household items like baby shampoo and Tylenol, but pharmaceuticals and medical technology are its big revenue drivers, bringing in $52.5 billion and $27.4 billion respectively, compared to $14.9 billion in the consumer health segment. 
<ul> 
 	<li>Revenue inched up 1.2% to $94.9 billion in 2022, but profits fell 14.1% to $17.9 billion.</li> 
 	<li>The U.S. government phased out Johnson &amp; Johnson’s one-shot COVID vaccine, hurting the company’s pharmaceutical division.</li> 
 	<li>In April 2023, the company settled a decade-long legal dispute in which consumers accused J&amp;J’s iconic baby powder of causing cancer. The company agreed to pay $8.9 billion to tens of thousands of plaintiffs but has not admitted wrongdoing. Before the settlement is final, a court must accept a controversial bankruptcy filing by a subsidiary that Johnson &amp; Johnson created to shield its corporate assets from litigation. A court rejected an earlier bankruptcy filing aimed at reaching a settlement, which allowed thousands of related cases against J&amp;J to go ahead.</li> 
</ul>

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WMAC-2022-17-Johnson and Johnson

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WMAC 2021-15-Johnson & Johnson

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G500-2021-094-Johnson & Johnson

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G500-2020-104-JJ

The sprawling 134-year-old health conglomerate eked out 0.6% sales growth in 2019 thanks to the strong performance of its pharmaceutical business, and particularly its immunology and oncology drugs. J&amp;J’s consumer business—with a portfolio that includes Neutrogena, Tylenol, and Listerine—was boosted by the acquisition of Zarbee’s, a purveyor of naturally based over-the-counter remedies. The company continued its push into the robotic surgery market in an effort to revive its struggling medical device business. J&amp;J is also mired in litigation surrounding its opioid and baby powder products. (In May, it announced it would stop selling talc-based baby powder.) While COVID-19 has dinged sales of some of its products—like contact lenses and artificial knees and hips—the company is one of the frontrunners in the race for a vaccine; J&amp;J has said it hopes to begin late-stage human trials by the end of September.

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F500-2020-035-Johnson and Johnson

The sprawling 134-year-old health conglomerate eked out 0.6% sales growth in 2019 thanks to the strong performance of its pharmaceutical business, and particularly its immunology and oncology drugs. J&amp;J’s consumer business—with a portfolio that includes Neutrogena, Tylenol, and Listerine—was boosted by the acquisition of Zarbee’s, a purveyor of naturally based over-the-counter remedies. The company continued its push into the robotic surgery market in an effort to revive its struggling medical device business. J&amp;J is also mired in litigation surrounding its opioid and baby powder products. No surprise, the company has been impacted by COVID-19 in various ways; while its pharma division is racing to develop a vaccine, sales of products like artificial knees and hips are down due to the cancellation of elective surgeries during the pandemic.

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Global business is back. After limping through a worldwide financial crisis and economic slowdown, the 500 largest companies ranked by revenues shattered all sorts of performance records in 2013: They racked up combined revenues of $31.1 trillion, up 2.5% from 2012, and profits soared 27% to nearly $2 trillion. China’s 95 companies (up from 89 last year) posted $5.8 trillion in revenues. The U.S. has four fewer companies on the list than last year but remains (for now) the country leader, with 128 corporations on the list—including No. 1 Wal-Mart Stores—reporting $8.6 trillion in revenues. 

Wal-Mart stayed on top as its sales crept closer to half-a-trillion dollars. Apple moved into the top five. And UnitedHealth Group continued its steady climb. 

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Johnson &amp; Johnson, founded in 1886, is among the world’s largest and most influential health care companies. It is involved in the research, development, manufacture, and distribution of innovative medicines and medical technologies. The company’s innovative medicine business operates in areas including oncology, immunology, neuroscience, and cardiopulmonary treatment. In medtech, the company is focused on developing and delivering cardiovascular, orthopedics, surgery, and vision solutions.

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Johnson & Johnson (JNJ): Company Profile, Stock Price, News, Rankings

legacy

Johnson & Johnson

johnson & johnson

Good morning, and welcome to Johnson and Johnson's Second Quarter twenty twenty five Earnings Conference Call. All participants will be in a 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. I will now turn the conference call over to Johnson and Johnson. You may begin.

Hello, everyone. This is Darren Snellgrove, Vice President of Investor Relations for Johnson and Johnson. I am excited to be here today and to lead the Investor Relations team moving forward. Welcome to our twenty twenty five second quarter review of business results and updated financial outlook. First, a few logistics.

