The Zhitong Finance App learned that Johnson & Johnson (JNJ.US) announced financial results for the third quarter of fiscal year 2026 and held a performance conference call. Financial reports show that Johnson & Johnson's third-quarter sales increased 5.9% year over year to US$25.4 billion, in line with general market expectations. In terms of profit, GAAP net profit plummeted 95.9% year over year to US$210 million. After dilution, earnings per share were only 0.09 US dollars (2.12 US dollars in the same period last year), mainly due to one-time pre-tax expenses related to the proposed settlement of the US$5,519 billion talc lawsuit.
In terms of guidance, Johnson & Johnson raised the median sales revenue guide for the full year of 2026, from about US$101.1 billion to US$101.2 billion (range of US$1010-101.4 billion), and the adjusted median earnings per share guidance was raised from US$11.04 to US$11.10 (range of 11.05 to 11.15 US dollars), all higher than the agreed market expectations.
Management said 2026 will be a year of accelerated growth and impact. The company is expected to surpass $100 billion in annual revenue for the first time in its 140-year history, and reaffirms double-digit growth by the end of this decade. The strong innovative drug business has offset headwinds in some fields of medical technology; long-term fundamentals of medical technology are still strong, but the company clearly needs to improve cardiovascular and surgical operations outside the US, and is taking action. The company expects to perform better in 2027 and will provide more 2027 outlook and early pipeline information in the corporate business review on December 8.
Below are the details of Johnson & Johnson's third quarter earnings call.
Management statement
operator
Good morning, and welcome to Johnson & Johnson's 2026 third quarter results conference call. Today's call will be recorded. Now leave the meeting to Johnson & Johnson.
Ryan Koors (Vice President of Investor Relations)
Hi everyone, I'm Ryan Koors, VP of Investor Relations at Johnson & Johnson. Welcome to the review of the company's business results and full-year financial outlook for the third quarter of 2026.
As a reminder, today's demo and related forms can be downloaded in the Investor Relations section of the Johnson & Johnson website. This presentation contains forward-looking statements relating to the company's future operating and financial performance, market position, and business strategy. Do not overrely on these forward-looking statements, which are based on current expectations of future events, are risky and uncertain, and may cause actual results to differ materially from predictions. The relevant risk descriptions can be found in SEC documents.
Today's agenda: Chairman and CEO Joaquin Duato will discuss business performance and growth drivers; I'll review third-quarter sales and profit and loss results; and CFO Joe Wolk will share capital allocation priorities and updated guidance for 2026. Tom Cavanaugh, Global Chairman of Innovative Drugs, John Reed, Executive Vice President of Innovative Drug Research and Development, and Tim Schmid, Global Chairman of Medical Technology, will participate in the Q&A. The call is expected to last approximately 60 minutes.
Joaquin Duato (CEO and Chairman)
Thanks Ryan and good morning everyone. Our strong performance in the third quarter strengthened confidence in 2026 as a year of accelerated growth and impact. Operating sales increased 6% in the third quarter, exceeding analysts' unanimous expectations, and accelerated from the second quarter.
We are leading the way in six strategic focus areas: oncology, immunology, neuroscience, cardiovascular, surgery, and vision. A strong combination of innovative medicines and medical technology expertise enhances competitiveness. Currently, 29 products and platforms have annual sales of at least $1 billion.
The listed portfolio continues to perform well, with newly launched products gaining significant momentum, and the new product pipeline will support growth over the next decade. With sales of over $25 billion this quarter, we are expected to reach our target and surpass $100 billion in annual revenue for the first time in the company's 140-year history. As differentiated combinations and pipelines advance, we have a clear path to double-digit growth by the end of this decade.
Operational sales of innovative drugs increased by 7.9%, and eight brands achieved double-digit growth.
In terms of cancer, we are redefining cancer care from treatment to cure. The oncology business grew by about 17% in the third quarter. The combination and pipeline for multiple myeloma is unrivaled, with 80% of patients receiving Johnson & Johnson during their treatment journey. We continue to strengthen our support for recently marketed multiple myeloma treatments and joint programs. The new phase III results announced in July showed that TECVAYLI combined with TALVEY in second-line treatment could reduce the risk of disease progression or death by 89%. In terms of solid tumors, RYBREVANT sales increased 64%, reflecting its strength in lung cancer. It is expected that RYBREVANT FASPRO will be approved by the US FDA for advanced head and neck cancer by the end of the year. In terms of bladder cancer, INLEXZO quickly became the market leader in new patient share just one year after launch. Nearly one-third of eligible patients began using the INLEXZO program in the third quarter. We also completed the acquisition of Firefly Bio this quarter, adding a promising degrading antibody conjugation platform to target drivers of difficult cancers such as KRAS. Our goal is to become the number one oncology company by 2030, with expected sales of over $50 billion.
