Novartis Lifts FY23 View As Q2 Results Top Market, Initiates $15 Bln Buyback; Stock Up


Shares of Novartis AG were gaining around 4 percent in the morning trading in Switzerland as well as in pre-market activity on the NYSE after the drug major raised its fiscal 2023 outlook on Tuesday after reporting higher second-quarter results. Core earnings and top line beat market estimates.

Further, the company announced up to $15 billion share buyback to be completed by year-end 2025.

The Board of Directors has also unanimously endorsed the proposed spin-off of Sandoz to create an independent company.

Regarding the proposed Sandoz spin-off, Novartis noted that as a next step, its shareholders will be invited to vote on the deal and a related reduction of the share capital of Novartis AG at an Extraordinary General Meeting, planned to be held on September 15. The proposed spin-off is planned to occur early in the fourth quarter of 2023, and Sandoz would be listed on the SIX Swiss Exchange, with an American Depositary Receipt program in the US.

Vas Narasimhan, CEO of Novartis, said: “Novartis delivers another strong quarter of sales growth and robust margin expansion, supporting an upgrade to Group guidance for 2023. The performance was broad-based across core therapeutic areas and key geographies. Our growth drivers and rich pipeline continue to provide confidence in our mid-term growth outlook, highlighted by upcoming milestones for Kisqali, Pluvicto and iptacopan.”

For fiscal year 2023, the company now expects group sales to grow high single digit and core operating income growth in low double digit. Previously, it expected annual group sales to grow mid-single digits and core operating income growth in high single digits.

For the second quarter, net income was $2.32 billion, an increase of about 37 percent from last year’s $1.70 billion, reflecting higher operating income. Quarterly earnings per share were $1.11, an increase of 44 percent from $0.77 last year.

Core net income was $3.81 billion, compared to $3.43 billion in the prior year. Core earnings per share were $1.83, up from $1.56 in the previous year. Analysts polled by Thomson Reuters expected the company to report earnings of $1.66 per share for the second quarter. Analysts’ estimates typically exclude special items.

Novartis’s operating income for the second quarter was $2.92 billion, up 31 percent, mainly driven by higher sales and lower restructuring charges. Core operating income grew 9 percent.

Net sales for the second quarter were $13.62 billion, an increase of 7 percent from the prior year’s $12.78 billion. Net sales grew 9 percent at constant currency rates. Analysts expected revenue of $13.17 billion for the quarter.

The sales growth reflected volume growth of 14 percentage points, price erosion of 2 percentage points and the negative impact from generic competition of 3 percentage points.

Innovative Medicines sales grew 7 percent on a reported basis and 9 percent at constant currency rates. In the quarter, the company recorded continued strong performance from Entresto, Kesimpta, Pluvicto and Kisqali.

Sandoz sales grew 5 percent on a reported basis and 8 percent at constant currency rates mainly driven by Europe. Global sales of Biosimilars grew 12 percent, also driven by growth excluding US.

In Switzerland, Novartis shares were trading at 87.95 Swiss francs, up 3.57 percent.

In pre-market activity on the NYSE, the shares were trading at $102.52, up $3.58 or 3.62 percent.

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