Novartis (NOVN) Q1 2026 earnings summary

Executive summary

• Net sales declined 1% year-over-year to $13.1 billion, with strong growth in priority brands and new launches offset by significant US generic erosion and pricing pressures.

• Core operating income fell 14% in constant currency to $4.9 billion, with margin at 37.3%, due to lower sales and higher R&D investment.

• Net income decreased 13% to $3.2 billion, with core EPS down 13% to $1.99.

• Free cash flow remained stable at $3.3 billion.

• Pipeline progress included the completed Avidity acquisition, multiple positive clinical readouts, and regulatory milestones for key assets.

Financial highlights

• Q1 2026 net sales: $13.1 billion (-1% USD, -5% cc); core operating income: $4.9 billion (-12% USD, -14% cc); core margin at 37.3% (down 4.8 pts YoY).

• Net income: $3.2 billion (-13% USD); core EPS: $1.99 (-13% USD); free cash flow: $3.3 billion, broadly stable year-over-year.

• Net debt increased to $38.1 billion, mainly due to M&A and dividend payments.

• Paid $9.1 billion in dividends and continued share buybacks, with $6.1 billion remaining in the program.

Outlook and guidance

• Full-year 2026 guidance reaffirmed: net sales expected to grow low single-digit, core operating income to decline low single-digit (cc).

• H1 expected to see low single-digit sales decline and low double-digit core operating decline; H2 expected to return to mid-single-digit sales and mid-to-high single-digit core operating growth.

• Foreign exchange at late April levels would add +2% to full-year sales and +1% to core operating income.