In terms of immunization, we are promoting industry-leading innovation based on 25 years of heritage. TREMFYA's sales increased 68% this quarter, reflecting strong momentum in various indications. In the US, it has become the number one IL-23 inhibitor in the new brand share for Crohn's disease, ulcerative colitis, and psoriatic arthritis. Based on the landmark STAR study, TREMFYA is the first and only IL-23 inhibitor to show positive results in axial disease clinical trials, including significant improvement in spinal pain, stiffness, and inflammation in patients with psoriatic arthritis. This has strengthened our confidence in TREMFYA as an essential drug for inflammatory bowel disease and psoriatic diseases, and that it can grow into a franchise of over $10 billion.
ICOTYDE is our first targeted oral peptide for plaque psoriasis and continues to surpass recent competitors' marketing performance. Since its launch in the US, more than 20,000 patients have begun treatment, and nearly 9,000 prescription doctors. Business access is progressing strongly, and ICOTYDE is now widely covered in national plans. This quarter, IMAAVY was approved as the first advanced treatment specifically for warm-type autoimmune hemolytic anemia, a rare, life-threatening disease that causes severe anemia and fatigue. This new indication is based on IMAAVY's kinetic energy in systemic myasthenia gravis and reflects its broad potential in autoantibody diseases. We continue to advance the next generation of therapeutics. In July, a collaboration with Sail Biomedicines was announced to advance in vivo CAR-T methods for immune-mediated diseases.
In terms of neuroscience, we aim to change the future of brain health by addressing complex neurological diseases. Today we are clear leaders in neuropsychiatry. CAPLYTA's year-to-date sales reached $1 billion, making it our 29th billion dollar platform. As an adjuvant treatment for major depression, CAPLYTA is the fastest growing oral brand therapy in this field. Last month, we released key phase III data showing that CAPLYTA significantly and rapidly improved symptoms of bipolar mania. SPRAVATO grew 36% this quarter, reflecting strong demand for intractable depression.
In terms of medical technology, operating sales increased 2.5% in the third quarter. Although below expectations for this business, our confidence in the future direction has not changed.
On the cardiovascular side, we continue to invest in cardiac recovery, circulatory recovery, and heart rhythm disease to address the world's leading causes of death. Shockwave once again experienced strong growth of 17%. The global launch of the Shockwave C2 Aero continues to expand the coverage of intravascular lithotripsy platforms. The VARIPULSE pulsed field ablation platform reached an important milestone this quarter, treating more than 100,000 patients with atrial fibrillation worldwide. VARIPULSE Pro melts 5 times faster and is popular in Europe, driving double-digit growth. Last week, VARIPULSE Pro was approved in Japan. As clinical experience increases, we see the differentiating advantages of VARIPULSE. A recent retrospective analysis showed that VARIPULSE reduced the risk of adverse cardiac events by 68% compared to competitive pulse-field ablation platforms. In terms of cardiac recovery, while physician selectivity continues to influence Abiomed's performance, we are confident in the technology and focused on supporting the right patient choices.
On the surgical side, we are preparing to shape the next era of care through robotics, digital innovation, and advanced devices. In July, the US FDA granted OTTAVA De Novo authorization, the world's first table-integrated soft tissue robotic system. This is one of the biggest medical technology innovations we will bring to market this decade. OTTAVA's unique architecture, automation capabilities, and next-generation robotic instruments help address operating room space and surgical process requirements. Its connection to the open digital ecosystem Polyphonic transforms surgical data into actionable insights for clinicians. We have signed our first OTTAVA commercial customer and are moving forward with development projects. Investigational device exemption trials have been carried out in inguinal hernia repair, and future plans are planned to expand to urology and gynecology.
