A：The key topics covered in the Johnson & Johnson third quarter 2025 earnings conference call include business performance and growth drivers, operational sales results, a discussion on the planned separation of the orthopedics business, and an overview of cash position, capital allocation priorities, and intended business separation milestones.

A：Johnson & Johnson achieved operational sales growth across its business by delivering double-digit growth across 11 brands and remarkable growth in Tremfya and Metform, contributing to a stronger overall operational sales growth performance.

A：The planned separation of the orthopedics business is intended to sharpen Johnson & Johnson's focus as a healthcare innovation leader, accelerate the shift of its portfolio to areas of greatest need and higher growth, including cardiovascular and robotic surgery.

A：Johnson & Johnson's momentum has been reflected in its performance across various therapeutic areas, including oncology where Q3 operational sales grew nearly 20%, immunology where it has been a leader for 25 years, neuroscience, cardiovascular surgery, and vision, all of which show significant progress and growth.

A：In the oncology field, highlights for Johnson & Johnson include operational sales growth of nearly 20% in Q3, the unrivaled competitiveness in multiple myeloma with the approval of Daratumumab in Europe for high-risk smoldering multiple myeloma, and the successful launch of Carvive T, the most successful car T launch ever with operational sales growth by more than Ed this quarter.

A：The FDA approval for a bladder cancer treatment highlights Johnson & Johnson's capability in both innovative medicines and medical devices, as well as the potential for future growth with a targeted release platform projected to be another blockbuster treatment with at least $500 billion in annual peak year sales.

A：In the field of immunology, Johnson & Johnson has been leaders for 25 years, with operational sales growth driven by new indications in inflammatory bowel disease and the approval of a subcutaneous formulation of Tremfya, the only Il-3 inhibitor to offer a fully subcutaneous regimen.

A：In the cardiovascular portfolio, Johnson & Johnson has experienced operational sales growth of approximately 12%, with strong performance across various segments including atherosclerotic cardiovascular patients with shockwave technology, and electrophysiology with the mapping technology and success of the Impella CP heart pump.

A：Johnson & Johnson has been delivering groundbreaking innovation in surgery by making progress on multiple fronts with surgical technologies, continuing the positive progress with Otava, and growing the biosurgery and wound closure segments driven by the adoption of latest innovations.

A：The separation of the orthopedic business from Johnson & Johnson signifies a strategic move to allow the new, standalone orthopedics company to be the largest and most comprehensive in its field with greater flexibility to extend its market leadership and focus on profitable growth opportunities.

A：The business segments that experienced growth in the third quarter included innovative medicine, with sales growth of 5.3% due to continued strength of key brands and new launches despite stelara's impact; Medtech with worldwide sales growth of 5.6% driven by strong performance in cardiovascular surgery, vision, and other areas; and orthopedic business growth of 5.4%, with hips and knees returning to growth.

A：Currency translation had an impact on Johnson & Johnson's sales results, with an approximate 640 basis point headwind from stelara and an approximate 1070 basis point headwind from currency translation, which offset some of the sales growth.

A：The components of Johnson & Johnson's adjusted net earnings include adjusted diluted earnings per share of $2.80, which represents an increase compared to the third quarter of 2024. Adjustments are made to exclude the impact of intangible amortization and special items.

A：The recent acquisition of Cap Light, which was part of the intracellular acquisition, contributed to Johnson & Johnson's performance with sales of $240 million and reflecting healthy sequential growth of 13 percentage points in the third quarter.

A：The progress in the Daubert motions in the TAC litigation involves the judicial process to reevaluate the scientific basis of mass tort plaintiff's claims against Johnson & Johnson. The expected outcome is to secure favorable rulings on the motions by the first quarter of 2026.

A：The current strategy for capital allocation and acquisitions involves generating $9 billion in free cash flow, maintaining a strong balance sheet, and using the funds to invest in innovation and return capital to shareholders. Johnson & Johnson plans to remain disciplined, opportunistically pursuing strategic high-value opportunities that utilize their expertise and deliver an appropriate return for the risk taken. They do not intend to rely on large transactions to drive growth and will not engage in speculative acquisitions out of desperation.