As a reminder, today's presentation and associated schedules are available on the Investor Relations section of the Johnson and 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 and are subject to certain risks and uncertainties that may cause the company's actual results to differ materially from those projected. A description of these risks, uncertainties, and other factors can be found in our SEC filings, including our 2024 Form 10 ks, 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 Duato, our Chairman and CEO, will discuss our business performance and key catalysts. I will then review the second quarter sales and P and L results. Joe Walk, our CFO, will then close by sharing an overview of our cash position and guidance update for 2025.

Jennifer Talbot, 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 and A. To ensure we provide enough time to address your questions, we anticipate the webcast will last approximately sixty minutes. With that, I will now turn the call over to Joaquin.

Thank you, Darren, and hello, everyone. I'm excited to talk about our very strong second quarter. Today's results showcase the strength of our uniquely diversified business as the only major healthcare company operating in both the medtech and innovative medicine sectors. In the second quarter, we delivered operational sales growth of 4.6% across our business. In Innovative Medicine, we reported 3.8% operational sales growth, delivering more than $15,000,000,000 in quarterly sales for the first time.

No other healthcare company has grown through the loss of exclusivity of a multibillion dollar product in the first year. In our case, Stellara and Jet, that is exactly what we are doing and for the second quarter in a row. Our performance was driven by double digit growth across 13 brands, including DARZALEX, CARVICTI, TEKVAI and TALVE as well as Ribrebam plus Las Cruze, Tremfya, CAPLYTA and SPRAVATO. And in Medtech, we delivered 6.1% operational sales growth with particularly strong momentum in cardiovascular, surgery and vision. Based on our strong performance in the quarter, we are pleased to raise our full year sales guidance by $2,000,000,000 and EPS guidance by $0.25 from $10.6 to $10.85 Results like these are a direct result of our deep and resilient portfolio.

It's what makes Johnson and Johnson unique. Today, we will focus on the remarkable ways we are driving innovation and creating value for patients and shareholders. We will highlight the depth of our portfolio and pipeline, focusing on six areas of unmet need and where we are delivering significant growth, oncology, immunology, neuroscience, cardiovascular, surgery, and vision. These are spaces where we are moving the conversation from treatment to cure and where we are extending and improving lives in meaningful ways. Let's start with innovative medicine and oncology where we have a bold vision to eliminate cancer.

Our leading products for the treatment of blood cancers and solid tumors are built on cutting edge scientific platforms that are transforming outcomes for patients. With more than 10 products in market across 26 approved indications and over 25 treatments in late stage development, we expect to become the number one oncology company by 2030 with sales of more than $50,000,000,000

And when you look at our quarterly results in oncology with operational sales growth of 22.3%, you can see that we are well on our way to achieving that. I'll draw your attention to three key areas of Q2 progress. First is multiple myeloma where we have treatments in every line of therapy. Approximately eighty percent of myeloma patients today receive a Johnson and Johnson medicine at some point in their treatment journey. And in Q2, we presented several important sets of data.

They include new five year data showing a single treatment of our CAR T therapy Carvicti has the potential to deliver long term remission. We also presented the first data from our investigational trial specific antibody, which showed an unprecedented one hundred percent overall response rate in heavily pretreated patients. With results like this, we are closer than ever to our ambition of curing multiple myeloma. Second is lung cancer where our chemotherapy free combination of Ribrebam plus Las Cruze has a projected overall survival of at least a year over the current standard of care in frontline non small cell lung cancer with EGFR gene mutations. Intent to prescribe continues to grow among healthcare professionals, which you can see in our strong quarterly sales.

This is a life changing advancement for patients and one we are building on with a pipeline of novel therapies. And third is bladder cancer, where we are excited to share that we have received FDA priority review for TAR200, a first of its kind drug releasing system. We anticipate launching TAR-two 100 for high risk non muscle invasive bladder cancer later this year, a transformational product that harnesses our unique expertise in both innovative medicine and medtech. We expect TAR200 to generate at least $5,000,000,000 in annual peak year sales. In immunology, we have a twenty five year legacy of redefining the standard of care and we are just getting started.

With six products in market across 14 approved indications and many treatments in late stage development, we are expanding treatment options for patients and restoring health for millions of people around the world. From Remicade and Symphony to Stellar and Tremfya and now exploring targeted oral peptides and future combinations, the growth potential of our immunology portfolio and pipeline continues to be significant. For immunology, I will draw your attention to two key areas of Q2 progress. First is Tremfya, which has recently expanded into inflammatory bowel disease. Tremfya grew 30% in the quarter.

