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3,600 | JNJ | 1 | 2,024 | 2024-04-16 08:30:00 | Johnson & Johnson | 139,677 | available for patients in the second-line setting. We also received biweekly dosing approval from the FDA for TECVAYLI, the only approved BCMA targeting bispecific antibody that provides patients with dosing flexibility. And finally, we submitted an application to the EMA for regulatory approval for DARZALEX-based quadruplet therapy and were granted U.S. priority review by the FDA. In addition, we made significant steps forward in the treatment of patients with EGFR-mutated non-small cell lung cancer. During the quarter, we received FDA approval for RYBREVANT in combination with chemotherapy for the first-line treatment of patients with locally advanced or metastatic non-small cell lung cancer with EGFR Exon 20 Insertion Mutations. The approval was based on data from the Phase III PAPILLON Study. We also received priority review from the FDA and submitted a filing to the EMA for RYBREVANT in combination with lazertinib as a first-line treatment option for adult patients with locally advanced or metastatic EGFR mutation non-small cell lung cancer. The priority review and filing to the EMA are supported by data from the landmark Phase 3 Mariposa Study. Turning to our immunology portfolio, we submitted a supplemental Biologics License Application to the FDA seeking approval for TREMFYA in the treatment of adults with moderate to severe ulcerative colitis. We are looking forward to presenting data from the Phase 3 QUASAR Study evaluating TREMFYA in patients with ulcerative colitis at Digestive Disease Week in May. We also significantly advanced our pipeline with important data readouts including positive top-line results from the Frontier 2 study demonstrating JNJ2113 as the first and only investigational targeted oral peptide that maintains skin clearance in moderate to severe plaque psoriasis through one year. Nipocalimab also delivered positive topline results in Phase 2 and Phase 3 studies in adults with Sjögren’s Disease and Myasthenia Gravis, respectively. We also received FDA breakthrough designation in the |
3,601 | JNJ | 1 | 2,024 | 2024-04-16 08:30:00 | Johnson & Johnson | 139,677 | in adults with Sjögren’s Disease and Myasthenia Gravis, respectively. We also received FDA breakthrough designation in the treatment of HDFN, hemolytic disease of the fetus and newborn, and fast-track designation for FNAIT, a rare and potentially fatal blood disorder in infants. Looking ahead, we expect upcoming data readouts for ERLEADA in localized prostate cancer as well as aticaprant and seltorexant in major depressive disorder. We also expect Phase 2 results for our combination therapy JNJ4804 in psoriatic arthritis as well as pivotal data from TAR-200 in non-muscle invasive bladder cancer which will be presented at the American Urological Association Annual Meeting in May. Lastly, we're excited to present our Phase 3 TREMFYA Crohn's disease data as well as our Sub-Q data for RYBREVANT at upcoming medical meetings. In MedTech, notable highlights in the first quarter includes significant advancements across our cardiovascular portfolio. In Pulsed Field Ablation, we received CE Mark approval for VARIPULSE based on the 12-month INSPIRE Study which demonstrated 80% of patients achieved freedom from recurrence and zero primary adverse events. We filed for U.S. approval of VARIPULSE based on the ADMIRE Study which showed all pilot phase patients achieved acute success and 80% remaining free from atrial arrhythmia recurrence after one year. We also submitted a CE Mark filing for our Dual Energy Smart Touch SF Catheter, which will provide physicians the optionality for RF and PFA energy sources in one catheter. We began enrollment of patients in a pivotal trial evaluating Laminar's left atrial appendage elimination device to reduce the risk of stroke in patients with non-valvular atrial fibrillation and the late-breaking DanGer Shock Study presented at the American College of Cardiology Conference and simultaneously published in the New England Journal of Medicine, confirmed routine use of Abiomed’s Impella CP in patients who have had a heart attack with STEMI cardiogenic shock reduced 180-day mortality by 12.7%. |
3,602 | JNJ | 1 | 2,024 | 2024-04-16 08:30:00 | Johnson & Johnson | 139,677 | Abiomed’s Impella CP in patients who have had a heart attack with STEMI cardiogenic shock reduced 180-day mortality by 12.7%. In vision we launched TECNIS PURE C, a next-generation presbyopia-correcting lens for cataract patients in EMEA. We also presented new data for our presbyope correcting IOL, TECNIS Odyssey at the 2024 American Society of Cataract and Refractive Surgery in April. Looking ahead, we will continue to advance our electrophysiology pipeline with the full U.S. market release of the QDOT microcatheter, the U.S. commercial launch of Abiomed Impella RP Flex with SmartAssist as well as the submission of Impella ECP. Within our robotic surgery pipeline, we are on track to submit an investigational device exemption to the FDA for Otava [ph] in the second half of 2024. Turning to financials, starting with cash and capital allocation. We ended the first quarter with $26.2 billion of cash and marketable securities and $33.6 billion of debt for a net debt position of $7.4 billion. We are pleased with our free cash flow generation in the first quarter of approximately $3 billion. This was above the first quarter of 2023, which included the consumer health business cash flow. Also in the first quarter of 2024, we incurred elevated payment levels made in furtherance of achieving a responsible, final, and comprehensive resolution of the talc litigation. We continue to maintain a healthy balance sheet and strong credit rating, underscoring the strength of Johnson & Johnson's financial position and ability to execute against our capital allocation priorities. Innovation continues to be a main priority for the company, as demonstrated by our industry-leading R&D spend. During the first quarter, we invested more than $3.5 billion in research and development or 16.6% of sales. We also remain committed to returning capital directly to shareholders through our dividend. We appreciate the value our investors place on the dividend, and we were pleased to announce this morning that our Board of Directors has authorized |
3,603 | JNJ | 1 | 2,024 | 2024-04-16 08:30:00 | Johnson & Johnson | 139,677 | our investors place on the dividend, and we were pleased to announce this morning that our Board of Directors has authorized a 4.2% increase marking our 62nd consecutive year of dividend increases. As we stated previously, we are disciplined in our approach to inorganic growth and prioritize acquisitions that strategically fit and present meaningful long-term growth opportunities. This is evidenced by the pending transaction in which we are adding a profitable commercialized portfolio of Shockwave Technologies in high-growth markets as well as a robust pipeline. I'll now discuss our full year 2024 guidance, which excludes the recently announced acquisition of Shockwave. As previously communicated, we assume the closing of the transaction will take place by midyear 2024 at which time we will update our guidance to reflect the expected dilution to adjusted earnings per share in 2024 of approximately $0.10 per share driven by financing costs. Based on the results delivered in the first quarter, we are tightening our ranges and increasing the midpoint for our full year operational sales and adjusted operational EPS guidance. As such, we expect operational sales growth for the full year to be in the range of 5.5% to 6.0% or $88.7 billion to $89.1 billion increasing the midpoint by $300 million or 0.3%. As a reminder, our sales guidance continues to exclude any impact from COVID-19 vaccine sales. As you know, we don't speculate on future currency movements. Last quarter, we utilized the Euro spot rate relative to the U.S. dollar of 1.09. As of last week, the Euro spot rate was 1.08, a modest strengthening of the U.S. dollar also experienced by a handful of other currencies. As a result, we now estimate a negative full year foreign currency impact of $700 million resulting in an estimated reported sales growth between 4.7% to 5.2% compared to 2023 with a midpoint of $88.2 billion or 5% at the midpoint, consistent with last quarter's guidance. We are maintaining other elements of our guidance provided on January's |
3,604 | JNJ | 1 | 2,024 | 2024-04-16 08:30:00 | Johnson & Johnson | 139,677 | the midpoint, consistent with last quarter's guidance. We are maintaining other elements of our guidance provided on January's earnings call, with the exception of two items, we are increasing interest income to a range of $550 million to $650 million. We are also tightening the range of our adjusted operational earnings per share guidance from $10.60 to $10.75, increasing the midpoint by $0.03 to $10.68, reflecting year-on-year growth of 7.7%. While not predicting the impact of currency movements, utilizing the recent exchange rates I previously referenced, our reported adjusted earnings per share for the year estimates a negative foreign exchange impact of $0.03 per share. As a result, the reported adjusted earnings per share remains unchanged at $10.65, reflecting 7.4% growth versus 2023. While we do not provide guidance by segment or on a quarterly basis, we continue to expect that the same qualitative considerations provided during January's earnings call to remain intact. We anticipate Innovative Medicine sales growth to be slightly stronger in the first half of the year compared to the second half given the anticipated entry of STELARA Biosimilars in Europe midyear. For MedTech we expect operational sales growth to be relatively consistent throughout the year. Looking ahead, we have many important catalysts in the pipeline that will drive meaningful near and long-term growth across both Innovative Medicine and MedTech. We look forward to advancing our pipelines in both segments to deliver innovative treatments, solving some of the most complex health challenges. This wouldn't be possible without our employees around the world, so it's only appropriate before turning to your questions that we recognize and thank our colleagues for their continued hard work, commitment, and dedication to patients. I'm pleased to be joined by Joaquin, Jennifer, John and Tim for the Q&A and kindly ask Kevin to provide instructions to initiate that portion of the call. |
3,605 | JNJ | 1 | 2,024 | 2024-04-16 08:30:00 | Johnson & Johnson | 139,677 | Operator: Thank you. [Operator Instructions]. Our first question today is coming from Terence Flynn from Morgan Stanley. Your line is now live.
Terence Flynn: Great. Thanks so much for taking the question. Maybe just a two-part on myeloma. First, on CARVYKTI, I was just wondering if you could elaborate on the phasing comments that impacted sales in the quarter? And then secondly, on TECVAYLI, how should we think about growth for this product, it looks like it's been somewhat flattish over the last couple of quarters, but just wondering if TALVEY had an impact there, so as we think about those franchises back half of this year, maybe you could provide high-level commentary? Thank you. |
3,606 | JNJ | 1 | 2,024 | 2024-04-16 08:30:00 | Johnson & Johnson | 139,677 | Joaquin Duato: Thank you, Terence, for your question. And before we go into the specifics of your question on CARVYKTI and TECVAYLI and TALVEY, our multiple myeloma franchise, let me share with all of you some reflections on this quarter. We are entering 2024 in a position of strength, and I'm particularly encouraged on the performance of our strategic platforms, the ones that are going to drive growth in the second half of the decade. In Innovative Medicines, DARZALEX, TREMFYA, ERLEADA all grew over 20% and specifically on TREMFYA, now we have more sales in our psoriasis and psoriatic arthritic indications than we do with STELARA and we have high expectations for the brand with ulcerative colitis data to be presented at the Digestive Disease Week just a few weeks from now and also data on Crohn's Disease to be presented also this year. We continue to see increased demand from our new product launches, SPRAVATO, TECVAYLI, TALVEY, CARVYKTI with CARVYKTI just a few weeks ago receiving FDA approval to move into the second line setting. Now let me move into MedTech. We have demonstrated a strong performance across cardiovascular, in electrophysiology and Abiomed and we have made significant progress with our PSA portfolio. We also have delivered several important capital allocation milestones in Q1, investing heavily in R&D, raising our dividend for the 62nd consecutive year closing the Ambrx acquisition and announcing the planned acquisition of Shockwave Medical. As you have heard from Joe in his prepared remarks, we continue to make progress on achieving a responsible final and comprehensive resolution of the talc litigation. Overall, I'm proud of the performance in the quarter, both in terms of the solid financial but also the numerous pipeline advancements. It is a solid start of the year that puts us in a position of strength for 2024. And it also the sustained progress gives us -- give me great confidence in achieving our long-term growth goals of operational sales compounded annual growth rate of 5% to 7% |
3,607 | JNJ | 1 | 2,024 | 2024-04-16 08:30:00 | Johnson & Johnson | 139,677 | give me great confidence in achieving our long-term growth goals of operational sales compounded annual growth rate of 5% to 7% from 2025 to 2030. Overall, it gives me great confidence in the future of Johnson & Johnson, now to Jennifer on your question, Terence, on CARVYKTI, TECVAYLI and TALVEY. |
3,608 | JNJ | 1 | 2,024 | 2024-04-16 08:30:00 | Johnson & Johnson | 139,677 | Jennifer L. Taubert: Thanks, Joaquin. Hello Terence and good morning everybody. Just also a quick shout out and a big thanks to our Innovative Medicine colleagues around the world, delivering 8.3% adjusted operational growth, definitely above-market growth for the quarter, with strength being really across our core launch, our core and launch brands, nine brands achieving double-digit growth, 10 actually, if you include TALVEY in that mix. A strong pipeline progress that Joaquin noted and also the announcement and closing of our acquisition of Ambrx really to add another key pipeline asset for us as well as key technology that can help us in ADCs. So really strong quarter all the way around. With respect to your question specifically in multiple myeloma and then CARVYKTI and TALVEY, multiple myeloma continues to be a true stronghold for us, and we had significant performance and growth across the board in those assets during the quarter. I can start off real quickly with DARZALEX with 21% growth, predominantly with that growth coming in the frontline setting and also it was noted that [indiscernible] data has been filed, which will offer us an additional expansion in frontline. For CARVYKTI, we had over 100% growth versus the first quarter of 2023, very, very strong demand. We did have both the ADCOM in the United States, which results in an unanimous recommendation for approval and then the subsequent to the end of the quarter, approval of CARVYKTI for that line two plus which we think bodes very well. I know there's always questions on how are we doing and where we're expanding our capacity, given the strength of the data and the additional data that's coming through in indications. I'm real happy to say we have doubled our manufacturing capacity since the beginning of 2023 for cell processing. We are continuing to work on our Gant [ph] facility to have that as a secondary source of supply. We brought on some contract manufacturers, and we have completely transformed and expanded antivirus production so that, |
3,609 | JNJ | 1 | 2,024 | 2024-04-16 08:30:00 | Johnson & Johnson | 139,677 | We brought on some contract manufacturers, and we have completely transformed and expanded antivirus production so that, that's not a rate-limiting step for us. So I know we were a flat -- roughly flat quarter-to-quarter from 4Q to 1Q as noted, that really just was some phasing and timing of orders and when they were actually delivered and built for nothing that -- anything to really see there. We do anticipate continued growth for this asset, particularly second half versus the first half as we continue to add more slots and expand our capacity. And based on the data and everything that we're seeing, we've continued to have a lot of optimism for how CARVYKTI is performing. Likewise, as it relates to TECVAYLI, the TECVAYLI launch is going very well around the world. Consistently, we're seeing very strong uptake and rapid adoption, whether we're in the U.S., Germany, Austria, France, the major markets that have launched to date and really as the first and we believe best-in-class off-the-shelf BCMA bispecific, we really believe that, that therapy is offering deep and durable responses. And so a lot of optimism for continuing to drive the launch there. The product is performing well in the later line settings and is also performing very well from a competitive standpoint. And last but not least is actually TALVEY, which is our 10th product with double-digit growth, although that falls in the all other oncology categories. So we're not fully breaking that out yet. But very, very strong uptake as the first in GPRC5D off-the-shelf by bispecific as well. So I think what this really means is we have got fabulous opportunities across lines of therapy with what we believe are truly best-in-class agents and many of these agents have potential as well to be combined as we work towards curing multiple myeloma. So a significant business for us, and I'm very positive on our outlook for the rest of the year and going forward. |
3,610 | JNJ | 1 | 2,024 | 2024-04-16 08:30:00 | Johnson & Johnson | 139,677 | Operator: Thank you. Our next question is coming from Larry Biegelsen from Wells Fargo. Your line is now live.