A：The company does not expect any change to the Johnson & Johnson dividend and is mindful of the impact from stranded costs that are typically present in these types of transactions.

A：The company has increased operational sales guidance for the full year by approximately $300 million, with a projected range of 5% to 5.3% with a midpoint of $93.2 billion. Excluding the impact from acquisitions and divestitures, adjusted operational sales growth is expected to be in the range of 4.9% to 5.1%. Reported sales growth is now between 5.4% to 5.9% with a midpoint of $93.7 billion. The operating margin guide is an approximate improvement of 10 basis points for the full year. The projected net interest expense is between $250 million and $350 million of improvement, and the projected effective tax rate is in the range of 22% to 24% for the full year.

A：The expected adjusted earnings per share guidance has been reaffirmed at $10.85 with a range of $10.80 to $10.90, representing an 8.7% midpoint. The adjusted operational earnings per share guidance is now at $10.68, or 7% at the midpoint. The company also reiterates its elevated July earnings per share outlook, which includes the impact of the intercellular acquisition and higher tax rates.

A：In innovative medicine, the company anticipates FDA approval for subcutaneous ribocastane for non-small cell lung cancer and for ketana in adjunctive major depressive disorder. A label expansion for tremor in spondyloarthritis of the knee is planned, with data presentation for ribocastane in head and neck cancer at ESMO. In Medtech, progress is made with the clinical trial for the Otava robotic surgical system, and regulatory submissions are planned for the dual energy thermocool smart touch SF catheter for cardiac arrhythmia in the US. Additionally, the company plans to continue rolling out Acuvue aspheric for astigmatism.

A：The company's strategy for growth in innovative medicine includes continued progress from recently launched products and anticipating a script approval for ilora in psoriasis. In Medtech, the company expects accelerated growth off this year's levels, focusing on higher growth markets and the adoption of newer products across all Medtech platforms. They also anticipate the launch of new products like the Shockwave C.I. Aero coronary IVL catheter and the Ticon pure C intraocular lens in the US, along with regulatory submissions for the Otava robotic surgical system.

A：The company believes the current revenue consensus for 2026 is lower than their projection, which they expect to exceed Ed. Similarly, the adjusted earnings per share consensus of $10.43 is seen to have some upside, potentially as much as 5 cents. This commentary considers investments in new product launches and reflects an understanding of the legislative landscape, tariffs, foreign exchange rates, and procedural volumes.

A：The company is very confident in its ability to deliver accelerated growth despite challenges such as loss of exclusivity. They are focused on in-market brands and the continued progress from recently launched products. The company is anticipating script approval for ilora in psoriasis and accelerated growth in Medtech off this year's levels. They are also confident in their ability to manage the portfolio to position Johnson & Johnson to deliver breakthrough innovation. The company is optimistic about the future and looks forward to sharing further details regarding their guidance for 2026 during their Q4 earnings call in January.

A：The company's margins and growth may be influenced by the mix of the business, with high growth cardio surgical being relatively high margin, and the potential for vision to contribute more than anticipated. Future muted impact is expected as higher growth profile businesses and margin improvement initiatives under Tim's leadership will take a few years to realize.

A：The separation of the orthopedics business is a significant step towards focusing on higher growth markets and aligning with the company's commitment to continuous portfolio optimization and value creation. It is a strategic move to shrink in order to grow faster in the medical technology sector, emphasizing the importance of best-in-class performance over size.

A：The company views ongoing discussions with the administration as an opportunity to find common ground on important issues such as patient access to innovation, preventing foreign free riding on American innovation, maintaining leadership in life sciences, and investing in U.S. manufacturing to build middle-class jobs. Although no specific details are shared, the company remains optimistic and is working towards a resolution that benefits both the administration and the company.

A：The company's approach to foreign exchange considers the impact as a slight tailwind for both top-line and EPS growth. They assume that the effects of foreign exchange are already reflected in consensus forecasts. Similarly, the impact of the extra week is acknowledged as a lift across the board, but it is not factored into the reported or adjusted operational growth figures provided.

