Johnson & Johnson : First Quarter 2025 2025 First-Quarter Earnings Transcript (April 15, 2025)

Published: 2025-04-17 23:02:04 ET JNJ

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EDITED TRANSCRIPT

JNJ.N - Q1 2025 Johnson & Johnson Earnings Call

EVENT DATE/TIME: APRIL 15, 2025 / 12:30PM GMT

OVERVIEW:

Company Summary

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APRIL 15, 2025 / 12:30PM, JNJ.N - Q1 2025 Johnson & Johnson Earnings Call

C O R P O R A T E P A R T I C I P A N T S

Jessica Moore Johnson & Johnson - Vice President - Investor Relations

Joaquin Duato Johnson & Johnson - Chairman of the Board, Chief Executive Officer

John Reed Johnson & Johnson - Executive Vice President - Innovative Medicine, Research and Development

Joseph Wolk Johnson & Johnson - Chief Financial Officer, Executive Vice President

Jennifer Taubert Johnson & Johnson - Executive Vice President, Worldwide Chairman, Innovative Medicine

Tim Schmid Johnson & Johnson - Executive Vice President, Worldwide Chairman of MedTech

C O N F E R E N C E C A L L P A R T I C I P A N T S

Larry Biegelsen Wells Fargo Securities, LLC - Analyst

Chris Schott JPMorgan Chase & Co. - Analyst

Asad Haider Goldman Sachs - Analyst

Danielle Antalffy UBS Equities - Analyst

Terence Flynn Morgan Stanley - Analyst

Joanne Wuensch Citi - Analyst

Vamil Divan Guggenheim Securities LLC - Analyst

Matt Miksic Barclays - Analyst

Tim Anderson Bank of America - Analyst

P R E S E N T A T I O N

Operator

Good morning and welcome to Johnson & Johnson's first quarter 2025 earnings conference call. (Operator Instructions) I now turn the conference call over to Johnson & Johnson. You may begin.

Jessica Moore - Johnson & Johnson - Vice President - Investor Relations

Hello, everyone. This is Jessica Moore, Vice President of Investor Relations for Johnson & Johnson. Welcome to our company's review of business results for the first quarter of 2025, and our updated financial outlook.

A few logistics before we get into the details. As a reminder, you can find additional materials, including today's presentation and associated schedules on the Investor Relations section of the Johnson & Johnson website at investor.jnj.com.

Please note that this presentation contains forward-looking statements regarding among other things the company's future operating and financial performance, market position, and business strategy. 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-K, which is available at investor.jnj.com and on the SEC's website. Additionally, several of the products and compounds discussed today are being developed in collaboration with strategic partners or licensed from other companies. This slide acknowledges those relationships.

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APRIL 15, 2025 / 12:30PM, JNJ.N - Q1 2025 Johnson & Johnson Earnings Call

Moving to today's agenda. Joaquin Duato, our Chairman and CEO, will open with a few comments on our performance and key catalysts for the company. John Reed, our Executive Vice President, Innovative Medicine, R&D, will highlight recent data from select assets.

I will then review the first quarter sales and P&L results. Joe Wolk, our CFO, will then close by sharing an overview of our cash position, capital allocation priorities, and guidance for 2025. Jennifer Taubert, Executive Vice President, Worldwide Chairman, Innovative Medicine; and Tim Schmid, Executive Vice President, Worldwide Chairman, MedTech, will be joining us for Q&A.

To ensure we provide enough time to address your questions, we anticipate the webcast will last slightly over 60 minutes. With that, I will now turn the call over to Joaquin.

Joaquin Duato - Johnson & Johnson - Chairman of the Board, Chief Executive Officer

Thank you, Jess and hello everyone. In the first quarter, we delivered strong operational sales growth of 4.2% across our business. Our Q1 performance reinforces my confidence in our 2025 guidance and reflects the strength of Johnson & Johnson's uniquely diversified business, with year-over-year sales increases in both our Innovative Medicine and MedTech sectors.

No other healthcare company has delivered growth through the first year of losing exclusivity for a multi-billion dollar product, in our case, STELARA, and yet that is exactly what we are doing. Our resiliency is a testament to what makes us unique. We are not just a pharmaceutical company or a MedTech company, we are a healthcare company, innovating across the full spectrum of disease.

