JNJ | Q3 2025

Operator: Good morning, and welcome to Johnson & Johnson's Third Quarter 2025 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. If you experience technical difficulties during the conference, you may press now turn the conference call over to Johnson & Johnson. You may begin.

Darren Snellgrove: Hello, everyone. This is Darren Snellgrove, Vice President of Investor Relations for Johnson & Johnson. Welcome to our 2025 third 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 & 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 growth drivers. I will then review the third quarter sales and P&L results. Joe Wolk, our CFO, will then close by sharing an overview of our cash position and capital allocation priorities, followed by additional details on our intended separation of the Orthopaedics business. He will also provide an update on 2025 guidance, key milestones, and qualitative considerations for 2026. Jennifer Taubert, 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&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.

Joaquin Duato: Thank you, Darren, and hello, everyone. We are looking forward to sharing our very strong third quarter results with you. They are a clear sign Johnson & Johnson is in a powerful new era of growth. The success of our portfolio and pipeline is proof that our relentless focus on innovation is doing more than fueling progress. It is accelerating it. In the third quarter, we delivered operational sales growth of 5.4% across our business. In Innovative Medicine, we reported 5.3% operational sales growth and a second consecutive quarter of sales of more than $15 billion. Some were not convinced we could grow through the loss of exclusivity of STELARA, but we were confident we have now unequivocally answered that question. How did we accomplish that when other companies have failed? In Q3, we did it by delivering double-digit growth across 11 brands, including DARZALEX, CARVICTI, TALVE, TEKVYLI, ERLIDA, DRIBREVAN, PLASLASKLUS, Caplitas, Spravato, Symphony, Remicade, and remarkable growth of 40% in TREMFYA. In MedTech, operational sales growth was even stronger, accelerating to 5.6% with improvements across all businesses. And as you have seen from this morning's news, we have announced the planned separation of our Orthopaedics business. This decision further sharpens our focus as a healthcare innovation leader and accelerates the shift of our MedTech portfolio to areas of greatest unmet need and higher growth, which includes cardiovascular and robotic surgery. I will touch more on this later. But one thing is clear, Johnson & Johnson's momentum is strong, and our achievements are multiplying. I will now focus on the progress we are making across our six priority areas

Darren Snellgrove: Thank you, Joaquin. Moving to our financial results. Unless otherwise stated, the percentages quoted represent operational results, therefore exclude the impact of currency translation. Starting with Q3 2025 sales results. Worldwide sales were $24 billion for the quarter. Sales increased 5.4% despite an approximate 640 basis point headwind from STELARA. Growth in The U.S. was 6.24.4% outside of The U.S. Acquisitions and divestitures had a net positive impact on worldwide growth of 100 basis points, primarily driven by the Intracelia acquisition. Turning now to earnings. For the quarter, net earnings were $5.2 billion, with diluted earnings per share of $2.12 versus diluted earnings per share of $1.11 a year ago. Adjusted net earnings for the quarter were $6.8 billion, with adjusted diluted earnings per share of $2.8, both representing an increase of 15.7% compared to 2024. As a reminder, results in 2024 were impacted by the acquired IPR and D expense of $1.25 billion associated with the NM-26 bispecific antibody. I will now comment on business sales performance in the quarter, focusing on the six key areas where meaningful innovation is driving our performance and fueling long-term growth. Beginning with Innovative Medicine, where our results demonstrate the depth of our expertise across oncology, immunology, and neuroscience. Worldwide sales of $15 billion increased 5.3% despite an approximate 1070 basis point headwind from STELARA, illustrating the continued strength of our key brands and new launches. Growth in The U.S. was 64.3% outside of The U.S. Acquisitions and divestitures had a net positive impact of 160 basis points on worldwide growth due to the Intracellular acquisition. In oncology, starting with multiple myeloma, DARZALEX growth was 19.9%, primarily driven by continued strong share gains of approximately 5.7 points across all lines of therapy, with nearly nine points in the frontline setting as well as market growth. Carvictee achieved sales of $524 million with growth of 81.4%, driven by share gains and site expansion. This reflects continued strong sequential growth of 18.5% as our expansion outside The U.S. progresses. Tekvele and Talve growth was 29.959.1% respectively, bolstered by continued expansion into the community setting. In prostate cancer, a leader delivered strong growth of 15.3% due to market growth and continued share gains, partially offset by the Part D redesign. In lung cancer, Ribrovan plus Lasclus delivered sales of $198 million and growth over 100%, driven by continued strong launch uptake. We continue to see share gains in both first and second lines of therapy. Within immunology, Tremfya delivered very strong growth of 40.1%. We continue to see share gains across all indications, with particularly robust momentum from our IBD launch. STELARA declined by 42% driven by the impact of biosimilar competition and Part D redesign, which is in line with our expectations. In neuroscience, SPRAVATO grew an impressive 60.8% driven by continued strong demand from physicians and patients. CAPLYTA, which was acquired in Q2 as part of the Intracellular acquisition, delivered sales of $204 million and reflects healthy sequential growth of 13.4%. Now moving to MedTech. Worldwide sales of $8.4 billion increased 5.6% with growth of 6.6% in The U.S. and 4.5% outside The U.S., driven by strong performance in our three focus areas

