Novartis Raises Full-Year Core Operating Income Guidance After Strong Q3 Despite $1.9 Billion Avidity Impairment

Novartis reported third-quarter 2026 net sales of $14.5 billion, a 4% increase in both constant currencies and reported USD compared to the prior year, narrowly missing analyst revenue estimates. The company simultaneously raised its full-year core operating income guidance to flat-to-up low single digits, compared with a prior forecast that called for a decline, citing solid sales growth and productivity gains.

Reported operating income fell 59% to $1.8 billion and net income dropped 70% to $1.2 billion, with both declines driven primarily by a $1.9 billion impairment charge tied to the $12 billion Avidity Biosciences acquisition. The write-down stemmed from a timeline shift in the del-desiran program after additional clinical work was required, and Novartis also separately halted a late-stage trial for a drug targeting a rare neuromuscular disease. On a non-GAAP basis, core EPS of $2.46 beat consensus by roughly $0.22.

Growth was led by newer oncology and multiple sclerosis medicines, which are increasingly offsetting generic competition to former blockbuster Entresto. Kisqali, Novartis's breast cancer drug and one of its largest revenue contributors, fell short of estimates and was flagged as a caveat within an otherwise upbeat report. Cash generation was weaker than expected, drawing some analyst attention despite the guidance upgrade.

CEO Vas Narasimhan said the company has sufficient "replacement power" to navigate the approaching patent cliff, and defended the current acquisition strategy as requiring no changes. He also noted that artificial intelligence has for the first time tangibly improved Novartis's profit-and-loss results, while cautioning that broader productivity gains in drug discovery will "come in phases" given the complexity of medicine relative to software. Novartis stock gained modestly on the day.