Quarter 1
Q1 2026 Earnings Call — April 14, 2026
Terrence Flynn (Morgan Stanley): Your line is now live. I had a two-part one on Iketide. I was just wondering if you can remind us of how you're positioning that drug in the market now that we have full details on the label and pricing, and also how should we think about the ramp of reimbursement coverage there and any sampling plans? Thank you.
Executive Name (Title): Well, good morning, Terrence. Hello, everyone. And just wanted to start with a big thanks to the entire Innovative Medicine team throughout the world. Really strong results in the first quarter with over $15 billion in net sales, 7.4% operational growth. Really importantly, 11 key brands delivering double-digit growth. And if you take a look at what is now 96% of our business that is not including Stellara, we actually grew at 16.6%. So really nice accelerating growth there across the portfolio. So I'm thrilled to talk about Icotide, really one of our outstanding products. And I've got to tell you, it's off to a very fast start. The product was approved back in March. And we're really, really happy with what we believe is a very differentiated label for the product as the first and only targeted oral peptide that precisely blocks the IL-23 receptor. Icotide, maybe
as a reminder, delivers complete skin clearance, favorable safety, and the simplicity of a once-daily pill.
And we think it's got the potential to become one of our biggest products. So we were day one launch ready for the product. And in fact, first patient was actually on medication within 24 hours of approval. We're seeing very strong early enthusiasm from both physicians and patients that reinforce our confidence in the potential for this product. A number of us were out at the AAD meeting as well, and the KOL receptivity to the strength and the simplicity of the label has been really encouraging. Things like no lab monitoring, the TB language that reflects the physician clinical judgment, you know, no black box or drug interactions really is giving us good confidence that this is going to be really the preferred choice and first choice for systemic therapy.
In terms of early uptake, we're seeing so far about 1,500 patients already that prescriptions have been written for that are going into our Access and Patient Support Service Center, so already 1,500. already over 1,000 unique customers that are writing in terms of payers our goal is to have both early and broad access and we're in we're in the middle of very very positive you know, conversations with them to try to drive that early and very broad access. So, more to come on that. In terms of the positioning, you know, I can't think of a better portfolio than being able to have both Icatide and Trumpfya for our folks and really for patients. So, with Icatide being the first and only targeted oral peptide, it is really going to become the preferred first-line systemic therapy. We know there are so many patients that keep cycling and cycling and cycling on topical therapies. Now the International Psoriasis Foundation guidelines have changed so that patients after two topicals and trials of four weeks each really become eligible for systemic and advanced therapies. And so we think Icatide fits right in this sweet spot as that first choice systemic.
Likewise, Tramphya holds a really unique and distinct position as well. And that really is the first choice biologic. And so, you know, Tramphia is both structurally and functionally different from the other IL-23s. We've been able to demonstrate really durable, complete skin clearance. And in our case here, it's the first and only IL-23 that's got significant inhibition of structural damage. So we think it's really the first choice biologic, especially in patients that have active or suspected PSA or psoriatic arthritis. So we think that with that one-two punch, we have got the portfolio for psoriatic disease in patients and are really excited about both agents going forward. Maybe we'd just add one other thing, John Reed here. Our study of mycotide in psoriatic arthritis should read out later this year. That's important given that about a third of patients with psoriasis also develop psoriatic arthritis. And the studies in inflammatory bowel diseases, Crohn's, and colitis are off and rolling that phase three program.
Larry Beagleson (Wells Fargo): Good morning. Thanks for taking the question, and congrats on a nice start to the year here. Tim, you know, sentiment in the medical device space is relatively low right now because of a number of headwinds and concerns. You posted a respectable growth rate this quarter, but it was slightly below the Q4 growth rate, and the comp in Q1 was relatively easy. So my question is, what are you seeing in your end markets, and how are you thinking about the remainder of the year?
Executive Name (Title): Well, good morning, Larry, and thank you for the question. Let me jump right in and say that, as you know, we've been very clear, Larry, in articulating our strategy, which is focused on higher growth and higher innovation markets. And that includes our deliberate choice to prioritize our three focus areas of cardiovascular, vision, and surgery as we separate ortho. And I can confidently say that that strategy is working. And in short, while we're navigating a dynamic world and market like everybody else, for us, Q1 unfolded as we expected the years to start. Seasonally quieter, but operationally solid. And this was also not a one business or one region quarter. As you've seen by the results, we saw growth across the board. And overall, we're pleased with the 4.6% operational growth, especially given that Q1 is typically our most seasonally subdued quarter. And I think it's also worth noting, Larry, that while there were some easier year-over-year comparisons, this by no means drove the quarter.
Specifically, the 210 basis points of one-time impact we referenced in Q1 of last year, which you will recall was a bit of a noisy quarter, were almost entirely related to the items that occurred in 2024. And so those prior year events temporarily depressed the year-over-year growth rate, creating a lighter competitor, but they did not affect underlying dollar sales. And so one-time items from 2024 fully lapped last year, and our Q1 performance reflects underlying operational execution and normal seasonality rather than any benefit from prior one-timers. So I'd say in summary, Larry, overall Q1 played out largely as we anticipated, balancing normal seasonality with solid execution. And most importantly, nothing in the quarter changes our confidence in further acceleration as we look towards Q2 and the remainder of 2026. And we've got a lot of growth catalysts to be proud of. What I will say in terms of the underlying market is that it's solid and underlying demand is what we expected. Now, we did see some procedural softness early in the quarter, but nothing that we would define really as material.