With strong uptake in Crohn's disease and ulcerative colitis, we expect it to generate at least $10,000,000,000 annually in peak year sales. We also made important progress in our pipeline in Q2 and expect to file ICOTROKINRA with the FDA in the third quarter as the first targeted oral peptide to selectively block the IL-twenty three receptor with similar efficacy to a biologic. As a once a day pill, this molecule has the potential to set a new standard in the treatment of plaque psoriasis and we look forward to sharing more in the coming months. In neuroscience, we are building on a seventy year legacy and expect to be the number one company by the end of the decade. We are pushing boundaries in diseases like schizophrenia, depression, and Alzheimer's, which together affect one in eight people worldwide.

In Q2, Spravato grew 53% delivering sustained double digit growth and demonstrating the power of this medicine for patients living with difficult to treat depression. We also completed the acquisition of intracellular therapies this quarter. Intracellular CAPLYTA is approved to treat adults with schizophrenia and bipolar depression and we are excited about the anticipated major depressive disorder approval later this year. With the addition of CAPLYTA, we now have five neuroscience products in market across six approved indications and eight treatments in late stage development. CAPLYTA adds to Johnson and Johnson's robust lineup of therapies with $5,000,000,000 plus potential in big year sales and further solidifies sales growth above analyst expectations through the rest of the decade.

Turning to medtech and in cardiovascular specifically, we are leaders in heart recovery, circulatory restoration, and electrophysiology. Cardiovascular has some of the largest unmet needs in healthcare and is one of the fastest growing spaces in medtech. In Q2, we delivered over 22% operational sales growth over the quarter, driven by new product performance in Abiomed, Shockwave and strength in mapping in electrophysiology. Today, we're a leader in four of the largest and highest growth medtech segments within cardiovascular intervention impacting more than 1,000,000 patients each year. Now, let me highlight three areas of important progress from Q2. First is electrophysiology, which delivered close to 10% operational sales growth over the quarter, driven by new product performance and strength in mapping. We have now completed more than ten thousand body pulse cases globally with a reported neurovascular event rate of less than zero point five percent consistent with published rates across other PFA platforms. Second, we continue to advance a suite of cardiovascular solutions to expand our market leadership, including our dual energy Thermocool SmartTouch SF catheter, where we performed our first cases in Europe this quarter. It also includes Omnipulse, where we presented strong early data that will expand our portfolio of tools for safe and streamlined ablation procedures. Third is Shawwave's unique intravascular ethotripsy technology or IVL, which has transformed the treatment of atherosclerotic cardiovascular disease and is driving significant growth.

Shockwave is expected to be our thirteenth billion dollars medtech platform by the end of the year, a position that is further strengthened by a compelling body of evidence on the benefits of this technology. This includes data showing an IVL first approach can achieve excellent outcomes in female patients with complex calcified coronary artery disease. In surgery, we have spent one hundred and forty years advancing the standard of care and today our surgical technologies are used in most Operating rooms around the world. Q2 highlights include the introduction of the Ethicon 4,000 Surgical Stapler, the newest advancement in our surgical portfolio. Featuring advanced stapling technology and reloads, the Ethicon 4,000 minimizes surgical leaks and bleeding, which are common and costly surgical complications for patients and hospitals.

This advanced stapling technology will be harnessed for future use exclusively on the Ottava robotic surgery system. And as mentioned on our earnings call in April, Ottava completed its first clinical cases, gastric bypass surgeries performed in Houston. In our conversations with surgeons who have spent time on Ottava, they tell us that they are eager for the system's sophisticated architecture, design features like Twinmotion, the surgeon entrusted Ethicon advanced instrumentation only available in Ottava, and the future connection to our open digital ecosystem, Polyphonic. We plan to submit for an FDA de novo approval next year. And finally vision, where we have a deep legacy in developing transformational innovation.

With quarterly growth of 4.6% across the business and 8.9% in surgical vision, the portfolio has a robust growth trajectory driven by our AccuView Oasis MAX 1D family of contact lenses and our Technis ODC and Technis PureC intraocular lenses. And with the Q2 release of the first disposable multifocal lenses for people with astigmatism, we have high expectations. You know, few other healthcare companies can talk about their impact across as many high growth areas as Johnson and Johnson, and none spanning both innovative medicine and med tech. These six examples are only a cross section of our cutting edge portfolio. This depth and breadth is who we are at Johnson and Johnson.

It's how we grow through a major loss of exclusivity, how we have reinvented ourselves time and time again, and how we will deliver strong financial performance through the end of the decade and beyond. The bottom line is this, Johnson and Johnson's relentless focus on innovation yields results quarter after quarter, year after year. I will now turn the call back over to Darren.

Thank you, Joaquin. Moving to our financial results. Unless otherwise stated, the percentages quoted represent operational results and therefore exclude the impact of currency translation.