Our consistent strong performance is a testament to our capabilities across commercial, R&D, and supply chain. It is also a reflection of our strength in execution, which you can see in our quarterly results. We have described 2025 as a catalyst year. It is a year that will set us up for accelerated growth through the second half of the decade and beyond.

In Q1, the power of our portfolio and pipeline was on full display. In Innovative Medicine, we delivered 4.2% operational sales growth despite an approximate 810 basis points headwind from STELARA, with 11 key brands growing double digits.

With our third consecutive quarter of sales above $3 billion, DARZALEX continues to set the standard in multiple myeloma with another quarter of over 20% growth. In fact, just last week, we expanded our DARZALEX indication in Europe with the approval of DARZALEX based quadruplet regimen for patients with newly diagnosed multiple myeloma, regardless of transplant eligibility.

It is further proof of the impact of this medicine, which together with CARVYKTI, TALVEY and TECVAYLI is changing the conversation from treating to progression to treating to cure. Other significant oncology portfolio advancements in Q1 included Phase 3 data presented at ELCC last month, showing RYBREVANT plus LAZCLUZE extended overall survival by more than one year versus the current standard of care in first-line EGFR mutated lung cancer.

And last week, the European Commission approved subcutaneous RYBREVANT in combination with LAZCLUZE for the treatment of EGFR mutated non-small cell lung cancer. This was an important milestone for patients as subcutaneous RYBREVANT reduces administration time from hours to minutes.

Our aspiration is for RYBREVANT to LAZCLUZE to become the new standard of care for these patients, and you can see our progress in Q1. In immunology, we are seeing the impact of TREMFYA's entry into inflammatory bowel disease, with our launch in ulcerative colitis, helping accelerate operational sales growth to 20%. And with our recent FDA approval in colon disease, I'm more confident than ever that this blockbuster drug will become the gold standard for IBD patients and a $10 billion plus product.

Turning to MedTech. In Q1, we delivered 4.1% operational sales growth with strong performance in our recently acquired cardiovascular businesses Abiomed and Shockwave as well as in surgical vision and wound closure.

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APRIL 15, 2025 / 12:30PM, JNJ.N - Q1 2025 Johnson & Johnson Earnings Call

In addition to their contribution to MedTech growth, Abiomed and Shockwave continue to meet deal model expectations and both announced important portfolio milestones this quarter. This included updates to the American College of Cardiology and American Heart Association guidelines for our Impella heart pump, which based on evidence from the DanGer Shock trial was upgraded from Class 2b to Class 2a.

And in Shockwave, the team launched the first of its kind, Javelin Peripheral IVL catheter for the treatment of difficult to cross lesions in peripheral artery disease. In electrophysiology, we resumed US VARIPULSE cases. And to date, we have completed more than 5,500 cases globally.

Turning to surgery. We recently announced we have started OTTAVA clinical trials with a procedure that supports submission for US FDA de novo in general surgery with an indication for multiple upper abdomen procedures.

This is an important milestone as we continue to strengthen our presence in robotic surgery. Beyond our existing portfolio and pipeline, we also fortified our leadership as an innovation powerhouse with two major announcements.

In March, we announced our commitment to invest more than $55 billion in the US over the next four years in manufacturing, R&D, and technology. This represents a 25% increase in investment compared to the previous four years.

It builds upon the company's already elevated commitment to the US economy while expanding our capacity to manufacture next generation medicine and devices for patients in America and around the world.

The investment includes four planned new manufacturing facilities, the first of which broke ground last month in North Carolina. And at the beginning of April, we announced the completion of our acquisition of Intra-Cellular Therapies, which extends Johnson & Johnson's industry leading portfolio in central nervous system disorders.

With the addition of CAPLYTA, we have expanded our lineup of therapies with at least $5 billion plus potential in peak year sales, further solidifying sales growth above analyst expectations now through the rest of the decade.

Turning to the Talc bankruptcy ruling. As we shared a few weeks ago, we will return to the tort system where we expect continual success in litigating these meritless claims. In terms of next steps, we will immediately pursue our motions pending in the multi-district litigation to exclude plaintiffs experts known as the Daubert challenge.

And finally, as announced this morning, we increased our dividend for the 63rd consecutive year, which we know is important to our shareholders. We had a strong start to 2025, and I'm looking forward to sharing many more successes throughout the year.

Recognizing that there have been many important milestones and data readouts in the quarter, I will now pass the call to John Reed for an Innovative Medicine R&D update.