You know, while certain regions, particularly here in the U.S., you will recall we experienced some periods of severe weather in late January and early February, that was largely consistent with normal seasonal patterns. And while there was some localized impact on procedure volumes due to poor weather in parts of the business area, we would not categorize them as material or meaningful at any – at an overall level. And so, you know, what I'm proud of is our teams are highly experienced in managing these types of short-term disruptions, and our supply chain, our clinical support and commercial teams work closely with healthcare providers to maintain continuity of service and support patient care. And so, you know, in short, Larry, you know, a strong quarter for us, consistent with our expectations, and we believe strongly in the robustness of our end markets.
Asad Haider (Goldman Sachs): Great. Thanks. And congrats on yet another solid quarter. For Joaquin, just going back to the goal of double-digit top-line growth towards the end of the decade, that's still not something that's getting reflected in consensus models. And in light of your comment earlier that Icotite could be one of your largest products ever, that would suggest an opportunity of at least $10 billion. So any updated views on what you see as the key product variances versus the street looking towards the end of the decade and related, how important is the BD lever in that global algorithm? Thanks.
Executive Name (Title): Thank you very much. And, Luke, again, as you can see, we are off to a faster start with momentum that will accelerate throughout the year in 2027. And as you mentioned, with line of sight to double digit growth by the end of the decade. And I think it's a fair question. How is that possible for a company that this year in 2026 is going to deliver more than $100 billion? This is grounded in reality. As a matter of fact, it's already happening today. If you look at the first quarter of 2026, we're already delivering double digit growth as total Johnson & Johnson when you exclude Stellara. So it's already happening today. And it's based on our pro portfolio and pipeline, the strongest in our history. And also, as the decade progresses, we are going to see increasing impact in our revenue of our new product launches that are largely de-risked. In particular, as you mentioned, there's still an underestimation of the potential of in psoriasis, psoriatic arthritis, and IBD. The potential of in non-small cell lung cancer, head and neck, where we got breakthrough resignation and colorectal cancer.
And finally, the potential of Inlexo in high-risk non-muscle invasive bladder cancer. By the way, Inlexo got the J code earlier in April. So I believe those are three particular products that remain underestimated that are already marketed. The same is true in medtech, where launches, especially in cardiovascular, including our next-generation PFA catheters and Impella ECP, along with Otava in robotic surgery, are not yet fully reflected, as well as the fact that the separation of orthopedics will further lift our growth rates. So I think when you take into consideration all those factors, you are going to get into a similar conclusion of double-digit growth by the end of the decade. Further, I would say that the strong sales growth will also drive operating leverage that will be further amplified when the U.S. Darth Alex royalties roll off in 2029. So, taken together, this creates what some of you have called the cleanest growth story in healthcare. And we are going to be providing additional details in our enterprising review that will take place in December as we have announced today. BD, let me be clear, all these numbers do not include business development.
This is based in the strong portfolio pipeline that we have today that is largely the risk, which increases the confidence in our ability to get there. When it comes to business development, I mean, that remains an important part of our capital allocation. As a matter of fact, I would say we have been ahead of the curve in our investments in M&A with the acquisitions during the last two and a half years of Biomed, Showave, and Intracellular. As I have commented in multiple times, our sweet spot remains early stage deals like the one we did earlier this year with Halda Therapeutics, which brings a new platform in our oncology business. And at the same time, I have to say that given the situation that I just described, our priority from a capital allocation perspective, our priority is to invest behind our portfolio of new product launches and our promising pipeline program. So that's our priority today. We remain opportunistic from a business development standpoint, but we do not depend on M&A to be able to deliver on that promise.
So in summary, you know, we see both revenue growth and operating margins improving, and we reaffirm that we have line of sight to double-digit growth by the end of the decade.
Chris Schott (J.P. Morgan): Great. Thanks so much for the question and congrats on the progress. I just had a two-parter coming back to Icotide. Maybe the first one, you mentioned 1,500 prescriptions so far. Is there any color on where those customers are coming from as we think about new patients versus those switching off orals versus those switching off injectables? And then just on the bigger picture view of Icotide, as you mentioned, potential for the drug to become one of the company's largest ever. The pathway to get there, should we think about this as a similar dynamic to Tramfaya that skews more towards IBD versus psoriasis? Or is this one that could have more balanced sales by indication given, as you mentioned, the frontline potential of the drug in the psoriasis setting? Thank you.
Executive Name (Title): Hi, Chris. Thanks so much for the question. So in terms of the early information on Iketide, obviously it is really early, so we're still getting information in. I can tell you that there's a broad range of prescribers for icotide as we look across the medical community. We don't yet have data that is specific to exactly where that's coming from, what is exactly new, what they're switching off of, etc. So hopefully we'll have greater granularity on that you know, at our next call next quarter. So obviously it's pretty new and hot off the press. I think as we take a look at Iketide, Iketide is going to fit in psoriasis really firmly in that systemic first-line therapy area. And there's also a great opportunity there for market expansion. If you think there are so many patients that are cycling on topicals, they are resistant to moving into biologics for a number of reasons, whether it's needle phobia, perceptions around safety profile and things. We think not only given the size of the current systemic market and having significant impact there, but really being able to expand that broader is going to be key for ICTIDE success.
I also think when you think about IBD, and having an oral agent, we've got to see the studies pan out, but based on our goals there, we think that that's going to be a similar very, very large opportunity. I think here we're going to see maybe more of a balanced scenario given the strength that we really anticipate having in psoriasis, but I think both segments, both psoriatic disease and inflammatory bowel diseases are going to be very big, offer a lot of potential and promise for icotide. Yeah, Chris, maybe just one other comment on that is that across most autoimmune diseases, about 70% to 80% of patients who are eligible for a biologic are not taking one. And so that's why we really think about this market expansion opportunity to offer patients the convenience of a highly effective, very safe, once-a-day pill.