Starting with Q2 twenty twenty five sales results. Worldwide sales were $23,700,000,000 for the quarter. Sales increased 4.6% despite an approximate seven ten basis point headwind from Stellara. Growth in The U. S.

Was 7.80.6% outside of The U. S. Worldwide growth was positively impacted by 160 basis points, primarily due to the Intracellular and Shockwave acquisitions. Turning now to earnings. For the quarter, net earnings were $5,500,000,000 with diluted earnings per share of $2.29 versus diluted earnings per share of $1.93 a year ago.

Adjusted net earnings for the quarter were $6,700,000,000 with adjusted diluted earnings per share of $2.77 representing a decrease of 2.11.8%, respectively, compared to the second quarter of twenty twenty four. The decrease is driven by interest associated with incremental debt from the Intracellular acquisition and GP erosion from Stellara. I will now comment on business sales performance in the quarter with a focus on the six areas Joaquin discussed that will drive significant growth for the enterprise. Beginning with Innovative Medicine, where our results demonstrate the depth of our expertise in oncology, immunology and neuroscience. Worldwide sales of $15,200,000,000 increased 3.8% despite an approximate eleven seventy basis point headwind from Stellara, demonstrating the strength of our key brands and new launches.

Growth in The US was 7.6% and minus 1.6% outside The US. Growth outside of The US was negatively impacted by Stellara Biosimilars and the COVID-nineteen vaccine. Acquisitions and divestitures had a net positive impact of 140 basis points on worldwide growth due to the Intracellular acquisition. In oncology, starting with myeloma, DARZALEX growth was 21.5%, primarily driven by continued strong share gains of approximately 4.1 points across all lines of therapy, with close to eight points in the frontline setting as well as market growth. CarVictee achieved sales of $439,000,000 with growth of over 100%, driven by share gains and capacity expansion.

This reflects continued strong sequential growth 17.9% as we expand outside of The U. S. Tekveli and Talvay growth was 22.454.3% respectively, bolstered by continued expansion into the community setting. Patient demand remains strong despite continued adoption of longer dosing intervals. In prostate cancer, Alida delivered strong growth of 21% with continued share gains and market growth.

In lung cancer, Ribrovant plus Lascluse delivered sales of $179,000,000 and growth over 100%, with sequential growth of 26.5% driven by continued strong launch uptake. We continue to see share gains in both first and second lines of therapy. Within immunology, Tremfya delivered growth of 30.1%, primarily driven by share gains with continued strong uptake across recently launched IBD indications and overall market growth. STELARA declined by 43.2%, driven by the impact of biosimilar competition and Part D redesign, which is in line with our expectations. In neuroscience, Provato growth of 53% was driven by continued strong demand from physicians and patients.

Long acting injectables declined by 6.3% due to the impact of Part D redesign and unfavorable patient mix. I'll now turn your attention to MedTech. Worldwide sales of $8,500,000,000 increased 6.1% with growth of 8% in The U. S. And 4.1 outside The U.

S, driven by strong performance in three focus areas: cardiovascular, surgery and vision. Acquisitions and divestitures had positive impact of 200 basis points on worldwide growth, primarily due to Shockwave. In cardiovascular, electrophysiology delivered growth of 9.8% versus prior year, driven by strength in competitive mapping, new product performance and procedure growth. Abiomed delivered growth of 16.9% with continued strong adoption of Impella technology and Shockwave delivered strong double digit growth with the recent introduction of the Javelin and E8 catheters. As a reminder, the acquisition benefit of Shockwave was lapped to the May.

Surgery grew 1.8% despite divestitures negatively impacting results by approximately 60 basis points. Performance was primarily driven by technology penetration in wound closure and the strength of the portfolio in biosurgery. Growth was partially offset by competitive pressures in energy and the negative impact of China VBP across the portfolio. In vision, contact lenses and other ocular products grew 2.9% driven by strategic price actions and strong performance in the AccuView Oasis one day family of contact lenses, including the recent launch of Oasis Max One Day multifocal for astigmatism. Surgical vision growth of 8.9% continues to be driven by strong performance in Tectus Odyssey, Pure C, and iHance.

The Orthopedics business declined by 1.6% driven by competitive pressures, the transformation program and China VBP. Now turning to our consolidated statement of earnings for the second quarter of twenty twenty five. I'd like to highlight a few noteworthy items that have changed compared to the same quarter a year ago. Cost of products sold deleveraged by 150 basis points, driven by product mix and amortization related to the Intracellular acquisition in Innovative Medicine as well as medtech macroeconomic factors and VBP in China. Selling, marketing and administrative expenses improved 50 basis points driven by corporate expense rationalization, partially offset by increased investment in recent acquisitions.