Joe Wolk: Thanks, Darren. Hello, everyone, and thank you for joining us today. The third quarter, we sustained momentum across our end market portfolio, delivering upon the heightened financial expectations we guided to last quarter. In Innovative Medicine, we continue to grow to the STELARA loss of exclusivity as we said we would. The progression of our pipeline, evidenced by significant regulatory milestones, adds further depth to our three focus areas of oncology, immunology, and neuroscience. We are well-positioned for the balance of the decade. In MedTech, we improved adjusted operational sales across key areas of the business. As Joaquin mentioned, we are sharpening our focus on high-growth, high-margin markets where we can improve patient outcomes, as this morning's announcement regarding the Depew Cynthesis business indicates. In a moment, I will build upon Joaquin's comments regarding that announcement. The foundation we have set, combined with the progression of our pipeline, strongly positions the company for accelerated growth. It also reinforces our conviction to deliver on the upper end of our long-term growth targets. Let me provide a brief update on the Daubert Motion's pending in the talc litigation. As you are aware, this is the judicial process by which the court will re-examine the junk science that the mass tort plaintiffs, Bart and Cox, to fuel baseless claims against Johnson & Johnson as well as many American businesses. We look forward to and expect to secure favorable rulings on the Dalbert motions, which should be rendered by 2026. Now turning to cash and capital allocation. We generated $14 billion in free cash flow through the first nine months of the year. We ended the third quarter with approximately $19 billion in cash and marketable securities, $46 billion of debt. We have a net debt position of $27 billion versus the $32 billion of net debt reported in the second quarter. We continue to utilize our free cash flow generation and strong balance sheet to invest in innovation and return capital directly to shareholders. We are often asked about our appetite for acquisitions to meet financial targets. I can be very clear on this. We rely on our thoughtful long-term approach to growing through any loss of exclusivity and won't carelessly deploy capital on speculative transactions out of desperation. Our current portfolio and pipeline have momentum, and with the Stellara loss of exclusivity increasingly in the rearview mirror, we do not need to rely on large transactions to drive our growth. We intend to remain disciplined, opportunistically pursuing strategic high-value opportunities that utilize our expertise and capabilities that deliver appropriate return for the risk that we bear on behalf of shareholders. Regarding the planned separation of our Orthopedics business, as Joaquin noted, the separation is expected to enhance the strategic and operational focus of each company, drive value for our shareholders and other stakeholders. Given that we are early in the process, there are limited details available. But we are committed to providing you with information on a timely basis. While we will, of course, communicate material developments, we don't expect to have anything newsworthy to convey until mid-next year. But what can we say at this moment? First, the separation will further strengthen our overall MedTech business and increase Johnson & Johnson's top-line growth and margins. To give that some directional context, if we just look at normalized year-to-date 2025 results, MedTech's top-line revenue growth and operating margin would both improve by at least 75 basis points. Next, we are targeting completion of the separation within eighteen to twenty-four months, subject to the satisfaction of certain conditions. Given it is the most resource-intensive and likely longest duration, we are prioritizing and have begun the separation assuming a spin-off, with the intention for that to qualify as a tax-free separation for U.S. Federal income tax purposes. However, we will consider other avenues that optimize shareholder value. We do not expect any change to the Johnson & Johnson dividend and are mindful of any impact from stranded costs that are typically present in these types of transactions. Finally, following the separation, we would expect the Pugh Cynthies to have a strong capital structure that would allow the Orthopedics business to build on its long history of innovation, extend leadership positions through enhanced organic investment and strategic growth accretive M&A. As we pursue this separation, the orthopedics unit will operate in alignment with the business' current strategy, continuing to make investments in growth, margin improvement, and innovation. Turning now to full-year guidance for 2025. We are increasing operational sales guidance for the full year by approximately $300 million, resulting in operational sales growth for the full year in the range of 4.8% to 5.3%, with a midpoint of $93.2 billion or 5.1%. Excluding the impact from acquisitions and divestitures, our adjusted operational sales growth is now expected to be in the range of 3.5% to 4% compared to 2024. As a reminder, we started the year guiding to a midpoint for 2.5% for adjusted operational sales. As you know, we don't speculate on future currency movements, and last quarter we utilized the euro spot rate relative to the U.S. Dollar of 1.17. The U.S. Dollar has stayed relatively flat to the euro spot rate, and as a result, we now expect reported sales growth between 5.4% to 5.9% with a midpoint of $93.7 billion or 5.7%. Turning to other notable items on the P&L. We are reiterating our operating margin guide of a 300 basis point improvement for the full year, assuming what we know today as it relates to tariffs. For net interest expense, we are now projecting between 0 and $50 million, an improvement from the previous guidance primarily driven by higher cash balances. We are expecting a higher effective tax rate to be in the range of 17.5% to 18% for the full year, with the increase largely due to the recently enacted One Big Beautiful Bill. We feel strongly that U.S. tax policy has enabled Johnson & Johnson to increase our manufacturing footprint in The U.S. We have more manufacturing facilities in The United States than in any other country, and we remain committed to $55 billion in U.S.-based innovation and manufacturing over the next four years. In March, we broke ground at our Wilson, North Carolina facility, and in August, we announced a $2 billion commitment to further increase our presence in North Carolina with a more than 160,000 square foot dedicated manufacturing facility at FUJIFILM's new biopharmaceutical manufacturing site in Holly Springs. Our overall U.S. investment plans also include three additional new advanced manufacturing facilities, as well as the expansion of several existing sites. Turning to earnings per share. You may recall we started the year guiding to adjusted EPS of $10.6. Today, we stand much higher, even after including dilution of $0.25 from the Intercellular acquisition. Today, we are reaffirming our elevated July earnings per share outlook, which also absorbs a higher annual effective tax rate and fourth-quarter investments that will further position the business for long-term success. As such, our expected adjusted earnings per share guidance remains $10.85 or 8.7% at the midpoint, with a range of $10.8 to $10.9. Our adjusted operational earnings per share guidance is $10.68 or 7% at the midpoint. Looking beyond our financial commitments for the year, we are on track to add to the already impressive number of milestones that we achieved across our pipeline in 2025. In Innovative Medicine, we anticipate U.S. FDA approval for subcutaneous Ribrovant for non-small cell lung cancer, as well as for CAPLYTA in adjunctive major depressive disorder. We recently filed for a label expansion on TREMFYA in psoriatic arthritis and plan to present data for Ribrovant in head and neck cancer at ESMO in the coming week. In MedTech, we continue to make progress with our clinical trial for our Ottava robotic surgical system. In our cardiovascular portfolio, we are planning regulatory submissions for the dual energy Thermo Cool SmartTouch SF catheter for cardiac arrhythmia in The U.S. And Envision we will continue to roll out AccuVue Oasis MAX for astigmatism. As we are close to year-end and with the strong caveat that we are still finalizing plans for next year and macro factors can change quickly, let me provide some preliminary thoughts to inform your modeling for 2026. For Innovative Medicine, we remain very confident in our ability to deliver accelerated growth despite STELARA loss of exclusivity. This will be driven by our in-market brands and continued progress from our recently launched products, including Tremfya in inflammatory bowel disease, Ribrovant plus Lascluse in non-small cell lung cancer, and Alexo in bladder cancer. We currently anticipate a 2026 approval for icotrokinura in psoriasis. In MedTech, we continue to expect accelerated growth off this year's levels, driven by focus on higher growth markets, as well as the continued adoption of newer products across all MedTech platforms. We also anticipate the launch of Shockwave C2 Aero Coronary IVL Catheter, the Technis Pure C intraocular lens in The U.S., as well as regulatory submission for the Ottava robotic surgical system. Again, while early, I like the way 2026 is shaping up. In fact, based on my last look at your 2026 models, it appears current revenue consensus of 4.6% growth in your models for 2026 is lower than we project, which we believe in total will exceed 5%. Similarly, with the expectation that adjusted earnings per share is commensurate with sales growth, there appears to be some upside to the current adjusted earnings per share consensus of $11.39, perhaps as much as $0.05. This commentary considers investments we will be making behind many of the new product launches I just highlighted, but you can also expect some margin improvement. It also reflects our understanding of the present legislative landscape, tariffs, foreign exchange rates, and procedural volumes. We look forward to sharing further details regarding our official guide for 2026 during our Q4 earnings call in January. In summary, the strength of our business model, with a focus on where we can have the greatest impact for patients, will enable Johnson & Johnson to deliver against our strategic objectives and financial commitments. We are as confident as we have been in recent memory about the future. I'd like to end my remarks by thanking our colleagues around the world for their continued hard work and steadfast dedication that serve our patients and who make these financial results possible and sustainable. With that, we are happy to take your questions. Kevin, will you please open the call for Q&A?