Lawrence Biegelsen: Good morning, thanks for taking the question. A question for Tim. Your MedTech business grew 6.5% on an adjusted operational basis in Q1, but there were a number of onetime items. What was the net impact from those onetime items in your view and what are you seeing around the world from a procedure standpoint and what are your expectations for the rest of the year? Thank you. |
3,611 | JNJ | 1 | 2,024 | 2024-04-16 08:30:00 | Johnson & Johnson | 139,677 | Timothy Schmid: Well, thank you for the question, Larry. And let me maybe just reflect a little on the journey that we've been on. As you know, we surpassed $30 billion last year with adjusted operational growth of 7.8%. And I think it's important to note that when we compare ourselves against the majority of the competitors within our competitive composite, we are double their size. So that is performance that we are particularly proud of. We've now followed that up with another solid quarter of 6.3% growth in the first quarter. Now Larry, to your point, there has been some noise in that. We are particularly proud of the tremendous double-digit growth within our Electrophysiology business. And to put that in context, this is a business that is nearing on $5 billion, growing north of 20%. And I think that really calls out the leadership position, which we're continuing to build on and couldn't be more excited about the progress we're making in PFA, which we believe also will continue to drive that performance. There has been some noise specifically in relation to our Vision business. But please rest assured, we are extremely confident in the underlying health of our Vision portfolio. This is a business that grew 6.6% last year, and we expect it to grow in high single-digit performance this year. There has been some stocking issues related to distributor inventory, which was the predominant driver of the performance you see this year. But once again, very confident that we'll see that return to strong single-digit performance for the remainder of the year. There have been a couple of one-timers both in terms of selling days, as we mentioned earlier, about 80 bps of selling days and then a revenue recognition change within our orthopedics business, which impacted that business by about 300 basis points. But all in all, a strong quarter Larry, and we remain very committed to strong high single-digit growth for the remainder of the year for 2024. Thank you. |
3,612 | JNJ | 1 | 2,024 | 2024-04-16 08:30:00 | Johnson & Johnson | 139,677 | Joseph J. Wolk: Larry, I just want to maybe add on to Tim's good comments there. The one timers, there was tailwinds and headwinds in that number. So the 6.3% that you're seeing is 6.5% is pretty much a true number when you consider both sides of the equation.
Operator: Thank you. Our next question is coming from Chris Schott from J.P. Morgan. Your line is now live.
Christopher Schott: Great, thanks so much for the question. I think BD type question here. I guess following the Shockwave acquisition, what's the appetite, I guess, for further away, maybe talk about like larger tuck-in type transactions either in your MedTech or Pharma business. It just seems like the portfolio and the pipeline at J&J has evolved pretty nicely over the past few years and I'm interested if you think the business is now at a point where we can think about maybe smaller earlier-stage assets as the primary focus for BD or do you still have a greater sense of urgency either in MedTech or pharma to add some of these kind of bolt-on type transactions going forward? Thanks so much. |
3,613 | JNJ | 1 | 2,024 | 2024-04-16 08:30:00 | Johnson & Johnson | 139,677 | Joaquin Duato: Thank you, Chris, and this is Joaquin. I'm glad that you recognize the strategic consistency of our M&A trajectory, and that's good. Our M&A strategy looks for the long term. So it's not going to change. Our capital allocation strategy will continue to be disciplined and M&A, it's going to be -- remain a critical component of that. And it's important for me to underline that with the strength of our cash flow and our balance sheet, we have significant flexibility to consider multiple types of transactions, as you mentioned. And what we have done so far is a demonstration of that with Abiomed, Laminar, Ambrx, and now the planned acquisition of Shockwave, all of them are good examples of our study consistency and the principles that we have outlined to you. So that is not going to change. Our M&A strategy is not going to change. We'll continue to evaluate opportunities agnostic to the sector and size and what we are looking for, it's a number of components. One, does this technology improve the current standard of care. That's critical for us. To what extent we believe there is a patient impact, which is positive. Number two, does it -- is it consistent with the capabilities and knowledge that we have in-house. We see a correlation between that and the success in the acquisitions. Number three, does it enable us to enter into higher growth markets, so areas that are growing in which we can continue to develop that market. And finally, and very important for us, does it continue to deliver a compelling financial result for our shareholders. So that's our M&A strategy, and it's been a cornerstone of our ability to create value. I am glad that you recognize the consistency that we have deployed, and it's not going to change looking into the future. When we think about M&A, we think in decades, we don't think opportunistically.
Operator: Thank you. Our next question is coming from Joanne Wuensch from Citibank. Your line is now live. |
3,614 | JNJ | 1 | 2,024 | 2024-04-16 08:30:00 | Johnson & Johnson | 139,677 | Operator: Thank you. Our next question is coming from Joanne Wuensch from Citibank. Your line is now live.
Joanne Wuensch: Good morning and thank you for taking the questions. Can you maybe circle back to Vision Care, please and can we unpack the different parts that are positive and negatives on the IO and the contact lens business? Thank you. |
3,615 | JNJ | 1 | 2,024 | 2024-04-16 08:30:00 | Johnson & Johnson | 139,677 | Joaquin Duato: Of course, Joanne and thank you for bringing this up because it does look odd and certainly isn't consistent with our expectations or the performance that we expect going forward from that business. As I mentioned earlier, this is a business that grew 6.6% in 2023 and actually consistently grows in high single-digit. We absolutely believe in the underlying health of our Vision business and that it remains strong and continues to perform above market. As I mentioned earlier, the Q1 performance was predominantly driven by a contraction of U.S. distributor inventory in contact lens. As we have mentioned in the past, we had some variability in terms of our supply, which resulted in changes within distributor inventory. We've now started to see that as our supply for contact lenses has stabilized, we've started to see a normalization of the inventory that our distributors are carrying on hand. And so that is the big driver in the results that you see today. As you know, in contact lens, this is an annuity business where it's all about how you gain your fair share of new users, while at the same time, protecting the base. We are incredibly pleased with the ongoing performance of our premium ACUVUE OASYS 1-Day family and we are seeing unprecedented share gains in multifocal. I will also say that if we look at sequential share gains across the contact lens business, we are seeing sequential gains, which should bode well for continued performance for the remainder of the year. Specifically to IOLs, as you know, we are not currently a market leader, but we are expecting to deliver the fourth consecutive year of global share gains driven primarily by tremendous performances of our IOL business in Asia Pac and in EMEA. We're also excited, as you heard from Jess earlier by the limited market release of our TECNIS PURE C and Odyssey next-gen multifocals and we'll see a full release occurred through the remainder of the year. So once again, very confident that you will see tremendous improvement in the |
3,616 | JNJ | 1 | 2,024 | 2024-04-16 08:30:00 | Johnson & Johnson | 139,677 | occurred through the remainder of the year. So once again, very confident that you will see tremendous improvement in the performance of that business, and we expect high single-digit growth for Vision for 2024. Thank you Joanne. |
3,617 | JNJ | 1 | 2,024 | 2024-04-16 08:30:00 | Johnson & Johnson | 139,677 | Operator: Thank you. Your next question is coming from Chris Shibutani from Goldman Sachs. Your line is now live.
Chris Shibutani: Great, thank you very much. Good morning. If I could ask about the Pulmonary Hypertension business. This quarter, quite strong. You mentioned, in particular, share gains and favorable patient mix, if you could help us understand that a little bit better? And then on the forward, the pulmonary arterial hypertension segment is anticipated to see some disruption with the introduction of the recently approved product from [indiscernible]. Can you comment on what you're thinking the portfolio will perform and how that market will respond to this anticipated shift? Thank you.
Jennifer L. Taubert: Hi Chris, it's Jennifer. So yes, we're really pleased with our Pulmonary Hypertension results for the first quarter with both OPSUMIT and UPTRAVI, delivering strong growth that was both volume and share gains in the market as well as some favorable patient mix and really rounding out a year of favorable patient mix. That last piece we don't see continuing to go forward to the same degree. But the products are performing very well for patients with PAH. Importantly, in the quarter, we got approval for OPSYNVI, which is the first combination tablet of PDE5 and an ERA. This is in line with guidelines. It's really once a patient is diagnosed really the right first choice for them is to start them on combination therapy. And so we think that this is an important introduction. And as we take a look at our portfolio and even despite other new competitors that are coming in, we do believe with OPSUMIT and UPTRAVI, they have got very strong usage and both with the launch of OPSYNVI as well as what we have, that these will continue to be really productive assets and a good therapeutic area for us.
Operator: Thank you. Next question is coming from Danielle Antalffy from UBS. Your line is now live. |
3,618 | JNJ | 1 | 2,024 | 2024-04-16 08:30:00 | Johnson & Johnson | 139,677 | Operator: Thank you. Next question is coming from Danielle Antalffy from UBS. Your line is now live.
Danielle Antalffy: Hey, good morning everyone. Thank you so much for taking the question. Tim, if I could just follow up on MedTech and specifically orthopedics and appreciate the onetime revenue recognition, not sure you can provide any color on exactly what changed there. But also, you talked about consistent MedTech growth going forward. I mean taking -- backing that out, you get to sort of 3% U.S. orthopedic sales growth. Is that the right way to think about that specific segment going forward or am I missing some onetime tailwinds, maybe talk a little bit about the outlook for ortho given what you guys put up this quarter? Thanks so much. |
3,619 | JNJ | 1 | 2,024 | 2024-04-16 08:30:00 | Johnson & Johnson | 139,677 | Timothy Schmid: Thank you, Danielle. Firstly, we are operating in a very robust market. As we communicated in the fourth quarter of last year, we still see some remnants of procedural backlog that are benefiting primarily our Orthopedics business, and we expect that to continue at least to the first half of 2024. As you mentioned, our overall performance in Orthopedics of 4.8% was impacted by a onetime change in revenue recognition timing. And this is only related to our U.S. business, but it did impact that business by about 300 basis points. Now keep in mind, we also had the impact of the fewer selling days, which disproportionately impacted our ortho business by 80 bps. We are proud of the ongoing progress we're making, specifically in areas where we needed to compete better and specifically in hips and knees, we saw high single-digit growth in the first quarter and specifically in knees driven by the tremendous performance of our VELYS platform. We're now within two years in 18 markets, 50,000 procedures and are seeing that as a constant tailwind as we now expand the provision of VELYS into EMEA and Asia Pac through the remainder of the year. And so I think you can expect continued improvement in our Orthopedics business for the remainder of the year as we continue to build our portfolio and drive further expansion across the globe. Thank you.
Operator: Thank you. Our next question today is coming from Geoff Meacham from Bank of America. Your line is now live.
Charles Young: This is Charlie Yang for Geoff. I have two questions, please. I know there's recent news regarding the INVEGA SUSTENNA Calpal [ph] litigation. Can you just tell us about kind of what we should kind of think about in terms of the potential kind of impact or in terms of the timing of the next steps? And then second, can you just talk about the TAR [ph] bladder cancer data expectation in terms of what kind of benchmark we should expect in terms of the 1-year CR rate? Thank you. |
3,620 | JNJ | 1 | 2,024 | 2024-04-16 08:30:00 | Johnson & Johnson | 139,677 | Jennifer L. Taubert: Perfect. I'll take the INVEGA SUSTENNA question, and I'll pass it over to my colleague, John to take the next one. So if we think about our LAI portfolio, our long-acting injectable just as a reminder for everybody, we really are leading therapies in this space with our INVEGA SUSTENNA, INVEGA TRINZA and INVEGA HAFYERA products. And we're really excited about the latest data that we have, particularly for HAFYERA, which a recent study shows that at two years, 96% patients on HAFYERA are relapse free, which is really, really striking. So as we get to the legal question, we really don't speculate on the impact of ongoing litigation. But that being said, we remain really confident about the strength of our INVEGA SUSTENNA patents, and we're going to continue to defend the intellectual property that's associated with these patents. If we're clear to go a little bit deeper, the Federal Circuit’s April 1st decision did not invalidate our patent. It just remanded the case back to the New Jersey District Court, the one that had ruled in our favor originally. Likewise, there was another ruling and another case on this patent against a different company that also did go in our favor. So it's going back to the original judge that ruled in favor of the patents, and we'll have to see what comes. We don't speculate on that, but we remain really confident on the strength of our patents. |
3,621 | JNJ | 1 | 2,024 | 2024-04-16 08:30:00 | Johnson & Johnson | 139,677 | John C. Reed: Yes. Thanks for your interest in the platform that we have, the drug device combo for early bladder cancer. Clearly, a great unmet need and as much as there are more than 600,000 people every year who are diagnosed with early bladder cancer and the vast majority of those patients go on to have their bladders removed, which clearly has a very detrimental effect on quality of life. With our drug device system which I think, again, is a great example of how MedTech and pharma can come together in a synergistic way, but we delivered really, I think, exciting early data. Those were presented at the ESMO conference last September and showed, for example, with the TAR200 product that has gemcitabine, an impressive complete response rate of over 75% and nice durability with 21 out of 23 patients, we showed at that meeting is still ongoing and no patients having had to progress to a radical cystectomy. So I think at the AUA, because those data are not yet disclosed, I can't provide the details, but I think you can expect to see more of the same now with longer follow-up and with more patients. We've expanded those cohorts and do believe that we're on track to deliver pivotal data in that first indication, which is in the BCG nonresponsive patients recollect that in early bladder non-muscle invasive bladder cancer. Standard care is this attenuated micro bacteria BCG. Unfortunately, fewer than half patients receive -- achieve a complete response. And the therapy is -- has tolerability problems to say the least where patients feel like they have a chronic urinary tract infection. The discontinuation rate with TAR200 has been very low. So we're very delighted with the excellent tolerability profile as well as these impressive deep efficacy, deep and durable efficacy. So yes, so please watch that AUA presentation. I think we remain on track for a filing early next year based on these pivotal data, and we look forward to sharing those results at that congress. |
3,622 | JNJ | 1 | 2,024 | 2024-04-16 08:30:00 | Johnson & Johnson | 139,677 | Operator: Thank you. Next question is coming from Matt Miksic from Barclays. Your line is now live.
Matthew Miksic: Hi, thanks so much for taking the question. So a follow-up maybe on some of the device trends, in particular, cardio and EP very strong in the quarter. Wondering if you could provide some color kind of geographically as to how some of the product launches have either driven overseas or competitive environment in the U.S. has affected U.S. performance so far? And then just one quick one on Ortho, if I could. |
3,623 | JNJ | 1 | 2,024 | 2024-04-16 08:30:00 | Johnson & Johnson | 139,677 | Timothy Schmid: Sure, Matt. Firstly, let me start on cardio. As Joaquin mentioned, we've made a lot of progress in building out our portfolio. And until recently, we only participated in one high-growth category within cardiovascular and that being electrophysiology, which I will touch on performance in a second. We are and have had a 20-year lead in electrophysiology and now have built on that position in cardiovascular with the acquisition of Abiomed. We're now over a year into integrating that business and couldn't be more proud of the progress we've made. We continue to perform ahead of the deal model. And once again, this quarter did so with growth in excess of 15%. That gives us now two leadership positions within cardiovascular care. Once we close the acquisition of Shockwave, that will be our third very thoughtful and deliberate move to only participate in high-growth, high-margin cardiovascular areas where there is significant unmet need and tremendous opportunity for us to grow. And so we're very excited by the fact that we will be one of the only strategics with only high growth, high-margin businesses in the largest category within MedTech, $60 billion market, growing roughly 8%, incremental $5 billion of growth coming out of that category each and every year. So very excited by those moves. Specifically, to your questions on EP, we've seen growth across the board in excess of 20%, both in the U.S. and ex U.S. And I think it really talks to the trust that our customers have in our technology today. RF and our portfolio of RF products are the most trusted and tested products with 20 years of experience. And by the way, we're not going to miss PFA, the progress we've made on ensuring that we can build our presence in that category with the approval in the EU as well as in Japan. We've also submitted for FDA approval. And while we don't control the timing, we expect that approval to come through by the end of this year or early next year. And so very confident in our ability to build on our leadership |
3,624 | JNJ | 1 | 2,024 | 2024-04-16 08:30:00 | Johnson & Johnson | 139,677 | to come through by the end of this year or early next year. And so very confident in our ability to build on our leadership position in EP. Was there a specific question to Ortho? |
3,625 | JNJ | 1 | 2,024 | 2024-04-16 08:30:00 | Johnson & Johnson | 139,677 | Matthew Miksic: Just a comment on Ortho generally was sort of low to mid-single digits, but in hips and knees, sounded like 9%-ish, we added back the selling day and you're at double digits is just kind of really off the chart growth, I think, in that category. And I'm just wondering should we see like some sustainability of that rate or ramping down of that rate, how can you help us think about the rest of the year, in particular, in hips and knees?
Joseph J. Wolk: Well, Matt, I think it's a testament to the progress of our team but then also in building out our portfolio. We had some gaps in the past and now filling those gaps both in hips and then even more notably in knees with the launch of our VELYS robot is really what is creating the tailwind that we're enjoying today, and we do expect that to continue. Now this was a strong quarter. Can we see that sort of growth every single quarter, not absolutely sure, but we do expect high single-digit growth out of both of those categories going forward. I will also say that the work we've done in the orthopedics areas hasn't been just about growth. It's also about improving our margin profile. And you know that in the second quarter of 2023, we announced a major restructuring, which is focused on really simplifying our portfolio and focusing our business on where we could drive the greatest impact for patients and for shareholders. That effort is resulting in a 20% reduction in our implants. And just to put that in context, we have 100,000 implants today within our orthopedics business. And so a real testament to the effort of group to not only drive top line performance but also evolve the portfolio to improve margins. Thank you again Matt.