Research and development expenses leveraged by 50 basis points, primarily driven by portfolio rationalization and expense phasing in medtech. We continued our strong investment in research and development with $3,500,000,000 or approximately 15% of sales in Q2. Interest income and expense was a net expense of $48,000,000 as compared to $125,000,000 of income in the second quarter of twenty twenty four, primarily driven by lower rates of interest earned on cash balances and a higher average debt balance associated with the Intracellular acquisition. Other income and expense was a net expense of $100,000,000 compared to an expense of $700,000,000 in the prior year, primarily driven by lower talc litigation expense in 2025 and the $400,000,000 loss on the sale of the retained stake in Cambuch as recorded in 2024. Regarding taxes in the quarter, our effective tax rate was 14.7% compared to 18.5% in the same period last year.

I encourage you to review our upcoming 10 Q for details on the changes in taxes. Lastly, I'll direct your attention to the box section of the slide where we have also provided the company's 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 adjusted income before tax by segment for the quarter. In support of our efforts to increase financial transparency, you will again find GAAP to non GAAP reconciliations by segment in the supplemental schedules of our press release. Innovative medicine margin declined from 44.6% to 42.7%, primarily driven by negative mix and cost of products sold related to Solara.

Medtech margin declined from 25.7% to 22.2% driven by macroeconomic factors in cost of products sold as well as other income. This concludes the sales and earnings portion of the call, and I will now turn the call over to John.

Thank you, Darren, and glad to see your first earnings call is off to a good start. I look forward to you leveraging your recent experience leading the Innovative Medicine Finance team to benefit Johnson and Johnson's Investor Relations function. Hello, everyone. Thank you for joining us today. As already highlighted, we delivered a very strong second quarter, exceeding expectations on both the top and bottom line.

While our currently marketed products and platforms drove this quarter's performance, the progress across our pipeline in the first half of the year heightens our conviction to achieve, and I'd be willing to bet likely beat the upper end of the growth targets we conveyed at our 2023 enterprise business review. As previously mentioned by Joaquin and Darren, the Innovative Medicine business continues to grow through Stellaris loss of exclusivity driven by our in market portfolio. We continue to advance our pipeline, attaining significant clinical and regulatory milestones that will help drive sustained and accelerating growth through the back half of the decade. In medtech, while we still have work to do, we saw improvement over first quarter results, driven by strong performance in the cardiovascular portfolio, surgical vision and wound closure in surgery. We remain focused on higher growth markets, enhancing competitiveness to gain market share and executing against our transformation initiatives to improve margins.

Let's get into some of the financial commentary starting with our cash position. Free cash flow through the first half of twenty twenty five exceeded 6,000,000,000, which accounts for elevated tax payments related to the final annual TCJA toll tax payment when compared to the first half of twenty twenty four. We ended the second quarter with $19,000,000,000 of cash and marketable securities and $51,000,000,000 of debt for a net debt position of $32,000,000,000 These figures include the debt raised for the $14,500,000,000 Intercellular acquisition, which closed on April 2. Regarding talc litigation, we expect the Daubert hearing to commence this fall and look forward to the court reexamining the junk science the mass tort plaintiffs bar has funded to promote baseless talc claims against Johnson and Johnson. Turning to our full year guidance for 2025.

Driven by the strength of our first half performance, we are increasing our operational sales guidance for the full year by approximately 900,000,000 We are now expecting operational sales growth for the full year to be in the range of 4.5% to 5%, with a midpoint of $92,900,000,000 or 4.8%, representing a full point better when compared to prior guidance. Excluding the impact from acquisitions and divestitures, our adjusted operational sales growth is now expected to be in the range of 3.2% to 3.7% compared to 2024. As you know, we don't speculate on future currency movements, And last quarter, we utilized the euro spot rate relative to the US dollar of 1.11. The US dollar has weakened across all major currencies since April. Last week, the euro spot rate relative to the US dollar was 1.17.

We estimate an incremental positive foreign currency impact of $1,100,000,000 versus previous guidance. As such, we now expect reported sales growth between 5.1% to 5.6% with a midpoint of $93,400,000,000 or 5.4%. Currently, our guidance does not include the impact of the most favored nation concepts. With respect to MFN, we share the administration's goal that American patients should pay less by addressing the real drivers of higher US costs, including middlemen driving up prices and foreign markets not paying their fair share. Turning to other notable items on the P and L.

