Novo Nordisk A/S (NOVO:CA) Q4 2025 Earnings Call Transcript

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Overview

The earnings call summary indicates a mixed outlook. While there are positive elements such as a 16% increase in Wegovy sales and optimistic guidance for Wegovy pill demand, there are also concerns about declining U.S. sales and significant restructuring costs. The Q&A reveals uncertainties in volume uplift and market dynamics, particularly in the obesity sector. These mixed signals, along with stable but not exceptional financial metrics, suggest a neutral sentiment, expecting minimal stock price movement in the short term.

Key Financial Performance

Sales Growth Novo Nordisk delivered 10% sales growth in 2025, with U.S. operations growing 8% and International Operations growing 14%. Sales growth was positively impacted by one-offs in the U.S.

Operating Profit Growth Operating profit grew by 6% at constant exchange rates but decreased by 1% in Danish kroner. The decrease in Danish kroner was due to restructuring costs of around DKK 8 billion. Excluding this, operating profit would have increased by 6% in Danish kroner and 13% at constant exchange rates.

Obesity Care Sales Obesity care sales increased by 31% in 2025, driven by Wegovy. U.S. operations grew 15%, and International Operations grew 73%. Growth was driven by Wegovy's launch in 35 new countries and increased uptake.

GLP-1 Diabetes Sales GLP-1 diabetes sales increased by 6%, driven by U.S. operations (+5%) and International Operations (+7%). Growth was driven by Ozempic, partially countered by Victoza and Rybelsus.

Insulin Sales Insulin sales decreased by 1%. U.S. operations increased by 2%, positively impacted by channel and payer mix, but International Operations decreased by 2% due to market share losses.

Rare Disease Sales Rare disease sales increased by 9%, driven by rare endocrine disorder products like Sogroya. U.S. operations grew 7%, and International Operations grew 10%.

Gross Margin Gross margin decreased to 81% from 84.7% in 2024. The decrease was due to amortization and depreciation related to the acquisition of 3 Catalent manufacturing sites and restructuring costs.

Cash from Operating Activities Novo Nordisk generated close to DKK 120 billion in cash from operating activities in 2025, with around DKK 60 billion invested in manufacturing capacity expansion and DKK 30 billion in R&D pipeline expansion.

Wegovy Sales Wegovy sales increased by 16% in U.S. operations in 2025, driven by increased volumes but partially countered by lower realized prices. Weekly Wegovy prescriptions reached around 230,000 by January 2026.

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Operating Highlights

Wegovy pill approval: FDA approved the Wegovy pill, the first oral GLP-1 for obesity, in late 2025. Early uptake has been encouraging, with 50,000 prescriptions in a week, suggesting market expansion.

CagriSema: Phase III readout showed superior A1c reduction and weight loss compared to semaglutide. Regulatory discussions for type 2 diabetes treatment are planned.

Zenagamtide: Phase II results showed significant A1c reduction and weight loss, supporting its potential as a next-generation treatment for type 2 diabetes.

Obesity care sales: Sales increased by 31% in 2025, driven by Wegovy. The product was launched in 35 new countries, with sales reaching DKK 28 billion, growing 134%.

GLP-1 market growth: The global GLP-1 market grew over 30% in 2025, with Novo Nordisk maintaining a 62% volume market share in International Operations.

Sales and profit growth: Novo Nordisk achieved 10% sales growth and 6% operating profit growth in 2025, driven by obesity and diabetes treatments.

Manufacturing expansion: Invested DKK 60 billion in manufacturing capacity expansion, including acquiring three Catalent manufacturing sites.

Executive management changes: Dave Moore and Ludovic Helfgott are leaving the company. Jamey Millar and Hong Chow will join as new executives in February 2026.

Shareholder returns: Returned over DKK 300 billion to shareholders since 2019, with plans for over DKK 60 billion in 2026.

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Risk or Challenges

Pricing headwinds in 2026: The company anticipates a year of pricing headwinds, particularly in the U.S. market, due to lower realized prices, including impacts from the most favored nations agreements and loss of exclusivity for the semaglutide molecule in certain markets.

Market share losses in insulin: Insulin sales decreased by 1% in 2025, with market share losses in International Operations contributing to a 2% decline in this segment.

Decline in Medicaid coverage for anti-obesity medicines: Several states in the U.S. are dropping Medicaid coverage for anti-obesity medicines, negatively impacting the growth of injectable Wegovy prescriptions.

