Site icon pharmaceutical daily

Gilead Sciences Announces First Quarter 2019 Financial Results

BusinessWire

– Product Sales of $5.2 billion –
– Diluted EPS
of $1.54 per share –
– Non-GAAP Diluted EPS of $1.76
per share –
– Reiterates Full Year 2019 Guidance –

FOSTER CITY, Calif.–(BUSINESS WIRE)–Gilead Sciences, Inc. (Nasdaq: GILD) announced today its results of
operations for the first quarter ended March 31, 2019. The financial
results that follow represent a year-over-year comparison of the first
quarter 2019 to the first quarter 2018. Total revenues were $5.3 billion
in 2019 compared to $5.1 billion in 2018. Net income was $2.0 billion or
$1.54 per diluted share in 2019 compared to $1.5 billion or $1.17 per
diluted share in 2018. Non-GAAP net income was $2.3 billion or $1.76 per
diluted share in 2019 compared to $2.0 billion or $1.48 per diluted
share in 2018.

 

 

Three Months Ended
March 31,
(In millions, except per share amounts) 2019   2018
Product sales $ 5,200 $ 5,001
Royalty, contract and other revenues 81   87
Total revenues $ 5,281   $ 5,088
 
Net income attributable to Gilead $ 1,975 $ 1,538
Non-GAAP net income $ 2,258 $ 1,958
 
Diluted earnings per share $ 1.54 $ 1.17
Non-GAAP diluted earnings per share $ 1.76 $ 1.48
 

Product Sales

Total product sales for the first quarter of 2019 were $5.2 billion
compared to $5.0 billion for the same period in 2018. Product sales for
the first quarter of 2019 were $3.8 billion in the United States, $882
million in Europe and $522 million in other locations. Product sales for
the first quarter of 2018 were $3.5 billion in the United States, $1.0
billion in Europe and $469 million in other locations.

___________________________________

Note:   Non-GAAP financial information excludes acquisition-related,
up-front collaboration, stock-based compensation and other expenses,
fair value adjustments of equity securities and discrete tax charges
or benefits associated with changes in tax related laws and
guidelines. A reconciliation between GAAP and non-GAAP financial
information is provided in the tables on pages 8 through 10.

Operating Expenses

  Three Months Ended
March 31,
(In millions) 2019   2018
Research and development expenses (R&D) $ 1,057 $ 937
Non-GAAP R&D expenses $ 871 $ 814
 
Selling, general and administrative expenses (SG&A) $ 1,030 $ 997
Non-GAAP SG&A expenses $ 962 $ 884
 

During the first quarter of 2019, compared to the same period in 2018:

Effective Tax Rate

The effective tax rate and non-GAAP effective tax rate in the first
quarter of 2019 were 16.3% and 16.7% compared to 24.3% and 22.8% for the
same period in 2018, respectively. The decreases were primarily due to
favorable settlements with taxing authorities. For the full year 2019,
Gilead reiterates its effective tax rate guidance and non-GAAP effective
tax rate guidance to be in the range of 21.5% – 22.5% and 20.0% – 21.0%,
respectively.

Cash, Cash Equivalents and Marketable Debt
Securities

As of March 31, 2019, Gilead had $30.1 billion of cash, cash equivalents
and marketable debt securities, compared to $31.5 billion as of December
31, 2018. During the first quarter of 2019, Gilead generated $1.4
billion in operating cash flow, repaid $750 million of debt, paid cash
dividends of $817 million and utilized $834 million on stock repurchases.

Full Year 2019 Guidance Reiterated

Gilead reiterates its full year 2019 guidance, initially provided on
February 4, 2019. The guidance for product sales reflects the
anticipated entry of generic versions of Letairis and Ranexa in the
United States and the full year impact of generic products containing
tenofovir disoproxil fumarate in certain European countries.

