Novo Nordisk $NVO ( ▼ 1.42% ) achieved the upper range of its third 2025 profit warning. I believe this is surpassing low analysts’ expectations in Q4 2025. However, the adjusted 2026 outlook, built on Q4 2025 performance and an exceptionally larger number of uncertainties in the coming year, captured all attention, leading to a decline in stock price of ↓-14.4%.

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Executive Summary

• Revenue Growth. Revenue increased +6.4% YoY (10.3% at CER), in FY 2025 caused by pricing pressures in the US.

• Operating income decreased by -0.5% YoY (+6.0% at CER), plenty of nuances go into the reported headline.

• Diluted EPS reached 23.03 DKK per share, up +1.7% vs FY 2025.

• Insulin managed sales decline performed within expectations, -4% YoY, while Rare Diseases segment continues its recovery, sales up +5.2% vs FY 24.

• FY25 dividend of 11.7 DKK/share proposed (+2.6% YoY) and share buyback program of DKK 15 billion (1.1% market cap at current stock prices) for 2026 approved.

• Outlook expecting a decreasing adjusted sales in 2026, -5% to -13% sales decrease at CER. FCF expansion guided at DKK 35 - 45 billion, due to CapEx peaking in FY 25 at DKK 60 billion.

Income Statement

Revenue & gross margin

Novo Nordisk reported its FY 2025 results, with revenue of DKK 309 billion, up 6.4% YoY (10.3% at CER). However, year-over-year, it has been observed that quarterly sales have decelerated and even decreased in Q4 2025.

Considering the seasonality (Q4 always show a sales spike) and tough comps. from Q4 2024 (best quarter in Novo’s history) we will have to wait for 2026 numbers to assess how this trend evolves.

Reported gross margin was 81.0%, -367 bps vs FY24. However, it included the one-off DKK 3.0 billion in restructuring costs of Q3 2025. Normalized gross margin would have reached 82.0% in line with expected drag from acquired Catalent sites.

Revenue Distribution

GLP-1s

Long story short, Wegovy sales are growing across all geographies while the performance of other GLP-1 drugs has been stagnant or flat over the past two years.

Ozempic sales have been flat vs 2024 in USO (US Operations) and IO (International Operations), ex. EUCAN where they grew +14.9% YoY and +3.9% vs Q4 2024. This flat performance outside EUCAN region might be explained by FX headwinds. In any case, Ozempic hasn’t grown double-digit as it did during the previous 5 years.

Regarding Rybelsus (or “Ozempic pill” as Novo Nordisk plans to rename it) sales, they have decreased by -5.2% vs FY24. However, there is a clear discrepancy between geographies. While Rybelsus sales decreased by -18.2% in USO (with the sharpest decline in Q4 2025, surpassing -30% YoY sales drawdown) across IO geographies, they grew HSD (high-single digit). Why? Because Novo Nordisk was preparing Wegovy pill launch in the US, and they needed the capacity to build up the required stock.

Note: oral Wegovy needs a significantly higher dose of 25 mg to 50 mg of semaglutide, compared to the 3 mg to 14 mg used in Rybelsus.

Insulin

Insulin managed sales declined within expectations, reaching DKK 53.3 billion vs 55.4 billion in 2024 (-4% YoY). However, I think it is negative to see that after 1 year since the launch of insulin icodec (Awiqli) it has only sold DKK 413 million, being 75% of sales in China alone.

I suspect it might be due to a tricky value proposition, especially in EUCAN: for T1D patients, they need to complement it with short-acting insulin while T2D patients have GLP-1 alternatives for weekly administration. Hopefully, treatment gets approved in the US in 2026 after resubmission and we get more sales datapoints about it.

Rare Diseases

On the one hand, Rare Blood Diseases sales decreased by -1.5%, showing weak performance in the underlying sub-segment. On the other hand, Rare Endocrine Diseases grew +19.3% and Other Rare Diseases +12.3%.

The segment as a whole reported sales growth +5.2% (+9% at CER) compared to FY24.

Operating Income

Reported operating income reached DKK 127.7 billion, equaling an operating margin of 41.3%, -289 bps vs FY 2024. Diving into the operating expenses, we can see:

1. R&D expenses were DKK 52.04 million (+8.3% vs 2024, 10% at CER). Normalization is needed for this expense. Firstly, in 2024 there was a recognized impairment loss of DKK 5.7 billion due to ocedurenone. Then in 2025, DKK 4.0 billion one-off restructuring costs. Hence, normalized R&D expenses increased +13.4% vs FY24.

2. Sales & Distribution costs rose by 4% in Danish kroner and by 7% at CER, reaching DKK 64.3 billion. However, they include DKK 2.0 billion one-off restructuring costs. Normalized, S&D costs would have stayed flat vs FY24.

3. Administration costs rose by 13% (16% at CER) to DKK 6.0 billion. DKK 500 million one-off restructuring costs impacted this category. Normalized, administrative costs would have increased by 4.2% vs FY24.

Unrolling the normalization:

1. FY 2024: DKK 5.7 billion of operating expenses in connection with ocedurenone impairment loss leading to a normalized operating income of DKK 134.0 billion (46.2% normalized operating margin).

2. FY 2025: DKK 6.5 billion in restructuring costs charged to operating expenses, plus additional DKK 2.5 billion in one-off restructuring costs booked in COGS. Normalized FY25 operating income would have been DKK 136.7 billion (44.2% normalized operating margin).

Headcount

After Q3 2025, employees headcount declines by 10%. The average revenue per employee increased by +18.4% during 2025 while the total cost per employee outpaced that growth, posting a +26.0% increase caused by the termination packages. I am looking forward to seeing the efficiency gains of this restructuring in next year’s reported numbers.

