NOVARTIS AG Earnings Summary — Q1 2026

• Revenue for Q1 2026 reached $13.52 billion, representing a significant YoY increase from Q1 2024, though it moderated slightly on a QoQ basis.
• Operating Income improved to $4.24 billion, reflecting a healthy 31.3% operating margin as the company transitions to a pure-play innovative medicines model.
• The successful spin-off of Alcon and Sandoz has simplified the corporate structure, removing lower-margin segments and focusing on high-value therapies.
• Research & Development costs remained high at $2.74 billion, supporting a pipeline focused on oncology, immunology, and neuroscience.
• Net Income shows volatility due to historical divestment gains, but current operations demonstrate strong cash flow generation capabilities.
• The company effectively managed operating expenses, with Selling, General & Admin costs declining 9% from the previous quarter.
• Novartis continues to face headwinds from patent expiries (LOE) on certain legacy blockbuster drugs, necessitating new product success.
• Management remains committed to its '20-20-20' goals, targeting 4% compound sales growth and a 40% core margin.

Management is focused on achieving a 40% core margin through operational efficiency and a unified 'Innovative Medicines' model, prioritizing high-potential assets in its R&D pipeline.

Improving

The shift toward a high-margin pure-play model is yielding better operating leverage and efficiency despite revenue fluctuations from patent cliffs.

The outlook remains solid as the transition to an innovative medicines company concludes, with a focus on radioligand and gene therapies to drive long-term compound growth.