Operator: Certainly. Our first question is coming from Alexandria Hammond from Wolfe Research. Your line is now live.

Alexandria Hammond: Good morning and thanks for taking the question. On the orthopedic spin-out, I'd be interested to understand the why now and also if we expect similar separations for other divisions in the future? And as a quick follow-up, how should we think about the long-term guidance in light of the separation? Should we expect J&J to revisit these forecasts in the near term?

Joaquin Duato: Thank you, Alexandria. And let me take the first question

Joe Wolk: Yes. Alexandria, maybe just to build on Joaquin's comments. Thanks for the question. So there were two other parts that I thought I heard from you. This is not a precursor to anything else. We look at what we have now in the clarity of our portfolio, three strongholds in Innovative Medicine serving unmet needs with transformational innovation that elevates the standard of care in oncology, neuroscience, and immunology. And likewise, now in MedTech, where we have market-leading positions, cutting-edge technology that is improving care for patients in surgery, eye health, and cardiovascular. So we're going to be real pleased with the portfolio. We think orthopedics is set up for success going forward based on their profile and their ability to compete against other singularly focused orthopedics companies. With respect to guidance revisions, so as we mentioned in the scripted comments, this will take eighteen to twenty-four months. So anything we say about 2026 will likely include the Orthopedics business in our outlooks. We would expect maybe some material developments in the middle of next year, but we commit to keeping this audience particularly advised on a timely basis should anything material unfold.