Shugun Singh (RBC Capital Markets): Thank you so much. I wanted to touch on some of your growth drivers within the medical device business. You know, Abiomed, Post-ACC, you know, some of our checks were suggesting that within the high-risk population, we could see up to a 30% reduction. How does that compare with your expectation? And it looks like the ideal space is looking to get increasingly more competitive. So, you know, how do you manage your market leadership position in that space? And then overall, as I think about all the drivers that you mentioned within medical devices, should we think about MedTech as a high single-digit growth contributor towards the double-digit growth that you've called out for total company by the end of the decade? Thanks for taking the question.
Executive Name (Title): Thank you for the question, and there's a lot in there. Let me try and unpack it. Firstly, we are really excited to be now significantly embedded in the cardiovascular space beyond the leadership position we hold in electrophysiology. And with the acquisitions of both Abiumed and Shockwave, we've added to high-growth, high-margin businesses with tremendous trajectory for the future. You know, Abiomed, as you know, grew 14, almost 15% in the first quarter. And this is really driven by rapid adoption of Impella 5.5 and CP. And what excites me most going forward is Abiomed's robust pipeline of not only technologies, but ongoing clinical studies showing the benefits of this technology. You will know that in August of last year, we saw new data from the danger shock randomized control trial published in the New England Journal of Medicine, and this really confirmed the long-term survival benefit of Impella. You know, these results found that up to 10 years, when compared to the standard of care, routine use of Impella in patients who had a STEMI heart attack with cardiogenic shock leads to an absolute mortality reduction of 16.3%.
And to put this in context, you know, when compared with the control arm in 10 years, Impella CP patients gained an average of 600 additional days alive. I mean, that is compelling. And so, you know, while you're always going to see new data and new studies come about, we believe that our evidence base for the products we have and the indications we have today are absolutely solid and will continue to drive performance in a category where we don't have line of sight to any significant competitor for the foreseeable future. I'll turn to Shockwave, 18.1% in the first quarter, and we're very pleased with that performance. You know, the IVL market is one we completely have created ourselves through the acquisition of Shockwave, and we continue to advance our leadership position. Now, clearly, competition is coming. Competition is going to come to any space that is attractive and certainly one as attractive as IVL. But there's three reasons that we have confidence in our portfolio and our future. And the first thing really is our portfolio. The second is evidence. And it's our presence.
And over the past seven years, we've earned the reputation of an innovative disruptor, launching nine new coronary and peripheral catheters that have introduced a new standard of care when it comes to safely and effectively treating calcified lesions. And as a result, shockwave IVL has become the preferred treatment strategy in most calcium cases worldwide, where it has been used in now more than a million cases around the world. And global expansion has also increased since the acquisition, as we have transitioned 10 markets to direct sales forces. We've expanded our presence to now cover 70 markets globally with J&J representatives, where we can leverage our scale and the broader J&J organization to drive government relations and address any legal and market access opportunities. And, you know, while we will never take any competitor for granted, new competitive entrants into the IVL market validate, really, Shockwave's robust portfolio in legion-specific solutions. You know, while competitors are introducing similar versions to our first-generation products from 2017, we're introducing our fifth-generation coronary and peripheral devices in 2026.
And, you know, a single catheter offering will be difficult to compete against Shockwave's portfolio strategy and the improvements we've made over the years to reset the standard of IVL. And while new competitors are completing their first regulatory-required clinical studies, we're continuing to invest millions in robust real-world clinical evidence, with nearly 25,000 patient outcomes published across 600 journals to date, demonstrating our unique safety profile exclusively associated with Shockwave's ultrasonic acoustic platform. And what physicians also appreciate is our compact, easy-to-use, and rechargeable generators, which require minimal capital expenditure. And back to the point of presence, these generators provide widespread access to Shockwave's IVL technology, and they're available in almost every cath lab across the United States, and we actually have more than two generators in over 1,700 U.S. hospitals, and so very difficult for competitors to unseat us.
Most importantly, I'd say is we remain hyper-focused on continuing to earn our innovative disruptor reputation with plans to launch at least one new IVL catheter per year that we expect will redefine the future of IVL in new indications and new disease states. And this year, we will launch our C2 arrow new coronary catheter, which from the early feedback we've got from physicians is going to be another standout product. I think to your final point around long-term prospects, we're excited about our growth profile and the catalysts we have to continue to accelerate medtech from a mid-single digit player into a higher single digit player as we move towards the end of the decade. You know, I will point to some big catalysts, especially in our surgery business. Surgery is one of our larger portfolios. We are a dominant leader both in the open and laparoscopic space. And we have an expectation to play a big role in the robotics space. As you know, we've submitted OTAVA for approval. And assuming everything plays out, we expect that by the end of this year, we will be launching not one, but two new surgical robotic programs, both with OTAVA and Monarch for Urology.
Now, while we don't expect those programs to be significantly accretive to growth in the short term, they certainly will be accretive as we move to the back half of the decade. So another good example of an important catalyst that will take us from a mid-single-digit player into a higher single-digit player as we look to the back half of the decade.
Alexandria Hammond (Wolf Research): Good morning, and thanks for taking the question. A few more on icotides. Can you walk us through the investments you guys are making on prescriber and patient education? And how important do you think advertising will be to kind of engage those new patients who might be nervous to start on a systemic therapy? And then just as a follow-up as well, with Iconic Ascend trial set to read out imminently, how important could this result be to those ongoing commercial discussions? Thank you.
Executive Name (Title): The study you mentioned in the head-to-head against the TIK2 inhibitor is, I think, just illustrates the best in disease profile for Icotide in terms of having both that high-level efficacy combined with safety in the once-a-day pill. How much the direct-to-consumer is going to matter? I'm going to let Jennifer answer that question.