In terms of vision, we promote lifelong eye health, bringing better eyesight to more than 40 million people every year. TECNIS PureSee was recently launched in the US to further enhance the intraocular lens portfolio. This quarter, TECNIS PureSee and Tecnis Odyssey implanted more than 1 million cases worldwide, reflecting continued adoption by physicians and our leadership in personalized vision solutions. We have also obtained CE certification for ACUVUE OASYS MAX 2-week reusable lenses, expanding the European ACUVUE portfolio.
Overall, this quarter's strong results attest to the impact of our choices to lay the foundation for lasting growth. We've streamlined our portfolio to focus on the most life-changing innovations. We have proven our ability to grow as major patents expire. Strategic investments in high-growth areas are bearing fruit, and innovation engines continue to drive patient breakthroughs. Therefore, we are confident that 2026 will end strongly, and 2027 will be better for Johnson & Johnson. Now it's up to Ryan.
Ryan Koors (Vice President of Investor Relations)
Thanks Joaquin. Next are the financial results. Unless otherwise specified, percentages are operating results, excluding exchange rate effects.
Sales for the third quarter of 2026: Global sales of US$25.4 billion, an increase of 6%. The US grew by 9.1%, and outside the US it grew by 1.8%. The net negative impact of acquisitions and divestments on global growth is 10 basis points.
Profit: Net profit for the quarter was $210 million, diluted earnings per share of $0.09, compared to $2.12 in the same period last year. The results were affected by the proposed talc lawsuit settlement, the Firefly Bio deal, and approximately $7 billion in costs associated with the Sail Biomedicines partnership. Adjusted net profit of $6.3 billion, and adjusted diluted earnings per share of $2.59 were down 6.8% and 7.5%, respectively. Adjusted earnings were also affected by Firefly Bio and Sail Biomedicines fees.
Business sales:
Innovative drugs: Global sales of $16.8 billion, up 7.9%, up 11.1% in the US, and 3% outside the US. The negative impact of divestment on global growth is 10 basis points.
Tumors: In terms of multiple myeloma, DARZALEX grew 15.6%, mainly driven by a 5 percentage point increase in the share of all treatment lines, a 10 percentage point increase in first-line sales, and market growth, partly offset by pricing headwinds outside the US. CARVYKTI grew 35.2%, driven by an increase in early treatment line share and site expansion. TECVAYLI grew by 77.3%, and the US grew by more than 100%, driven by market adoption and an increase in the share of early treatment lines. TALVEY grew by 42.1%, driven by an increase in share brought about by an increase in the depth of prescriptions in the community. In terms of lung cancer, RYBREVANT and LAZCLUZE increased 63.5%, and first-tier and second-tier shares increased strongly. In terms of prostate cancer, ERLEADA increased by 9.4%, driven by share and market growth, partly offset by an unfavorable patient mix.
Immunity: TREMFYA increased by 68.2%. Driven by the continued momentum of IBD marketing, the share of ulcerative colitis and Crohn's disease both increased by 4 percentage points. STELARA declined by 54%, reflecting competitive pressure on biosimilar drugs and a shift to new categories. Other immune growth was driven by IMAAVY and ICOTYDE's adoption in the US.
Neuroscience: SPRAVATO grew 36%, driven by increased share, doctor adoption, and patient demand. CAPLYTA increased 66.1%, driven by momentum to market adjuvant treatment for severe depression and demand for bipolar disorder and schizophrenia.
Medical technology: Global sales of $8.6 billion, up 2.5%, up 4.8% in the US, and 0.1% outside the US. Overall cardiovascular growth of 4.1%, including 20 basis point acquisition contributions. Electrophysiology increased by 4.4%, driven by surgical expansion, commercial execution and new product performance, partly offset by competitive PFA pressure, more pronounced in Asia Pacific, and the dynamic base of inventories outside the US last year. Abiomed decreased by 1.5% due to lower patient volume. U.S. performance is showing signs of improvement, with continued adoption for acute myocardial infarction, cardiogenic shock, and Impella 5.5. Shockwave grew 17.2%, driven by coronary and peripheral product adoption, new product launches, and US office lab reimbursement. The reduction in surgery was 1%, including negative effects of about 30 basis point peeling. The decline was mainly due to China's volume procurement expansion, surgical transformation program results, and Middle East disruptions affecting tender times and order patterns. Partially offset by recent innovations such as ETHICON 4000 and DUALTO, as well as biosurgical commercial execution. Vision grew 5.1%, driven by high-end innovation, execution, and global reach. Contact lenses and others grew 4.3%, driven by strong ACUVUE OASYS 1-Day series performance, partially offset by US inventory dynamics. Surgical vision increased by 7.1%, driven by new product innovation, demand for high-end IOL, and commercial execution, partially offset by market factors such as Middle Eastern disruptions. Orthopedics increased by 3.4%, mainly driven by the launch of new products such as VOLT Trauma and Hips, and VELYS Knee Pull.