Operator: Thank you. Next question today is coming from Danielle Antalffy from UBS. Your line is now live.

Danielle Antalffy: Hey, good afternoon, guys. Thanks so much for taking the question. Just a question on, Joe, your commentary around potential margins post the ortho spin. 75 bps, I don't want to get too greedy, but that feels a little light to me. So just curious about why, given the mix of the business, it's high growth cardio, surgical, which I think should be relatively high margin and vision. Feels like maybe it could be a little bit more than that. So just want to make sure I understand the puts and takes to that 75 bps number appreciating. That's just, you know, a very early target.

Joe Wolk: Yes. Thanks, Danielle. That's an insightful question. And I think it really depends on the time period by which you're measuring. If we were just to take 2025, you're absolutely right. It would be probably closer to 100 bps both on top and bottom or margin improvement. What I would say is we looked out a couple of years given this will take a couple of years to go through the process. And as Abiomed, Shockwave, and the other businesses have higher growth profiles, margin improvements initiatives that are already underway under Tim's leadership, it will have a more muted impact as it goes forward. So I think on today's math, you're probably closer to being right. It's okay. I don't consider it greedy. Tim might, but I don't. But I think as you look out a little bit further, with some of the stronger profile businesses from a financial perspective, it will have more of a muted impact.

Tim Schmid: Yes. And Danielle, maybe just building on Joe's comments, as I'm sure there'll be a lot of questions on this topic, and we'd like to try and get them out of the way so we can focus on the broader business. I wanted to highlight why this makes sense for Johnson & Johnson MedTech. And as you heard from Joaquin and Joe, this is all about our commitment to continuous portfolio optimization and value creation. And as you know, we've been on a journey over the last couple of several years to really aggressively move our portfolio into higher growth markets and adding attractive assets such as Abiomed and Shockwave in our growth markets like cardiovascular are good examples of the bold moves we already made. This decision to separate ortho is the next major step in that direction. Ortho is a great business, but frankly, one that participates, as you know, in lower growth markets. This is all about shrinking to grow faster for MedTech. And last time I looked, you're not rewarding size, but really rather best-in-class performance, and that's the path that we're on. As you already have heard, we expect the separation would increase our top-line growth and margins following the completion. And this allows us in MedTech to really focus on the businesses that will remain, which is our priorities of cardiovascular, surgery, and vision.

Joaquin Duato: Thank you, Danielle. Look, I want to reiterate, as I told you, day one when I became CEO, I am fully focused and determined to make our MedTech sector the best-in-class MedTech group in the industry. That's a total priority for me. It's a priority for Johnson & Johnson, and we are fully committed to delivering on that, and we are on track to become the best MedTech sector in the industry.

Operator: Thank you. Our next question today is coming from Christopher Schott from JPMorgan. Your line is now live.

Christopher Schott: Great. Thanks so much. Maybe just a question for Joaquin. There seems like there might be a framework for MFN agreements with the administration that's emerging across the space focused on new launches in Medicaid. Can you just talk about how you're thinking about MFN tariffs, etcetera, and J&J's approach to some of these kind of policy dynamics that are floating around out there? Thanks so much.

Joaquin Duato: Thank you for the question. And we've been talking with this administration with an open dialogue since day one, even before day one. And we are always looking, as we have done as Johnson & Johnson, for common ground to build in the administration priorities that are similar to ours. Priorities like making sure that American patients have access to innovation in an affordable and timely way, priorities like making sure that foreign entities do not feel right on American innovation, making sure that we are able to maintain the overall leadership that this country has in Life Sciences. And finally, making sure that we continue to invest in manufacturing in this country to build good middle-class jobs. So we are delivering on that. We announced our plan to invest €55 billion in The U.S. in the next four years, which is essentially going to make it so that all our advanced medicines that are used in The U.S. are going to be manufactured in The U.S. As far as the discussions, those are ongoing. I don't have anything to share today, but I am optimistic that we are going to land in a place, which is going to create common ground between the administration and ourselves.

Operator: Thank you. Our next question today is coming from Larry Biegelsen from Wells Fargo. Your line is now live.

Larry Biegelsen: Good morning. Thanks for taking the question. Joe, you talked about the accelerating sales growth in both Innovative Medicine and MedTech next year. Is the 5% plus I heard you say earlier, on a reported or adjusted operational basis? I think FX is a tailwind. How are you thinking about the extra week next year? I guess I'm trying to understand if growth will accelerate next year. On an adjusted operational basis excluding the extra week. And the same for EPS, is that on a reported or operational basis? Thank you.