Jennifer (Title): Hi, Alex. It's safe to say that we are investing big in Icotide to make sure that this brand can do all that it can do for patients. I think that the ease and the simplicity, when you combine the clinical profile, the safety, the efficacy, and then the ease of the product, we really believe that we've got a winner. And so we're investing to really get off to a very strong launch that's with all of the appropriate field teams. Additionally, we've invested and built out what we believe are really best-in-class patient access and support services to help patients get on the medicine both get on and be able to stay on. And then we're continuing to evaluate the best way to make sure that both the clinicians, all the appropriate health care providers, and patients are aware of this important offering. So probably more to come on that, but please know that we're investing what we believe we're investing to win in this area.
Joanne Wench (Citibank): Good morning. Thanks for taking the question, and very nice start to the year. I'm going to pause for a moment on the ophthalmology franchise, in particular your views on the U.S. surgical and U.S. contact lens markets. I'm curious in particular about the almost 3% decline in U.S. surgical in the quarter and how to think about that recovery throughout the remainder of the year. Thank you.
Executive Name (Title): Joanne, thank you for the question. Vision overall delivered a solid first quarter with sales growth of 3.6%, which is really consistent with our expectations. You'll recall that business tends to be slower in the first couple quarters and then accelerate throughout the year. We've seen that over the last couple and certainly 2025 was no exception. Keep in mind that Q1 is typically our lowest quarter and we're confident that we will see acceleration through the remainder of the year. If you break it down into the two component businesses, contact lens grew 2.7%, driven by the AccuAce's one-day family, and especially, as you heard earlier from Joaquin, the max multifocal products. And these latest launches really complete our family of daily disposables and are solidifying our leadership in the category with exceptional comfort, clarity and stability. And when I look to surgical vision, we grew 6% driven by normal seasonality. We continue to see strong global momentum in premium IOLs led by Technus, Odyssey, and Piercy, where we're outpacing the market globally. And this premium segment remains a key driver of value and differentiation.
I think to your pointed question on U.S. performance, you know, if we look at surgical vision growth in the quarter, it was offset in the U.S. due to competitive pressures as new entrants came into the market, which is not unexpected given the fierce nature of this portfolio. We also continue to expect some seasonality in our business as growth won't always be linear. That said, we remain confident in our clinical position with Technus Odyssey and as we prepare for the launch of Technus Pure C in the U.S. later this year. And, you know, we have seen extremely strong uptake of Technus Pure C globally, nearly half. It's actually almost half a million eyes worldwide have already experienced the clearer, uninterrupted vision with this premium IOL. And Technus Piercy, which received FDA approval, this quarter is the first and only U.S. FDA-approved extended depth of focus IOL with no warning on loss of contrast sensitivity, which is a huge game-changer for physicians and the comfort they have in recommending an IOL. In fact, 97% of patients reported no bothersome visual disturbances like halos or glares, which can often occur with other AIOLs.
And we're really excited about the launch of Peercy here in the US, which will give surgeons an important new lens option for their patients. As we continue to focus on the premiumization of our portfolio, we firmly believe that the combination of Technus Odyssey, which is in the market, and now Technus Piercy will be a key driver of value and differentiation. On the back of this, we can confidently say that we expect accelerated growth in the back half of the year for our surgical vision business and vision overall, including here in the U.S.
David Reisinger (Learning Partners): Yes, thanks so much. So my question is on JNJ4804, the co-antibody. Could you talk about your vision for its role in IBD treatment paradigms and the readouts that we should be focused on? And then since others have asked multiple questions, Joe, could you just share a the M of A sales like you did in the first quarter for Inlexo. Thank you.
Executive Name (Title): Yeah, thanks for the question about 4804. So just to remind the audience, this is our co-antibody therapeutic that combines Gucelcomab, our IL-23 inhibitor, also known as Trampia, together with our TNF inhibitor, Golimumab. And we are in a position to potentially be the first with a co-antibody therapeutic in the IBD space. Now, even with the best of therapies, more than half of patients with IBD do not achieve a complete remission. And so we see for patients where monotherapy is not getting the job done, then offer this dual therapy, the combined therapy as a fixed dose combination. So the Phase II data on that in both Crohn's and colitis, so we're two separate studies, will be presented in the coming year at a medical conference. So you'll have an opportunity to see the details of the data there, and that will provide more insights into the specifics around the most ideal patient populations for this kind of co-antibody therapeutic approach. But we're really excited to move this forward now with PACE. The phase three programs are underway and really excited to then try to break through these efficacy ceilings that have limited how many of these patients who battle with inflammatory bowel disease are able to achieve a complete remission and really get that mucosal healing from their therapy. David, thanks for the extra question there. We actually don't disclose the MRV sales at this point in time, so more to come on that.
Matt Mixick (Barclays): Oh, great. Thanks so much for squeezing me in, and congrats again on a really impressive quarter and start to the year. So you mentioned in Lexo a couple of times, and I know you've talked at length about it in the past. Just wondering if you could give us a sense of what the commercialization plan and rollout looks like for that, given it's a slightly different delivery mechanism than many of your other therapeutics and kind of where you are with that, any metrics you can provide would be great. And thanks again.
Executive Name (Title): Sure, thanks good morning. So maybe
as a reminder, you know, despite recent advances in bladder cancers unmet need in that area really remains significant and this is for bladder sparing options there's almost 600,000 new patients.