Segments

Rare Diseases segment is recovering from the issues experienced in the Rare Endocrine Diseases sub-segment as previously highlighted. Operating margin doubled vs FY24, reporting a 12.9% operating margin in Q4 2025, in another sequential improvement.

Net Income

Net income reached DKK 102.4 billion, up +1.4% due to net financial gains of DKK 2.88 billion from dollar hedging.

Interest expenses on debt and borrowings reached DKK 4.2 billion compared to the previous year DKK 1.64 billion. At the same time, the effective tax rate increased by +90 bps.

Reported diluted EPS were 23.03 DKK/share, up vs 22.63 DKK/share from the previous year.

Balance Sheet

Most short-term provisions DKK 26.5 billion are being recognized in 2026 which is the large change we can see in the balance sheet liabilities composition in figure 10.

Furthermore, in the coming five years, DKK 55 billion of borrowing is maturing according to note 4.6 in the FY 2025 earnings report, which equals 50% of the OCF in FY25. This allows for room for Novo Nordisk to face its obligations kept outside the balance sheet as per note 5.2, using the proceeds coming from its operations (e.g. R&D milestone payments).

Cash Flow Statement

Capital Allocation

The company allocated the capital as follows during 2025:

1. Property, Plant & Equipment expenses reached DKK 60.1 billion, up +27.5% vs FY24. This is the peak of the CapEx cycle as the company is guiding for around DKK 55 billion in 2026.

2. M&A

During the year, Novo Nordisk deployed $5.24 billion during 2025 in three different M&A operations:

• Acquisition of Akero Therapeutics for $4.7 billion in cash due to its asset factor 21 (FGF21) strategic fit into Novo Nordisk MASH portfolio.

• Asset purchase: zaltenibart drug candidate from Omeros to complement its OCVD and Rare Diseases portfolio. The price paid is $340 million plus up to additional 1,760 million for the completion of milestones and net sales royalties.

• License agreement (ex-China, Macau, Hong-Kong and Taiwan) of triple agonist UBT-251 of United Laboratories in exchange for $200 million and milestone payments up to $1.8 billion.

3. Dividend: The company increased the yearly dividend by +2.6% from 11.3 DKK/share in 2024 to 11.7 DKK/share in 2025.

4. Buyback: minimal executed buyback of DKK 1.39 billion to counter SBC dilution despite the stock valuation and the existing approval at the 2025 Annual General Meeting to repurchase up to 10% of the company's equity.

In hindsight, it might have been a wise decision not to execute the share buyback program from the first half of 2025, considering the stock price continued to trend downwards and the undervaluationjust became larger.

Working Capital

Working capital worsened due to a sharp decrease in days’ payables outstanding. However, it should be highlighted that stockpiling Wegovy pills for its launch in 2026 didn’t have a negative effect on the days of inventory outstanding, which improved compared to 2024.

I would expect to see further improvement in inventory management in the coming quarters, positively impacting FCF generation.

FCF Generation

Operating Cash Flow (OCF) was DKK 119.1 billion decreased by -1.6% YoY compared to DKK 121.0 billion in FY 2024.

FCFF was DKK 16.1 billion, up from last year’s negative DKK -22.7 billion FCFF caused by Catalent sites acquisition from Novo Holdings.

Other Metrics

There are other metrics I also like to review which are:

• CapEx/Revenue: 19.5% vs 16.4% in FY 2024.

• NWC/Revenue: 32.6% vs 28.9% in FY 2024.

• D&A/Revenue: 7.1% vs 6.6% in FY 2024.

• EBIT/EBITDA: 85.3% vs 87.2% in FY 2024.

• OCF/EBITDA: 80.0% vs 82.0% in FY 2024.

2026 Outlook

After lowering the guidance twice in 2025, Novo Nordisk 2026 sales outlook is just terrible, at least at first glance:

• Adjusted sales decrease -5 to -13% plus a -3% FX headwind.

• Adjusted operating profit decrease -5 to -13% plus a -5% FX headwind.

• DKK 35-45 billion of FCF

• DKK 55 billion in CapEx

• Financial items gain of DKK 2.3 billion.

However, this is adjusted sales and EBIT, in which Novo Nordisk has excluded:

1. The impact of reversing a provision for sales rebates of USD 4.2 billion (DKK 26.5 billion) in the first quarter of 2026 related to the 340B Drug Pricing Program in the US.

2. Major legal matters

3. Major intangible and PPE impairments, which in FY25 amounted DKK 2.3 billion only from the company’s restructuring, and I consider highly unlikely to recur during 2026 because “house clean-up” already took place during 2025.

As I understand it, they will add back the sales from the retained provisions to what they belong to, meaning to reflect actual FY25 performancce the adjusted sales in USO will be higher than the reported ones for this guidance. I have no confirmation on this though.

This change is based on the company’s intent to provide guidance reflecting the underlying business performance. They also added some more color during the earnings call:

R&D Portfolio

This year, there are plenty of new drug launches, with some of them having the potential to initiate the turnaround, plus remarkable clinical trial results.

2026 will be the year of Cagrisema, filed for approval in the US. It has three clinical test readings. Worst case, it matches the tirzepatide efficacy with a more cumbersome manufacturing process. The benefit is that it can position itself as the high efficacy weight loss alternative for the cohort that manifests GIP side-effects.

I also look forward to see ziltivekimab phase 3 results. This drug has the potential to really diversify the portfolio, both in terms of molecule and therapeutic area. Additionally, Mim8, under FDA review for approval since Q3 2025, is a monthly subcutaneous antibody to treat haemophilia A expected to become a lockbuster and capture 20-30% of the market in a few years.

Oral Wegovy