John Reed - Johnson & Johnson - Executive Vice President - Innovative Medicine, Research and Development

Thank you, Joaquin. I'm excited to share a few highlights from our industry leading Innovative Medicine pipeline that occurred throughout the quarter. With the successful acquisition of Intra-Cellular, I want to focus on CAPLYTA, a remarkable medicine with balanced pharmacology that delivers robust efficacy, combined with a favorable tolerability profile for neuropsychiatric disorders.

CAPLYTA is already approved for the treatment of schizophrenia and is the only medicine approved for the treatment of depression in both bipolar 1 and 2 as either monotherapy or adjunctive therapy.

On this slide, we're sharing data for major depressive disorder, showing very impressive and consistent improvements in the standard depression scoring metric MADRS in both Phase 3 studies that served as the basis for submission of the supplemental new drug application to the FDA. We anticipate approval of CAPLYTA later this year as an adjunctive treatment for major depressive disorder, representing the largest of the indications for novel antidepressant drugs today.

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APRIL 15, 2025 / 12:30PM, JNJ.N - Q1 2025 Johnson & Johnson Earnings Call

Turning to oncology. We are so excited about our recent overall survival data for RYBREVANT plus LAZCLUZE in first-line non-small cell lung cancer, harboring EGF receptor gene mutations. Non-small cell lung cancer is the most prevalent type of lung cancer, making up about 85% of lung cancer diagnosis.

Sadly, less than 20% of people diagnosed with this form of the disease are alive after five years and only a fraction live long enough to try a second treatment. That's why it is so important to use the best treatment first.

In a head-to-head study against today's standard of care, our RYBREVANT plus LAZCLUZE regimen improved overall survival by more than a year with the Kaplan-Meier survival curves continuing to separate at 37.8 months median follow-up.

With RYBREVANT's triple mechanism of action, we're looking to reset the standard five year survival expectations in a never before seen way. In simplest terms, we are giving patients more hope that they may live to celebrate another birthday, anniversary, or other important family event, a truly practice-changing achievement.

Now moving on to immunology. I draw your attention to the recent FDA approval of TREMFYA in Crohn's disease, our fourth indication for TREMFYA. TREMFYA is currently the only IL-23 inhibitor, with the flexibility of subcutaneous administration for both induction and maintenance dosing for the treatment of Crohn's disease, which means patients can start their treatment by self-administering with results as rapid and robust as receiving the IV in a clinic or doctor's office.

Additionally, in a recent head-to-head study in adult patients with moderately to severely active Crohn's disease, TREMFYA demonstrated superiority versus STELARA in all pooled endoscopic endpoints. As the only dual-acting IL-23 inhibitor, TREMFYA neutralizes IL-23, while also binding to CD64 and immune cells that produce IL-23, thus localizing TREMFYA right at the source of inflammation. TREMFYA continues to offer an exceptional solution for patients struggling with inflammatory bowel disease.

Lastly, highlighting some of our latest data for our investigational oral IL-23 pathway inhibitor, icotrokinra, we are aiming to redefine the standard of care for people living with plaque psoriasis. Icotrokinra is the first and only targeted oral peptide that selectively blocks the IL-23 receptor.

In two placebo-controlled Phase 3 studies, icotrokinra demonstrated impressive complete skin clearance and a favorable safety profile in a once daily pill. Our Phase 3 data demonstrated that nearly half of adult patients and three quarters of adolescents with moderate to severe plaque psoriasis treated with icotrokinra achieved completely clear skin by week 24.

We also reported that icotrokinra achieved the prespecified endpoints in additional Phase 3 psoriasis studies, comparing our molecule head-to-head with the most commonly prescribed TYK2 inhibitor. Those data will be shared in an upcoming medical Congress.

Looking forward, we are initiating the first ever head-to-head study seeking to demonstrate the superiority of a pill, icotrokinra, compared to an injectable biologic, STELARA, in moderate to severe plaque psoriasis, representing an important step forward in psoriasis research. As a reminder, we intend to file icotrokinra for approval later this year.

Finally, beyond psoriasis, we recently announced positive top line results from ANTHEM-UC, our Phase 2b study of icotrokinra in adults with moderate to severe ulcerative colitis. That study showed that icotrokinra achieved impressive clinical remission rates, combined with a favorable safety profile, again, dosed as a once-daily pill.