Joe Wolk: Yes, Larry. Very simply, since consensus is based on reported for both top line as well as EPS, that was the comparator I used. So there is a slight tailwind, as you mentioned, for FX. But I, and I know Larry, you and your team are very astute at capturing the FX impact, would assume that's already baked into the 4.6% top-line growth that I saw consensus have for 2026. Similarly with the earnings. So it is a lift, I would say, across the board, but on a basis by which the analysts, yourself included, look at it.

Operator: Thank you. Our next question today is coming from Asad Haider from Goldman Sachs. Your line is now live.

Asad Haider: Great. Thanks for taking the question. Just a big picture question. You'll be exiting this year in a clear position of strength. Where a number of headwinds from the Stellara LOE are fading into the background, the base businesses are strong, and you've got new product cycle momentum accelerating through the Innovative Medicines portfolio, and you're also seeing a second-half improvement in MedTech. So in that context, and with the announcement of this morning to spin off Dupuy, can you just maybe double-click a little bit more on how you're going to be balancing capital allocation priorities? To sustain acceleration in innovative meds and push MedTech sustainably towards the 5% to 7% ERB targets. And then related in the Innovative Medicines business, the sales growth acceleration in 2026, like you said, Joe, that's not getting modeled by consensus. So what are the biggest disconnects there that you're able to highlight today specifically for next year? Thank you.

Joaquin Duato: So first, look, we are in a favorable position as far as capital allocation. It means we have a number of important opportunities to invest within our pipeline and portfolio. So that is our number one priority now as far as capital allocation. We're in the middle of the launch, and Tim and Jennifer will discuss that, of major blockbuster products. On the Innovative Medicines side, we are launching Tremfya in inflammatory bowel disease, Ribrevan and Lascluse in lung cancer, Inlexo in localized bladder cancer. We continue with the growth of Carbiti and Espravato. And we just filed for Aikotrokindra in Plexor IAC. So we have a wealth of opportunities to drive significant growth in our Pharmaceutical business that Jennifer will describe. Just to give you an idea of the strength of our Pharmaceutical business, excluding Stelara, the pharmaceutical business in the third quarter grew a whopping 16%. So that's a very big business, more than $50 billion business growing at 16%. So we have multiple opportunities to drive capital allocation in the Pharmaceutical business as well as in our pipeline there. I mean, we're working on biospecific prostate cancer, try specific for multiple myeloma, a wealth of opportunities to drive capital allocation. On the MedTech side, I mean, we're in the middle of major things in the MedTech side. On one hand, we are committed to remaining leaders in the electrophysiology segment with the launch of VariPulse, our dual energy catheter. We continue to work on improvements in the Cartos system, and we are determined to invest there to remain the leaders as we have been. We are working to expand our heart pumps. You guys all know about the New England Journal of Medicine publication showing the DANGER study in patients with acute myocardial infarction that had cardiogenic shock that show a 600 days improvement over a ten-year period, impressive breakthrough innovation there. We have a lot of opportunities in Shockwave with the Javelin peripheral catheter and the AERIO system in coronary that we are launching. And if I move into the second priority, which is our robotic surgery expansion, we are about to file with the FDA in the first half of the year our Ottava soft tissue robotic system. We are also determined to be a major player in robotics. I'm always telling you, we are determined to be a major player in robotics. So we continue to have opportunities for capital allocation in both businesses. And our priority now is to be able to fuel the growth in our portfolio and our pipeline. We, as Joe mentioned before, we are in a position just to be clear that we do not need large M&A to deliver in the high end of our growth targets. Let me repeat that. We do not need large M&A to deliver in the high end of our growth targets. We are going to be looking at opportunities as we always do, but we are in a position in which our number one capital priority is going to be to fuel our pipeline and our portfolio.

Joe Wolk: Yes. I think Asad, the only thing I would add to that is just the number of smaller deals we do that don't make headlines on the day of the transaction, I think 60 over the last two years. And those lead to products like Inlexo, which we acquired in 2019 for a couple of $100 million and through really tax for their craft as well as passion for meeting patients' unmet needs. Doctors Chris Coote, Doctor. Charles Drake were able to find, and their teams were able to find a bladder cancer treatment that is revolutionary. Nothing has been new in the last few decades with respect to not only ease for the patient but also ease for the administrating physician. It's deals like that. We look at next year's product for icotrakinda, where we're expecting again a couple $100 million investment will turn out to be a $1 billion platform for us because that's where our competitive advantage lies is the scientific expertise that we're able to recognize early on bringing forth a label that is most expansive, most complete, and in record time.