Jessica Moore: Thanks, Matt. Kevin, we have time for one more question.
Operator: Thank you. Our final question today is coming from Vamil Divan from Guggenheim Securities. Your line is now live. |
3,626 | JNJ | 1 | 2,024 | 2024-04-16 08:30:00 | Johnson & Johnson | 139,677 | Operator: Thank you. Our final question today is coming from Vamil Divan from Guggenheim Securities. Your line is now live.
Vamil Divan: Great, thanks so much for taking my questions. Maybe if no one is after me I will just lead into it. One, I just was curious on SPRAVATO and sort of where like very strong growth again this quarter. If you can just provide a little more context there on where the growth is coming from, what sort of practices, what that the patients are given that product to be hopefully get a sense of that trend? And then just the other question we get a lot from investors is on the drug price negotiations with Medicare on the 10 drugs that are selected for this year's program through IRA. I know you probably won’t get too much into the specifics, but I'm curious if you can just share some high-level thoughts on how the progress of those discussions are going and is it sort of in line with what you expected, is there anything sort of very different from what you expected as the process plays out? Thank you. |
3,627 | JNJ | 1 | 2,024 | 2024-04-16 08:30:00 | Johnson & Johnson | 139,677 | Jennifer L. Taubert: Well, thanks for the question, and thanks for asking about SPRAVATO. We continue to be really pleased with the uptake of SPRAVATO as we continue to launch that product globally. You saw that there's over 70% growth in the quarter as it continues to perform well for patients with treatment-resistant depression. And so we've got a bold outlook for SPRAVATO as we continue to launch it into more markets and as we are able to even further penetrate the existing markets that we're in into a bit more of the community setting there. In terms -- so good -- really, really good outlook. We're also just to put in a plug for neuroscience. We talk a lot about our oncology business and our immunology business. Neuroscience is also a key area for us, so SPRAVATO is a key platform. We've also got aticaprant and seltorexant coming, and we had mentioned the long-acting therapies with the INVEGA SUSTENNA franchise earlier. So back on IRA, we've been really clear that we do think that these -- the IRA’s drug setting provisions are damaging to the health care innovative system. It just -- it is not something that is going to help reinforce the tremendous investments that we're making in R&D to develop the next types of treatments and cures. That being said, we do focus on patient access and are trying to make sure that our products are available to the patients who need them. And so we're working appropriately with the government and in line with the process to start going back and forth around what the ultimate price will be. So there has been a round or two of going back and forth. And so we're still in the middle of that process. I can't really provide any more details on that. What I will say is that the products that we have that are going through the process, they are not our growth drivers for the future. Those are -- they are our products that are more at end of life. And so they're not the ones that are going to be really key for us both in the coming years as well as out through the end of the decade. |
3,628 | JNJ | 1 | 2,024 | 2024-04-16 08:30:00 | Johnson & Johnson | 139,677 | not the ones that are going to be really key for us both in the coming years as well as out through the end of the decade. And what I'd love to also reinforce is that we do remain confident that we've got a clear path to achieving our $57 billion commitment that we made back in December at our Enterprise Business Review as well as from 2025 to 2030, delivering above market growth with the 5% to 7% compounded annual growth rate and with growth in every year that being 2025 as well as all of the years beyond that. So irrespective of the IRA, when I take a look at our growth drivers and how our pipeline is coming in, we feel really confident about the state of our business. |
3,629 | JNJ | 1 | 2,024 | 2024-04-16 08:30:00 | Johnson & Johnson | 139,677 | Jessica Moore: Thank you, Vamil, and thanks to everyone for your questions and your continued interest in our company. We apologize to those that we couldn't get to because of time, but don't hesitate to reach out to the Investor Relations team with any remaining questions you may have. I will now turn the call over to Joaquin for some brief closing remarks.
Joaquin Duato: Thank you, Jess, and Johnson & Johnson's solid first quarter performance reflects our sharpened focus and the progress in our portfolio and pipeline. Our impact across the full spectrum of health care is unique in our industry and the commercial, clinical, and capital allocation milestones achieved in Q1 reinforce our position as an innovation powerhouse. One of the most significant milestones this quarter was the announcement of our planned acquisition of Shockwave that will further strengthen our leadership position in cardiovascular. We continue to make strong progress towards the goals that we set out at our December Enterprise Business Review, and I'm looking forward to all that we will achieve through the remainder of 2024.
Operator: Thank you. This concludes today's Johnson & Johnson's first quarter 2024 earnings conference call. You may now disconnect. |
3,630 | JNJ | 1 | 2,025 | 2025-04-15 08:30:00 | Johnson & Johnson | 139,677 | Operator: Good morning, and welcome to Johnson & Johnson's First Quarter 2025 Earnings Conference Call. All participants will be in listen-only mode until the question and answer session of the conference. The 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 star zero to reach the operator. I would now like to turn the conference call over to Johnson & Johnson. You may begin.
Jessica Moore: Hello, everyone. This is Jessica Moore, Vice President of Investor Relations for Johnson & Johnson. Welcome to our company's review of business results for the first quarter of 2025 and our updated financial outlook. A few logistics before we get into the details.
Operator: As a reminder, you can find additional materials |
3,631 | JNJ | 1 | 2,025 | 2025-04-15 08:30:00 | Johnson & Johnson | 139,677 | Operator: As a reminder, you can find additional materials
Jessica Moore: including today's presentation and associated schedules on the Investor Relations section of the Johnson & Johnson website at investor.jnj.com. Please note that this presentation contains forward-looking statements regarding, among other things, the company's future operating and financial performance, market position, and business strategy. You are cautioned not to rely on these forward-looking statements, which are based on the current expectations of future events using the information available as of the date of this recording and are subject to certain risks and uncertainties that may cause the company's actual results to differ materially from those projected. A description of these risks, uncertainties, and other factors can be found in our SEC filings, including our 2024 Form 10-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 open with a few comments. John Reed, our Executive Vice President, Innovative Medicine R&D, will highlight recent data from select assets. I will then review the first quarter sales and P&L results. Joe Wolk, our CFO, will then close by sharing an overview of our cash position, capital allocation priorities, and guidance for 2025. Jennifer Taubert, Executive Vice President, Worldwide Chairman, Innovative Medicine, and Tim Schmid, Executive Vice President, Worldwide Chairman, MedTech, will be joining us for Q&A. To ensure we provide enough time to address your questions, we anticipate the webcast will last slightly over sixty minutes. With that, I will now turn the call over to Joaquin. |
3,632 | JNJ | 1 | 2,025 | 2025-04-15 08:30:00 | Johnson & Johnson | 139,677 | Joaquin Duato: Thank you, Jess, and hello, everyone. In the first quarter, we delivered strong operational sales growth of 4.2% across our business. Our Q1 performance reinforces my confidence in our 2025 guidance and reflects the strength of Johnson & Johnson's uniquely diversified business, with year-over-year sales increases in both our innovative medicine and med tech sectors. No other healthcare company has delivered growth through the first year of Lucin exclusivity for a multibillion-dollar product. In our case, STELARA. And yet, that is exactly what we are doing. Our resiliency is a testament to what makes us unique. We are not just a pharmaceutical company or a med tech company. We are a healthcare company, innovating across the full spectrum of disease. Our consistent strong performance is a testament to our capabilities across commercial, R&D, and supply chain. It is also a reflection of our strength in execution, which you can see in our quarterly results. We have described 2025 as a catalyst year. It is a year that will set us up for accelerated growth through the second half of the decade and beyond. In Q1, the power of our portfolio and pipeline was on full display. In innovative medicine, we delivered 4.2% operational sales growth despite an approximate 810 basis points headwind from STELARA, with eleven key brands growing double digits. With our third consecutive quarter of sales above $3 billion, DARZALEX continues to set the standard in multiple myeloma with another quarter of over 20% growth. In fact, just last week, we expanded our DARZALEX indication in Europe with the approval of a DARZALEX-based quadruplet regimen for patients with newly diagnosed multiple myeloma regardless of transplant eligibility. It is further proof of the impact of this medicine, which together with CARVYKTI, Talvey, and TECVAYLI, is changing the conversation from treating to progression to treating to cure. Other significant oncology portfolio advancements in Q1 included Phase 3 data presented at ELCC last month |
3,633 | JNJ | 1 | 2,025 | 2025-04-15 08:30:00 | Johnson & Johnson | 139,677 | to treating to cure. Other significant oncology portfolio advancements in Q1 included Phase 3 data presented at ELCC last month showing riboflavin plus LASCRUZ extended overall survival by more than one year versus the current standard of care in first-line EGFR-mutated lung cancer. Last week, the European Commission approved subcutaneous riboflavin in combination with LASCRUZ for the treatment of EGFR-mutated non-small cell lung cancer. This was an important milestone for patients as subcutaneous riboflavin reduces administration time from hours to minutes. Our aspiration is for riboflavin plus LASCRUZ to become the new standard of care for these patients, and you can see our progress in Q1. In immunology, we're seeing the impact of Tremfya's entry into inflammatory bowel disease, with our launch in ulcerative colitis helping accelerate operational sales growth to 20%. And with our recent FDA approval in Crohn's disease, I'm more confident than ever that this blockbuster drug will become the gold standard for IBD patients and a $10 billion-plus product. Turning to MedTech, in Q1, we delivered 4.1% operational sales growth with strong performance in our recently acquired cardiovascular businesses, Abiomed and Shockwave, as well as in surgical vision and wound closure. In addition to their contribution to MedTech growth, Abiomed and Shockwave continue to meet deal model expectations and both announced important portfolio milestones this quarter. These included updates to the American College of Cardiology and American Heart Association guidelines for our Impella heart pump, which based on evidence from the DANGER shock trial was upgraded from class IIb to class IIa. And in Shockwave, the team launched the first of its kind Javelin Peripheral IVL catheter for the treatment of difficult-to-cross lesions in peripheral artery disease. In electrophysiology, we resumed U.S. VariPulse cases and to date, we have completed more than 5,500 cases globally. Turning to surgery, we recently announced we have started OTAVA |
3,634 | JNJ | 1 | 2,025 | 2025-04-15 08:30:00 | Johnson & Johnson | 139,677 | and to date, we have completed more than 5,500 cases globally. Turning to surgery, we recently announced we have started OTAVA clinical trials with a procedure that supports submission for US FDA de novo in general surgery with an indication for multiple upper abdomen procedures. This is an important milestone as we continue to strengthen our presence in robotic surgery. Beyond our existing portfolio and pipeline, we also fortified our leadership as an innovation powerhouse with two major announcements. In March, we announced our commitment to invest more than $55 billion in the U.S. over the next four years in manufacturing, R&D, and technology. This represents a 25% increase in investment compared to the previous four years. It builds upon the company's already elevated commitment to the U.S. economy while expanding our capacity to manufacture next-generation medicine and devices for patients in America and around the world. The investment includes four planned new manufacturing facilities, the first of which broke ground last month in North Carolina. And at the beginning of April, we announced the completion of our acquisition of IntraCellular Therapies, which extends Johnson & Johnson's industry-leading portfolio in central nervous system disorders. With the addition of Caplyta, we have expanded our lineup of therapies with at least $5 billion-plus potential in peak year sales, further solidifying sales growth above analysts' expectations now through the rest of the decade. Turning to the TALC bankruptcy ruling, as we shared a few weeks ago, we will return to the tort system where we expect continual success in litigating these medical claims. In terms of next steps, we will immediately pursue our motion pending in the multi-district litigation to exclude plaintiffs' experts, known as the Daubert challenge. And finally, as announced this morning, we increased our dividend for the sixty-third consecutive year, which we know. We have a strong start to 2025, and I'm looking forward to sharing many more |
3,635 | JNJ | 1 | 2,025 | 2025-04-15 08:30:00 | Johnson & Johnson | 139,677 | the sixty-third consecutive year, which we know. We have a strong start to 2025, and I'm looking forward to sharing many more successes throughout the year. Recognizing that there have been many important milestones and data readouts in the quarter, I will now pass the call to John Reed for an innovative medicine R&D update. Thank you, Joaquin. |
3,636 | JNJ | 1 | 2,025 | 2025-04-15 08:30:00 | Johnson & Johnson | 139,677 | John Reed: I'm excited to share a few highlights from our industry-leading innovative medicine pipeline that occurred throughout the quarter. With the successful acquisition of IntraCellular, I want to focus on Caplyta, a remarkable medicine with balanced pharmacology that delivers robust efficacy combined with a favorable tolerability profile in neuropsychiatric disorders. Caplyta is already approved for the treatment of schizophrenia and is the only medicine approved for the treatment of depression in both bipolar I and II, either as monotherapy or adjunctive therapy. On this slide, we are sharing data for major depressive disorder showing very impressive and consistent improvements in the standard depression scoring metric, MADRS, in both Phase 3 studies that served as the basis for submission of the supplemental new drug application to the FDA. We anticipate approval of Caplyta later this year as an adjunctive treatment for major depressive disorder, representing the largest of the indications for novel antidepressant drugs today. Turning to oncology, we are so excited about our recent overall survival data for riboflavin plus LASCRUZ in first-line, non-small cell lung cancer harboring EGFRCEPT gene mutations. Non-small cell lung cancer is the most prevalent type of lung cancer, making up about 85% of lung cancer diagnoses. Sadly, less than 20% of people diagnosed with this form of the disease are alive after five years, and only a fraction live long enough to try a second treatment. That's why it is so important to use the best treatment first. In a head-to-head study against today's standard of care, our riboflavin plus LASCRUZ regimen improved overall survival by more than a year, with the Kaplan-Meier survival curves continuing to separate at 37.8 months median follow-up. With riboflavin's triple mechanism of action, we're looking to reset the standard five-year survival expectations in a never-before-seen way. In simplest terms, we're giving patients more hope that they may live to celebrate another |
3,637 | JNJ | 1 | 2,025 | 2025-04-15 08:30:00 | Johnson & Johnson | 139,677 | in a never-before-seen way. In simplest terms, we're giving patients more hope that they may live to celebrate another birthday, anniversary, or other important family event. A truly practice-changing achievement. Now moving on to immunology, I draw your attention to the recent FDA approval of Tremfya in Crohn's disease, our fourth indication for Tremfya. Tremfya is currently the only IL-23 inhibitor with the flexibility of subcutaneous administration for both induction and maintenance dosing for the treatment of Crohn's disease, which means patients can start their treatment by self-administering with results as rapid and robust as receiving the IV in a clinic or doctor's office. Additionally, in a recent head-to-head study in adult patients with moderately to severely active Crohn's disease, Tremfya demonstrated superiority versus STELARA in all pooled endoscopic endpoints. As the only dual-acting IL-23 inhibitor, Tremfya neutralizes IL-23 while also binding to CD6 and immune cells that produce IL-23, thus localizing Tremfya right at the source of inflammation. Tremfya continues to offer an exceptional profile. Lastly, highlighting some of our latest data for our investigational oral IL-23 pathway inhibitor, Ichotrochindra, we are aiming to redefine the standard of care for people living with plaque psoriasis. Ichotrochindra is the first and only targeted oral peptide that selectively blocks the IL-23 receptor. In two placebo-controlled Phase 3 studies, Ichotrochindra demonstrated impressive complete skin clearance and a favorable safety profile in a once-daily pill. Our Phase 3 data demonstrated that nearly half of adult patients and three-quarters of adolescents with moderate to severe plaque psoriasis treated with Ichotrochindra achieved completely clear skin by week 24. We also reported that Ichotrochindra achieved the pre-specified endpoints in additional Phase 3 psoriasis studies comparing our molecule head-to-head with the most commonly prescribed TIC-two inhibitor. Those data will be shared in an |
3,638 | JNJ | 1 | 2,025 | 2025-04-15 08:30:00 | Johnson & Johnson | 139,677 | comparing our molecule head-to-head with the most commonly prescribed TIC-two inhibitor. Those data will be shared in an upcoming medical congress. Looking forward, we are initiating the first-ever head-to-head study seeking to demonstrate the superiority of a pill by Ichotrochindra compared to an injectable biologic, STELARA, in moderate to severe plaque psoriasis, representing an important step forward in psoriasis research. As a reminder, we intend to file Ichotrochindra for approval later this year. Finally, beyond psoriasis, we recently announced positive top-line results from Anthem UC, our Phase 2b study of Ichotrochindra in adults with moderate to severe ulcerative colitis. That study showed that Ichotrochindra achieved impressive clinical remission rates combined with a favorable safety profile, again dosed as a once-daily pill. With all this progress, you can be excited about the potential of Ichotrochindra to transform the treatment paradigm for patients battling with autoimmune diseases. |
3,639 | JNJ | 1 | 2,025 | 2025-04-15 08:30:00 | Johnson & Johnson | 139,677 | Jessica Moore: Overall, across all our therapeutic areas, we are absolutely thrilled with the progress that our pipeline has made in the first quarter of this year. And we are eager to report on other significant milestones scheduled for the remainder of 2025. And now, I will turn the call over to Jess.
