Novo Nordisk A/S (NVO) Cash Flow Statement

The OCF/NI ratio has ranged from 0.28 to 2.63 over the past ten quarters, indicating that net income is not consistently translating into cash. The 2026Q2 ratio of 2.63 suggests strong cash generation relative to earnings, but the 2026Q1 ratio of 0.50 implies a large working capital outflow. This volatility may reflect timing of collections and payments, but investors should monitor whether it signals a structural shift in earnings quality.

FCF has been highly erratic, with positive quarters like 2026Q2 ($42.4B) and negative quarters like 2025Q4 (-$36.2B). This pattern suggests that FCF is not a stable indicator of underlying performance, possibly due to large working capital swings and capex timing. The deceleration in revenue growth, as noted in prior analysis, may further pressure FCF stability.

Capex has consistently exceeded $8.5B per quarter, with a peak of $18.4B in 2025Q4. This elevated capital intensity suggests that Novo Nordisk is investing heavily in production capacity, likely to support its GLP-1 franchise. However, the rising capex/revenue ratio may indicate diminishing returns if revenue growth continues to decelerate.

The large swings in working capital are the primary driver of the erratic operating cash flow. Positive changes in 2025Q4 and 2026Q2 suggest favorable collections or inventory reductions, while negative changes in 2026Q1 and 2025Q1 indicate build-ups or delayed payments. This pattern may reflect channel inventory management or payment terms with large customers, but it warrants close monitoring.

Shareholder returns have been substantial, with dividends and buybacks occurring in most quarters, but the $81.5B acquisition outflow in 2024Q4 stands out as a major deployment event. This suggests that Novo Nordisk is willing to make large strategic acquisitions, which could impact future cash flows. The mix of dividends, buybacks, and M&A indicates a balanced approach, but the scale of the acquisition may strain future liquidity.

The cumulative OCF/NI ratio of 1.17 suggests that Novo Nordisk's earnings are backed by strong cash flows, with non-cash charges like D&A and favorable working capital movements contributing. This divergence is positive, but the quarterly volatility implies that the timing of cash flows is unpredictable. Investors should consider the sustainability of this trend given the competitive pressures noted in prior analysis.