Profit and loss statement: Sales cost deleveraged by 150 basis points, driven by unfavorable product sales portfolios and increased amortization of intangible assets of the innovative drug Intra-Cellular, partially offset by medical technology tariff recovery. Sales, marketing, and administrative expenses account for the same proportion of sales. R&D investment was approximately US$4.7 billion, accounting for 18.3% of sales, including US$1 billion related to the acquisition of Firefly Bio. The current quarter's R&D depreciation of US$339 million is related to PreCardia asset write-down. Other revenue expenses were net expenditure of US$5.8 billion, compared to revenue of US$478 million for the same period last year. The change was mainly due to proposed talc litigation settlement and costs associated with orthopedic separation. The tax rate was a small net gain for the quarter, mainly related to the tax impact associated with talc litigation settlement.
Adjusted revenue before tax: Innovative drug profit margin fell from 44.3% to 35.4%, mainly due to approximately $1 billion in R&D expenses associated with the Firefly Bio acquisition, Sail Biomedicines transaction costs, and unfavorable product sales portfolios and costs. The profit margin for medical technology rose from 21% to 22.9%, driven by tariff recovery and partly offset by strategic investment in commercial capacity. The adjusted pre-tax revenue share of the enterprise fell from 35.2% to 30.2% of sales.
Joseph Wolk (Executive Vice President and Chief Financial Officer)
Thanks Ryan. Hello everyone. As Joaquin and Ryan said, the third-quarter results were strongly driven by the innovative drug business, offsetting headwinds in some areas of medical technology, and allowed us to exceed expectations at both the top and bottom lines while continuing to invest in the pipeline and future growth. We understand that medical technology needs to be improved, particularly cardiovascular and non-US surgeries, and are taking action to enhance results.
Although disappointing, the fundamentals of the medtech business remain strong, supporting our long-term confidence in the business. Across Johnson & Johnson, the drivers underpinning the outlook remain strong. As a result, we have raised our 2026 guidance compared to the latest update in July.
Financial indicators and cash: Cash and marketable securities at the end of the third quarter were about $17 billion, debt was about $45 billion, net debt was about $28 billion, and free cash flow in the third quarter was over $6 billion. We remain confident in the full-year free cash flow guideline of approximately $21 billion. The $1 billion Firefly Bio acquisition was completed this quarter, deepening oncology capabilities. We're also partnering with Sail Biomedicines to advance in vivo CAR-T.
Capital allocation principles: Prioritize supporting key commercial listings, accelerate future innovation, increase annual dividends, and strengthen pipelines through inorganic opportunities that create strategic value. It was announced in July that the ovarian cancer talc lawsuit would be settled for $5.5 billion, which was reflected in the third quarter GAAP results. The terms of the agreement are explicit participation in at least 95% of remaining ovarian claims. We're on our way to reaching the 95% threshold.
2026 full-year guidance: Based on year-to-date performance and fourth-quarter expectations, we raised the midpoint of our operating sales guidance and narrowed the range. Operating sales are expected to increase 6.7%-7.1% for the full year, to a midpoint of US$10.7 billion, an increase of 6.9%. We don't speculate on future exchange rates. The EUR/USD spot exchange rate was 1.12 last week, but the average exchange rate for the fiscal year was 1.15. Based on this average exchange rate, reported sales are expected to increase 7.2%-7.6%, to the midpoint of US$101.2 billion, an increase of 7.4%. Assuming that the current spot exchange rate continues until next year, the exchange rate may become a headwind.