Jessica Moore: Thank you, John. Moving to our financial results. Unless otherwise stated, the percentages quoted represent operational results and therefore exclude the impact of currency translation. Starting with Q1 2025 sales results, worldwide sales were $21.9 billion for the quarter. Sales increased 4.2% despite an approximate growth in the U.S. was 5.9% and 2.1% outside of the U.S. Worldwide growth was positively impacted by 90 basis points due to acquisition and divestitures. Turning now to earnings, for the quarter, net earnings were $11 billion and diluted earnings per share was $4.54 versus diluted earnings per share of $1.34 a year ago, primarily driven by the reversal of $7 billion related to the talc settlement proposal. Excluding after-tax intangible and special items for both periods, adjusted net earnings for the quarter were $6.7 billion and adjusted diluted earnings per share was $2.77, representing increases of 1.9% and 2.2% respectively compared to the first quarter of 2024. We are proud to deliver bottom-line growth despite the loss of exclusivity of STELARA and the impact of Part D redesign. |
3,640 | JNJ | 1 | 2,025 | 2025-04-15 08:30:00 | Johnson & Johnson | 139,677 | Jessica Moore: I will now comment on business sales performance in the quarter. Beginning with innovative medicine, worldwide sales of $13.9 billion increased 4.2% despite an approximate 810 basis point headwind from STELARA. Growth in the U.S. was 6.3% and 1.5% outside of the U.S. Starting with oncology, SARS growth was 22.5%, primarily driven by continued share gains of approximately three points across all lines of therapy and approximately five points in the frontline setting as well as market growth. Pervixi achieved sales of $369 million and growth of over 100%, driven by share gains and capacity expansion. This reflects sequential growth of 10.5% as we continue to expand outside of the U.S. TechValley and Talvei growth was 15% and 50.2% respectively, reflecting strong launches in the relapsed refractory setting. Patient demand remains strong despite continued adoption of longer dosing intervals. Erlida continued to deliver strong growth of 14.6% despite the impact of Part D redesign, primarily driven by share gains and market growth. Ribrovant plus LastClues continued its strong launch trajectory with sales of $141 million, growth over 100%. Within immunology, Tremfya delivered growth of 20.1% despite the impact of Part D redesign, driven by share gains and market growth across all indications, including our newly launched indication in ulcerative colitis. STELARA declined 32.3%, driven by the impact of biosimilar competition and Part D redesign. |
3,641 | JNJ | 1 | 2,025 | 2025-04-15 08:30:00 | Johnson & Johnson | 139,677 | Jessica Moore: As a reminder, Remicade and Symphony distribution rights in Europe were returned in Q4. This positively impacted results in the quarter and is anticipated to continue for the remainder of the year. Remicade sales also include a one-time patient mix benefit in the U.S. In neuroscience, growth of 42.9% was driven by increased physician and patient demand. Finally, other assets that were impacted by Part D redesign include Invego long-acting injectables, which declined 13.5%, pulmonary hypertension, which declined 1.2%, and was partially offset by market growth and share gains, and Xarelto, which increased by 33% and also included a one-time patient mix benefit. I'll now turn your attention to MedTech. Worldwide sales of $8 billion increased 4.1% with growth of 5.1% in the U.S. and 3% outside of the U.S. Acquisitions and divestitures had a net positive impact of 280 basis points on worldwide growth, 420 basis points in the U.S., and 120 basis points outside of the U.S. Underlying MedTech performance was driven by commercial execution and strength of new products, partially offset by several one-time events disproportionately impacting orthopedics in addition to continued competitive PFA pressures, in electrophysiology and headwinds in China. Results were negatively impacted by approximately 210 basis points worldwide, 240 in the U.S., and 180 outside of the U.S. due to these one-time events. In cardiovascular, electrophysiology growth was roughly flat versus prior year driven by lapping of prior year inventory dynamics in Asia, impacting worldwide results by roughly 310 basis points, and competitive PSA ablation catheter pressure. This was mostly offset by global procedure growth, new product uptake, and commercial execution. Abiomed delivered growth of 14% driven by strong growth in all regions and continued adoption of Impella 5.5 and Impella CP technology. Cardiovascular results also included $258 million associated with the acquisition of Shockwave. As a reminder, we will lap the acquisition |
3,642 | JNJ | 1 | 2,025 | 2025-04-15 08:30:00 | Johnson & Johnson | 139,677 | results also included $258 million associated with the acquisition of Shockwave. As a reminder, we will lap the acquisition benefit at the end of May. In vision, contact lenses and other grew 2.7% driven by continued strategic price actions and strong performance in the Acuvue Oasis one-day family of products. Surgical vision growth of 6.2% was driven by our recent innovations, Tegnis Odyssey, PIRC, and Eye Hands, as well as commercial execution, partially offset by competitive pressures in the U.S. Surgery grew 1.1% with divestitures negatively impacting results by approximately 180 basis points. Performance was driven primarily by commercial execution and the continued strength and adoption of new products across wound closure and biosurgery. Growth was partially offset by competitive pressures in energy and endocutters, as well as the negative impact of China VBP. Given the disproportionate impact of the one-time events to orthopedics, I'd like to draw your attention to this additional slide. Orthopedics declined 3.1%, primarily driven by the lapping of a one-time revenue recognition timing change related to certain products across all platforms in the U.S., fewer selling days, and revenue disruption from the previously announced orthopedic transformation. These one-time events negatively impacted worldwide orthopedics growth by approximately 480 basis points, 650 basis points in the U.S., and 210 basis points outside of the U.S. This was partially offset by the success of new product launches and commercial execution. Now turning to our consolidated statement of earnings for the first quarter of 2025. I'd like to highlight a few noteworthy items that have changed compared to the same quarter of last year. Cost of products sold deleveraged by 320 basis points, driven by unfavorable transactional currency and product mix, primarily due to the decline of STELARA in innovative medicine, as well as the fair value step-up in amortization associated with the Shockwave acquisition in MedTech. Selling, marketing, and |
3,643 | JNJ | 1 | 2,025 | 2025-04-15 08:30:00 | Johnson & Johnson | 139,677 | as well as the fair value step-up in amortization associated with the Shockwave acquisition in MedTech. Selling, marketing, and administrative expenses improved 130 basis points driven by operating spend management and phasing of investments primarily in innovative medicine. Research and development expenses leveraged by 190 basis points primarily driven by portfolio progression towards commercialization and phasing of investments in innovative medicine, partially offset by investments associated with the recent acquisitions of Shockwave and V Wave in MedTech. Interest income and expense was a net income of $128 million as compared to $209 million in the first quarter of 2024, primarily driven by higher interest rates paid on higher average debt balances. Other income and expense was a net income of $7.3 billion compared to an expense of $2.4 billion in the prior year, driven by the $7 billion talc reserve reversal in the first quarter of 2025 and the $2.7 billion talc settlement proposal recorded during the first quarter of 2024. Regarding taxes in the quarter, our effective tax rate was 19.3% versus 12.4% in the same period last year, primarily driven by the tax effect of the reversal of the talc settlement accrual. Excluding special items, the effective tax rate was 16.3% versus 16.5% in the same period last year. I encourage you to review our upcoming first quarter 10-Q filing for additional details on specific tax-related matters. Lastly, I'll direct your attention to the box section of the slide where we have also provided the company's income before tax, net earnings, and earnings per share adjusted to exclude the impact of intangible amortization expense and special items. Now let's look at adjusted income before tax by segment for the quarter. New this quarter and to continue our efforts of increased financial transparency, you will find GAAP to non-GAAP reconciliations by segment in the supplemental schedules of our press release. Innovative medicine margin declined from 42.9% to 42.5%, primarily |
3,644 | JNJ | 1 | 2,025 | 2025-04-15 08:30:00 | Johnson & Johnson | 139,677 | segment in the supplemental schedules of our press release. Innovative medicine margin declined from 42.9% to 42.5%, primarily driven by unfavorable transactional currency and product mix, and cost of products sold and Part D redesign, partially offset by operating leverage. MedTech margin declined from 26.4% to 25.9%, primarily driven by R&D and selling, marketing, and administrative investments associated with the recent acquisition of Shockwave and V Wave. As a result, adjusted income before tax for the enterprise as a percentage of sales decreased from 36.8% to 36.6%. This concludes the sales and earnings portion of the call, and I will now turn the call over to Joe. |
3,645 | JNJ | 1 | 2,025 | 2025-04-15 08:30:00 | Johnson & Johnson | 139,677 | Joe Wolk: Hello, everyone, and thank you for joining us today. Thanks, Jessica, not just for the transition now, but also how well you have led the investor relations function the past few years. The investment community will miss you, but we look forward to seeing you in the lead finance role in innovative medicine. Our first quarter results demonstrate the strength and reliability of Johnson & Johnson. Innovative medicine achieved robust growth in the face of STELARA biosimilar entrants, and we advanced our pipeline, attaining significant clinical and regulatory milestones. In MedTech, as indicated in January, we anticipated pockets of challenge early on and are planning for higher second-half growth in those areas of our business. The team is focused on commercial execution and accelerating the recently launched products to deliver MedTech's commitments that are included in the company's full-year guidance. The recent acquisitions of Abiomed and Shockwave continue to expand our presence in higher growth markets. |
3,646 | JNJ | 1 | 2,025 | 2025-04-15 08:30:00 | Johnson & Johnson | 139,677 | Joe Wolk: In addition, we continue to take steps to improve MedTech's future margin profile, implementing a restructuring program designed to simplify and focus the operations of our surgery business, similar to what we launched in orthopedics in 2023. Focusing on portfolio renewal, we plan to exit certain non-strategic product lines globally and optimize select sites across the network. We anticipate some modest short-term revenue disruption in Surgery of approximately $250 million in total over the next two years, but these actions will improve our ability to accelerate growth and enhance profitability. The program is expected to be completed in 2027 with costs estimated at approximately $900 million. Let's now turn to cash and capital allocation. We are pleased with free cash flow generation in the quarter of approximately $3.4 billion. We ended the first quarter with $38.8 billion of cash and marketable securities and $52.3 billion of debt for a net debt position of $13.5 billion. It is important to note that cash and net debt will be favorably impacted by approximately $14 billion of cash held in anticipation of the IntraCellular acquisition, which closed on April 2nd. Taking this into consideration, net debt would have been approximately $27.5 billion. Investment in innovation remains the highest priority in our capital deployment, and during the first quarter, we invested more than $3 billion in research and development, approximately 15% of sales. We also remain committed to returning capital directly to shareholders. We recognize the value investors place on our dividend, and we were pleased to announce today that our board of directors authorized a 4.8% increase, marking our sixty-third consecutive year of dividend increases. The IntraCellular Therapies acquisition bolsters our neuroscience portfolio, and we maintain a disciplined approach to inorganic growth, focusing on acquisitions and partnerships that align strategically and offer value creation. As noted in our talc investor call, and following |
3,647 | JNJ | 1 | 2,025 | 2025-04-15 08:30:00 | Johnson & Johnson | 139,677 | and partnerships that align strategically and offer value creation. As noted in our talc investor call, and following up on some of Joaquin's earlier comments, we reversed $7 billion of the reserve previously held for the bankruptcy plan. This litigation has not and we foresee will not impact our ability to execute upon our capital allocation priorities to appropriately manage our business. Let's now discuss our full-year guidance for 2025. We are increasing our operational sales guidance for the full year by $700 million to reflect the addition of Caplyta following the completion of the IntraCellular acquisition. |
3,648 | JNJ | 1 | 2,025 | 2025-04-15 08:30:00 | Johnson & Johnson | 139,677 | Joe Wolk: Therefore, we now expect operational sales growth for the full year to be in the range of 3.3% to 4.3% with a midpoint of $92 billion or 3.8%. Excluding the impact from acquisitions and divestitures, we are maintaining our adjusted operational sales growth to the range of 2% to 3% compared to 2024. As you know, we don't speculate on future currency movements, and last quarter, we utilized the euro spot rate relative to the US dollar of 1.04. Last week, the euro spot rate relative to the US dollar was 1.11. We estimate an incremental positive foreign currency impact of $1.1 billion versus previous guidance, resulting in a full-year headwind of $600 million. As such, we now expect reported sales growth between 2.6% to 3.6% with a midpoint of $91.4 billion or 3.1%. Turning to other notable items on the P&L, we are maintaining our guide of operating margin improvement by 300 basis points versus 2024. This improvement takes into consideration the dilution from the IntraCellular transaction as well as what we know today about the impact of tariffs on our business. |
3,649 | JNJ | 1 | 2,025 | 2025-04-15 08:30:00 | Johnson & Johnson | 139,677 | Joe Wolk: We now project net interest expense between $100 million and $200 million, primarily driven by financing costs associated with the IntraCellular acquisition. Other income is anticipated to be in the range of $1 billion to $1.2 billion, a slight increase versus previous guidance. Despite $0.25 dilution from the IntraCellular acquisition, including the impact of tariffs, based on what is in place today, we are pleased to be able to maintain our adjusted reported earnings per share guidance of 6.2% at the midpoint for a range of $10.50 to $10.70, partially aided by the reduced FX impact. I'll now provide some qualitative considerations on phasing for your models. We continue to expect both innovative medicine and MedTech operational sales growth to be higher in the second half of the year versus the first half. Regarding innovative medicine, we maintain the assumption that the impact of STELARA biosimilar competition will accelerate throughout the year, similar to HUMIRA's erosion curve, which is still our proxy with the additive impact of Part D redesign. The impact of Part D redesign on affected products as a percent of sales will be consistently applied throughout the year, aligned with how we traditionally account for similar discount and rebate programs. Naturally, we expect a greater benefit from our newly launched products as the year progresses. Regarding MedTech, we expect normalized procedure volume and seasonality, and of course, we anniversary the Shockwave acquisition at the end of May. We anticipate our newly launched products to build throughout the year with the relaunch of VERIPULSE in the U.S., the introductions of dual energy STSF in the EU, Velas Uniti, Velas Spine, and Technis Odyssey. Lastly, this slide highlights the one-time prior year P&L items that should be taken into quarterly consideration for your models. Beyond our financial commitments and what Joaquin and John mentioned, we are excited for the pipeline progress planned for the remainder of 2025. In innovative medicine, |
3,650 | JNJ | 1 | 2,025 | 2025-04-15 08:30:00 | Johnson & Johnson | 139,677 | Joaquin and John mentioned, we are excited for the pipeline progress planned for the remainder of 2025. In innovative medicine, this includes expected approvals in nipocalumab for generalized myasthenia gravis, subcutaneous riboflavin for non-small cell lung cancer in the U.S., Tremfya subcutaneous induction for ulcerative colitis, and Caplyta for adjunctive major depressive disorder. We continue our rolling submission of TAR-200 in non-muscle invasive bladder cancer and anticipate filing Ichotrochindra in psoriasis. And planned data readouts for riboflavin in head and neck cancer, Ichotrochindra in ulcerative colitis, as well as head-to-head data versus SITC-2 in psoriasis. In MedTech, we continue to make progress with clinical trials for our OTAVA robotic surgical system and across our cardiovascular portfolio, including heart recovery with Impella ECP submission, and circulatory restoration with Javelin and Shockwave E8 launches. This progress will bode well for financial performance for the balance of this decade. In fact, building on John's earlier discussion on our innovative medicine pipeline, and what I just outlined, I'd like to revisit and update a slide that we shared at our enterprise business review in late 2023. In that slide, you may recall we highlighted key assets in our portfolio that we expected to drive long-term growth and projected higher revenue than street estimates. We've been pleased to see some estimates have been raised since the 2023 enterprise business review, and now I'd like to walk you through some of our current thinking on our pipeline potential. To show where we see even more upside. Based on current 2027 street estimates, our projections are at least two times higher for riboflavin plus LASCRUZ and at least 50% higher for SPRAVATO. One asset that we didn't highlight in this look back in 2023 was Tremfya. However, given recent regulatory approvals for inflammatory bowel disease, we now see sales for Tremfya at least 25% higher than current street estimates. When looking ahead |
3,651 | JNJ | 1 | 2,025 | 2025-04-15 08:30:00 | Johnson & Johnson | 139,677 | inflammatory bowel disease, we now see sales for Tremfya at least 25% higher than current street estimates. When looking ahead to 2028, we anticipate sales previously referred to as TARUS to be at least three times higher than current street estimates, and new to the chart, Ichotrochindra, our targeted oral peptide, to be at least two times higher. To be balanced, analyst estimates are still a bit more optimistic than our own estimates on nipocalumab in 2027. However, we do anticipate closing that gap after launch. We have even stronger conviction today in our growth opportunities than at the enterprise business review as we've reached new milestones with each of these medicines. And importantly, we expect all these assets to achieve peak year sales beyond 2028 with further potential upside to street estimates in the outer years. Even after considering risk adjustments for unapproved products that you may apply, hopefully, you'll also conclude there is additional value to your outlooks. In summary, it was a solid start to the year. Johnson & Johnson's diversified business model uniquely positions us to tackle the headwinds in 2025, deliver on our financial commitments, and advance our pipeline to create long-term sustainable value for shareholders. Thank you. And with that, we are happy to take your questions. Kevin, will you please provide instructions for those seeking to participate in the Q&A? |
3,652 | JNJ | 1 | 2,025 | 2025-04-15 08:30:00 | Johnson & Johnson | 139,677 | Operator: Certainly. Without conducting a question and answer session, we ask you please limit ourselves to one question only. Our first question today is coming from Larry Biegelsen from Wells Fargo. Your line is now live.