Jennifer Taubert: Thanks, and good morning, everybody. So, I'd love to double down on the fact that it really was a great quarter in 3Q, and those numbers that for 90% of our business, we actually grew 16%. And that's really driven by 11 key brands that grew double digits, brands like DARZALEX, ERLITA, BRAVATO, CARVICTI, and so on, as well as the strength that we're seeing in our new launches. And most notable there is in Crohn's disease and ulcerative colitis with 40% growth, that is four-zero. And so we've got a lot of strength in the business right now. Those growth drivers are growing double digits are not only now in just this year, these really are our growth drivers throughout the rest of the decade, as well as the pipeline assets that are coming in and the great growth that we're seeing, and most notably, Trampfya. If we take a look versus your models in the areas where we have even or were even more bullish, a few areas to note. So first, is TREMFYA. And we think that there's a lot of strength with TREMFYA already. We're seeing in ulcerative colitis about fifty percent share of the IL-23s. This was actually before we got the subcutaneous induction dose, which we just got approval for. We're seeing really, really strong uptake there. And I think things bode real well for Tremfya. As a reminder for STELARA, about seventy-five percent of Stellara sales were in Crohn's and ulcerative colitis, so in IBD. We think that, that's entirely like or may even be stronger for Tremfya. So we think that there's a lot of growth opportunity there. We believe SPRAVATO there is a bit of a disconnect. We are more bullish there as well. And we continue to expand into new treatment centers, as we expand globally. That product is offering so much value for patients with treatment-resistant depression. Throw in Riborvant Lasclus for non-small cell lung cancer. We're anxiously anticipating our launch of the subcutaneous dosage form. We think that there is a lot of runway there as a $5 billion plus asset. We're also anticipating new data coming out in head and neck cancer and also colorectal cancer. So great growth. Joaquin mentioned Inlexo, formerly known as TerrAs, and we just got approval and are in the process of launching for bladder cancer. This is one of our next $5 billion plus assets. And last but not least, I co which we have filed and are also in the midst of showing new data both in psoriasis as well as in ulcerative colitis. And so when we take a look at the business both as well as these future growth drivers, we've got a lot of bullishness there. And so those are really the major areas for disconnection.

Tim Schmid: Asad, maybe just building on Jennifer and Joaquin's comments for MedTech, a couple of things that I'd really highlight. Joaquin mentioned our continued confidence and commitment to winning over the long term in electrophysiology. We had a standout quarter, and what really marked it was our continued improvement, especially here in The U.S., which will continue to be the largest and most attractive market. We saw a doubling of our growth rate in this quarter. We continue to build momentum. Vision, which we haven't touched on also, which had a standout quarter, 6.1% growth, 14% growth in the IOL category with significant share gains against our major competitors there. And then surgery, our largest business around 3.3% growth, but really bolstered by strong performance in wound closure at 7% and biosurgery. And once again, that launch of OTAVA next year is going to really bolster our performance there. And then I think also what made us more proud and excited about this quarter versus last is that we had performance across the board. Ortho, back to growth, with significant improvements in spine, knees, trauma, and border.

Darren Snellgrove: Thank you. Thanks, Tim. And just before we take the next question, we will actually run a little bit longer than the sixty minutes we planned just given the announcement that we had leading to longer script remarks. Next question, please.

Operator: Thank you. Next question is coming from Shagun Singh from RBC. Your line is now live.

Shagun Singh: Great. Thank you so much. Joaquin and Joe, congratulations on all the operational progress at J&J. I think the key message that I'm hearing is the acceleration in sales growth. And in your prepared comments, you did indicate the higher end of the 5% to 7%. I guess my question is, and a lot of your businesses are growing very lively in the double digits. So what gets you to exceed those levels? And as we think about 2026, why is 5% a good number given that you have easy comps? Could you do better, and what would drive that? Thank you for taking the question.

Joe Wolk: Yes, Shagun, thanks for the recognition. It's a great job by the entire Johnson & Johnson team across the globe. I think towards the 5% to 7%, obviously, we made that commitment back in 2023. We've seen significant progress with our portfolio. We've added some acquisitions that fortify that number. We are striving for something better than that, don't misconstrue our ambitions here. What I would say for the year specifically, we are still going to face significant erosion with respect to Stelar. There will be additional discounting in the Innovative Medicine portfolio. And we will still have the orthopedics business, and we will continue to make progress with electrophysiology going back to market leadership with the PFA platform. So there are things that we will obviously look to improve upon those numbers. But when I glimpsed at your models for 2026, I did see a clear disconnect, and I'll provide more details when it comes to January. But we feel very confident in not just how we're going to conclude 2025, not just the backdrop for 2026, but really the balance of the decade. As Joaquin has said, both on media interviews as well on today's call, this is a new era of growth, accelerated growth for Johnson & Johnson, and we feel very good about not just our in-market portfolio, but all the new products within our pipeline that will come to launch over the next one to two years.

Operator: Thank you. Next question is coming from Terence Flynn from Morgan Stanley. Your line is now live.

Terence Flynn: Great. Thanks for taking the questions. Congrats on all the progress. This one's for John. I know at our healthcare conference you talked about some upcoming data you're going to have for your anti-tau antibody, which is in Phase two. Just I was wondering if you could help frame that data for us, what you're hoping to see there? And could that trial actually be used to support an accelerated approval? Or will you need a Phase III? Thank you.

