Novartis reported adjusted earnings per share of $2.10 for the quarter ended December 2025, topping the consensus estimate of $1.95 and marking a 7.7% increase year-on-year. Net income attributable to shareholders rose to $3.2 billion, compared with $2.9 billion in the year-ago period. The company’s Zacks Rank performance highlights internal cost efficiencies and a favorable product mix, contributing to earnings outperformance despite revenue headwinds.

Group sales for Q4 reached $13.4 billion, falling short of the $13.7 billion consensus forecast and down 2% from the prior year. U.S. sales of Entresto and Promacta declined by 18% and 12% respectively due to the entry of generic competitors, resulting in a combined revenue impact of approximately $450 million. Growth in oncology therapies—including a 15% lift in sales of recently launched targeted treatments—partially offset the volume declines in established franchises.

Operating margins expanded by 120 basis points to 29.5% in Q4, driven by lower R&D spending in late-stage programs and disciplined SG&A control. Cost of goods sold decreased by 1.3 percentage points to 22.8% of sales. Free cash flow improved to $2.1 billion, up from $1.8 billion a year earlier, reflecting tighter working capital management and reduced capital expenditure requirements.

For full-year 2026, Novartis projects a low single-digit percentage decline in core operating profit, attributing the downward revision to continued generic erosion of Entresto and several hematology products. The company expects group sales growth in the mid-single-digit range, supported by new launches in ophthalmology and cell therapy. Capital allocation will prioritize debt reduction and a 7% increase in the dividend payout, underscoring confidence in the underlying cash-generation profile.