Other profit and loss items: Operating margin is expected to fall by about 60 basis points, an improvement of 75 basis points from the July guidance. The latter includes the impact of Firefly Bio and Sail Biomedicines deals, which adversely affects 150 basis points. Excluding these transactions, we continued to improve our underlying profit margin. The pre-tax adjusted operating margin outlook also reflects 53rd week operating costs and previously announced agreements with the US government to improve access to medicines. The net interest expense guideline was lowered to $150 million to $200 million. The effective tax rate guidelines were narrowed to 17.0%-17.5%. Adjusted operating earnings per share are expected to be $10.95-11.05, a midpoint increase of 2%. The report is expected to report adjusted earnings of $11.05-11.15 per share, a midpoint of $11.10, an increase of 2.9%. Excluding the impact of the Firefly Bio and Sail Biomedicines deals at $0.64, EPS growth is reported to be close to 9%. Reminder: At the time of modeling in 2027, Firefly Bio and Sail Biomedicines expect to dilute their total adjusted earnings per share by $1.36 for the full year. We'll provide more of our 2027 outlook in our corporate business review later this year.
Upcoming developments: In terms of tumors, a number of important data are expected to be read in the fourth quarter, including pasritamig (bispecific antibody for advanced prostate cancer) and JNJ-6143 (once-daily oral therapy for metastatic castration-resistant prostate cancer). INLEXZO's sales from the beginning of the year to date are about 200 million US dollars, and data on high-risk non-muscle-invasive bladder cancer is expected to be read out by the end of the year. US approval for RYBREVANT FASPRO advanced head and neck cancer is expected. In terms of immunization, ICOTYDE is off to a strong start and is expected to release psoriatic arthritis data later this year. In terms of medical technology, US approval for VARIPULSE Pro is expected in the fourth quarter, supplementing Japan's approval last week. In terms of cardiac recovery, corrective actions are being taken to improve Abiomed's performance. Continuing to invest in clinical evidence, the 2027 HRPCI PROTECT IV trial results are expected. The trial, with 1,252 patients, is 4 times that of the CHIP-BCIS3 study to evaluate the safety and efficacy of Impella CP in high-risk percutaneous coronary intervention. In terms of surgery, OTTAVA recently focused on commercialization after FDA De Novo approval. Adoption and revenue contributions are expected to increase over time, and the goal is to become an important pillar of the surgical portfolio by the end of this decade. In terms of orthopedics, DePuy Synth is scheduled to be split in mid-2027. I'm proud that the team evaluated all of the separation methods, and all options were better than when they were announced. Given DePuy Synth's performance and Namal Nawana's team momentum, we prefer a spin-off to be the best option to create long-term value. We will provide updates in due course.
Finally, look forward to the corporate business review on December 8. More details on the 2027 outlook and key drivers supporting double-digit growth at the end of the decade will be provided at that time. More importantly, it will show how the early pipeline represents the next decade's growth wave. Attendees will also have the chance to experience the latest innovations such as OTTAVA. 2026 is expected to be successful again, exceeding expectations at the beginning of the year. We look forward to a strong end to 2026 and lay the foundation for continued success in 2027. Thank you to our colleagues for their dedication. Now I'm ready to answer the questions. Kevin, please open questions and answers.
Q & A session
Asad Haider (Goldman Sachs)
Q: Congratulations on the progress. One thing to clarify: Regarding double-digit growth at the end of the decade, the press release mentioned “along with strategic investments.” Please confirm that this refers to internal investments and not mergers and acquisitions. Also, Joe, if you say you are not satisfied with the performance of medical technology and are taking action, does that mean there is now a greater sense of urgency to increase high-growth areas through mergers and acquisitions? Or do you think the current product portfolio is sufficient to drive improvements?
Joseph Wolk: Yes, Asad, thanks. The first point is correct. You understand this as an internal strategic investment, which will drive us to achieve double-digit growth by the end of this decade, and gradually improve our performance over the next few years. No inorganic additions are assumed. We always focus on strategic drivers that complement our business, that are more meaningful to our holdings than current holders, and that create value for shareholders to take risks. Regarding urgency, it's the urgency of repairing existing businesses. We love the current mix and structure, with three areas of focus: vision care, surgery, and cardiovascular. You're probably familiar; maybe I'll leave it to Tim to talk about specific heart recovery measures. The business is now stable, but we want to catalyze back to double-digit growth. We are excited about OTTAVA's future addition to Surgery, which will significantly contribute to growth at the end of this decade. Vision performs well in surgery and contact lenses, and we are a market leader. Tim, maybe you talk about Abiomed.