Larry Biegelsen: Good morning. Thank you for taking the question, and congrats on a nice quarter. Joe, you talked about $400 million in tariffs in the 2025 guidance or about fourteen cents by our math. What is that on an annualized basis? And how are you thinking about being able to mitigate that over time? Can you pass it along to customers, or can you offset it by moving production? Thanks for taking the question. |
3,653 | JNJ | 1 | 2,025 | 2025-04-15 08:30:00 | Johnson & Johnson | 139,677 | Joe Wolk: Yeah. Thanks, Larry. Good to hear from you. So what's included in the $400 million, and again, that is primarily MedTech tariffs at this point. It's based on the programs that have been announced and the timing that correlates with those programs. So that would be inclusive of Mexico and Canadian import tariffs that are not excluded. Of USMCA. It'll include to us a very small degree some of the steel and aluminum tariffs that impact some of our products. It includes the China tariffs as well as the China retaliatory tariff, and that is probably the most substantial out of all the tariffs in terms of that $400 million. And so just to maybe clarify for everybody, that is products of US origin being shipped into China, and that's probably the most penalizing factor. That $400 million, I don't want to be cavalier about that. It's obviously the program has been phased in as a partial year. And then you have mostly this being captured as cost of goods. It's going to sit on the balance sheet in inventory and be relieved through the P&L in future periods. So that's how we're thinking of it. In terms of mitigation strategies, I think you know across our entire business, we're very limited in terms of price leverage. Whether it be on the MedTech side, there's contractual agreements already in place and certainly very much precluded on the pharmaceutical side. On current products that exist in terms of taking price increase. And I know Joaquin has a few thoughts regarding tariffs and maybe other mitigation factors and the supply nature of healthcare. Thank you, Joe. And thank you, Larry, for the question. Thinking about tariffs and thinking specifically about pharmaceutical tariffs, there's a reason why pharmaceutical tariffs are zero. It's because tariffs can create disruptions in the supply chain leading to shortages. If what you want is to build manufacturing capacity in the US, both in MedTech and in pharmaceuticals, the most effective answer is not tariffs, but tax policy. As a matter of fact, since |
3,654 | JNJ | 1 | 2,025 | 2025-04-15 08:30:00 | Johnson & Johnson | 139,677 | both in MedTech and in pharmaceuticals, the most effective answer is not tariffs, but tax policy. As a matter of fact, since President Trump's 2017 tax reform, the investment in manufacturing both in MedTech and in pharmaceuticals has significantly increased. And when you think about our recent announcement of investing $55 billion over the next four years, at the completion of this investment plan, essentially, all our advanced medicines that are used in the US will be manufactured in the US. So tax policy is a very effective tool to be able to build manufacturing capacity here in the US both for MedTech and pharmaceuticals. Hey, Larry. I just want to follow-up too. You did ask about a full-year impact, and I would say I purposely ignored the only because it would be way too speculative at this point. As we know, these tariffs are very fluid, and the responsible action for us now is to quantify what we see the impact in 2026 and then see what happens with respect to does it lend itself to negotiations with other countries on what's actually in place as we get into the later part of 2025? |
3,655 | JNJ | 1 | 2,025 | 2025-04-15 08:30:00 | Johnson & Johnson | 139,677 | Operator: Thank you. Next question today is coming from Chris Schott from JPMorgan. Your line is now live.
Chris Schott: Great. Thanks so much. Just had a question on gross margins in the quarter. It seems like these came in well below trends. I'm just trying to get a better understanding of the drivers there and the outlook going forward as we consider mix, tariffs, etcetera, on the gross margin line. Thank you.
Joe Wolk: Hey, Chris. This is Joe. Thanks for the question. So I would say it's a there's a two-part answer to this one. So specifically, in the quarter when looking at the first quarter of 2024, we obviously had the impact of STELARA, which was a much higher gross margin product than our average product in our portfolio. You had Part D, which is exclusively priced, which is an eroding margin. And then you had some, I would say, transactional currency headwinds, one a favorable impact last year or in 2023, funneling into 2024, and then some unfavorability from last year's currency action. I would expect moving forward based on some of the plans that we have, you could expect that that 300 basis points to probably improve by a third to fifty percent, and that would be inclusive of the tariff that I just mentioned in Larry's question. The other thing I would say is, I know you guys do a great job, but I think analysts were maybe a little bit optimistic with respect to their outlook for gross profit, given that we had STELARA in Part D certainly communicated in the past, I believe the consensus was taking gross margins up year over year, and that one was probably a little bit of a miss. So we probably could have done a better job explaining it.
Operator: Thank you. Next question is coming from Asad Hader from Goldman Sachs. Your line is now live. |
3,656 | JNJ | 1 | 2,025 | 2025-04-15 08:30:00 | Johnson & Johnson | 139,677 | Operator: Thank you. Next question is coming from Asad Hader from Goldman Sachs. Your line is now live.
Asad Hader: Thanks for taking the question. Just going back to the STELARA biosimilar erosion and the acceleration of the trajectory that we're going to see over the course of the year. Are you able to provide any quantitative framing on your views as it relates to the extent to which you think this erosion gets smoothed out by the transition to other brands like Tremfya and other products? Thank you.
Jennifer Taubert: Well, good morning. Thanks so much for the question. It is Jennifer. So what we saw with STELARA in the first quarter was definitely in line with our expectations for the product for the year, and we continue to guide to the HUMIRA two-year erosion curve once there were multiple biosimilars as really the best model there and make sure, you know, are also including the additional impact of Part D redesign. If I could, you know, one additional point around STELARA, we take a look at the business overall, it was highlighted that we had 4.2% growth across innovative medicine. That included a negative 810 basis point impact from STELARA. You know, if you exclude that from our business, the remaining business, the bulk 90% of our business was actually growing at over 12%, really demonstrating the strength of our overall business. And with eleven key brands that were growing double digits. So, yes, we've got the STELARA LOE, but the strength of the business is really coming through across all of our growth drivers. Yeah. And I would add to that. It is remarkable that in a year in which we are facing the headwind of the STELARA biosimilars and Part D redesign, we are able to grow even in the first quarter and that we are able to do it like any other company to my knowledge in the healthcare industry, has done it. It's a testament to the strength of our business, to the diversification of our growth platforms, and it gives me a strong belief we are going to continue to deliver throughout the year. |
3,657 | JNJ | 1 | 2,025 | 2025-04-15 08:30:00 | Johnson & Johnson | 139,677 | John Reed: And Jennifer, just building on the focus on STELARA, of course, as STELARA begins its sunset, Tremfya continues to rise. You've seen the recent approvals in inflammatory bowel disease, where Tremfya now is available as the only IL-23 class medicine for subcutaneous delivery in both inductive and maintenance. We have generated additional strong data going head to head against STELARA in a rigorous double-blind study and showing the superiority across all mucosal endpoints. So that's really disease healing, and then finally, I would say, you'll see later this year data in psoriatic arthritis where we've done a rigorous study looking at preservation of joint avoiding the joint erosion that leads to long-term disability. And you'll see in those data when they're presented is a best-in-disease profile for Tremfya endosurgery. So really excited about the progress with Tremfya, the world's first selective IL-23 inhibitor.
Operator: Thank you. Next question today is coming from Daniela from UBS. Your line is now live.
Daniela: Hey, good morning, everyone. Thanks so much for taking the question. Thanks so much too for all the color on tariffs and the ortho impact. That was super helpful. And Jess, we're really going to miss you. But congrats, and good luck in your next role. Just a quick question on, you know, and maybe this isn't really a question I don't know. But I think it's still on the table, and that's do we or don't we go into a recession? And I'd love some color, if as much as you can provide on how you guys think about your business and how recession-proof it is and what areas might be most at risk of underperforming relative to where we are today in a recession. Thanks so much. |
3,658 | JNJ | 1 | 2,025 | 2025-04-15 08:30:00 | Johnson & Johnson | 139,677 | Joe Wolk: Hey, Daniela. Good to hear from you. Yeah. It's a good question. I think when you know, we think about our business, the one thing we look to is certainly job reports in the US, and as of the most recent reports, it seemed to be pretty healthy. The reason we look at that is because it's a precursor as to who may have benefits and coverage for prescription medications as well as procedures inclusive of elective procedures. We have seen in times past when there's been a little bit of a recession that some of those elective procedures maybe get delayed, but they don't get abandoned. And I'm thinking primarily within orthopedics, you know, healthcare overall has proven to be, while nothing is immune to a recession, it's been a little bit more recession-proof than most other industries. And so we'll continue to monitor that. But right now, we feel good about the standards of care that we're elevating on both the innovative medicine and MedTech side of the house. Overall care demand remains solid, and we feel good about the rest of the year regarding procedures and use of pharmaceuticals. I don't know any comments on that team? Sure. Further to Joe's point, Daniela, the category such as advanced IOLs is a good precursor to really assessing the health of the economy. And so far, we haven't seen any impact on the performance of our IOL portfolio. In fact, we've seen the opposite. When you look at the performance of our IOL business on the back of the launch of both TECNIS Odyssey here in the US and PureC globally. We're seeing benchmark performances and frankly a turnaround of our performance here in the US with truly differentiated innovation. And so so far, no major headwinds.
Operator: Thank you. Next question today is coming from Terence Flynn from Morgan Stanley. Your line is now live. |
3,659 | JNJ | 1 | 2,025 | 2025-04-15 08:30:00 | Johnson & Johnson | 139,677 | Operator: Thank you. Next question today is coming from Terence Flynn from Morgan Stanley. Your line is now live.
Terence Flynn: Hi, good morning. Congrats on the quarter and thanks for taking the question. Joe, we heard your comments this morning on the Section 232 potential pharma tariffs being focused more towards generics API versus the complex branded biologics. So just wondering if that's based on your impression of the most likely outcome here or that's more just your speculation or hope for the outcome? Thank you.
Joaquin Duato: Let me take that question, Terence, myself. So we are analyzing the Section 232. It was already announced previously, so it's something that we consider normal that is going to happen. And overall, adding to my comments on tariffs before, I think it's also important that companies in healthcare partner with the administration to look to mitigate some of the vulnerabilities that exist today in our healthcare supply chain so as to avoid any continuity of supply effect. So it's important for us to partner with the administration and with the government, and we plan to do it in this process to make sure that we have enough manufacturing capacity here in the US to be able to address multiple scenarios. And, Terence, just to be clear that we want to be deferential to the administration and their process. That is speculative. Just looking at the pharmaceutical landscape and where, you know, national security interests may reside and what products there, that those are delivered from. So that was really kind of our take on it, but we are working and engaging with the administration and being to their process.
Operator: Thank you. Next question today is coming from Joanne Wuensch from Citibank. Your line is now live. |
3,660 | JNJ | 1 | 2,025 | 2025-04-15 08:30:00 | Johnson & Johnson | 139,677 | Operator: Thank you. Next question today is coming from Joanne Wuensch from Citibank. Your line is now live.
Joanne Wuensch: Good morning, and thank you for taking the question and for providing all of this information. Very helpful. I do want to set it to pause for a second on the orthopedic sales and try to unpack how much of that is, you know, which variable is there a way to quantify it and how do we think about the recovery and the back half of the year and then into next year? Thank you. |
3,661 | JNJ | 1 | 2,025 | 2025-04-15 08:30:00 | Johnson & Johnson | 139,677 | Joaquin Duato: Joanne, thank you for the question. And as we mentioned, we've tried to provide as much transparency as possible to the significant impact of one-timers in the quarter, which, to your point, have disproportionately impacted the Ortho business to the tune of roughly 480 basis points. There are three key drivers to that. Number one, the lapping of prior year change in walking implants revenue recognition, fewer selling days, and finally revenue disruption from the recent ortho transformation, which we announced in 2023. So when you actually look at our operational growth, when accounting for those, it would be closer to 2%. Now at the same time, I will say, Joanne, we are not satisfied. Our underlying performance was impacted by competitive pressures, primarily in spine and sports, which is partially offset by strong NPIs and commercial execution in categories like trauma, shoulder, and foot and ankle. What gives us confidence in continued acceleration to the back half of the year is the incredible impact of truly differentiated innovation across our ortho portfolio. In fact, in 2024, we had eighteen 510(k) approvals here in the US, and forty-five outside of the US across our portfolio. And what gives us confidence is this combination of having best-in-class implants with truly differentiated enabled technology such as Velas. In our Hips portfolio, we believe we're going to see continued performance on the back of our focus on two-point-o. In these, we have seen a slowdown in revisions where I think you know we are historically number one, but feel very confident about continued momentum in primary with the combination of Attun and Velas which is now available in thirty markets. We have a hundred and ten thousand procedures, and as you probably know, we're now launching the Velocirune knee in the coming quarters. In trauma, this was a standout quarter for us, close to 7.3% operational growth when you account for the one-timers, and this was driven by a tremendous uptake of our VoLTE plating system |
3,662 | JNJ | 1 | 2,025 | 2025-04-15 08:30:00 | Johnson & Johnson | 139,677 | operational growth when you account for the one-timers, and this was driven by a tremendous uptake of our VoLTE plating system and the feedback we've got from surgeons, especially for our small frag. Our mini frag and our distal radius has been exceptional. I think you also know that spine has been a bit of a laggard for us in the ortho portfolio. We are now effectively launching the TriAlta Spine System, which is a thoracolumbar system coupled with Velo Spine, also launching in the coming quarters. And so not the best start but strong confidence in improved performance the remainder of the year and also. |
3,663 | JNJ | 1 | 2,025 | 2025-04-15 08:30:00 | Johnson & Johnson | 139,677 | Operator: Thank you. Next question today is coming from Vamil Divan from Guggenheim Partners. Your line is now live.
Vamil Divan: Great. Thanks for taking the question and for all the information. I just wanted to maybe focus on that slide twenty-nine, Joe, that you touched on on this for you, Joe Riffer, for Jennifer. Appreciate you sharing your perspective on those products and how they differ. Your expectations differ from consensus. There's three products that are not on there anymore that were there. At the end of twenty twenty-three, and that's Carvicki, Talve, and Tekvely. And I don't think the consensus expectations have changed for those. Very much since then. So maybe you can just talk about, you know, what has changed there, why those aren't listed. Has anything changed from your internal perspectives or again, externally that just had those come off of that list. Thank you.
Jessica Moore: Hi, Vamil. This is Jess. Yes. You're absolutely correct. The multiple myeloma portfolio was on the slide. During the EBR in 2023 and they are not on the slide today. Not saying that there's not. It's still a disconnect, but it's just not to the extent of the other products on the list. At that time, we had estimated if you did the math on the slide, it would have been about $4 billion that would have been added to 2027. Around $2 billion was added so those estimates did go up at that time. Again, not that there's not still a disconnect. It's just not to the extent of the others on the slide because those estimates were increased.