A：The company's strategy for capital allocation focuses on sustaining acceleration in innovative medicines and pushing medtech towards 5 to 7% EBIT targets. Key investment priorities include a robust pipeline and portfolio, major blockbuster product launches, and growth opportunities in both pharmaceuticals and medtech businesses. The company aims to fuel growth without needing large amounts of money, with a focus on small, impactful deals and investments that align with their scientific expertise and the potential to create significant value.

A：The growth drivers for the company's business include Darzalex, orli USS, bravado, carvic tea, and the strength in new launches, notably trephina in Crohn's disease and ultrasonic colitis with 40% growth.

A：The potential growth opportunity for Tresiba and Tregila is significant, especially in IBD (Inflammatory Bowel Diseases) as they are anticipating strong uptake with the subcutaneous induction dose, and 75% of stelara sales were in Crohn's and Ultram of colitis.

A：The company is optimistic about the future growth potential of Tresiba in treating patients with treatment-resistant depression and the potential expansion into new treatment centers.

A：The anticipated benefits of the subcutaneous dosage form include significant growth potential as a $5 billion plus asset, with the potential to address unmet patient needs in a more convenient and effective manner.

A：The future growth prospects for Joaquin and Alexa include anticipated launches and approvals for bladder cancer, with a view to becoming a $500 billion plus asset for Johnson Johnson. Also, new data is expected to be presented for psoriasis and ultra-rare colitis.

A：The company views the Medtech business with continued confidence and commitment to winning over the long-term, particularly in electrophysiology, where there has been a standout quarter with improvements in the US market. It also saw growth in the IOL category with significant share gains, and the business as a whole is bolstered by strong performance in various segments like wound closure and biosurgery.

A：The company expects to achieve higher levels of sales growth by continuing to improve upon the portfolio, which includes acquisitions that fortify the numbers. They also plan to address significant erosion with stelar, potential additional discounting in the innovative medicine portfolio, and continuing progress with electrophysiology and orthopedics businesses.

A：The significance of the phase II data for the anti-tau antibody is that it includes cognitive endpoints traditionally used for regulatory approval of medicines for Alzheimer's disease, along with important neuroimaging data looking at tau spread using Pet imaging. This data will be a decision-making point for the company.

A：The company expects to meet its expectations for the $2 billion plus product by 2028 through the initial launch in BCG (Bladder Cancer G) unresponsive, high-risk, non-muscle-invasive bladder cancer, demonstrating high complete response rates without the need for re-induction, and over half of responders remaining cancer-free at one year. They anticipate the J code for reimbursement come April of the following year, which will be a catalyst for uptake.

A：The company is conducting phase II studies to address the non-muscle invasive bladder cancer population that is considered high risk.

A：The neoadjuvant studies are expected to show a higher percentage of patients completely free of disease, evidenced by a pathological complete response, which is anticipated to lead to better outcomes for patients with muscle invasive bladder cancer.

A：The new device is anticipated to deliver a steady release of medicine for up to 12 months, offering sustained treatment benefits beyond the initial period and addressing the unmet need in bladder cancer.

A：The company plans to use the performance improvements in the orthopedic business to enhance its competitive position and to contribute to the overall sequential improvements across all businesses.

A：The key focus areas for the company moving forward are vision, cardiovascular, and robotic surgery, with a particular emphasis on advancing the Otava soft tissue robotic system towards FDA submission in the first half of 2023.

A：The company plans to position Icera as a leading brand in the psoriasis treatment market, targeting a significant market expansion opportunity by bringing more patients into advanced therapies in the frontline setting. Icera is anticipated to set a new standard of care with its combination of complete skin clearance, a favorable safety profile, and the simplicity of an oral pill.

A：Icera and Truvia are expected to have unique and distinct positions in the market, with Icera positioned to be a significant asset for the company, as indicated by the 40% growth achieved in the quarter. Differentiation in market profiles is expected to allow both assets to continue significant growth, particularly given the high level of unmet need in the market.

A：Upcoming publications and studies will include more data on the A data for Icera, with back-to-back papers in prestigious journals such as the New England Journal and The Lancet. These studies will show placebo-controlled trials and comparisons with leading biologics in psoriatic diseases, providing further insight into the efficacy and safety of the company's therapies.