Quarter 2
Q4 2025 Earnings Call — January 21, 2026
Asad Haider (Goldman Sachs): Congrats on the quarter, and thanks for taking the question. Joaquin, maybe just a big-picture question for you. You're entering this year in a clear position of strength, following what's been one of the best performance years for the stock in about 20 years. You've had momentum in both business segments. You're generating tremendous free cash flow, and that you're saying is going to continue to elevate. And you've now started to talk more about double-digit revenue growth by the latter part of the decade, although street consensus is currently modeling something in the 6% range. If you could just maybe double-click a little bit more on what the key levers are to bridge to that double-digit growth profile from where we sit today, particularly in the context of the current revenue base that's now approaching $100 billion and remains sizable through the end of the decade, even with the ortho spin. And I guess what we're really trying to understand is how much of that acceleration comes from the organic pipeline versus acquisitions versus portfolio pruning. And I guess related, what innings are we in of the strategic repositioning away from lower growth segments like you're doing with ortho towards higher growth segments? Thank you.
Joaquin (Executive): Thank you. Great question. And sure, I mean, we come out of a really successful 2025, leaving the Stellara biosimilars in the rearview mirror and initiating a cycle of accelerated growth for Johnson & Johnson. And you have seen that we have provided guideline guidance for 2026, which is strong and ahead of expectations. As I said before, we have line of sight to double-digit growth in the later part of the decade, which is especially remarkable for a company that, according to our guidance, would be $100 billion in sales in 2026. So what are the reasons to believe? The reasons to believe are focused on the strength of our portfolio and pipeline. Let me take you through the six areas of focus that we are investing into the future.
Let me start with oncology. Our ambition with oncology is to become the number one oncology company, reaching $50 billion by the end of the decade, sustained by our success in multiple myeloma and also in solid tumors with lung cancer, prostate cancer, and bladder cancer. We are very confident on our progress there in our pipeline, and I'm sure we'll have some time to discuss that later in the call.
In our second area in innovative medicine, which is immunology, we are focusing on three major blockbusters. One is Trenfaya, which has been very successful in IBD. You have seen the growth in the fourth quarter, you know, really spectacular, 65%. Trenfalla and IBD launch is doing really well. And
as a reminder, in the case of Stellara, IBD was 75% of the sales.
So there's significant growth for Trenfalla ahead of us. We see Trenfalla more than a $10 billion asset. The second one is IcoTide. IcoTide is the trademark of Icotroquinra, our oral IL-23 blocker. We see the oral IL-23 blocker expanding the market, becoming a new blockbuster for us. We expect to have the launch of Icotide in 2026, initially in psoriasis. This is going to be a transformational change for the treatment of these diseases, and we plan to continue to develop Icotide 2 in IBD, in inflammatory bowel disease. And finally, the third blockbuster in which we will see data this year is our co-antibody therapeutic for patients that are refractory to biologics. I think that's a great solution for these patients. Many of them relapse.
So three major blockbusters in immunology, which are largely de-risked. Some of them are a proof file, or you're going to see data very, very soon. To end in innovative medicine, we are very encouraged by the progress of Spravato, more than 60% growth, and also the very successful launch of Caplita in adjunctive treatment of major depressive disorder. We're seeing the first data coming in, very, very encouraging. We see Caplita as we discussed, as additive to our growth, more than a $5 billion business. So all positives in our innovative medicine group clearly driving this line of sight to double-digit growth by the end of the decade.
If I move to our medtech business, our cardiovascular sector, very strong growth in 2025. Double digit growth is reaching $9 billion. It's one of the largest cardiovascular franchises in the industry. We are in three major markets, which are specialty markets with high growth. Cardiac ablation, where we are the leaders and we plan to expand our leadership in PFA with a launch of a new catheter every year, a new cartoversions. Tim will explain later. Our strong position both with a biomed and shockwave in heart recovery and in calcified arterial disease. So that's going to be a growth driver for us into the rest of the decade.
In surgery, we have had strong results both in wound closure and in biosurgery, which are high single digit in both areas. We just filed for Otava, which is going to make us a relevant player in the surgery robotics market, which is an area in which we have all the right to compete. Let me remind all of you that we are in all hospitals in the world and we already participate in all surgeries and we plan to be a relevant player in robotic surgery with Otava and also with the launch of Monarch in urology, in which we are going to have a unique position.
Then finally, in vision, you see our results in vision. It's a market with growth. We're gaining share and it's an area of innovation in which we plan to invest. So, you know, we have about a dozen new product launches for the company. Some of them are already approved, most of them submitted. So I would say that in that sense is essentially what I would call the risk. And some of you have called our story of growth in the second half of the decade as one of the cleanest stories of growth for the healthcare sector, for the healthcare entire sector overall. So we feel very confident about our outlook is reflected in our guidance for 2026, and I can assure you that everybody here at Johnson & Johnson is focused on doing exactly what we do best, which is looking for innovation in medicines and medical technologies to improve the standard of care of the millions of patients that we serve, and we are convinced that will translate in strong business results. Thank you.
Larry Beagleson (Wells Fargo): Good morning. Thanks for taking the question, and I'll echo my congratulations on a nice end to the year here. So, Tim, there's some dynamics in the MedTech market that you called out in the slides, as well as the loss of coverage in the U.S. from the enhanced subsidies expiring. How are you thinking about the MedTech market in 2026 relative to 2025? And how are you thinking about J&J's adjusted operational growth in 26 versus 25? Do you expect an acceleration? And it would be helpful if you could touch upon the outlook for your EP business, which is growing below market. Thank you.
Tim (Executive): Larry, thank you for the question. Let me touch quickly on the first question around ACA subsidies and put that one to bed. Firstly, you know, based on what we know today, we do not expect the loss of ACA subsidies or any potential policy changes under the big, the one big beautiful bill to have a material impact on our MedTech performance. And, you know, while we'll continue to monitor how coverage dynamics evolve, at this stage, we see no indication of an impact on our growth trajectory. You know, the primary constraint, as you know, Larry, in our business is really more about clinical capacity, not coverage levels, and procedure demands remain very robust across our portfolio, which I think really speaks to the resilience of the businesses that we've decided to participate in.