With all this progress, you can understand why we continue to be excited about the potential of icotrokinra to transform the treatment paradigm for patients battling with autoimmune diseases. Overall, across all our therapeutic areas, we are absolutely thrilled with the progress that our pipeline has made in the first quarter of this year, and we are eager to report on other significant milestones scheduled for the remainder of 2025.

And now I will turn the call over to Jess.

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APRIL 15, 2025 / 12:30PM, JNJ.N - Q1 2025 Johnson & Johnson Earnings Call

Jessica Moore - Johnson & Johnson - Vice President - Investor Relations

Thank you, John. Moving to our financial results. Unless otherwise stated, the percentages quoted represent operational results, and therefore exclude the impact of currency translation. Starting with Q1 2025 sales results. Worldwide sales were $21.9 billion for the quarter.

Sales increased 4.2% despite an approximate 470 basis point headwind from STELARA. Growth in the US was 5.9% and 2.1% outside of the US. Worldwide growth was positively impacted by 90 basis points due to acquisitions and divestitures.

Turning now to earnings. For the quarter, net earnings were $11 billion, and diluted earnings per share was $4.54, versus diluted earnings per share of $1.34 a year ago, primarily driven by the reversal of $7 billion related to the Talc settlement proposal.

Excluding after tax intangible asset amortization expense and special items for both periods, adjusted net earnings for the quarter were $6.7 billion, and adjusted diluted earnings per share was $2.77, representing increases of 1.9% and 2.2%, respectively, compared to the first quarter of 2024.

We are proud to deliver bottom line growth despite the loss of exclusivity of STELARA and the impact of Part D redesign. I will now comment on business sales performance in the quarter. Beginning with Innovative Medicine. Worldwide sales of $13.9 billion increased 4.2%, despite an approximate 810 basis point headwind from STELARA. Growth in the US was 6.3% and 1.5% outside of the US.

Starting with oncology. DARZALEX growth was 22.5%, primarily driven by continued share gains of approximately 3 points across all lines of therapy and approximately 5 points in the frontline setting as well as market growth.

CARVYKTI achieved sales of $369 million and growth of over 100%, driven by share gains and capacity expansion. This reflects sequential growth of 10.5% as we continue to expand outside of the US. TECVAYLI and TALVEY growth was 15% and 50.2%, respectively, reflecting strong launches in the relapsed refractory setting.

Patient demand remained strong despite continued adoption of longer dosing intervals. ERLEADA continued to deliver strong growth of 14.6% despite the impact of Part D redesign, primarily driven by share gains and market growth. RYBREVANT plus LAZCLUZE continued its strong launch trajectory with sales of $141 million and growth over 100%.

Within immunology, TREMFYA delivered growth of 20.1% despite the impact of Part D redesign, driven by share gains and market growth across all indications, including our newly launched indication in ulcerative colitis.

STELARA declined 32.3% driven by the impact of biosimilar competition and Part D redesign. As a reminder, REMICADE and SIMPONI distribution rights in Europe were returned in Q4. This positively impacted results in the quarter and is anticipated to continue for the remainder of the year. REMICADE sales also include a one-time patient mix benefit in the US.

In neuroscience, SPRAVATO growth of 42.9% was driven by increased physician and patient demand. Finally, other assets that were impacted by Part D redesign include INVEGA long-acting injectables, which declined 13.5%. Pulmonary hypertension, which declined 1.2% and was partially offset by market growth and share gains. And XARELTO, which increased by 33% and also included a one-time patient mix benefit.

I'll now turn your attention to Medtech. Worldwide sales of $8 billion increased 4.1%, with growth of 5.1% in the US and 3% outside of the US. Acquisitions and divestitures had a net positive impact of 280 basis points on worldwide growth, 420 basis points in the US and 120 basis points outside of the US.

Underlying Medtech performance was driven by commercial execution and strength of new products, partially offset by several one-time events, disproportionately impacting orthopedics, in addition to continued competitive PFA pressures in electrophysiology and headwinds in China. Results were negatively impacted by approximately 210 basis points worldwide, 240 in the US and 180 outside of the US due to these one-time events.

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APRIL 15, 2025 / 12:30PM, JNJ.N - Q1 2025 Johnson & Johnson Earnings Call

In cardiovascular, electrophysiology growth was roughly flat versus prior year, driven by lapping of prior year inventory dynamics in Asia, impacting worldwide results by roughly 310 basis points and competitive PFA ablation catheter pressure.