Joe Wolk: Yeah. So just to be super clear on that one, Vamil, we are still extremely bullish based on the clinical progression, R&D, as well as the performance that we're seeing in the marketplace. I mean, look at CARVYKTI, I think, doubled sales year on year. So it's just a matter to that you guys took your numbers up and so we agree. I guess, that's maybe the best way to say that. |
3,664 | JNJ | 1 | 2,025 | 2025-04-15 08:30:00 | Johnson & Johnson | 139,677 | Jennifer Taubert: And maybe just to add in a little bit more on CARVYKTI. So, yeah, over 100% operational growth in the fourth in the first quarter. In that second line plus indication. We continue to add sites. We continue to add countries. And capacity expansion globally. And so, we have very firm conviction in CARVYKTI as a $5 billion-plus asset and really are rolling that out globally very effectively at this point in time. So we don't see capacity as a constraint. Going forward based on the strength of the efforts that have taken place. And so, you know, we're full speed ahead for CARVYKTI going forward.
John Reed: And with Tech and Tal, John here, you know, we're really just getting started. You've probably seen some of the recent data where we've even combined those two molecules to a really unprecedented level of complete responses. At the hematology meetings last year. We also showed combining either TEC or Tal with DARZALEX and demonstrating really impressive 100% minimal residual disease negativity in earlier lines of therapy and the opportunity therefore to really start bringing these first-in-class bispecific T cell redirecting molecules into earlier lines, even frontline in combination with our DARZALEX. So really, enormous opportunity lies ahead of us with Tech and Tal. |
3,665 | JNJ | 1 | 2,025 | 2025-04-15 08:30:00 | Johnson & Johnson | 139,677 | Jennifer Taubert: And a couple of other things on Tech and Tal. So we continue to expand. We've got very good penetration in the academic settings right now. And we continue to expand out into the community. We've got very strong new patient starts. I know that the products have been plagued a little bit because the product is so effective with some less frequent dosing. As we move forward, we should be lapping that soon. And really, you'll see the strength of those new patient starts and the continued expansion into the community starting to show through. Combined then with what John talked about in terms of additional combinations and such. We've got very strong convictions and we remain convinced on the opportunities for Tech and Tal.
Operator: Thank you. Next question is coming from Matt Miksic from Barclays. Your line is now live. |
3,666 | JNJ | 1 | 2,025 | 2025-04-15 08:30:00 | Johnson & Johnson | 139,677 | Operator: Thank you. Next question is coming from Matt Miksic from Barclays. Your line is now live.
Matt Miksic: Great. Thanks so much for taking the questions. And I appreciate all the color. I had a clarification and a question if I could. So the question first, you know, would be great if you could maybe flush out the way that you know, the opportunities in Tremfya, you know, which is now kind of leaning into IT and the emerging opportunities for Ichotrochindra. In oral kind of you know, now you see them coming together this year, next year, year after, as kind of a portfolio. In immuno. And then a clarification, if I could, just for Tim, sounded like when you were describing the ortho impacts, the two I don't know, like, two percent. But if you look at the hip and knee math, it's if I'm right, it looks like about two percent in the US, I just want to make sure I understand. It sounded like your view was that's on us, you know, and we're going to remedy that with innovations and new products this year. Maybe you know, just put two spine of a coin on it, but it's like that's not market growth, like two percent. Like, you would say we're below market, and we should be doing better. Or do you think that you know, that's kind of where the market's at? Is in that, like, low single-digit range for US and S and Ps. Thanks so much. Apologies for the long super helpful. Thanks. |
3,667 | JNJ | 1 | 2,025 | 2025-04-15 08:30:00 | Johnson & Johnson | 139,677 | Tim Schmid: Matt, let me start with your question on ortho. And to be perfectly frank, while we have seen an improvement in outperformance both in hips and knees through 2024, Q1 clearly wasn't our strongest quarter. And we have seen competitive pressures. As you know, these are highly attractive categories within ortho. It's where the primary fight is. And, frankly, we need to do better. And so we believe that our performance so far in the quarter was slightly below market. These are attractive markets. We've seen a, you know, strong robust procedures across ortho, and we expect that to continue, as I mentioned, with the addition of our portfolio of both implants as well as enabling technology across hips and knees, we're confident that we will see an improvement through the remaining quarters. Thank you. |
3,668 | JNJ | 1 | 2,025 | 2025-04-15 08:30:00 | Johnson & Johnson | 139,677 | Jennifer Taubert: Great. So let's switch over to Tremfya in immunology. And Tremfya really had a great quarter in the first quarter with sales nearly a billion dollars and over 20% operational growth. And this was really driven by March as well as what we're seeing as it relates to the launch in ulcerative colitis and also in Crohn's disease. So, we are really encouraged by the launch in both of these IBD indications. Tremfya is now if we start with ulcerative colitis and how we're doing and then now go to Crohn's disease. So, in ulcerative colitis, Tremfya is the fastest-growing product. In the ulcerative colitis market, IL-23s are the fastest-growing class, and Tremfya has already achieved nearly a 50% share of the IL-23 new patient starts in UC. So, this is really based on the strength of the profile of the product and the strong differentiation that we have as a dual-acting IL-23, both impacting both IL-23 as well as CD-sixty four. The robust data that we have as it relates to efficacy and remission. And then as we get into Crohn's disease and then later in ulcerative colitis, as well, what we see is unrivaled simplicity with the opportunity for subcu induction as well as maintenance dosing. When we take a look at market research data and you know, intend to prescribe, the data comes through really strong that gastroenterologists really prefer Tremfya over the IL-23 competitors based on those aspects that I just discussed. So, you know, efficacy, sustained remission, and mucosal healing right now for UC. On Crohn's, there is very significant enthusiasm around our launch there, and it's really quickly getting traction. In the first few weeks since approval in Crohn's disease, patient initiation volumes are outpacing the other IL-23 launches in the market, and the polling data, our recent market research, eighty-two percent of gastroenterologists consider Tremfya's induction dosing and flexibility to be a very positive differentiation in their treatment decisions. And they're seeing the efficacy profile to be |
3,669 | JNJ | 1 | 2,025 | 2025-04-15 08:30:00 | Johnson & Johnson | 139,677 | flexibility to be a very positive differentiation in their treatment decisions. And they're seeing the efficacy profile to be quite compelling compared to the other therapies that are in the market. So we believe that in IBD, both in ulcerative colitis and Crohn's, we're off to a strong start. And, as a reminder, tracking back to STELARA, seventy-five percent of sales were in IBD indications. We see no reason why Tremfya wouldn't be the same or even better based on what we're seeing with the strength and competitiveness of the profile. |
3,670 | JNJ | 1 | 2,025 | 2025-04-15 08:30:00 | Johnson & Johnson | 139,677 | John Reed: And maybe just a comment on Ichotrochindra, since you asked about that. The most proximal opportunity there is our psoriasis campaign where we will have altogether five phase three studies. Data for that this year, we expect to submit this year for psoriasis. So excited to be able to offer patients more choice. You know, with even a market like psoriasis, which, you know, should be well penetrated by now because it is a place where some of the biologics first got their start. More than half of patients who are eligible for advanced therapy are still not on advanced therapy, and for many of these patients, it's really an aversion to the injections and going to biologic route. So to be able to offer patients a choice of a once-a-day pill to provide a solution for their disease, which has efficacy in the same ballpark as the biologics and with that well-proven safety profile of the IL-23 class is really exciting for us.
Jennifer Taubert: Yeah. We really believe that Ichotrochindra is a big market expansion opportunity to get in those earlier lines of therapy and to bring patients into therapies that have that strong biologic-like efficacy. We think that there is a lot of room for both Ichotrochindra and Tremfya in the market based on different very very important growth drivers for us going forward.
Jessica Moore: Thank you, Matt. Kevin, we have time for one last question.
Operator: Thank you. Our final question today is coming from Tim Anderson from Bank of America. Your line is now live.
Tim Anderson: Thank you so much. Going back to tariffs, you know, a big concern by investors is how that might alter wrap in transfer pricing structures, and every company I know is usually hesitant to talk about that. I'm wondering what J&J can offer up on that front. That could include things like major products where you have transfer price structures in place, as well as which geographies you have those in place as well. |
3,671 | JNJ | 1 | 2,025 | 2025-04-15 08:30:00 | Johnson & Johnson | 139,677 | Joe Wolk: Yeah. I appreciate the question, Tim. It's just not something that for competitive reasons we're going to comment on.
Joaquin Duato: I would reiterate what I said before. With our $55 billion investment plan at the completion of that plan, which we spoke about four years, all our advanced medicines that are used in the US will be manufactured here in the US. So that's our plan, and that's why we believe it's important to provide discontinuity. As I said before, after 2017, President Trump's tax reform, the level of investments in the US have been increased, and we plan to continue to increase it given the current tax regime or improvements that may come into the future.
Jessica Moore: Thank you, Tim. And thanks to everyone for your questions and your continued interest in our company. Apologize to those that we couldn't get to because of time. But don't hesitate to reach out to the Investor Relations team with any remaining questions. As many of you have seen, Darren Snellgrove will be transitioning into the transition into the Innovative Medicine CFO role. The last three and a half years have been an absolute pleasure getting to engage with you all. I will now turn the call over to Joaquin for some brief closing remarks.
Joaquin Duato: Thank you, Jess, and thank you everyone for joining the call today. As you heard, 2025 is going to be a catalyst year for Johnson & Johnson. And with our Q1 results, we are off to a great start. This start reflects the power of Johnson & Johnson's uniquely diversified business model and further strengthens our confidence in our 2025 guidance and beyond. Thank you very much.
Operator: Thank you. This concludes today's Johnson & Johnson's first quarter 2025 earnings conference call. You may now disconnect. |
3,672 | JPM | 4 | 2,024 | 2025-01-15 08:30:00 | JPMorgan Chase & Co. | 658,776 | Operator: Good morning, ladies and gentlemen. Welcome to JPMorgan Chase's Fourth Quarter 2024 Earnings Call. This call is being recorded. [Operator Instructions] We will now go live to the presentation. The presentation is available on JPMorgan Chase's website, please refer to the disclaimer in the back concerning forward-looking statements. Please standby. At this time, I would like to turn the call over to JPMorgan Chase's Chairman and CEO, Jamie Dimon; and Chief Financial Officer, Jeremy Barnum. Mr. Barnum, please go ahead. |
3,673 | JPM | 4 | 2,024 | 2025-01-15 08:30:00 | JPMorgan Chase & Co. | 658,776 | Jeremy Barnum: Thank you, and good morning, everyone. Starting on Page 1, the firm reported net income of $14 billion, EPS of $4.81 on revenue of $43.7 billion with an ROTCE of 21%. On Page 2, we have more on our fourth quarter results. The firm reported revenue of $43.7 billion, up $3.8 billion or 10% year-on-year. NII ex-markets was down $548 million or 2%, driven by the impact of lower rates and the associated deposit margin compression as well as lower deposit balances in CCB, largely offset by the impact of securities reinvestment, higher revolving balances in card and higher wholesale deposit balances. NII ex-markets was up $3.1 billion or 30%. Excluding the prior year's net investment securities losses, it was up 21%, largely on higher asset management fees and investment banking fees. And markets revenue was up $1.2 billion or 21%. Expenses of $22.8 billion were down $1.7 billion or 7% year-on-year. Excluding the prior year's FDIC special assessment, expenses were up $1.2 billion or 5%, predominantly driven by compensation as well as higher brokerage and distribution fees. And credit costs were $2.6 billion, reflecting net charge-offs of $2.4 billion and a net reserve of $267 million. On Page 3, you can see the reported results for the full year, I'll remind you that there were a number of significant items in 2024. Excluding those items, the firm reported net income of $54 billion, EPS of $18.22, revenue of $173 billion and we delivered an ROTCE of 20%. Touching on a couple of highlights for the year, in CCB, we had a record number of first-time investors and acquired nearly 10 million new card accounts. In CIB, we had record revenue in markets, payments, and security services, and in AWM, we had record long-term net inflows of $234 billion, positive across all channels, regions, and asset classes. On to balance sheet and capital on Page 4, we ended the quarter with a CET1 ratio of 15.7%, up 40 basis points versus the prior quarter as net income and lower RWA were largely offset by both OCI losses and |
3,674 | JPM | 4 | 2,024 | 2025-01-15 08:30:00 | JPMorgan Chase & Co. | 658,776 | of 15.7%, up 40 basis points versus the prior quarter as net income and lower RWA were largely offset by both OCI losses and capital distributions, which included $4 billion of net common share repurchases this quarter. The $24 billion decrease in RWA reflects a seasonal decline in markets activity and lower wholesale lending, which was predominantly offset by a seasonal increase in card. Now let's go to our businesses, starting with CCB on Page 5. CCB reported net income of $4.5 billion on revenue of $18.4 billion, which was up 1% year-on-year. In Banking and Wealth Management, revenue was down 7% year-on-year on deposit margin compression and lower deposits, partially offset by growth in wealth management revenue. Average deposits were down 4% year-on-year and flat sequentially as consumer balances have stabilized. Client investment assets were up 14% year-on-year, predominantly driven by market performance, and we continue to see healthy flows across branch and digital channels. In Home Lending, revenue was up 12% year-on-year, predominantly driven by higher production revenue. Turning to Card Services & Auto, revenue was up 14% year-on-year, largely driven by Card NII on higher revolving balances. Card outstandings were up 11% due to strong account acquisition and revolver growth. And in Auto, originations were $10.6 billion, up 7%, reflecting higher lease volume on robust new vehicle inventory. Expenses of $9.7 billion were up 4% year-on-year, predominantly driven by field compensation and growth in technology. In terms of credit performance this quarter, credit costs were $2.6 billion, reflecting net charge-offs of $2.1 billion, up $428 million year-on-year, driven by Card. The net reserve build was $557 million, predominantly driven by higher Card revolving balances. Next, the Commercial & Investment Bank on Page 6. CIB reported net income of $6.6 billion on revenue of $17.6 billion. IV fees were up 49% year-on-year and we ranked number one with wallet share of 9.3% for 2024. Advisory fees were up 41%, |
3,675 | JPM | 4 | 2,024 | 2025-01-15 08:30:00 | JPMorgan Chase & Co. | 658,776 | IV fees were up 49% year-on-year and we ranked number one with wallet share of 9.3% for 2024. Advisory fees were up 41%, benefiting from large deals and share growth in a number of key sectors. Underwriting fees were up meaningfully with debt up 56% and equity up 54%, primarily driven by favorable market conditions. In terms of the outlook for the overall investment banking wallet, in light of the positive momentum, we remain optimistic about our pipeline. Payments revenue was $4.7 billion, up 3% year-on-year, excluding equity investments, driven by higher deposit balances and fee growth, largely offset by deposit margin compression. Lending revenue was $1.9 billion, up 9% year-on-year, predominantly driven by lower losses on hedges. Moving to markets, total revenue was $7 billion, up 21% year-on-year. Fixed income was up 20% with better performance in credit as well as continued outperformance in currencies and emerging markets. Equities was up 22% on elevated client activity and derivatives amid increased volatility and higher trading volumes and cash. Security Services revenue was $1.3 billion, up 10% year-on-year, driven by fee growth on higher client activity and market levels as well as higher deposit balances. Expenses of $8.7 billion were up 7% year-on-year, predominantly driven by higher brokerage, technology, and legal expense. Average banking and payments loans were down 2% year-on-year and down 1% sequentially. Global Corporate & Investment Banking loans were down 2% quarter-on-quarter, driven by paydowns in lower short-term financing, primarily offset by new originations. In commercial banking, middle market loans were also down 2%, driven by paydowns, predominantly offset by new originations, and commercial real estate loans were flat as new originations were offset by paydowns. Average client deposits were up 9% year-on-year and 5% sequentially, driven by underlying client growth. Finally, credit costs were $61 million, driven by net downgrade activity and the net impact of charge-offs, offset -- |
3,676 | JPM | 4 | 2,024 | 2025-01-15 08:30:00 | JPMorgan Chase & Co. | 658,776 | growth. Finally, credit costs were $61 million, driven by net downgrade activity and the net impact of charge-offs, offset -- largely offset by a reserve release due to an update to certain loss assumptions. Then to complete our lines of business, Asset & Wealth Management on Page 7. AWM reported net income of $1.5 billion with pre-tax margin of 35%. Revenue of $5.8 billion was up 13% year-on-year, predominantly driven by growth in management fees on higher average market levels and strong net inflows as well as higher performance fees. Expenses of $3.8 billion were up 11% year-on-year, predominantly driven by higher compensation, including revenue-related compensation and continued growth in our private banking advisor teams as well as higher distribution fees. Long-term net inflows were $76 billion for the quarter, positive across all asset classes. In liquidity, we saw net inflows of $94 billion for the quarter and $104 billion for the full year -- $140 billion for the full year, sorry. And we had client asset net inflows of $468 billion for the year. AUM of $4 trillion and client assets of $5.9 trillion were both up 18% year-on-year, driven by continued net inflows and higher market levels. And finally, loans were up 2% quarter-on-quarter and deposits were up 5% quarter-on-quarter. Turning to Corporate on Page 8; Corporate reported net income of $1.3 billion. Revenue of $2 billion was up $223 million year-on-year. NII of $2 billion was down $415 million year-on-year, driven by the impact of lower rates, largely offset by balance sheet actions, primarily securities reinvestment activity. NII was a net loss of $30 million compared to the net loss of $668 million in the prior year, driven by lower net investment securities losses this quarter. And expenses of $550 million were down $3 billion year-on-year, predominantly driven by the absence of the FDIC Special Assessment of $2.9 billion in the prior year. With that, let's pivot to the outlook, starting with NII on Page 9. We expect 2025 NII ex-markets to be |
