Novartis (NOVN) Q2 2024 earnings summary

Executive summary

• Q2 2024 net sales rose 11% in constant currency (cc), with core operating income up 19% and margin reaching 39.6%, driven by strong growth in key brands and robust commercial execution across geographies.

• Net income increased 49% (cc) to $3.2B in Q2, with EPS up 52% (cc) to $1.60; H1 net sales grew 11% (cc) to $24.3B.

• Broad-based growth across cardiovascular, immunology, oncology, and neuroscience, with significant innovation, FDA submissions, and new data readouts.

• Completed Sandoz spin-off in October 2023; 2024 results reflect only continuing operations.

• Upgraded full-year 2024 core operating income guidance to mid- to high-teens growth, with margin on track to exceed 40% by 2027.

Financial highlights

• Q2 net sales: $12.5B (+11% cc, +9% USD); H1 net sales: $24.3B (+11% cc, +9% USD).

• Q2 core operating income: $5.0B (+19% cc); Q2 net income: $3.2B (+49% cc); Q2 EPS: $1.60 (+52% cc); core EPS: $1.97 (+21% cc).

• Free cash flow: $4.6B in Q2 (+40% USD), $6.7B in H1 (+11% USD).

• Core operating income margin: 39.6% in Q2, 39.0% in H1, up over 2.7 percentage points year-over-year.

• Net debt as of June 30, 2024: $18.8B, up from $10.2B at year-end 2023.

Outlook and guidance

• FY 2024 net sales expected to grow high single to low double-digit percent; core operating income now expected to grow mid- to high teens.

• Assumes no US generics for Entresto or Promacta in 2024; core tax rate expected at 16.2%.

• FX impact for 2024 expected to be -1% to -2% on net sales and -3 points on core operating income.

• Focus on accelerating growth in innovative medicines, operational excellence, and disciplined capital allocation.

• Q3 growth expected to be lower due to prior year one-time events, but strong underlying growth dynamics remain.