This was mostly offset by global procedure growth, new product uptake, and commercial execution. Abiomed delivered growth of 14%, driven by strong growth in all regions and continued adoption of Impella 5.5 and Impella CP technology.

Cardiovascular results also included $258 million associated with the acquisition of Shockwave. As a reminder, we will lap the acquisition benefit at the end of May. Envision, contact lenses and other grew 2.7%, driven by continued strategic price actions and strong performance in the ACUVUE OASYS 1-Day family of products.

Surgical vision growth of 6.2% was driven by our recent innovations, TECNIS Odyssey, PureSee, and Eyhance, as well as commercial execution, partially offset by competitive pressures in the US. Surgery grew 1.1%, with divestitures negatively impacting results by approximately 180 basis points.

Performance was driven primarily by commercial execution and the continued strength and adoption of new products across wound closure and biosurgery. Growth was partially offset by competitive pressures in energy and endocutters as well as the negative impact of China VBP.

Given the disproportionate impact of the one-time events to orthopedics, I'd like to draw your attention to this additional slide. Orthopedics declined 3.1%, primarily driven by the lapping of a one-time revenue recognition timing change related to certain products across all platforms in the US, fewer selling days and revenue disruption from the previously announced orthopedics transformation.

These one-time events negatively impacted worldwide orthopedics growth by approximately 480 basis points, 650 basis points in the US and 210 basis points outside of the US. This was partially offset by success of new product launches and commercial execution.

Now turning to our consolidated statement of earnings for the first quarter of 2025. I'd like to highlight a few noteworthy items that have changed compared to the same quarter of last year. Cost of products sold deleveraged by 320 basis points, driven by unfavorable transactional currency and product mix, primarily due to the decline of STELARA in Innovative Medicine as well as the fair value step-up and amortization associated with the Shockwave acquisition in MedTech.

Selling, marketing and administrative expenses improved 130 basis points, driven by operating spend management and phasing of investments, primarily in Innovative Medicine. Research and development expenses leveraged by 190 basis points, primarily driven by portfolio progression towards commercialization and phasing of investments in Innovative Medicine, partially offset by investments associated with the recent acquisitions of Shockwave and V-Wave in MedTech.

Interest income and expense was a net income of $128 million as compared to $209 million in the first quarter of 2024, primarily driven by higher interest rates paid on higher average debt balances. Other income and expense was a net income of $7.3 billion compared to an expense of $2.4 billion in the prior year, driven by the $7 billion Talc reserve reversal in the first quarter of 2025 and the $2.7 billion Talc settlement proposal recorded during the first quarter of 2024.

Regarding taxes in the quarter, our effective tax rate was 19.3% versus 12.4% in the same period last year, primarily driven by the tax effect of the reversal of the Talc settlement accrual. Excluding special items, the effective tax rate was 16.3% versus 16.5% in the same period last year.

I encourage you to review our upcoming first quarter 10-Q filing for additional details on specific tax related matters. 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. New this quarter and to continue our efforts of increased financial transparency, you will find GAAP to non-GAAP reconciliations by segment in the supplemental schedules of our press release.

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APRIL 15, 2025 / 12:30PM, JNJ.N - Q1 2025 Johnson & Johnson Earnings Call

Innovative Medicine margin declined from 42.9% to 42.5%, primarily driven by unfavorable transactional currency and product mix and cost of products sold and Part D redesign, partially offset by operating leverage.

MedTech margin declined from 26.4% to 25.9%, primarily driven by R&D and selling, marketing and administrative investments associated with the recent acquisition of Shockwave and V-Wave. As a result, adjusted income before tax for the enterprise as a percentage of sales decreased from 36.8% to 36.6%. This concludes the sales and earnings portion of the call, and I will now turn the call over to Joe.

Joseph Wolk - Johnson & Johnson - Chief Financial Officer, Executive Vice President

Hello, everyone, and thank you for joining us today. Thanks, Jessica. Not just for the transition now but also for how well you have led the Investor Relations function in the past few years. The investment community will miss you, but we look forward to seeing you in the lead finance role for Innovative Medicine. Our first quarter results demonstrate the strength and reliability of Johnson & Johnson's diversified business model.

Innovative Medicine achieved robust growth in the face of STELARA biosimilar entrants and we advanced our pipeline, attaining significant clinical and regulatory milestones. In MedTech, as indicated in January, we anticipate pockets of challenge early on and are planning for higher second half growth in those areas of our business.