At the beginning of the year, we guided to an approximate 300 basis points improvement in operating margin. Despite what you may have calculated on a year to date basis, we remain confident and reiterate our operating margin guide for the full year. This is due to efficiency programs designed for margin improvement as well as non recurring one time IP R and D charges that occurred in the second half of twenty twenty four. This expected improvement also takes into consideration the dilution from the Intercellular transaction as well as what we know today about the impact of tariffs on our business. During our first quarter conference call, we anticipated an impact from tariffs in 2025 to be approximately $400,000,000 Based on the current tariff landscape, we now anticipate the impact to be approximately $200,000,000 exclusively related to our medtech business.

We will look to reinvest the differential to continue to accelerate our pipeline and further power the launch of our new products, those on the market with new indications and those with near term anticipated approvals. We continue to monitor what the future year's impact could be from tariffs on our business. For net interest expense, we now project between 0 and $100,000,000 an improvement from the previous guidance, primarily driven by higher interest earned on cash balances. Our effective tax rate is now expected to be in the range of 17 to 17.5% for the full year, with the increase largely due to an adjustment to the company's global tax reserves. We are pleased that the One Big Beautiful Bill Act provides certainty for our previously announced $55,000,000,000 commitment to invest here in The United States.

This includes provisions such as permanent expensing for domestic r and d spend, permanent bonus depreciation, and a 100% expensing of qualified production property, including our newly planned facility in North Carolina. We also welcome the improvements that were made to the international tax system. For your modeling, it is worth noting that the tax rate on foreign earnings known as GILTI is increasing by approximately 2% from a statutory rate of 10.5% to 12.6%. This will result in an approximate 1% increase to our global effective tax rate in 2026. Turning to earnings per share.

We are pleased to increase our reported adjusted earnings per share estimate by $0.25 to $10.85 or 8.7% at the midpoint for a range of $10.8 to $10.9 which is a combination of operational improvement and the favorable foreign currency dynamics I referenced earlier. Embedded in that is $08 of adjusted operational earnings per share, increasing our guidance to $10.68 or 7% at the midpoint. I'll now provide some qualitative considerations on phasing for your models. We continue to expect both Innovative Medicine and MedTech operational sales growth to be higher in the second half of the year versus the first half. Regarding Innovative Medicine, we maintain the assumption that Stellaris biosimilar competition will accelerate throughout the year with erosion similar to HUMIRA's in year two, which is still our proxy with the additive unfavorable impact of Part D redesign.

Turning to med tech, we anticipate an acceleration in growth to be driven by the increased adoption of newly launched products in cardiovascular, surgery and vision. We continue to expect normalized procedure volumes and typical seasonality patterns throughout the remainder of the year. Beyond our financial commitments and what Joaquin has already referenced, we are excited for the expected pipeline progress in the remainder of 2025. In innovative medicine, this includes expected approvals in TAR200 in non muscle invasive bladder cancer, subcutaneous Ribrovant for non small cell lung cancer in The US, Tremfya subcutaneous induction for ulcerative colitis, and CAPLYTA for adjunctive major depressive disorder. Anticipated filings for approval include icotrochinra in psoriasis and TREMFYA in psoriatic arthritis.

As far as data readouts, we are planning for Ribrovant in head and neck cancer and icotrochinra in ulcerative colitis, as well as head to head data versus SuTiktu in psoriasis. In medtech, we continue to make progress with our clinical trials for our Otava robotic surgical system. In our cardiovascular portfolio, we are planning regulatory submission for dual energy thermal cool smart touch SF catheter for cardiac arrhythmia in The US, an Impella ECP submission in heart recovery, as well as Javelin and Shockwave e eight launches in circulatory restoration outside of The US. In orthopedics, we will be launching a tune revision hinge and a new plating system called Volt in The US. We will also be launching the Ethicon 4,000 stapler with three d reloads in surgery and the AccuView Oasis MAX in vision for astigmatism.

In summary, I trust you agree the results delivered in the first half are evidence that our portfolio has the breadth and depth that enables us to attain growth, even in the face of a major LOE where very few, if any, other company could. The clinical advancements provide a robust base for accelerated top line growth, not just for the remainder of this year, but for the back half of the decade. We're confident that the strength of our business model enables Johnson and Johnson to navigate a dynamic external environment while delivering on our financial commitments. This is directly attributable to the hard work and dedication of our 138,000 colleagues who focus daily on advancing our pipeline, increasing market share, and progressing breakthrough treatments to patients that create long term value for our shareholders. Thank you.

And with that, we are happy to take your questions. Kevin, will you please provide instructions for those seeking to participate in the Q and A?

Certainly. We'll now be conducting a question and answer session. If you'd like to be placed into question queue, please press star one on your telephone keypad. If you'd like to withdraw your question, please press star then the number 2. Please limit your questions to 1 question only.