John Reed: Hey, thanks, Terence. We expect to have the data on the Phase two study in-house within this year and would then be in a position to share those at a medical congress sometime in the first half of next year. The endpoints in that study include first and foremost cognitive endpoints that are traditionally used for regulatory approvals for medicines in terms of looking for effects and efficacy in Alzheimer's. But in addition, we'll also have important neuroimaging data looking at tau spread using PET imaging. So that'll be an important piece of the data as well. And based on the quality of those data, that will be a decision-making point for us in terms of go, no go. We have designed our antibody to attack a specific epitope in tau that's differentiated from what some others have exploited. And feel confident in the ability to prevent the spread of tau based on the preclinical data. But of course, the data will be the data, as we say, when we get the clinical results. So we'll be eagerly awaiting those results and look forward to communicating in the fullness of time.

Operator: Thank you. Next question today is coming from Jayson Bedford from Raymond James. Your line is now live.

Jayson Bedford: Good morning and congrats on the progress. Maybe just a quick one for Joe or Tim. Just trying to gauge the underlying growth in MedTech. It looks like there was a reserve adjustment that helped MedTech growth, perhaps offset by this go-to-market change in energy. Is there a way to quantify the net impact of these adjustments as it relates to the, what, 5.7% adjusted operational growth in MedTech?

Joe Wolk: Yes. I'm happy to take one. We do believe that the one you're referring to has any significant materiality and shouldn't impact, we'd say moderate, certainly not material from an overall performance perspective.

Operator: Thank you. Next question is coming from Vamil Divan from Guggenheim Securities. Your line is now live.

Vamil Divan: Great. Thanks so much for taking my questions. I can't wait on the next slide. Really two-part question. So one is sort of the near-term uptake. Just curious if you can comment on sort of what initial feedback is from doctors and is this buy and bill model? Just curious you're seeing doctors already sort of step in and purchase the product or are they waiting for the permanent J code? And then second is more of a longer-term question on this. It's just what should we expect in terms of updates both clinical data-wise or regulatory-wise in the next, say, twelve to eighteen months to just expand the addressable population here to other patients with bladder cancer and also outside The U.S. I think we're getting excited about the outlook for this product, before you mentioned that there's a big disconnect between your internal expectation and where consensus is. And I think that suggests you guys think this will be sort of $2 billion plus product by 2028. So just trying to get a sense of how you expect to build on the initial launch to that level. Thanks.

Jennifer Taubert: Sure. Thanks so much for the question. So yes, we did just get approval for Inlexo, and the teams are out in full launch mode. And we have a lot of confidence that this is one of our $5 billion plus assets for Johnson & Johnson. The receptivity has been very strong. We like to say that this product was really designed by urologists for urologists. And really is addressing a high unmet need. There hasn't been much advances in the way of bladder cancer for a very, very long time. And so in the initial launch, it's in BCG unresponsive, risk non-muscle invasive bladder cancer. And we've been able to demonstrate the highest complete response rates without a need for re-induction, and over half of responders are still cancer-free at one year. And so really, really transformational results. The product was designed to seamlessly fit into your urology practice and be relatively speaking easy on the patient compared to other therapies and like I said, seamless work into practice. And so, so far, the response from clinicians has been very positive. For our Executive Committee, we actually had one of our top investigators come and spend time with us last week. And show us on models their demonstration and talk about why he is so excited about it, both as a clinician as well as for his patients. So we've already had a number of insertions. Based on the high level of unmet need, but as you know, we're also anticipating the J code for reimbursement come April. So we think that, that will be an important catalyst for uptake as is normal and common in route buy and bill type products. So we're excited about that. John, maybe you want to talk a little bit particularly about Sunrise three and what's coming as well as TAR-two 10.

John Reed: Yes. Thank you so much for the question. We have a broad development program underway with several Phase III studies to address the non-muscle invasive bladder cancer population high risk, that's about half of all the non-muscle invasive bladder cancer patients. And our studies include both the patients who are BCG experienced in the first approval that was for BCG non-responsive. We also have studies in BCG relapsed. And then we also have head-to-head frontline studies against BCG. So really covering a broad landscape there. And just to remember that there are about 600,000 patients every year who are newly diagnosed with bladder cancer. Seventy-five percent of those have the non-muscle invasive localized, and then another twenty percent have localized, but it is muscle invasive. There too, we're also doing studies, and in fact, at the ESMO conference, in a couple of days, we'll present data. Where in the neoadjuvant context, we've used Inlexo in combination with our PD-one antibody, sotrelimab. And we'll report the data there showing that we're able to render a much higher percentage of patients completely free of any evidence of disease that you can find histologically or by other methods, what's called pathological complete response. And therefore, voting for better outcomes for these patients who already have muscle invasive disease and are having surgery to remove their bladder as a result of that risk. So really see a broad opportunity for Inlexo, particularly in the non-muscle invasive across all lines of therapy. In that high-risk non-muscle invasive, which is about half of all of those patients, as well as in some subpopulations of patients with the muscle invasive as well. And then I would just give a shout-out that that's not going to be a one-trick pony for us. We have TAR-two ten coming rapidly on the heels. This is a next-generation device that releases instead of a chemotherapy, a targeted therapy or erdafitinib drug. That inhibits receptor tyrosine kinase. That is commonly mutated in bladder cancers. It's the most common genetic mutation that occurs in bladder cancers. In there, we've seen response rates, complete response rates north of ninety percent in our next-generation device for that. Releases the medicine at a steady rate not just for three weeks like Inlexo, but for three months. So more to come, really excited about this platform for addressing the great unmet need of bladder cancer.

