Johnson & Johnson (JNJ) Q2 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
Johnson & Johnson's earnings call highlights strong growth in key areas like Oncology and MedTech, with promising future targets and new product launches. Despite concerns about STELARA, the company has shown resilience with its diversified portfolio. The acquisition of Intra-Cellular Therapies and a $55 billion investment plan further bolster their position. While some guidance was unclear, the overall outlook remains optimistic, supported by robust sales growth across multiple segments. The positive sentiment outweighs any uncertainties, suggesting a likely stock price increase in the near term.
Key Financial Performance
Worldwide Sales $23.7 billion for Q2 2025, increased by 4.6% year-over-year. Growth was driven by strong performance in Innovative Medicine and MedTech, despite a 710 basis point headwind from STELARA.
Net Earnings $5.5 billion for Q2 2025, with diluted earnings per share of $2.29, compared to $1.93 a year ago. The increase was driven by operational improvements and favorable foreign currency dynamics.
Adjusted Net Earnings $6.7 billion for Q2 2025, with adjusted diluted earnings per share of $2.77, representing a decrease of 2.1% and 1.8%, respectively, compared to Q2 2024. The decrease was due to interest from incremental debt and GP erosion from STELARA.
Innovative Medicine Sales $15.2 billion for Q2 2025, increased by 3.8% year-over-year. Growth was driven by strong performance in Oncology, Immunology, and Neuroscience, despite a 1,170 basis point headwind from STELARA.
MedTech Sales $8.5 billion for Q2 2025, increased by 6.1% year-over-year. Growth was driven by strong performance in Cardiovascular, Surgery, and Vision, with acquisitions like Shockwave contributing positively.
Oncology Sales Growth 22.3% operational sales growth in Q2 2025. Growth was driven by strong performance in multiple myeloma treatments, lung cancer therapies, and prostate cancer drugs.
TREMFYA Sales Growth 30.1% growth in Q2 2025, driven by share gains and strong uptake in inflammatory bowel disease indications.
SPRAVATO Sales Growth 53% growth in Q2 2025, driven by strong demand for treatment of difficult-to-treat depression.
Electrophysiology Sales Growth 9.8% growth in Q2 2025, driven by new product performance and strength in mapping.
Abiomed Sales Growth 16.9% growth in Q2 2025, driven by strong adoption of Impella technology.
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Operating Highlights
CARVYKTI: Presented new 5-year data showing potential for long-term remission in multiple myeloma patients.
RYBREVANT plus LAZCLUZE: Projected overall survival of at least a year over the current standard of care in frontline non-small cell lung cancer with EGFR gene mutations.
TAR-200: Received FDA priority review for high-risk non-muscle invasive bladder cancer; expected to launch later this year with $5 billion annual peak sales potential.
TREMFYA: Expanded into inflammatory bowel disease; grew 30% in Q2 and expected to generate $10 billion annually in peak sales.
icotrokinra: Expected FDA filing in Q3 as the first targeted oral peptide for plaque psoriasis.
SPRAVATO: Grew 53% in Q2, demonstrating strong demand for difficult-to-treat depression.
CAPLYTA: Acquired through Intra-Cellular Therapies; expected approval for major depressive disorder later this year with $5 billion-plus peak sales potential.
Ethicon 4000 surgical stapler: Introduced to minimize surgical leaks and bleeding; will be used in the OTTAVA robotic surgery system.
OTTAVA robotic surgery system: Completed first clinical cases; FDA de novo approval submission planned for next year.
ACUVUE OASYS MAX 1-Day lenses: Released first disposable multifocal lenses for astigmatism, driving growth in Vision segment.
Oncology: Operational sales growth of 22.3% in Q2; aiming to become #1 oncology company by 2030 with $50 billion in sales.
Immunology: TREMFYA expanded into inflammatory bowel disease; icotrokinra filing expected in Q3.
Neuroscience: SPRAVATO grew 53%; CAPLYTA acquisition strengthens portfolio with $5 billion-plus potential in peak sales.
Cardiovascular: Delivered 22% operational sales growth in Q2; driven by new products like Abiomed and Shockwave.