Our first question is coming from Chris Schott from JPMorgan. Your line is now live.

Great. Thanks so much for the question. J and J also reported a very strong top line beat despite the Stellara LOE. And I'd be interested, Joe, in any color you might hear of in terms of the drivers of upside to the guidance for the year as we think about how much of this is the innovative business versus medtech and any particular franchise in those businesses that's driving guidance raise? Thank you.

Yeah. Good morning, Chris, and thank you very much for the question. I I would say it's, both are contributing, in terms of the strong performance. And in fact, I would say this is a great opportunity for Jennifer and Tim to address some of the strength that we saw in our second quarter results. As you saw and credit to Jennifer and her team achieving the first $15,000,000,000 quarter despite $1,200,000,000 of year on year erosion in the quarter from Stellard.

I don't think any other company can do that. And then, Tim, a notable improvement from what we reported in q one that gives us a lot of enthusiasm for the balance of this year where we we as you heard in my earlier comments, we expect both businesses to actually continue that momentum and grow better in the second half than the for the first half. But why don't I turn it over to Jennifer and Tim to give you some insights from their perspective?

Thanks so much, Joe, and and good morning, everybody. And, Joe, you stole my thunder on the, the over 15,000,000,000 in our first $15,000,000,000 quarter. You know, importantly, if you take a look at the 90% of our business that is not Stellara, we actually had extraordinarily robust growth of 15.5% growth, really demonstrating the strength across our portfolio. We had 13 brands that were growing double digits. And as we take a look at those, they are the vast majority of those are not only our growth drivers for today and tomorrow, but are also key growth drivers out through the end of the decade.

So a few of the notable drivers there. So first in oncology, DARZALEX continues to perform very well, CARVICTI performed well, ERLIDA, and we're really pleased with the launch uptakes thus far on Ribrovant plus Lascluse in non small cell lung cancer. In immunology, Tremfya is off to a great start in ulcerative colitis and also Crohn's disease. And across neuroscience, both SPRAVATO and CAPLYTA both had really, really strong performance for the quarter. So as I mentioned, 13 brands with double digit growth.

I won't go into all of those, but really, really strong across the base of our business. And we're really excited throughout the rest of this year because we've got a number of additional catalysts that are coming through with additional approvals and such. Tim?

Thank you, Jennifer. And Chris, to your question, I mean, for MedTech, we were happy with our Q2 operational growth of 6.1%. This is a 4.4% sequential improvement over the first quarter. I think you know the primary contributor is certainly cardiovascular, 22% growth. We are by far and away now one of the largest and certainly the fastest growing medtech company in cardiovascular, not only on the back of the success of the AbiaMed and Shockwave acquisitions, but also the tremendous improvements you saw in our electrophysiology business, which by the way has a $5,000,000,000 base.

And so tremendous performances there. We also saw great results in Vision, primarily driven both by contact lenses as well as almost double digit growth in Surgical Vision and then continued solid growth in Surgery, especially on the back performance in wound closure and biosurgery, both of those businesses, multibillion dollar businesses, by the way, growing close to 7%. And as we look to the back half, what gives us confidence in continued acceleration is a couple of things. Firstly, it's important to remember that Q1 and Q2 had difficult prior year competitors. But more importantly, what gives us confidence is the further acceleration as we continue to shift our portfolio into higher growth markets and really bring truly differentiated innovation to market.

In cardiovascular, that will continue with Abiomed, which continues to add to our portfolio. But more importantly, the evidence base around the benefits of Impella continues to impress both with the danger shock study and the recent ACC and Ah guidelines supporting Impella use in patients with cardiogenic shock. Shockwave, two new products this launch, E8 as well as Javelin, which will further drive our performance specifically in the peripheral space. And then with EP, you're going to see continued performance of Varipulse, and we'll add to that with the addition of the dual energy STSF catheter in the European Union. In vision, this is a true turnaround story.

We're seeing tremendous results, especially with our Tectnes and PURE C IOLs. And just to put that in context, in The U. S, we had our second consecutive year of quarter of double digit growth growing 13%. And then in the back half of the year, you'll also see the launch of the AccuView Oasis MAX one day multifocal for astigmatism. I know there's a lot Well, this is the world's first and only daily disposable lens for people with both astigmatism and presbyopia.

Surgery, we continue to see performance expect continued performance on the back of SurgiFlo, Eesthesia and StrataFix. And then I will call out that while our ortho performance was softer than we would like, we have strong reasons to believe in continued acceleration through the remainder of the year with roughly 18, five ten approvals last year, close to 40 outside of The U. S. And so big launch is coming our way, especially in the areas where we face the most competition, hips and knees. We have the Velis Uni Knee Attune Revision Hinge as well as KINSIGHT two point zero.