You know, turning to your question about the year, we do expect to see acceleration. We expect the year to be better in 2026 than it was in 25. And, you know, I think it's important to maybe head to this question on really our strategy. And I think you know for the last couple of years we've been very clear in articulating our strategy focused on shifting our portfolio into higher innovation, higher growth, and higher margin markets. As you just heard from Joaquin, we have deliberately chosen to focus on our three focus areas of CV, surgery, and vision. And I think our results, Larry, speak for themselves. Our strategy is working. We said we would accelerate our performance in the back half of 25, and we did exactly that, beating consensus for the third consecutive quarter.
And what we're most proud of, Larry, is that we saw acceleration across the board. As you heard from Joaquin, cardiovascular, now one of our largest businesses at $9 billion, grew 15.2% operationally in 2025, driven by success of Abbott and Shockwave, both double-digit growers, and increasing performance in EP, which I'll touch on a little later. Vision, strong, mid to high single-digit performer, double-digit growth in surgical vision. And, of course, we couldn't be more excited by the growth opportunity that will come with OTAVA as we look to commercialize that first in the U.S., hopefully this year.
We've also seen continued improvement of ortho. You would have expected maybe some distraction as a result of the announcement we made. We've seen exactly the opposite with sequential growth during the quarter and 3.5% in Q4. And so I'll finally reinforce, Larry, that our portfolio transformation is working. You know, if you look at the $34 billion business today, we have roughly half of our assets participating in higher growth markets, growing north of 5%. That's compared to about 20% in 2018. And this will catapult to north of 70% following the ortho separation. And so as a result, we believe, frankly, that our best days are ahead, and we remain very confident in our ability to drive accelerated operational growth as we further push into higher areas of innovation, growth, and margins.
Let me touch quickly on EP, because I think that was another part of your question. You know, the results speak for themselves, and they're speaking loud and clear. We're seeing continued acceleration in the markets that matter most, especially here in the U.S. and in Europe. You will have seen that in the fourth quarter, our growth accelerated to 9.5 percent. We're on the cusp of, once again, double-digit growth here in the United States, which is by far and away the most important market. We're seeing this driven by the success of Verapulse, more than 40,000 cases today, Larry, with a benchmark safety profile. As you heard from Joaquin, we've made a commitment to an additional catheter each year for the foreseeable future, starting with dual energy STSF, followed by OmniPulse, which is a large to focal catheter. And we're also doubling down on our leadership position in mapping. And we now see really customers shifting back to Cardo based on the integration we have across our portfolio.
And just to put a point on this, Larry, you know, for example, our CARDO3 system is widely recognized as the industry benchmark in mapping. In fact, in a recent study, it found that patients treated with PFA devices, whether that be ours or the competitions using CARDO, were 61% less likely to experience afeb-related readmissions, which I think further reinforces the competitive advantage we have in this portfolio. I've said this before, Larry, and I'll end by saying that we are not rolling over. J&J's strength lies in our comprehensive portfolio of integrated EP solutions, mapping, ablation, and cardiac imaging technologies, combined with our best-in-class mappers. And we remain resolute and confident that our deep EP expertise, earned over 30 years, and our robust pipeline position us well to continue to drive global leadership in this important space. Thanks, Larry.
Chris Schott (JPMorgan Chase & Company): Hi, great. Thanks so much, and congrats on the results. Joe, can you just elaborate a little bit more on how to think about margin progression over time at J&J? You've obviously highlighted the potential for accelerating top-line growth over the next several years. Should we think about that higher level of top-line growth being associated with greater margin expansion? Or is this kind of 50 basis point year type improvement that you're seeing this year a reasonable proxy to think about margin expansion for J&J over time? Thank you.
Joe (Executive): Yeah, good morning, Chris. Thanks for the question. Yeah, it's a great question. As we look at the margin expansion, the idea would be to continue to improve our infrastructure. What gives me confidence with respect to 2026 is outlook of at least the 50 basis points is, as you know, with the orthopedic separation, much like we did with the consumer health separation, we're going to take this opportunity to look and see where there's areas of opportunity efficiency to eliminate stranded costs. While that will probably need to be in place for 2027, we're going to get a jump start on that in 2026.
There's also, as you know from recent calls, efforts underway to improve our operating margins, our gross margins specifically, in our manufacturing footprint, largely in the med tech space. And then lastly, while we will have continued Stellara erosion, it'll be off a smaller base, so that will have less of an impact going forward. And so I wouldn't want to give you a longer-term outlook. What I can say is I'll harken back to our last investor day where we said that earnings would be commensurate with sales growth, so you can expect that the margin profile will improve in conjunction with the sales growth profile as we move out to the next couple of years and to the back half of this decade. Thank you.
Joanne Wunsch (Citibank): Good morning. Thank you for taking the question, and I'll add my congrats on the good quarter. I just want to spend a minute or two talking about vision care. You highlighted that as one of the three growth areas in medical technology. It looks like in your surgical business, it was a little bit slower during the quarter in the United States versus what we saw outside the United States. If you could tease that apart a little bit and your views on the health of the contact lens market would be really welcome. Thanks again.
Executive: Well, Joanne, thank you for your note. And once again, we have doubled down and really focusing on vision as one of our three priority areas within MedTech. And, you know, as you highlighted, a strong fourth quarter growth of just under 7 percent, strong underlying performance within our contact lens category. While we did see a little softness, Joanne, in Asia Pacific, underlying demand is robust, and we saw tremendous growth at roughly 5.3 percent with share gains, driven by the continued rollout of our AccuView Oasis one-day family, which I think you probably know that we've added to with the addition of a product focused on multifocal astigmatism, an only product or only daily disposable available for patients suffering with both presbyopia and astigmatism, and so we believe that's going to be a nice growth driver for the future.