Surgery: Introduced Ethicon 4000 stapler and advanced OTTAVA robotic surgery system.
Vision: Quarterly growth of 4.6%, driven by ACUVUE OASYS MAX lenses and TECNIS intraocular lenses.
Operational sales growth: 4.6% across the business in Q2, with 6.1% growth in MedTech and 3.8% in Innovative Medicine.
Cost management: Selling, marketing, and administrative expenses improved by 50 basis points due to corporate expense rationalization.
R&D investment: $3.5 billion invested in Q2, approximately 15% of sales.
Pipeline advancements: Focused on Oncology, Immunology, Neuroscience, Cardiovascular, Surgery, and Vision to drive growth.
Acquisitions: Completed acquisition of Intra-Cellular Therapies, adding CAPLYTA to Neuroscience portfolio.
Market leadership: Aiming to lead in Oncology, Neuroscience, and Cardiovascular by 2030.
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Risk or Challenges
Loss of exclusivity for STELARA: The company is experiencing a significant headwind from the loss of exclusivity for STELARA, which has led to a 43.2% decline in sales for the product. This is expected to accelerate throughout the year, impacting financial performance.
Biosimilar competition: STELARA's decline is driven by biosimilar competition, particularly outside the U.S., which is negatively impacting sales growth.
Macroeconomic factors in MedTech: MedTech margins have declined due to macroeconomic factors, including cost pressures and the impact of Value-Based Pricing (VBP) in China.
Interest expense and debt: The company has incurred higher interest expenses due to incremental debt from the Intra-Cellular acquisition, which has negatively impacted earnings.
Regulatory and litigation risks: The company faces ongoing talc litigation, with a Daubert hearing expected in the fall. This presents a legal and financial risk.
Part D redesign impact: The redesign of Medicare Part D has negatively impacted sales of certain products, including STELARA and long-acting injectables.
Competitive pressures in Surgery and Orthopedics: The Surgery and Orthopedics segments are facing competitive pressures, which have negatively impacted growth.
Tariff impacts on MedTech: Tariffs are expected to impact the MedTech business by approximately $200 million, creating additional cost pressures.
China VBP impact: Value-Based Pricing (VBP) in China has negatively affected the MedTech portfolio, particularly in Surgery.
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Guidance & Outlook
Full Year Sales Guidance: Johnson & Johnson raised its full-year sales guidance by $2 billion, now expecting operational sales growth of 4.5% to 5%, with a midpoint of $92.9 billion. Including currency impacts, reported sales growth is expected to be 5.1% to 5.6%, with a midpoint of $93.4 billion.
Earnings Per Share (EPS) Guidance: The company increased its adjusted EPS guidance by $0.25 to a range of $10.80 to $10.90, representing an 8.7% increase at the midpoint.
Oncology Growth Projections: Johnson & Johnson aims to become the #1 oncology company by 2030, targeting over $50 billion in sales. Key drivers include multiple myeloma treatments, lung cancer therapies, and the anticipated launch of TAR-200 for bladder cancer, expected to generate $5 billion in annual peak sales.
Immunology Growth Projections: TREMFYA, recently expanded into inflammatory bowel disease, is expected to generate at least $10 billion annually in peak sales. The company also plans to file icotrokinra with the FDA in Q3 2025, a once-daily pill for plaque psoriasis with potential to set a new treatment standard.
Neuroscience Growth Projections: Johnson & Johnson expects to be the #1 neuroscience company by the end of the decade. Key products include SPRAVATO, which grew 53% in Q2, and CAPLYTA, anticipated to generate $5 billion in peak sales. The company also expects major depressive disorder approval for CAPLYTA later this year.
MedTech Growth Projections: The MedTech segment is expected to see accelerated growth in the second half of 2025, driven by new product launches in Cardiovascular, Surgery, and Vision. Shockwave technology is projected to become a $13 billion platform by year-end.