3,677 | JPM | 4 | 2,024 | 2025-01-15 08:30:00 | JPMorgan Chase & Co. | 658,776 | in the prior year. With that, let's pivot to the outlook, starting with NII on Page 9. We expect 2025 NII ex-markets to be approximately $90 billion. Going through the drivers, as usual, the outlook assumes that rates follow the forward curve. It's worth noting that the NII decrease is driven by both the cut expected in 2025 and the impact of the 100 basis points of cuts in the back half of 2024. You can see on the page that we've illustrated the historical trajectory of card loan growth. We expect healthy card loan growth again this year, but below the 12% pace we saw in 2024 as tailwinds from revolve normalization are largely behind us. Turning to deposits; firm-wide deposits have stabilized and we expect to see a more visible growth trend to assert itself in the second half of 2025. It's notable that we can already see that trend in consumer checking deposits. On deposit margin, we expect modest compression due to lower rates. When you put all that together, we expect the NII trough could be sometime in the middle of the year, followed by growth as we illustrated at the bottom of the bar. And for completeness, we expect firm-wide NII to be approximately $94 billion as a function of markets NII increasing to about $4 billion, which you should think of as being primarily offset in NIR. Finally, I want to point out that starting this quarter, we are including an estimate of earnings at risk in the earnings supplement, so you no longer have to wait for the K or the Q to get that number. Now let's turn to expenses on Page 10. We expect 2025 expense to be about $95 billion. Looking at the chart in the middle of the page, I'll touch on the drivers of the year-on-year change, which you'll note are very consistent with what you've been hearing from us recently. The largest increase is volume and revenue-related expense, which is primarily driven by expected growth in auto leasing as well as capital markets. As a reminder, this comes with higher revenues. We continue to hire bankers and advisors to support business |
3,678 | JPM | 4 | 2,024 | 2025-01-15 08:30:00 | JPMorgan Chase & Co. | 658,776 | capital markets. As a reminder, this comes with higher revenues. We continue to hire bankers and advisors to support business growth as well as expand our branch network. The increase in tech spend is primarily business-driven as we continue to invest in new products, features, and customer platforms as well as modernization. Marketing remains a driver of spend as we continue to see attractive opportunities, resulting in strong demand and engagement in our Card business. And finally, while we haven't explicitly called it out in each bar, inflation remains a source of some upward pressure, and as always, we are generating efficiencies to help offset it. Now let's turn to Page 11 to cover credit and wrap-up. On credit, we expect the 2025 card net charge-off rate to be in line with our previous guidance of approximately 3.6%. So, in closing, 2024 was another year of record revenue and net income, and we're proud of what we accomplished. As we look ahead to 2025, we still expect NII normalization, although to a lesser extent than we previously thought. And taking a step back, we think it's important to acknowledge the tension in the risks and uncertainties in the environment and the degree of optimism embedded in asset prices and expectations. In that context, we remain upbeat about the strength of the franchise, but we are focused on being prepared for a wide range of scenarios. Finally, let me say a few words about the wildfires in Los Angeles, while we don't expect much of a financial impact from it, we have a presence in the area across all three lines of business, so we're keeping in close contact with our customers, clients, and employees. We are offering support in a variety of ways, including waiving consumer and business banking fees as well as making a contribution to local relief organizations, offering employee donation matching, and supporting employee volunteer efforts. With that, I'll turn it over to Jamie before we open up the line for Q&A. |
3,679 | JPM | 4 | 2,024 | 2025-01-15 08:30:00 | JPMorgan Chase & Co. | 658,776 | Jamie Dimon: Good morning, everybody. I just want to point out that Daniel Pinto is not leaving the company yet. So, it's premature what I'm about it, guys, I just wanted to say I'd be -- and I'd be remiss not to say, here's a young man who joined the company at 20 years old in Argentina. He ran trading in Argentina, then he ran trading for Latin America, then he ran global emerging markets trading, then he ran fixed-income trading, and then became Co-Head of the Investment Bank and the sole Head of the Investment Bank for 10 years. And over that whole time, he was helping build one of the great investment banks in the world, and so -- and then obviously, he was President for five years or more, a great partner of mine, trusted by everyone at the company. So we're thrilled to have his skills and talents going forward, but I just wanted to recognize the contributions he made.
Jeremy Barnum: Great. All right. So let's go to questions.
Operator: Thank you. Please standby. Our first question comes from John McDonald with Truist Securities. You may proceed.
John McDonald: Hi, good morning. Jeremy, I wanted to ask about capital, and I know you get this question a lot about the kind of high-class dilemma of your growing capital base and your perspective of that as earnings in store. So I guess what's the framework for thinking about the opportunity cost of sitting on the growing base of capital and how high you might let that go versus your patience in waiting for more attractive deployment opportunities?
Jeremy Barnum: Yes, good question, John, and welcome back, by the way. So...
Jamie Dimon: Welcome back, John, read your theme the other day. It took me quite a while, but it was good work.
John McDonald: Thanks. |
3,680 | JPM | 4 | 2,024 | 2025-01-15 08:30:00 | JPMorgan Chase & Co. | 658,776 | John McDonald: Thanks.
Jeremy Barnum: So yes, you've noted all the points that we always make, so I won't repeat them. And I think the way we're thinking about it right now is that we feel very comfortable with the notion that it makes sense for us to have a nice store of extra capital in light of the current environment. We believe there's a good chance that there will be a moment where we get to deploy it at better levels essentially in whatever way than the current opportunities would suggest. And so that feels like a correct kind of strategic and financial decision for us. Having said that, having studied it quite extensively over the last six months and had all the debates that you would expect, we've concluded that we do have enough, we have enough excess. And given that we would like to not have the excess grow from here. So when you think about the implications of that, given the amount of organic capital generation that we're producing, it means that unless we find in the near-term opportunities for organic deployment or otherwise, it means more capital return through buybacks, all else being equal in order to arrest the growth of the excess, and that is our current plan, although I'll give you the caveat that, as you know, is in our disclosure, which is we don't want to get in the business of guiding on buybacks and we reserve the right to change the trajectory at any time for any reason, but that is our current thinking.
John McDonald: Okay. Thanks, Jeremy. And then just as a follow-up, when we think about the investment spend agenda this year. How does it differ from, say, last year or last couple of years across lines of business in this kind of certainty of return spectrum you've talked about? And then what kind of efficiencies are baked into the outlook as well? Thanks. |
3,681 | JPM | 4 | 2,024 | 2025-01-15 08:30:00 | JPMorgan Chase & Co. | 658,776 | Jeremy Barnum: Sure. I mean, the truth is, and I guess this is a good thing that the themes are remarkably consistent. So we are seeing the results of our kind of high-certainty investment choices across all the categories that you know very well and that we highlighted on the outlook page for expenses and those continue to be the main areas of focus. The execution gets tweaked at the margin as we pursue different opportunities, in the Commercial & Investment Bank, we continue drilling down and analyzing into the relative pockets of weakness that you might see if you go a level or two below the very significant -- significantly strong share positions that you see on an aggregate level. Daniel always talked about the reds and the ambers that are behind the greens and that's embedded in the culture of the company. So we do that everywhere and continue analyzing and iterating and we throw resources against that stuff, as we do that. But broadly, the themes were very consistent. I think in terms of efficiency, a couple of things to say, which you know well. One is, when we think about efficiency and how we've generated at this company, it's organic, it's BAU, it's evergreen, it happens every day in all the teams everywhere. And so that is sort of part of the bottoms-up culture and that remains the case. We do have a few top-down areas of focus. I think if I go, for example, technology for starters, we're putting a lot of effort into improving the sort of ability of our software engineers to be productive as they do development and there's been a lot of focus on the development environment for them in order to enable them to be more productive, and so all else equal, that generates a little bit of efficiency. We also have a lot of efficient -- a lot of focus on the efficiency of our hardware utilization and so that's embedded in there as well. And another thing that's worth noting, you'll recall that at Investor Day, I talked about how we had probably reached peak modernization spend. Now as Jamie always says, we're |
3,682 | JPM | 4 | 2,024 | 2025-01-15 08:30:00 | JPMorgan Chase & Co. | 658,776 | that at Investor Day, I talked about how we had probably reached peak modernization spend. Now as Jamie always says, we're always modernizing. So the fact that we've gotten to a peak and that it might come down a little bit from here still means we're going to be constantly modernizing. But at the margin, that means that inside the tech teams, there's a little bit of capacity that gets freed up to focus on features and new product development and so on, which is also in some sense a form of efficiency. Finally, though, what I would say is that, if you look at the headcount trajectory of the company over the last few years, we have grown a lot and it's been for very good reasons and it has contributed quite a bit to our growth and our ability to run the company efficiently, but anytime you have that quantum of headcount growth as well as that rate of headcount growth, you have to believe, all else equal, that some amount of inefficiency has been introduced. And so this year, as we went through the budget cycle, we asked people at the margin to try to support the growth of the company while living within their means on the headcount front. So, we're going to try to run things, with some important exceptions that I'll highlight in a second, on roughly flat headcount and have that lead to people generating internal efficiencies as they get creative with their teams and reconsider more efficient ways of doing things. The obvious exceptions are the ongoing areas of high-certainty investment and growth. So obviously branches and bankers and so on, and also critical non-negotiable areas of risk and control like cyber or whatever independent risk management needs to ensure that we're running the company safely. So that's how we're thinking about efficiency in the current moment. |
3,683 | JPM | 4 | 2,024 | 2025-01-15 08:30:00 | JPMorgan Chase & Co. | 658,776 | John McDonald: Very helpful. Thank you.
Operator: Thank you. Next, we will go to the line of Mike Mayo from Wells Fargo Securities. You may proceed.
Mike Mayo: Hi. Simple and then more difficult, I guess. Jamie, who is your successor? And then the second question is, I know I asked the question at Investor Day, how -- why not stay as CEO a little bit longer? I think what I'm hearing from investors now, this goes up and down, but I think investors would like you to stay. So why say you're going to stay less than five years and you're finally getting what you wanted, 15 years of your spaghetti chart about the regulatory structure and the unpredictability of capital requirements and the regulatory costs and it seems like you're finally getting what you've been playing for, so why not stay around a bit longer if investors want you to do so? And what would you do otherwise anyway, you don't play golf, you aren't going to be Treasury Secretary. It seems like your work is your hobby, right? So how much longer would you stay around?
Jamie Dimon: I do love what I do and answering the second question first. Look, we're on a path. The path is not just about me, it's about the other senior people in the company, it's about the Board. If I'm here for several more years and I may or may not be Chairman, that's going to be up to the Board, does it really fit the new CEO and stuff like that. Now you're targeting potentially four, five years or more. I'm 60 -- I'll be 69 in March. I think it's a rational thing to do. I've had a couple of health problems you know. I just think it makes a lot of sense, and so -- and what's your first question you began?
Mike Mayo: Who is you're successor? |
3,684 | JPM | 4 | 2,024 | 2025-01-15 08:30:00 | JPMorgan Chase & Co. | 658,776 | Mike Mayo: Who is you're successor?
Jamie Dimon: I mean this is -- look, this is an unfortunate thing for any big company like this where these people have to be in the spotlight all the time and all the toing and froing. We have several exceptional people. You guys know most of them. There's maybe one or two you don't know. The Board reviews and meets with them all the time. I think it's wonderful that Jen Piepszak, who does not want to be the CEO, will be here as Chief Operating Officer and stay after that. So obviously, she's willing to work for those people, which I think is great for a company that's having continuity of management and leadership and it will be more of those people. And obviously, we're not going to tell the press, but it's not determined yet. And of course, at the last minute, a couple of years from now, people get sick, they change their mind, they have family circumstances. So even if you thought you knew today, you couldn't be completely sure.
Mike Mayo: So, you will stay around maybe for a few more years base case right now?
Jamie Dimon: Yes. Basic case, yes.
Mike Mayo: All right. Thank you.
Operator: Thank you. Our next question comes from Jim Mitchell with Seaport Global Securities. You may proceed.
Jim Mitchell: Hi, good morning. Maybe just on regulation, we have a new administration coming in. We have a new soon to be, I guess, a new Head of Regulation at the Fed. So, maybe just talk about again what areas of the regulatory structure, if it were to change, would be most impactful for you, and is there any areas where you think capital requirements could actually go down or is this more of a story of requirements just simply stop going up? Thanks. |
3,685 | JPM | 4 | 2,024 | 2025-01-15 08:30:00 | JPMorgan Chase & Co. | 658,776 | Jeremy Barnum: Hi, Jim, I mean, it's obviously something we're thinking about a lot, but I could go down some pretty deep rabbit holes speculating on all the different parts of the framework and how they could evolve. And I just don't really think that's productive right now. But let me make some attempt to answer your question. So backing off a second, if you read Jamie's quotes, they're very consistent with what we've been saying as a company for a long time, which is that all we want is a coherent, rational, holistically assessed regulatory framework that allows banks to do their job supporting the economy that isn't reflexively anti-bank. It doesn't default to the answer to every question being more of everything, more capital, more liquidity. It uses data and it balances the obvious goal that we all share of a safe and sound banking system with actually recognizing that banks play a critical role in supporting growth. And the hope is that we got some of that and that also while we're at it, some aspects of the supervisory framework get a little bit less bureaucratic and a little bit less adversarial and a little bit more substantive so that at the margin, management can focus its time on the things that matter the most. So, whether capital goes up, down, stays flat is really so complicated because it's not just Basel III endgame, it's also G-SIB, it's also a number of other factors and that's why we keep hammering away on the importance of doing all of this holistically, properly with the right analysis. And if that takes time, so be it. |
3,686 | JPM | 4 | 2,024 | 2025-01-15 08:30:00 | JPMorgan Chase & Co. | 658,776 | Jamie Dimon: I'll just add. Jeremy, gave it all. Let me add three quick things. Liquidity is also equally important. There's been a lot of recognition that more counts of liquidity and discount windows and how LCR has done, I think is very important. Second is competition. All of these things should be done in light of looking at what kind of public markets you want, what kind of private markets you want, what do you want in the banking system, what do you want out of the banking system. And the third is, I think most people realize there is a huge need to take a step back and look at the business team volcanized system we built, which has negatives and even the regulars will tell you that. So one point, just take a deep breath as Jeremy said, do the right thing and continue to have the best financial system in the world.
Jim Mitchell: Yes, that makes sense. And maybe just as a follow-up, just on loan growth, have you -- since the election, it seems like CEO confidence, business confidence has increased. So, are you starting to see any improvement in demand on lending? Just any thoughts there would be great. |
3,687 | JPM | 4 | 2,024 | 2025-01-15 08:30:00 | JPMorgan Chase & Co. | 658,776 | Jamie Dimon: Yes, it's a good question. And I think given the significant improvement in business sentiment and the general optimism out there, you might have expected to see some pickup in loan growth. We are not really seeing that. I don't particularly think that's a negative. I think it's probably explained by a combination of wide open capital markets. And so many of the larger corporates are accessing the capital markets and healthy balance sheets in small businesses and maybe some residual caution. And maybe there are some pockets in some industries where some aspects of the policy uncertainty that we might be facing are making them a little bit more cautious than they otherwise would be about what they're executing in the near term. But we'll see what the New Year brings as the current optimism starts getting tested with reality one way or the other and maybe if it materializes with tangible improvements and things one way or the other, you'll actually see that come through C&I loan growth in particular.