Operator: Thank you. Next question is coming from Matt Miksic from Barclays. Your line is now live.

Matt Miksic: Hey, thanks so much. So just a couple of follow-ups. One on just sequential strength in the quarter, a little bit unusual for a summer quarter. So much of that do you feel like is these speaking of MedTech mostly here, even though pharma was pretty strong also, but just the sequential improvements from you think the market feels stronger, or was this predominantly user leaning back into competition in some of your core MedTech markets? And then just a follow-up on all the discussion about the spin, just if I if we should think of holding on to MedTech concentrating on the key businesses that you mentioned. This has also opened the door to sort of I guess, loosen up the capital structure and balance sheet in such a way to start adding to some of those areas as you get closer to or through this span? Thanks so much.

Tim Schmid: Matt, thank you for the question. Let me take the first one. What was really attractive about this quarter and built on the tremendous performance in the second quarter was the solid performances across all businesses. And so where you saw that sequential improvement, if you'll recall, our Ortho business struggled in the first and quarter. We saw a nice improvement in Q2. Q3, we returned that business to growth with tremendous performances in categories like hips with 5.1%, knees 5.6%, strong performance in trauma, and actually returning to growth in Spine. And so Ortho was a major competitor or major contributor to that performance. And then of course, we had continued tremendous performance in our fastest-growing category in cardiovascular, solid performances in surgery, and acceleration within Vision, as I mentioned earlier, driven by our performance primarily in the intraocular space.

Joaquin Duato: Thank you. And overall, as we discussed at the beginning of this call, our focus and priority within MedTech is around our three areas, which are vision, cardiovascular, in which we already have acquired a number of companies, and also robotic surgery, where we are focusing on being able to submit our Ottava soft tissue robotic system to the FDA in 2026. We'll continue to look for opportunities there in order to enhance our portfolio and be able to make our MedTech group the best MedTech Group in the industry, which is a clear goal for me and for Johnson & Johnson.

Darren Snellgrove: Thanks, Matt. We have time for one last question.

Operator: So our final question today is coming from David Risinger from Leerink. Your line is now live.

David Risinger: Yes. Thanks very much and congrats on the performance. So my question is on icropinra. I'm curious about how you plan to position it relative to TREMFYA given the similar indications for the two therapies? Thank you very much.

Jennifer Taubert: Great. Thanks. Good morning. And we are really excited about the opportunity for iCotra Kinra and see this as one of our next big $5 billion plus brands. And so why are we excited about it? So we believe it's really going to set the new standard of care in the treatment of plaque psoriasis. And that will be the first indication. Unprecedented combination of complete skin clearance and a favorable safety profile with the simplicity of an oral pill. We're really, really confident in what we've seen. And so not only are we studying it versus other orals, we're actually studying it head-to-head versus Stellara. And no oral agent has been able to really compete with that combination of both biologic-like efficacy and that known safety profile. And so we're really bullish. If you take a look at the despite today's treatments, they're still less than thirty of eligible patients who have moderate to severe psoriasis who are receiving advanced treatments. And so we think there is a significant market expansion opportunity to be able to bring patients into advanced therapies into that frontline setting. So we think there's a big opportunity there. We think as we move closer to the launches with the way the profiles are differentiating, there will be a unique and distinct position for icotrokinra and also a distinct and unique position for TREMFYA that will allow us to have both really continued significant growth on both assets, particularly given the high level of unmet need in the market. So more to come on that. I'm not going to give away everything on the positioning, but we think that there are really distinct places that they're going to play. AECO is going to be a really significant asset for us. And you can see how well Tromphaya is doing with the 40% growth that we achieved this quarter.

John Reed: David, keep your eyes open when we have more publications coming out on our AGCOTROCHINRA data, two back-to-back papers in press at the New England Journal of Medicine. Describing the placebo-controlled studies and then a paper in at The Lancet showing our head-to-head against the leading tick inhibitor in psoriasis. So exciting times for that really novel targeted oral peptide for the autoimmune diseases where the IL-23 class plays.

Darren Snellgrove: Thanks, David, and thanks to everyone for your questions and interest in J&J. Please reach out to the Investor Relations team with any remaining questions you have. I will now turn the call over to Joaquin for some brief closing remarks.

Joaquin Duato: Thank you all of you for joining the call today. As you heard, we have had a very strong third quarter. We have sharpened focus around our six priority areas of oncology, immunology, neuroscience, cardiovascular surgery, and vision, and we are in a period of accelerated growth with innovation and pioneering treatments that are going to transform lives. Thank you for your interest in Johnson & Johnson. And enjoy the rest of your day.

Operator: Thank you. This concludes today's Johnson & Johnson's third quarter 2025 earnings conference call. You may now disconnect.