Intensifying competition in GLP-1 market: The company faces intensifying competition in the GLP-1 market, which could impact its market share and growth potential.

Patent expiry of semaglutide: The patent expiry of the semaglutide molecule in certain markets is expected to negatively impact sales in International Operations.

Restructuring costs: The company incurred one-off restructuring costs of around DKK 8 billion in 2025, which impacted operating profit.

Supply chain and manufacturing challenges: The acquisition of three Catalent manufacturing sites led to increased amortization and depreciation costs, as well as one-off restructuring costs.

Regulatory and reimbursement challenges: The company is working to develop reimbursed access for the Wegovy pill and broaden reach through partnerships, but challenges remain in securing commercial access and coverage.

Economic uncertainties: The company faces economic uncertainties, including exchange rate fluctuations that could impact reported sales and operating profit.

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Guidance & Outlook

2026 Adjusted Sales Growth: Expected to be minus 5% to minus 13% at constant exchange rates. Growth reported in Danish kroner is expected to be 3 percentage points lower than at constant exchange rates. The outlook reflects expectations for sales growth within International Operations and expectations for sales decline within U.S. operations.

Global GLP-1 Market Expansion: Assumed to continue in 2026, enabling Novo Nordisk to increase patient reach and expand volumes. However, this is countered by lower realized prices, including impacts from the most favored nations agreements in the U.S. and loss of exclusivity for the semaglutide molecule in certain markets in International Operations.

International Operations Growth: Based on current growth trends, including continued volume penetration from GLP-1 treatments and market expansion, mainly within obesity as well as intensifying competition and negative impacts from the patent expiry of semaglutide in certain markets.

U.S. Operations Outlook: Based on current prescription trends for the injectable GLP-1 portfolio, intensifying competition as well as negative impact from reduced anti-obesity medication coverage in Medicaid. Furthermore, lower realized prices linked to investments in market access are amplified by the MFN agreement with the U.S. administration.

Wegovy Pill Launch Uptake: Reflected based on a range of assumptions related to market penetration, potential negative impact on the growth of the injectable anti-obesity medication category as well as channel mix.

Adjusted Operating Profit Growth: Expected to be minus 5% to minus 13% at constant exchange rates. Reported operating profit growth in Danish kroner is expected to be around 5 percentage points lower than at constant exchange rates. The expectation for adjusted operating profit growth primarily reflects the sales growth outlook combined with targeted investments in current and future growth opportunities within R&D and commercial.

Free Cash Flow for 2026: Expected to be DKK 35 billion to DKK 45 billion. Capital expenditure is expected to be around DKK 55 billion in 2026. In the coming years, the capital expenditure investments are expected to decline following expansion project finalizations.

CagriSema in Type 2 Diabetes: Novo Nordisk will approach authorities to discuss the regulatory pathway for CagriSema in type 2 diabetes following results from pivotal trials and cardiovascular outcomes studies.

Zenagamtide Development: Phase III program called AMBITION in type 2 diabetes and other indications to start in the second half of 2026. Phase III obesity program called AMAZE will start in the first quarter of 2026.

Regulatory Decisions in Obesity: Anticipated EU decision on oral semaglutide 25 milligram and injectable semaglutide 7.2 milligram during the second half of 2026. U.S. decisions on semaglutide 7.2 milligram and CagriSema expected later in the year.

Rare Disease Developments: Phase III HIBISCUS readout for etavopivat in sickle cell disease expected in the second quarter of 2026. Regulatory decisions for denecimig in hemophilia A expected in the second half of 2026.

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Shareholder Return Plan

Dividend Increase: At the Annual General Meeting on March 26, 2026, the Board of Directors will propose a final dividend of DKK 7.95 for an expected total 2025 dividend of DKK 11.70, including the interim dividend paid out in August '25. This is a 2.6% increase compared to last year, making it the 30th consecutive year with increasing dividend per share.

Share Repurchase Program: The Board of Directors has approved a new share repurchase program of up to DKK 15 billion to be executed during the next 12 months.

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Key Q&A

Q:Can you provide a breakdown of the guidance for International Operations and the U.S., particularly in terms of volumes and price?

A:The International Operations are expected to deliver mid-single-digit growth, adjusting for LOE in specific markets. The U.S. is expected to see a sales decline in the teens, driven by price declines, investments in market access, channel mix, and the MFN impact. The company is observing volume responses to lower prices, but the year’s outcome remains uncertain due to various variables.

Q:What are your assumptions around the speed of the Medicare unlock?