And then also in Spine, we're seeing the rollout of our Spine Velis robot as well as Trialtus, which we are confident that will continue to bolster our growth and competitiveness. And so I think in summary, due to easier comps as well as significant new products, we're confident in continued acceleration in the back half.

So Chris, as you can see it, it's hard to pick one particular product that gives us reason for our enthusiasm in the back half. But if I had to point and maybe pick a couple of favorite children, would say Tremfya, we're just getting started with our inflammatory bowel disease and we grew thirty percent in the quarter. Those indications will provide further growth. As a reminder, Stellaris, had seventy percent of their prescriptions within IBD. Looking forward to getting the subcutaneous administration approval for lung cancer with Ribrovant and Lascluse.

And then on the med tech side, I think the really shining star, well, maybe not the highest number is the EP energy that we have going forward, either maintaining or recapturing that market leadership position as well as expected improvement in our contact lens business. You saw about 3% growth this quarter, with the launch of one day AccuView OASIS MAX that treats presbyopia and astigmatism. We think there's, even higher growth ahead on the horizon.

Great. Thanks, Chris, for the question. And, Kevin, next question, please.

Certainly. Our next question is coming from Terence Flynn from Morgan Stanley. Your line is now live.

Great. Thanks so much for taking the question. You mentioned oncology target of $50,000,000,000 by end of the decade. Looks like that's well above consensus. Just wondering if you could point us to the largest deltas that you see there.

I know you've talked about TAR-two 100 in the past, but maybe any other areas. And then on Ribrevant subcu, can you just confirm that you've responded to the CRL and, what the, target review, date would be for that, approval? Thank you.

Thanks, Hai. It's Jennifer again. We feel really confident in that $50,000,000,000 target for our Oncology business. It's really based on the strength across the base of our business. You can take a look at multiple myeloma with DARZALEX and a lot of continued growth opportunity.

Carvicti, also a $5,000,000,000 plus brand. We've got TekVeili and Talve. We may come to it later, a TriSpecific that we've started outlining and presenting data on. So multiple myeloma we anticipate to continue to be a stronghold. We've got a really nice franchise in prostate cancer right now with ERLEADA that is growing very well.

You mentioned TAR200, that is probably the asset that has the biggest disconnect between our internal forecasts and what the Street expects. We're really excited for this product and to be launching it in the second half of the year with the ability to truly transform the treatment for non muscle invasive bladder cancer. There has not been much innovation there in a very, very, very long time. And we think we're going to bring new hope. The data that we've presented there looks fabulous.

We've really designed this product by urologists, for urologists to seamlessly fit into routine clinical practice, and we really think that we've got a winner there. And if just take a look, I think, boy, we see if you take a look at 2028 consensus, we actually see our numbers at least three times higher. So that's a big disconnect. And then again, this is oncology. There's a lot to talk about last on Ribrovant plus Lascluse.

So a quick update, the launch is going very well. As a reminder, Ribrovant plus Lascluse is the first and only regimen that provides really clinically meaningful overall survival to patients greater than probably twelve months versus ocimertinib. If you think about new patients, newly diagnosed patients, they want to live longer and they do not want to be using chemo in a first line setting. And so we think we've really got the winning combination and are poised to become the new standard of care in that frontline lung cancer EGFR mutated lung cancer. And so this is another one of our $5,000,000,000 plus assets.

In terms of the launch, while we're still early in it, as Joaquin had noted, the intent to prescribe has grown consistently and we're now the number one regimen that providers are claiming that they intend to prescribe for those frontline patients. We've done a great job of penetrating. We're already in nearly 100% of our high priority accounts. And if we take a look really across the lines of therapy, one out of every four patients across those lines of therapy is now being initiated on a Ripravant plus Lascluse combination. So making really nice progress here.

So key to that continued growth is the subcu dosage. And so we have responded to the agency. This was not anything where the agency required any further clinical studies or clinical data. This was a manufacturing related question or two. So we've responded and we're looking forward to the second half and hopefully getting approval on that.

Terrence, John Reed here. If I could build just a little bit on Jennifer. We've had, really great momentum in the oncology pipeline. In the last eighteen months, last year and a half, I think we've had eight what we would call, proof of concept readouts that then gave us the confidence to now move into late stage pivotal studies across the portfolio. Since you asked about Riborband, I would also remind you that we're in advanced studies now for colorectal cancer, which will be a a huge opportunity for patients and for our portfolio.

Johnson & Johnson (JNJ) Q2 2025 Earnings Call Transcript

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