Tim Schmid: Sure, Joe. Asad, Abiomed is still in temporary headwinds, as shown in the third quarter, but our confidence in long-term opportunities has not changed. The slowdown is still the same issue highlighted last quarter, namely high-risk PCI research outside the US. Importantly, we don't think the challenge is structural and won't have a long-term impact on the business. There has been no change in patient demand, reimbursement access, or competitive pressure. We also question whether the study has best practices, so the current focus is on educating and advancing the clinical evidence base to show Impella's tremendous impact in saving and improving lives. We believe this is a short-term headwind. There will always be debate and discussion in any emerging field of science, and it is our responsibility to continue advancing the evidence base to support the best interests of patients. Abiomed is just that. Short-term headwinds, but we are very confident this will be a strong growth platform for Johnson & Johnson in the future.
Larry Biegelsen (Wells Fargo)
QUESTION: Joe, I'd like to ask about your previous review at Deutsche Bank about 2027. On the top-line side, you said that the reported sales growth is expected to be similar to 2026. After two additional weeks of adjustments of 100 basis points each, this means that next year's report will increase by about 5.4%. In terms of EPS, how should growth capacity be considered after IPR&D is excluded? And remind Firefly and Sail how much IPR&D will dilute this year and next?
Joseph Wolk: IPR&D diluted $0.64 this year, and next year's two deals will total $1.36. Larry, you've been with us for a long time and know that usually revenue growth or EPS growth is slightly better than sales growth. After an adjustment of $1.36, it can be considered this way next year. We will continue to pay attention to the profit margin improvements brought about by orthopedic separation, take a more comprehensive view of the business, and improve efficiency with technological advancements. This is the 2027 framework for thinking. The December 8 Investor Day will be more specific, list the specific components, and may provide exam preparation data and long-term prospects for orthopedic separation.
Chris Schott (JPMorgan)/Richard Wagner (BofA)
QUESTION: I want to talk about ICOTYDE. Two parts: First, patient adoption, new biologics vs. oral conversion vs. injection conversion? Second, the bigger picture. You say this is an asset of more than 10 billion US dollars, but the psoriasis market is strong, and there are still many indications to be approved. Is the peak sales opportunity likely to be far greater than 10 billion US dollars?
Tom Cavanaugh: Chris, I'm Tom. First of all, thanks to Jennifer Taubert for her leadership and collaboration. She placed innovative drugs in an excellent position, and quarterly earnings showed strong momentum, excellent combinations and pipelines, and a great team. We are so lucky to continue on the foundation she built. ICOTYDE is expected to be one of the biggest assets of innovative drugs and is off to an excellent start. As Joaquin said, more than 20,000 patients have started treatment, and nearly 9,000 prescription doctors. It definitely performs better than most psoriatic drugs on the market. Early prescription trends: About 60% of patients have systemic initial treatment; of 40%, 20% are oral medications, 20% are from other treatments, mostly biologics. We are expanding the systemic treatment market. Commercial access is broad, all national business plans have priority access, and Medicare is being actively expanded. We're just as excited about the launch and the future. PSA and Phase III data are expected to be released soon, as well as head-to-head data between ASCEND and STELARA. It is expected to expand to IBD, UC, and CD in the future, and similar listing performance is expected.
Joanne Wuensch (Citi)
Q: I want to focus on medical technology. When you say “the fundamentals of medical technology are stable,” do you mean the number of patients, hospital CapEx expenses, and overall traffic? Also, what needs to be done to improve Johnson & Johnson's business?