(In millions, except percentages and per share amounts)   Initially Provided
February 4, 2019
Net Product Sales $21,300 – $21,800
Non-GAAP
Product Gross Margin 85% – 87%
R&D Expenses $3,600 – $3,800
SG&A Expenses $3,900 – $4,100
Effective Tax Rate 20.0% – 21.0%
Diluted EPS Impact of Acquisition-related, Up-front Collaboration,
Stock-based Compensation and Other Expenses 		$1.40 – $1.50
 

Corporate Highlights, Including the
Announcement of:

Product and Pipeline Updates, Including the
Announcement of:

Inflammation Program

HIV and Liver Diseases Programs

Non-GAAP Financial Information

The information presented in this document has been prepared in
accordance with U.S. generally accepted accounting principles (GAAP),
unless otherwise noted as non-GAAP. Management believes non-GAAP
information is useful for investors, when considered in conjunction with
Gilead’s GAAP financial information, because management uses such
information internally for its operating, budgeting and financial
planning purposes. Non-GAAP information is not prepared under a
comprehensive set of accounting rules and should only be used to
supplement an understanding of Gilead’s operating results as reported
under GAAP. Non-GAAP measures may be defined and calculated differently
by other companies in the same industry. A reconciliation between GAAP
and non-GAAP financial information is provided in the tables on pages 8
through 10.

Conference Call

At 4:30 p.m. Eastern Time today, Gilead’s management will host a
conference call and a simultaneous webcast to discuss the company’s
financial results for the first quarter 2019 and provide a business
update. The live webcast of the call can be accessed at Gilead’s
Investor page at http://investors.gilead.com/.
Please connect to Gilead’s website at least 15 minutes prior to the
start of the call to allow adequate time for any software download that
may be required to listen to the webcast. Alternatively, please call
877-359-9508 (U.S.) or 224-357-2393 (international) and dial the
conference ID 5259422 to access the call. Telephone replay will be
available approximately two hours after the call through 8:00 p.m.
Eastern Time, May 4, 2019. To access the replay, please call
855-859-2056 (U.S.) or 404-537-3406 (international) and dial the
conference ID 5259422. The webcast will be archived on www.gilead.com
for one year.

About Gilead Sciences

Gilead Sciences, Inc. is a research-based biopharmaceutical company that
discovers, develops and commercializes innovative medicines in areas of
unmet medical need. The company strives to transform and simplify care
for people with life-threatening illnesses around the world. Gilead has
operations in more than 35 countries worldwide, with headquarters in
Foster City, California.

Forward-Looking Statement

Statements included in this press release that are not historical in
nature are forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Gilead cautions readers that
forward-looking statements are subject to certain risks and
uncertainties that could cause actual results to differ materially.
These risks and uncertainties include: Gilead’s ability to achieve its
anticipated full year 2019 financial results; Gilead’s ability to
sustain growth in revenues for its antiviral and other programs; the
risk that private and public payers may be reluctant to provide, or
continue to provide, coverage or reimbursement for new products;
austerity measures in European countries that may increase the amount of
discount required on Gilead’s products; an increase in discounts,
chargebacks and rebates due to ongoing contracts and future negotiations
with commercial and government payers; a larger than anticipated shift
in payer mix to more highly discounted payer segments and geographic
regions and decreases in treatment duration; availability of funding for
state AIDS Drug Assistance Programs (ADAPs); continued fluctuations in
ADAP purchase driven by federal and state grant cycles as well as
purchase by retail pharmacies and other non-wholesaler locations with
whom we have no inventory management agreements may not mirror patient
demand and may cause fluctuations in Gilead’s earnings; market share and
price erosion caused by the introduction of generic versions of our
products; an uncertain global macroeconomic environment; potential
amendments to the Affordable Care Act or other government action that
could have the effect of lowering prices or reducing the number of
insured patients; Gilead’s ability to initiate clinical trials in its
currently anticipated timeframes; the levels of inventory held by
wholesalers and retailers which may cause fluctuations in Gilead’s
earnings; Gilead’s ability to realize the potential benefits of
collaborations, including with Yuhan Corporation; Gilead’s ability to
submit new drug applications for new product candidates in the timelines
currently anticipated; Gilead’s ability to receive regulatory approvals
in a timely manner or at all, for new and current products; Gilead’s
ability to successfully commercialize its products, including Yescarta;
the risk that physicians and patients may not see advantages of these
products over other therapies and may therefore be reluctant to
prescribe the products; safety and efficacy data from clinical studies
may not warrant further development of Gilead’s product candidates,
including filgotinib, selonsertib and GS-6207; Gilead’s ability to pay
dividends or complete its share repurchase program due to changes in its
stock price, corporate or other market conditions; fluctuations in the
foreign exchange rate of the U.S. dollar that may cause an unfavorable
foreign currency exchange impact on Gilead’s future revenues and pre-tax
earnings; and other risks identified from time to time in Gilead’s
reports filed with the U.S. Securities and Exchange Commission (the
SEC). In addition, Gilead makes estimates and judgments that affect the
reported amounts of assets, liabilities, revenues and expenses and
related disclosures. Gilead bases its estimates on historical experience
and on various other market specific and other relevant assumptions that
it believes to be reasonable under the circumstances, the results of
which form the basis for making judgments about the carrying values of
assets and liabilities that are not readily apparent from other sources.
There may be other factors of which Gilead is not currently aware that
may affect matters discussed in the forward-looking statements and may
also cause actual results to differ significantly from these estimates.
Further, results for the quarter ended March 31, 2019 are not
necessarily indicative of operating results for any future periods. You
are urged to consider statements that include the words may, will,
would, could, should, might, believes, estimates, projects, potential,
expects, plans, anticipates, intends, continues, forecast, designed,
goal or the negative of those words or other comparable words to be
uncertain and forward-looking. Gilead directs readers to its press
releases, Annual Report on Form 10-K for the year ended December 31,
2018 and other subsequent disclosure documents filed with the SEC.
Gilead claims the protection of the Safe Harbor contained in the Private
Securities Litigation Reform Act of 1995 for forward-looking statements.