Pipeline and Approvals: Anticipated approvals in 2025 include TAR-200 for bladder cancer, subcutaneous RYBREVANT for lung cancer, and TREMFYA for ulcerative colitis. Expected filings include icotrokinra for psoriasis and TREMFYA for psoriatic arthritis.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:What were the drivers of Johnson & Johnson's strong top-line performance despite the STELARA LOE?
A:The strong performance was driven by both the Innovative business and MedTech. Key contributors included robust growth in Oncology (e.g., DARZALEX, CARVYKTI, ERLEADA, RYBREVANT plus LAZCLUZE), Immunology (e.g., TREMFYA), and Neuroscience (e.g., SPRAVATO, CAPLYTA). MedTech saw 6.1% operational growth, with notable contributions from Cardiovascular (22% growth), Vision, and Surgery. The company also highlighted the launch of new products and approvals as catalysts for future growth.
Q:What is Johnson & Johnson's Oncology target by the end of the decade, and what are the key drivers?
A:The Oncology target is $50 billion by the end of the decade. Key drivers include DARZALEX, CARVYKTI, TECVAYLI, TALVEY, TAR-200 (for non-muscle invasive bladder cancer), and RYBREVANT plus LAZCLUZE (for lung cancer). The company also highlighted trispecific antibodies and advancements in prostate cancer treatments as significant contributors.
Q:What is the status of the RYBREVANT subcutaneous dosage approval?
A:The company has responded to the FDA's Complete Response Letter (CRL), which required addressing manufacturing-related questions. No additional clinical studies were needed, and the company is optimistic about approval in the second half of the year.
Q:What is Johnson & Johnson's outlook for MedTech growth?
A:MedTech achieved 6.1% operational growth in Q2, with strong performance in Cardiovascular (22% growth), Vision, and Surgery. The company expects continued acceleration in the second half of the year, driven by new product launches, easier year-over-year comparisons, and innovations in Cardiovascular (e.g., Abiomed, Shockwave, Impella), Vision (e.g., ACUVUE OASYS MAX), and Surgery (e.g., OTTAVA robotic system).
Q:What is the company's perspective on tariffs and their impact on manufacturing?
A:The company is committed to manufacturing all medicines consumed in the U.S. within the U.S. by the completion of its $55 billion investment plan over the next four years. They view recent tax policies as beneficial for creating American jobs and driving innovation.
Q:What is the status of the OTTAVA robotic system?
A:The OTTAVA robotic system is on track, with clinical trials initiated in Q1 2025 and a de novo submission expected in Q1 2026. The company emphasized its differentiation in robotics and digital environment.
Q:What is the company's strategy for TAR-200?
A:TAR-200 is targeted for non-muscle invasive bladder cancer, with plans to expand into broader indications. The company is leveraging its MedTech and Innovative Medicine expertise for launch planning, including urologist training and supply chain readiness.
Q:What is the company's outlook for MedTech growth in the long term?
A:The company expects MedTech to grow at 5%-7% operationally through 2027, with Cardiovascular and Surgery as key drivers. Vision is expected to grow mid-to-high single digits, and Orthopedics is targeted for improvement.
Q:What is the status of the co-antibody therapy 4804?
A:Phase IIb studies for Crohn's disease and ulcerative colitis are expected to read out in mid-2025. The therapy aims to break through efficacy ceilings in inflammatory bowel disease by combining IL-23 and TNF inhibitors.
Q:Review of Unclear Management Responses
A:Management avoided providing specific guidance on 2026 sales growth and operating margin improvement, citing uncertainties such as Part D redesign and tariffs. Additionally, they did not elaborate on the details of the TAR-200 launch strategy or provide a clear timeline for MedTech's long-term growth beyond 2027.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
CAPLYTA
CARVYKTI
Cardiovascular Vision
Corporate Participant
Day
Ethicon
Executive VP
Executive Vice
Immunology Neuroscience
Intra acquisition
LLC Research
Medicine MedTech
OASYS
OTTAVA
Odyssey TECNIS
Oncology Immunology
RYBREVANT LAZCLUZE
Research Division
Securities LLC
Today
depth
health care
indication treatment
legacy
product market
stage development
standard
strength mapping
treatment stage
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