The team is focused on commercial execution and accelerating the recently launched products to deliver MedTech's commitments that are included in the company's full year guidance. The recent acquisitions of Abiomed and Shockwave continue to expand our presence in higher growth markets.

In addition, we continue to take steps to improve MedTech's future margin profile, implementing a restructuring program designed to simplify and focus the operations of our surgery business, similar to what we launched in orthopedics in 2023.

Focusing on portfolio renewal, we plan to exit certain non-strategic product lines globally and optimize select sites across the network. We anticipate some modest short term revenue disruption in surgery of approximately $250 million in total over the next two years, but these actions will improve our ability to accelerate growth and enhance profitability. The program is expected to be completed in 2027, with cost estimated at approximately $900 million.

Let's now turn to cash and capital allocation. We are pleased with free cash flow generation in the quarter of approximately $3.4 billion. We ended the first quarter with $38.8 billion of cash in marketable securities and $52.3 billion of debt for a net debt position of $13.5 billion.

It is important to note that cash and net debt were favorably impacted by approximately $14 billion of cash held in anticipation of the Intra-Cellular acquisition, which closed on April 2. Taking this into consideration, net debt would have been approximately $27.5 billion.

Investment in innovation remains the highest priority in our capital deployment. And during the first quarter, we invested more than $3 billion in research and development, approximately 15% of sales. We also remain committed to returning capital directly to shareholders.

We recognize the value investors place on our dividend, and we were pleased to announce today that our Board of Directors authorized a 4.8% increase, marking our 63rd consecutive year of dividend increases. The Intra-Cellular Therapies acquisition bolsters our neuroscience portfolio and we maintain a disciplined approach to inorganic growth, focusing on acquisitions and partnerships that align strategically and offer value creation.

As noted in our Talc investor call and following up on some of Joaquin's earlier comments, we reversed $7 billion of the reserve previously held for the bankruptcy plan. This litigation has not, and we foresee will not impact our ability to execute upon our capital allocation priorities to appropriately manage our business.

Let's now discuss our full year guidance for 2025. We are increasing our operational sales guidance for the full year by $700 million to reflect the addition of CAPLYTA following the completion of the Intra-Cellular acquisition. Therefore, we now expect operational sales growth for the full year to be in the range of 3.3% to 4.3%, with a midpoint of $92 billion or 3.8%.

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APRIL 15, 2025 / 12:30PM, JNJ.N - Q1 2025 Johnson & Johnson Earnings Call

Excluding the impact from acquisitions and divestitures, we are maintaining our adjusted operational sales growth to the range of 2% to 3% 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 $1.04. Last week, the euro spot rate relative to the US dollar was $1.11.

We estimate an incremental positive foreign currency impact of $1.1 billion versus previous guidance, resulting in a full year headwind of $600 million. As such, we now expect reported sales growth between 2.6% to 3.6%, with a midpoint of $91.4 billion or 3.1%.

Turning to other notable items on the P&L. We are maintaining our guide of operating margin improvement by 300 basis points versus 2024. This improvement takes into consideration the dilution from the Intra-Cellular transaction as well as what we know today about the impact of tariffs on our business.

We now project net interest expense between $100 million and $200 million, primarily driven by financing costs associated with the Intra-Cellular acquisition. Other income is anticipated to be in the range of $1 billion to $1.2 billion, a slight increase versus previous guidance.

Despite $0.25 dilution from the Intra-Cellular acquisition and including the impact of tariffs based on what is in place today, we are pleased to be able to maintain our adjusted reported earnings per share guidance of 6.2% at the midpoint for a range of $10.50 to $10.70, partially aided by the reduced FX impact.

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 the impact of STELARA biosimilar competition will accelerate throughout the year, similar to HUMIRA's erosion curve, which is still our proxy with the additive impact of Part D redesign.

The impact of Part D redesign on affected products as a percent of sales will be consistently applied throughout the year, aligned with how we traditionally account for similar discount and rebate programs. Naturally, we expect a greater benefit from our newly launched products as the year progresses.

Regarding MedTech, we expect normalized procedure volume and seasonality. And of course, we anniversary the Shockwave acquisition at the end of May. We anticipate our newly launched products to build throughout the year with the relaunch of VARIPULSE in the US, the introductions of dual energy STSF in the EU, VELYS Uni-Knee, VELYS Spine and TECHNIS Odyssey.