You know, turning to surgical vision, growth, of course, to 11% in the quarter, and that's all driven by our doubling down of our focus on premium intraocular lenses, both with Technus Odyssey launch here in the U.S. last year and Piercy more broadly globally. As you look to 2026, we're going to be further enhancing that performance by building out the portfolio specifically with the launch of Piercy here in the United States. You know, you touched on our fourth quarter performance. Underlying performance of our premium IOLs here in the U.S. was outstanding. We did see that offset somewhat by some ongoing market declines in some of the legacy categories which we're working to address, but we're confident that our surgical vision business can continue to be a strong double-digit grow for the foreseeable future.
A couple other areas I'll focus on here is that we are expanding global market share, both in contact lenses and surgical vision, not just winning here in the United States, but more important, globally. We're focusing very much on portfolio optimization, and I do think the ortho separation enables greater capital allocation to vision, supporting both R&D, commercial execution, and digital transformation. And so we're thrilled with the continued improvement in surgical vision and have great confidence in that continuing. Thank you.
Terrence Flynn (Morgan Stanley): Great. Thanks for taking the question. Appreciate it. Congrats on the quarter. Obviously, multiple myeloma is another one of your key growth drivers here. I was wondering, post a lot of the earlier stage data, earlier line data we've seen for Tech Valley, if you could speak to how you're thinking about positioning here of that franchise relative to Carvicti. And then the related question is, I know FDA published some final guidance regarding the MRD negativity and CR's endpoint. So just thinking about how you might implement that across your development portfolio and what that could mean for timelines. Thank you.
Executive: Thanks for the question, Terrence, and good morning, everyone. Yeah, for multiple myeloma, we were absolutely thrilled with the data that we saw for Tecvalli plus Darzalex in the second line plus setting, as well as most recently the Tecvalli data in patients who were refractory to anti-CD38 and lenalidomide therapy. And maybe if I take a step back, you know, over the past 20 years, J&J therapies have dramatically improved survival for people with multiple myeloma, you know, from three to five-year survival rates to 10 to 15 years now or more. Yet, you know, despite these advances, multiple myeloma is still a complex disease, a heterogeneous disease, and about 40% of patients are currently in the second-line and third-line settings.
So, how do all of these agents fit and why do we see that this is such an extraordinary opportunity? Well, first, if we start off with the TEC-DARA information, plus TEC-9 and CARVICTI, together they really provide highly effective agents that allow treatment that's tailored to the treatment goals, the patient setting, access, the patient status, and the prior therapy. So there's a number of things that get taken into account. So we start off with TEC plus DERA. This is really community ready therapy that's proven an unprecedented efficacy rate in the second line plus setting. The hazard ratio was .17. And so this is for patients who are CD38 naive or are CD38 experienced. And this is about 70% of the population in that second line and third line setting.
If you take a look at TEC-DARA, the data, again, extraordinarily impressive, 71% reduction in the risk of disease progression, 40% reduction in overall survival. And this is for patients who are refractory to anti-CD38 therapy and lenalidomide therapies. And so you can see the 70% TACDARA and then the 30% for the TAC9 data. And then when you bring CARVICTI in, CAR-VICTI is really the most successful CAR-T therapy. We just announced we're over 10,000 patients who've been infused with this, and this is a single-dose therapy with really a tremendous shot at what we would count as cure. And we're the only CAR T therapy that's got that superior overall survival versus the standard of care.
And so really when you take a look at what the goals are for that patient, what their prior lines of therapy would be and what the practice setting is, J&J now has an option for really every one of those patients in that second line, third line setting. So we see a lot of growth potential ahead for these agents as well as Darzalex in the front line setting. Yeah, maybe to get into your MRD, but first just to supplement a little bit, I'd also note that the Tech Bailey regimens, whether it's monotherapy in CD38 refractory patients or the combo with Darzalex in patients who are CD38 naive or have been exposed but still remain sensitive. These are dexamethasone-free regimens, which means the patients aren't on high-dose steroids, which really is an improvement on quality of life.
The other thing I wanted to note is that the FDA, in fact, was so impressed with our Majestic 3 data that, unsolicited, they contacted us and offered a priority review voucher to accelerate bringing this new regimen to patients. Really excited with that recent interaction with the FDA. Indeed, on MRD, that is exciting for us. Last year, there was an ODAC that endorsed that concept of using these biomarker, if you will, approach to finding those rare residual malignant cells. Much of the evidence behind that, frankly, was pioneered by J&J over the years. So we're excited that that is an option. We are mindful, however, that it's only an option in the United States. So we, at this point, will still have to deliver progression-free and overall survival data for other territories. So I suspect that will continue to be an element of our protocols. But, indeed, we will be speaking with the agents to be on opportunities to accelerate some of our development.
And in that regard, I think a place where this could be particularly apropos is with our new tri-specific antibody for myeloma, romantamig, which brings the features of both Teq and Tal into a single molecule with unprecedented efficacy, improved tolerability as well, fewer, for example, of the taste effects that you might see with TALVI, less weight loss, et cetera, really improved tolerability, and then great convenience that makes it apropos for the community setting with only one step-up dose and Q4 week for monthly dosing. Really excited about the pilot data. We're seeing a newly diagnosed myeloma in combination with DARA with that tri-specific, and that could be a really apropos place to discuss with the FDA using MRD negativity. Thank you.