Tim Schmid: Joanne, I'm Tim. Thank you. First, let's give some background on the overall results of MedTech Q3. To be clear, our performance fell short of internal standards and expectations previously communicated with investors. In short, we can do better, and we definitely will. The current focus is on the actions needed for stronger results in the fourth quarter and beyond. According to the breakdown results, the pressure is mainly concentrated in two different areas: first, outside the US; second, global Abiomed. As the most important market, the US experienced strong growth this quarter, accelerating to nearly 5%. Challenges outside the US reflect mostly known headwinds, such as surgical transformation plans and the expansion of volume procurement in China. Electrophysiological competition is intense, particularly in Asia Pacific, where PFA adoption is still relatively early. The additional headwinds are increasing pressure brought about by the Middle East conflict. But taking a closer look, we saw a few encouraging indicators that gave us confidence in a stronger Q4 and future outlook. For example, in electrophysiology, we have resumed double-digit growth in markets where VARIPULSE Pro has already been launched, such as Europe. It will be listed soon after approval in Japan last week. It is expected to launch in the US by the end of the year. The AbioMed high-risk PCI study, which we believe does not follow mature practices, is being addressed through education. The evidence base is very solid. In particular, AMI cardiogenic shock showed a strong performance of 5.5. The quarter has seen a month-on-month improvement, and I believe the business will resume growth soon. Although Q3 medical technology is weak, the whole picture should not be distorted. The issues focus mainly on two areas. The surgical environment remains stable in key markets. Our mission is to turn requirements into more consistent performance. We are confident that America's momentum and recent headwinds will support improvements in Q4 and position us for stronger performance in 2027 and beyond. More details will be shared on December 8, especially new innovations such as OTTAVA.
Vamil Divan (Guggenheim)
Q: Following up on ICOTYDE, can you comment on this quarter's net sales or compare them to consensus? Also, INLEXZO, year-to-date sales, Sunrise-5 data, market opportunities expand?
Tom Cavanaugh: We haven't disclosed ICOTYDE sales, but based on momentum and progress, I'm sure we'll disclose it next year. INLEXZO is also an exciting product, or even a platform, consider the TAR-210 opportunity. A great start. Joe revealed year-to-date net sales of nearly $200 million. No quarterly sales were reported, but Q3 surpassed $90 million. Strong month-on-month growth. New patient admissions increased 45% month-on-month during the quarter. This is a high-risk group of non-muscular-invasive bladder cancer with cancer in situ. The total number of patients is about 4,000, which is relatively small, yet one-third of patients still use INLEXZO. Sunrise-5 is the broader population, with about 15,000 patients; Sunrise-3 is the first-time BCG treatment group, about 50,000. Here we see the platform's opportunity of over $5 billion, which I believe will be met and surpassed, given unmet medical needs, the simplicity of INLEXZO, and the high long-term complete remission rate. John can talk about clinical development.
John Reed: Currently approved for CIS non-muscle-invasive bladder cancer, which spreads laterally. More common is papillary. In the Sunrise-1 study, we had a papillary cancer cohort. Urologists applied INLEXZO after removing outward protruding lesions to prevent recurrence. Nearly 75% of patients had no recurrence after 1 year, and more than 95% had no progression. Based on this, INLEXZO for papillary diseases has been included in the NCCN guidelines, and the FDA has invited us to submit label extensions.
Joaquin Duato: ICOTYDE and INLEXZO, along with RYBREVANT, will be key drivers of accelerated growth, driving double-digit growth. They're all going to be one of the biggest products.
Michael Yee (UBS)
QUESTION: Two pipeline science questions. ICOTYDE has good psoriasis data, slightly lower than biologics, but UC data is strong in IBD. Could intestinal release be a greater driver for replicating biological-like efficacy? Second, milvexian, SSP data will soon be released. Do you have confidence in being similar to Asundexian, as a relative risk reduction for Factor XI?
John Reed: I'm John Reed. ICOTYDE and IBD, we are often asked if oral administration is more effective due to intestinal absorption. Just look at the data when it comes down to it. We are satisfied with the UC Phase II data. Phase III studies, such as psoriasis and PSA studies, were enrolled quickly. Previously, enrollment time was usually about one-third, reflecting the enthusiasm of physicians and patients for oral options. The theory that oral absorption enhances efficacy is yet to be verified by data. milvexian, we remain confident in the research, especially for grade 2 stroke, because of the asundexian data. In vitro, milvexian is a stronger factor XI inhibitor. We have a margin of safety that pushes the dosage to a certain effective range. I am confident in the results. The grade 2 stroke data may be released this year, which is event-driven. More research on atrial fibrillation next year. It would be exciting if both indications were successful, as approximately 25% of second-degree stroke candidates had atrial fibrillation. The dose can be 4 times higher in atrial fibrillation studies, and monitoring anticoagulant status is shown within the correct range. Thank you.