A:The company expects a gradual ramp-up starting mid-year, with limited benefit in 2026 and a bigger benefit into 2027. This is due to lag times in educating physicians and administrative staff, as well as patient access to the benefit.

Q:What has shifted in guidance between Q3 and now?

A:The guidance now reflects the latest market trends, including Q4 performance, Wegovy pill uptake, and injectable cash business response to price reductions. The obesity market remains dynamic, with variables like competitive dynamics, gross-to-net dynamics, and channel dynamics impacting the guidance.

Q:How are you thinking about formulary access for Wegovy and its impact on mix and volumes?

A:Injectable access remains stable, with ongoing discussions to maintain it. On the pill side, there has been positive progress with coverage from CVS, Prime, Optum, and Anthem. The company expects more plans and employers to cover the pill over the year. The compounding market remains stable, and it’s too early to determine the impact of the pill on compounding volumes.

Q:Can you provide details on the REDEFINE 4 trial design and its differences from REDEFINE 1?

A:REDEFINE 4 compares CagriSema and tirzepatide in an obese population, testing for non-inferiority followed by superiority. The dosing was similar to REDEFINE 1, but learnings from REDEFINE 1, such as the need for longer studies and more flexible dosing, have been incorporated into REDEFINE 11.

Q:What are the expectations for Wegovy pill demand and its economics?

A:The company is optimistic about the sustainability of Wegovy pill demand, citing its superior weight loss efficacy compared to competitors. The gross margin for the pill is lower than the injectable but remains attractive. The focus is on expanding the market rather than cannibalizing existing products.

Q:What is the status of Wegovy pill supply and potential risks of supply outages?

A:The company is confident in its ability to supply the U.S. market despite the strong launch and high demand for the Wegovy pill.

Q:What are the implications of missing doses of the Wegovy pill?

A:Due to the long half-life of semaglutide, missing a dose does not significantly impact blood exposure or efficacy. Patients can resume their regular dose without experiencing adverse effects.

Q:What is the status of CapEx and API build-out?

A:CapEx levels are high but expected to decrease in the coming years. The API build-out is on track, with some facilities expected to come online this year and more in subsequent years.

Q:What are the plans for the high-dose Wegovy approval and launch?

A:The company plans to launch the high-dose Wegovy immediately upon approval, using the same type of devices currently available. The higher dose is expected to provide weight loss efficacy comparable to tirzepatide.

Q:What are the dynamics of the guidance, particularly regarding price impact and volume uplift?

A:The guidance reflects high visibility on price impact and lower visibility on volume uplift, especially in the self-pay channel. The company has made assumptions about the timing of generic launches in Canada, which could impact the guidance.

Q:Review of Unclear Management Responses

A:Management avoided providing direct answers or lacked clarity on the following: 1. Specific details on the volume uplift assumptions in the self-pay channel, citing uncertainties in the obesity market. 2. The exact timing and impact of generic semaglutide launches in Canada, as they lack detailed insights into the status of those files. 3. The full weight loss potential of CagriSema in REDEFINE 4, deferring to REDEFINE 11 for more comprehensive results.

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Earnings Word Cloud

The most frequently occurring keywords in this quarter's earning call

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Novo Nordisk A/S (NOVO:CA) Q4 2025 Earnings Call Transcript

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The earnings call reveals several concerns: lowered sales and profit growth outlooks, market share loss in the GLP-1 market, and challenges in the U.S. obesity market. Despite some optimistic guidance and strategic initiatives, the lowered growth expectations and uncertainties in regulatory approvals and market dynamics create a negative sentiment, likely leading to a stock price decline of -2% to -8%.

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The earnings call reflects strong financial performance with an 18% sales growth and 20% operating profit increase. The company's strategic initiatives, such as partnerships and market expansions, are promising. While there are some uncertainties in litigation and pricing strategies, management's confidence in growth, particularly in China, and the launch of new products like oral Wegovy, supports a positive outlook. The guidance suggests continued strong performance, and there's optimism in overcoming challenges like LOE impacts. Overall, the sentiment is positive, with potential for stock price appreciation.

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The earnings call presents a mixed outlook. Positive aspects include a 20% increase in operating profit, strong net profit growth, and a significant free cash flow increase. However, challenges are evident with a decreased gross margin, increased costs, and a significant net financial loss. The Q&A reveals uncertainties in market share dynamics and competitive pressures, with management providing vague responses. Despite positive shareholder returns, the lack of clear guidance and potential competitive risks balance the positives, leading to a neutral sentiment.

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