Lastly, this slide highlights the one-time prior year P&L items that should be taken into quarterly consideration for your models. Beyond our financial commitments and what Joaquin and John mentioned, we are excited for the pipeline progress planned for the remainder of 2025.

In Innovative Medicine, this includes expected approvals in nipocalimab for generalized myasthenia gravis, subcutaneous RYBREVANT for non-small cell lung cancer in the US, TREMFYA subcutaneous induction for ulcerative colitis, and CAPLYTA for adjunctive major depressive disorder.

We continue our rolling submission of TAR-200 in non-muscle invasive bladder cancer and anticipate filing icotrokinra in psoriasis, and planned data readouts for RYBREVANT in head and neck cancer and icotrokinra in ulcerative colitis as well as head to head data versus Sotyktu in psoriasis.

In MedTech, we continue to make progress with clinical trials for our OTTAVA robotic surgical system and across our cardiovascular portfolio, including heart recovery with Impella ECP submission and circulatory restoration with Javelin and Shockwave E8 launches.

This progress will bode well for financial performance for the balance of this decade. In fact, building on John's earlier discussion on our Innovative Medicine pipeline and what I just outlined I'd like to revisit and update a slide that we shared at our enterprise business review in late 2023.

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APRIL 15, 2025 / 12:30PM, JNJ.N - Q1 2025 Johnson & Johnson Earnings Call

In that slide, you may recall we highlighted key assets in our portfolio that we expected to drive long term growth and projected higher revenue than Street estimates. We've been pleased to see that some estimates have been raised since the 2023 enterprise business review. And now I'd like to walk you through some of our current thinking on our pipeline potential to show where we see even more upside.

Based on current 2027 Street estimates, our projections are at least 2 times higher for RYBREVANT plus LAZCLUZE, and at least 50% higher for SPRAVATO. One asset that we didn't highlight in this look back in 2023 was TREMFYA.

However, given recent regulatory approvals for inflammatory bowel disease, we now see sales for TREMFYA at least 25% higher than current Street estimates. When looking ahead to 2028, we anticipate sales for our intravesical drug releasing system previously referred to as TARIS to be at least 3 times higher than current Street estimates, and new to the chart, icotrokinra, our targeted oral peptide to be at least 2 times higher.

To be balanced, analyst estimates are still a bit more optimistic than our own estimates on nipocalimab in 2027. However, we do anticipate closing that gap after launch. We have even stronger conviction today in our growth opportunities than at the enterprise business review as we've reached new milestones with each of these medicines.

And importantly, we expect all of these assets to achieve peak year sales beyond 2028 with further potential upside to Street estimates in the outer years. Even after considering risk adjustments for unapproved products that you may apply, hopefully, you'll also conclude there is additional value to your outlooks.

In summary, it was a solid start to the year. Johnson & Johnson's diversified business model uniquely positions us to tackle the headwinds in 2025, deliver on our financial commitments, and advance our pipeline to create long term sustainable value for 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&A.

Q U E S T I O N S A N D A N S W E R S

Operator

(Operator Instructions) Larry Biegelsen, Wells Fargo.

Larry Biegelsen - Wells Fargo Securities, LLC - Analyst

Good morning. Thanks for taking the question, and congrats on a nice quarter. Joe, you talked about $400 million in tariffs in the 2025 guidance or about $0.14 by our math. What is that on an annualized basis? And how are you thinking about being able to mitigate that over time? Can you pass along pass it along to customers? Or can you offset it by moving production? Thanks for taking the question.

Joseph Wolk - Johnson & Johnson - Chief Financial Officer, Executive Vice President

Yeah, thanks, Larry. Good to hear from you. So what's included in the $400 million, and again, that is primarily MedTech tariffs at this point. It's based on the programs that have been announced and the timing that correlates those programs.

So that would be inclusive of Mexico and Canadian import tariffs that are not excluded out of USMCA. It will include to a very small degree, some of the steel and aluminum tariffs that impact some more products. It includes the China tariffs as well as the China retaliatory tariff. And that is probably the most substantial out of all the tariffs in terms of that $400 million.

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Johnson & Johnson published this content on April 18, 2025, and is solely responsible for the information contained herein. Distributed via Public Technologies (PUBT), unedited and unaltered, on April 18, 2025 at 03:01 UTC.