Jim Mitchell: Okay, great. Thanks.
Operator: Thank you. Next, we will go to the line of Erika Najarian from UBS. Your line is open. |
3,688 | JPM | 4 | 2,024 | 2025-01-15 08:30:00 | JPMorgan Chase & Co. | 658,776 | Operator: Thank you. Next, we will go to the line of Erika Najarian from UBS. Your line is open.
Erika Najarian: Yes, hi, good morning. I wanted to follow up on the questions on capital and maybe ask about some of Jeremy, the cross currents in terms of the denominator. So if we look at the third quarter regulatory data for your G-SIB surcharge score, that would imply that your score would put you in a range of a 5% G-SIB. So obviously, from what we understand, if you print that somewhere near that score at the end of this year, then your G-SIB surcharge goes up by -- to 5% or by 50 basis points two years and one day from now. At the same time, around the holidays, we did get the press release from both the Federal Reserve and the lawsuit from the banks. In terms of the transparency, it looks like the transparency is going to be focused on perhaps being improved as soon as this year's stress test. So as we think about the definition of excess, right, because part of this is like 15.7% is clearly a huge number. So as we think about your returns going forward, the definition of excess also continues to shift. So how should we think about those cross currents in terms of two big components, clearly one is your G-SIB surcharge and the other is your stress capital buffer? |
3,689 | JPM | 4 | 2,024 | 2025-01-15 08:30:00 | JPMorgan Chase & Co. | 658,776 | Jeremy Barnum: Right, Erica. Okay you are tempting me with many rabbit holes that are very deep. So let's try to address this not at too much great length. First of all, G-SIB; so yes, it was a high print in the third quarter, but we had normal seasonality third quarter or fourth quarter. So while our current view of the G-SIB number is an estimate, we're quite confident that we wound up comfortably in the 5% bucket just as a result of normal seasonality. It was actually a relatively quiet December in terms of the types of year-end things that sometimes create pressures in various types. So that is more or less what you might have otherwise expected in terms of our typical seasonal pattern. So not much to see there. And the obvious point also being that even under the existing proposed G-SIB rule, which is obviously a little bit hung up, with the smaller buckets and some of the recalibration and so on, it's not even sort of obvious that it would have mattered one way or the other, but anyway, for now, we're managing to the current rules and normal seasonality took us back under five. Okay, you mentioned the lawsuit. I think the only thing to say about that is that we are happy to see the clear recognition on the part of the Fed that many of the things that we've been talking about for a long time in terms of transparency and volatility and some of the non-substantive bureaucratic burden associated with the CCAR process needs improvement. So that's great. I think I won't speak for the industry bodies that were the actual litigants, but it seems to me if you just read what they said publicly in their press releases, this is as much as anything about preserving rights in light of the statute limitations deadlines that were coming up. So let's just hope that we see some significant progress on that front. And then taking a step back, at a high level, what you're really asking me is what is our core view about -- and I think probably the best way to think about this is just through the lens of the numerator actually. |
3,690 | JPM | 4 | 2,024 | 2025-01-15 08:30:00 | JPMorgan Chase & Co. | 658,776 | core view about -- and I think probably the best way to think about this is just through the lens of the numerator actually. What is our core view about -- if you just for the sake of argument assume modest growth in the normalized amount of economic denominator like actual need for capital organically, what will be the likely additional numerator that will be needed or not as a function of the environment. And the way we're increasingly thinking about that is just doing different scenario analyses of like a flat numerator, up 5 numerator, up 10 numerator, up 20 numerator, I guess there could be some versions of the world where the numerator is a little less. And then guessing about our several case and comparing our projected capital amount to that number to determine the excess. And as you point out, at 15.7 and I think the actual quantum of the numerator is something like $275 billion, through pretty much any reasonable lens, it's a ton of excess, which is why we've concluded that it doesn't need to grow anymore. |
3,691 | JPM | 4 | 2,024 | 2025-01-15 08:30:00 | JPMorgan Chase & Co. | 658,776 | Erika Najarian: And just a follow-up question. Follow-up to John's line of questioning, as a placeholder, as we think about what you said, trying to arrest the growth of CET1, for now, should we just assume that anything that you don't need for organic growth and your dividend obligations in terms of that 15.7% we bought back by the company as we think about? I know you don't want to predict the buyback, but is that sort of just a placeholder for now as we think about what can return back to shareholders in the form of repurchase?
Jeremy Barnum: Yes. I mean, you've quoted our capital hierarchy and your conclusion flows naturally from my statement that we do want to arrest the growth of the excess.
Jamie Dimon: So, we are never going to tell the market what we're going to do. I mean, you all know that everybody is out there modeling these things and trading against these things. So steady, consistent buyers in the marketplace were so predictable are making a mistake.
Operator: Does that conclude your question, Erika?
Jamie Dimon: You go to the next question. Thanks.
Operator: Thank you. Our next question comes from Matt O'Connor with Deutsche Bank. Your line is open.
Matt O'Connor: Good morning. It seems like you guys have backed off the view that you're materially over-earning on net interest income. And is this all because of the higher-rate environment that's expected now or is it also partly a different view on deposit pricing, specifically on the consumer side, which I think you had assumed it would reprice a bit more than we've seen? |
3,692 | JPM | 4 | 2,024 | 2025-01-15 08:30:00 | JPMorgan Chase & Co. | 658,776 | Jeremy Barnum: Yes, it's a good question, Matt. I guess maybe -- let me try to frame that from a couple of different perspectives. So on the one hand, you're right, if you look at the NII guidance that we're giving you, including the notion that subject to the yield curve panning out in line with the current forwards, which as we know is the one thing that we know won't happen, but if you want to assume something, if you assume the forwards, we're sort of telling you that we might return to sequential growth in the back half of the year, again, based on all of our current assumptions, all else being equal. And, you could draw the conclusion that means that the over-earning narrative is no longer applicable. I think if you take a big step back by historical standards, the difference between the policy rate and the weighted-average rate paid on consumer deposits remains quite elevated. For a variety of reasons and subject to the fact that in the end, deposit pricing is always going to be a response to the competitive environment that we experience in the field, the current structure of the yield curve is such that for the time being, anyway, when we do the math, that's what we see. Do we think that's truly, truly, truly sustainable through the cycle, unclear, but I guess we'll cross that bridge when we come to it. For now, this is the outlook for the coming year.
Jamie Dimon: We've gotten closer to normalized NII and normalized credit.
Jeremy Barnum: Yes, it is worth noting, that NII ex-market is down year-on-year. So, there's some amount of normalization there. |
3,693 | JPM | 4 | 2,024 | 2025-01-15 08:30:00 | JPMorgan Chase & Co. | 658,776 | Matt O'Connor: Okay. And then just separately, a strategic question, there's been some reports about you further expanding the consumer banking business globally, and I guess I just want to push on that where we really haven't seen other banks do it in a successful way, obviously, your approach is kind of coming from a position of strength, leading digitally, but I guess I'm just wondering like, is it worth it? Is there enough upside to justify maybe some of the increased regulatory and execution risks of dealing with global consumer banking?
Jeremy Barnum: Yes. I mean, I think you kind of answered your own question in the sense like we talked about this a lot when we first launched the initiative. And I just think that the comparison to other players is not apt in the current moment. And that's not to say that like we're special or anything, it's just that the strategy is very different and it's a very different moment. So it's a new initiative, it's obviously not risk-free, but it's going pretty well. And pointing out the obvious, if we didn't think it was worth it, we wouldn't be doing it. But we have obviously considered all of the risks and opportunities associated with the decision and that's one of our strategic initiatives and those get scrutinized quite aggressively through all of our management processes.
Matt O'Connor: Okay. Thank you.
Operator: Thank you. Our next question comes from Betsy Graseck from Morgan Stanley. You may proceed.
Betsy Graseck: Hi, good morning.
Jeremy Barnum: Hi, Betsy. |
3,694 | JPM | 4 | 2,024 | 2025-01-15 08:30:00 | JPMorgan Chase & Co. | 658,776 | Betsy Graseck: Hi, good morning.
Jeremy Barnum: Hi, Betsy.
Betsy Graseck: Hi, can you hear me, okay. All right. Just want to make sure you can hear me. So this has been a great call. First, congratulations on a great quarter. It's been a great call with a lot of robust questions here. You're like, what else is there to ask? Here's my question. As we think about the NII outlook and you highlighted the NIM pressure, but loans, but basically balance is increasing here, right? Maybe you could just speak to the -- could you help me understand the order of the drivers? Is it QT going away, deposits going up, punch it into securities? Is it loan growth inflecting? Is there any place in the franchise where you see loan growth opportunities for inflection this coming year? And then lastly, as I think about your comments around, you've got the green market-share, number one, you've got the yellow, you've got the red places maybe we can't see. Could you help us understand where those yellows and reds are, where they are? Are they just scattered, everybody is -- every single business has one or are there some that have more than others and therefore, more opportunities and is it more balance sheet or fee generative? That's kind of what I'd like to just discuss if you have a minute. Thanks. |
3,695 | JPM | 4 | 2,024 | 2025-01-15 08:30:00 | JPMorgan Chase & Co. | 658,776 | Jeremy Barnum: Sure. Yes, let me take a crack at that, Betsy. So loan growth, I think looking for areas where it might inflect, the only thing I can think of, frankly, that would be in that category certainly in terms of being meaningful to the company's performance would be acquisition finance, because that's been relatively muted as a function of the M&A environment. And if that picks up, you could see more there. Now those aren't loans that we necessarily keep on the balance sheet for that long. So, whether that shows up in fees or NII or whatever is a separate issue, but as we -- as you can see like on our presentation page for the NII outlook, you know that card loan growth and revolve normalization has been a significant tailwind. And while that is also a driver of growth in 2025, again, based on our current guess about the future, it will be -- it's decelerating a little bit rather than the opposite, still growing above-trend obviously, which is great and it's a sign of the strength of the franchise and the amount of engagement that we're getting from our card clients, but the big normalization tailwinds there are gone. You know well the state of the mortgage market given rates, rates are also a headwind in some other pockets like our multifamily lending business at the margin. So yes, I think a higher growth environment, a little bit more optimism, could you see a bit more loan growth in business banking, could you see a bit more growth in C&I at the margin? Yes. But I think the place where you might see inflection is more on the areas that are deal-driven, I would say. So we'll see. We'll see what happens there. And in terms of the reds and the ambers under the greens, I think you know them, right, and they're aligned with our big longstanding investment strategies. The biggest single one arguably is that in what you might call the affluent section of the wealth management space, we are significantly underpenetrated relative to the number of households that we bank in the country and our capabilities |
3,696 | JPM | 4 | 2,024 | 2025-01-15 08:30:00 | JPMorgan Chase & Co. | 658,776 | we are significantly underpenetrated relative to the number of households that we bank in the country and our capabilities and our brand and what we think we bring to the table. So that's why we're pushing so hard on that front because I think we can get more share there and it completes the franchise very nicely. There are a bunch of examples elsewhere, but we talk a lot about drilling down inside the markets business, inside investment banking and finding the places where even where at the aggregate global sector level, we look great in any given region and any given sub-sector, we can do better. And as I mentioned, we continue to look at that as aggressively as ever. |
3,697 | JPM | 4 | 2,024 | 2025-01-15 08:30:00 | JPMorgan Chase & Co. | 658,776 | Betsy Graseck: Thank you.
Jeremy Barnum: Thank you, Betsy.
Operator: Thank you. Next, we will go to the line of Ebrahim Poonawala with Bank of America Merrill Lynch. Your line is open.
Ebrahim Poonawala: Hi, good morning. I guess just two questions. In terms of areas of vulnerability, so I heard you, Jeremy, on the lending side, but lots of cross currents, like if we anchor to the fact that you have an administration that's taking play and you'll take office with a focus on domestic CapEx. Even if we don't get any rate cuts, when you look through your customer base, where do you see areas of vulnerability, be it because of tariffs, be it because of just lack of any additional relief from the Fed? Yes, I would love to hear just from a credit quality perspective, what no rate cuts might mean.
Jeremy Barnum: I see what your question is, just give me a second. Yes. I mean, look, wholesale credit is pretty hard to predict. It tends to be very idiosyncratic. You obviously know that we were coming out of a 10 plus year period of an exceptionally low charge-off rate. And so at some point, that has to normalize to a slightly more reasonable level, if we go to Jamie's comments earlier about how some things are still not fully normalized and arguably wholesale credit could be one of those. We do run extensive stress test on the sensitivities to the portfolio -- of the portfolio to rate shock. A lot of what we do from an underwriting perspective is designed to protect us from that, frankly. So you can rest assured that we're running the relevant analysis, but I'm not inclined to go into detail on any given sector or whatever. Jamie, did you want to add? |
3,698 | JPM | 4 | 2,024 | 2025-01-15 08:30:00 | JPMorgan Chase & Co. | 658,776 | Jamie Dimon: I would just point the biggest driver of credit has been and always will be unemployment, that's both on the consumer side and it bleeds into the corporate side. It bleeds into mortgages, subprime, credit card. So really it's your forecast of unemployment, which you're going to have to make your own, which will determine that over time, and so -- and the second thing that you said vulnerabilities, it's unemployment, but the worst case would be stagflation, higher rates with higher unemployment will drive higher credit losses literally across the board. I'm not -- we're not predicting that, but you just asked where the vulnerabilities -- as the vulnerabilities.
Ebrahim Poonawala: Okay. And I guess, thanks for that. Just sticking with that, as far as QT is concerned, when you talk to experts, like no one knows where the right level for the Fed to end is. I'm just wondering if you have any thoughts there on how -- when the Fed should end the pressure on the system and what it may imply for deposit growth?
Jeremy Barnum: Yes. I mean, I think the conventional wisdom on QT and I'm not pretending to add to the conventional wisdom one way or the other is that the tapering should sort of complete and therefore, we might see an end sometime in the middle of the year. Of course, they may change that, but that seems to be the current market consensus. And when we sort of take a step back and look at the H.8 data and our kind of flow of funds models and that type of stuff. When you look at the way RFP is behaving, evolution of QT expectations for economy-wide loan growth, et cetera, and what the impact of that might be on the growth of system-wide deposits, it's kind of consistent with the story that we're telling about our sort of the background growth in our NII outlook, plus or minus what happens with the policy rate and stabilizing and growing deposit balances through the second half of the year.
Ebrahim Poonawala: Okay. Thank you. |
3,699 | JPM | 4 | 2,024 | 2025-01-15 08:30:00 | JPMorgan Chase & Co. | 658,776 | Ebrahim Poonawala: Okay. Thank you.
Operator: Thank you. Our final question is comes from Gerard Cassidy from RBC Capital Markets. Your line is open.
Gerard Cassidy: Hi, Jeremy. Hi, Jamie. Jeremy, you mentioned...
Jeremy Barnum: Good morning, Gerard.
Gerard Cassidy: You mentioned in your comments about the overall firm-wide deposits have stabilized and in the second half, you could see some growth in your various -- I think you said you started to see maybe some of that in the consumer checking deposits, we noticed in the industry data from the regulators, household checking deposits pre-pandemic for the industry were running about $1 trillion. Now they have remained elevated post-pandemic at $4 trillion. Can you -- based on what you're seeing in your customer base, what can you attribute the strength to in this consumer checking account deposits?
Jeremy Barnum: That's fascinating, Gerard, I'll have to take a look at that data. I don't actually recognize those numbers, but I can speak for ourselves, which is that when we look at the encouraging growth that we see in our checking franchise, it's a couple of things. So, of course, there was some excess and there was some yield-seeking behavior. So you did see people moving money out of checking into higher-yielding alternatives over the course of the last couple of years in the rate cycle. It feels to us as if we're in the final innings of that. We're just not seeing nearly as much yield-seeking pressure as we had seen. In the meantime, as you well know, we are aggressively engaging with clients and acquiring a lot of new clients and deepening in a lot of different markets as part of our branch expansion strategy and the deepening in all of those markets. So, the combination of the tail end of the yield-seeking flows and excellent client engagement and success in the sort of organic build-out of that franchise is starting to show up in checking account growth, which we see as a very healthy indicator for the franchise. |
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