Danielle Antofi (UBS): Hey, good morning, guys. Thanks so much for taking the question. I'll echo everyone's strong end to the year and happy new year. Just a question on this move to higher growth and markets. Appreciate that you've done a lot of and are doing a lot of portfolio pruning now. You mentioned the 70% in a few years here. I mean, ultimately, I guess it's two parts. Do you see that 70% moving higher or do you think that's like sort of the aspirational peak? That's the first part. And the second part is what are some other growth markets, whether it's in innovative medicines or med tech, where you guys are participating today that you see to participate over that timeframe, whether it's via organic or inorganic moves. Thanks so much for taking the question.
Executive: Danielle, thank you. I mean, our aspiration is not to put a limit on the high growth markets in which we participate. And I think we can conservatively say that once we separate ortho, we'll be at least at 70%. And there is tremendous opportunity even just focused within the three business units we've decided to focus on within MedTech, both in cardiovascular, in surgery, and in vision. I think we've built your confidence around cardiovascular continuing to be a strong double-digit grower. Surgery, one of our profitable businesses where we maintain leadership positions both in contact lens and surgical vision. We believe it's going to be a strong middle to high single-digit grower.
And then surgery is the major opportunity to really catapult our growth, and that comes down to our belief in Otava. As you heard from Joaquin, we are absolutely resolute in our commitment to play a bigger role beyond open and laparoscopic surgery in robotics with Otava. And what we are most confident about is that we have something that is unique and different and something that surgeons and health system CEOs tell us every day that they need. While we're excited by the recent milestone and the submission for approval, we're just getting started.
What really highlights the fact that this is different is you'll recall that this is a very different regulatory pathway we chose. This is a de novo pathway. The reason we chose that pathway is that there is no predicate device, nothing that can be compared against. This is a novel platform where there's no reference or predicate device. You know, that coupled with the fact that we're going after the U.S. should further reinforce our confidence in the fact that we believe we have something that is really different. Now, we're not stopping just in the U.S. We're building our submissions in a parallel path fashion outside of the U.S. with a focus on Japan and some select U.S. markets.
And you will have recalled from the announcement we made two weeks ago, we're also already expanding into our next IDE clinical study in the lower abdomen. And so make no mistake that we believe that we can and will be a formidable player in surgical robotics. We don't take the current incumbent for granted by any means, but we do think that presence we have in open laparoscopic and soon-to-be robotic surgery give us a right to play and a tremendous opportunity to drive to those high levels of growth that we've committed in the back half of the decade.
And then in innovative medicine, we are looking to expand in a number of really exciting areas. Right now where we've got clinical work already underway. And so to give maybe a few examples, ribavand in head and neck cancer and colorectal cancer, which is clinical trials underway. AMAVE, which we haven't spoken about yet today, but areas such as Sjogren's disease and SLE, lupus, areas of really high unmet medical need. Atopic dermatitis, of which we made a number of key acquisitions and licensing at the end of 2024 that give us a stable of assets there that we're working towards. B-cell malignancies with our bicar that's in development. and even milvexian that we're developing in partnership with Bristol-Myers Squibb and that we're very, very excited about for atrial fibrillation and secondary stroke prevention. So a number of additional really key diseases that could be growth drivers for us in the future.
Vamo Devan (Prudenheim Security): Great. Thank you so much for taking the questions. I just want to ask on Nlexo, it's a couple questions here. We just want any sort of initial feedback you can share with us in terms of the initial launch and what doctors and patients are saying. Is there any update on when you expect to get a permanent J-code? And then finally, I see you listed Sunrise 5 data and potential submission on your events list for 2026. So that's good to see. I'm curious if you can just talk about how that data and how that might impact the addressable population for the product. And then tied to that, Sunrise 3 I thought might come this year. You didn't include that one on the list. Just curious if there's any update on time you're going, we might see data from Sunrise 3. Thanks.
Executive: Great. Thanks so much for the question on Elexo. So we are really pleased with the launch and what we're seeing in terms of interest and receptivity by both urologists as well as the patients who've had application of the device. As you recall, we've really launched into the BCG unresponsive population. And as you noted, we're actually looking to further expand that through Sunrise 5, the BCG experience, and then Sunrise 3 population, the BCG naive population. So, so far the interest and enthusiasm on this has been really, really robust.
We are anticipating the permanent J code at the beginning of the second quarter, sort of in that April timeframe, which we think is going to be a really nice catalyst for utilization and so we do continue to believe strongly that this is one of our five billion dollar plus assets and really look forward to getting that permanent J code in the second quarter.
John, you want to talk about?
John (Executive): Yeah, just you know, we're making great progress with this lead product in Lexo. But I would also remind that we see a whole series of innovative products where we use these devices in the bladder to deliver different payloads. The next one on deck is containing ertifitinib. That's the same targeted therapy that is currently marketed as Valversa for metastatic bladder cancer, but here delivered through a unique device, a customized device. It's not the same one as in Lexo, but works in much the same way to deliver that targeted therapy. There we are focusing on the so-called intermediate risk population, whereas in Lexo is targeted for the high-risk population.
So this broadens our coverage of patients with bladder cancer. And just to remind people that localized bladder cancer represents about 600,000 new cases per year and another 400,000 cases annually of patients who've relapsed and are looking for a solution that would allow them to save their bladder. So it's about a million patients a year between in Lexo and now TAR210, the ertifitinib-carrying device. We'll be able to really address a very large percentage of these patients with these bladder-sparing technologies. With TAR210, the success rate we've been seeing with complete responses has been north of 90%. And so we're super excited about that and there'll be other devices with different payloads to come over time. So we see this as a platform that will address this incredible unmet need and that will be a big growth driver for J&J.
I would finally close by just giving a shout out to our colleagues in MedTech because this is just a wonderful example of how innovative medicines and MedTech can come together, bringing devices and drugs together in an unprecedented way.