Tom Cavanaugh: Added John. Highly effective oral anticoagulants are absolutely necessary to reduce the risk of bleeding. Atrial fibrillation alone, about 40% of patients eligible for oral anticoagulation were not accepted, usually due to current DOAC safety and bleeding risk concerns.
Jayson Bedford (Raymond James)
Question: Back to international medical technology. Can the Middle East and VBP impact be quantified? Tim, International Surgery, confirms that there has been no change in potential international demand? Joe mentioned international surgery taking action, what exactly?
Tim Schmid: Thanks Jayson. First the Middle East, we emphasized that this is a new risk and will expand over time. The impact is no longer limited to the initial few markets. We are seeing disruptions in order models, tender times, and hospital spending decisions in the wider country. Government and health-care systems spend more prudently, and funding and procurement decisions take longer. The impact on buying behavior was more obvious than at the beginning of the year. But the important thing is that we see it as a short-term factor. Clinical needs remain the same, and many opportunities may be delayed rather than permanently lost. Surgery, we're excited about America's performance. Outside of the US, the problem is mainly due to transformation plans and volume procurement, as well as incremental pressure from the Middle East. Despite headwinds, we focus on areas where we can influence, and there are plenty of opportunities. Wound closure benefits from growth, and we definitely dominate this category, and growth is driven by innovations such as StrataFix and Plus Stures. Another billion-dollar biosurgery platform is being promoted by brands such as SURGIFLO, SURGICEL, and VISTASEAL. The internal mechanical innovations ETHICON 4000 and DUALTO also have good traction. We believe that the US will continue to grow, EMEA will accelerate, and overall growth will resume in the fourth quarter. It is also worth mentioning the long-term confidence in this business. This is the core of Johnson & Johnson Healthcare Technology, and it's our long-term commitment. The reason for our greatest confidence is entering the field of surgical robotics. Combining our leadership in wound closure, biosurgery, and advanced equipment, OTTAVA allows us to participate more fully in the most attractive and underpenetrating field of surgery. As the portfolio transforms, existing businesses innovate, and OTTAVA prepares to go public, we are confident about the long-term trajectory. The OTTAVA outlook will be provided on December 8 to strengthen confidence in long-term significant contributions.
Alexandria Hammond (Wolfe Research)
Q: As CARTITUDE-5 and 6 advance in newly diagnosed multiple myeloma, how can Johnson & Johnson educate doctors and treatment centers to prepare for using CARVYKTI earlier? How should investors consider taking a share from existing front-line schemes?
Tom Cavanaugh: Alex, I'm Tom. First, we are eagerly awaiting these tests to read out. This is currently being done globally through CARTITUDE-4. CARVYKTI is available in more than 20 markets, and the share of early treatment lines has increased significantly. About 50% of the US CARVYKTI is used in the second and third tier. The increase in familiarity, accessibility, and excitement of the product is mainly due to the unparalleled overall survival period seen in the second tier. We've been educating healthcare providers to use it earlier, including proper patient selection, the sooner the better, and proper bridging to enable patients to reach the highest MRD negative for effective treatment.
John Reed: Reminder that the recent myeloma conference showed 5-year follow-up data on the second line of CARTITUDE-2. About half of the patients continued to be in complete remission for 5 years without further treatment. One treatment, continuous disease-free survival for 5 years. Very exciting.
Concluding remarks
Ryan Koors: Thanks John and Alex for asking. Thank you all for your questions and continued interest in the company. Now let's leave it to Joaquin for a brief closing statement.
Joaquin Duato: Thanks for asking and participating. As you can see, we continue to accumulate momentum. Growth improved month-on-month in the third quarter, and is expected to accelerate further in 2027, with a clear path to double-digit growth by the end of this decade. Innovative drug growth will come from existing portfolios, including DARZALEX and TREMFYA, as well as new products such as ICOTYDE, RYBREVANT, and INLEXZO, which will begin to contribute more significantly. Similar opportunities in medical technology, including cardiovascular marketing potential, next-generation PFA and IVL catheters, and additional data for Impella and OttaVA robotic surgery are not fully reflected in the growth. Taken together, these drivers make Johnson & Johnson one of the clearest growth stories in healthcare. We will provide more details on the portfolio and later pipeline in the December corporate business review. Thank you so much and I wish everyone a great day.
Operator: Thank you. This concludes today's Johnson & Johnson 2026 third quarter results call. You can now disconnect.