All forward-looking statements are based on information currently
available to Gilead and Gilead assumes no obligation to update or
supplement any such forward-looking statements other than as required by
law. Any forward-looking statements speak only as of the date hereof or
as of the dates indicated in the statements.

# # #

Gilead owns or has rights to various trademarks, copyrights and trade
names used in its business, including the following: GILEAD®,
GILEAD SCIENCES®, AMBISOME®, ATRIPLA®,
BIKTARVY®, CAYSTON®, COMPLERA®, DESCOVY®,
EMTRIVA®, EPCLUSA®, EVIPLERA®, GENVOYA®,
HARVONI®, HEPSERA®, LETAIRIS®, ODEFSEY®,
RANEXA®, SOVALDI®, STRIBILD®, TRUVADA®,
TRUVADAFORPREP®, TYBOST®, VEMLIDY®,
VIREAD®, VOSEVI®, YESCARTA® and ZYDELIG®.

LEXISCAN® is a registered trademark of Astellas U.S. LLC.
MACUGEN® is a registered trademark of Eyetech, Inc. SYMTUZA®
is a registered trademark of Janssen Sciences Ireland UC. TAMIFLU®
is a registered trademark of Hoffmann-La Roche Inc.

For more information on Gilead Sciences, Inc., please visit www.gilead.com
or call the Gilead Public Affairs Department at 1-800-GILEAD-5
(1-800-445-3235).

 
GILEAD SCIENCES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
(in millions, except per share amounts)
 
Three Months Ended
March 31,
2019   2018
Revenues:
Product sales $ 5,200 $ 5,001
Royalty, contract and other revenues 81   87  
Total revenues 5,281   5,088  
Costs and expenses:
Cost of goods sold 957 1,001
Research and development expenses 1,057 937
Selling, general and administrative expenses 1,030   997  
Total costs and expenses 3,044   2,935  
Income from operations 2,237 2,153
Interest expense (254 ) (290 )
Other income (expense), net 367   170  
Income before provision for income taxes 2,350 2,033
Provision for income taxes 382   494  
Net income 1,968 1,539
Net income (loss) attributable to noncontrolling interest (7 ) 1  
Net income attributable to Gilead $ 1,975   $ 1,538  
Net income per share attributable to Gilead common stockholders –
basic 		$ 1.55 $ 1.18
Shares used in per share calculation – basic 1,276 1,307
Net income per share attributable to Gilead common stockholders –
diluted 		$ 1.54 $ 1.17
Shares used in per share calculation – diluted 1,283 1,320
Cash dividends declared per share $ 0.63 $ 0.57
 
 
GILEAD SCIENCES, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION
(unaudited)
(in millions, except percentages and per share amounts)
 
Three Months Ended
March 31,
2019   2018
Cost of goods sold reconciliation:
GAAP cost of goods sold $ 957 $ 1,001
Acquisition-related – amortization of purchased intangibles (283 ) (301 )
Stock-based compensation expenses(1) (14 ) (13 )
Non-GAAP cost of goods sold $ 660   $ 687  
 
Product gross margin reconciliation:
GAAP product gross margin 81.6 % 80.0 %
Acquisition-related – amortization of purchased intangibles 5.4 % 6.0 %
Stock-based compensation expenses(1) 0.3 % 0.3 %
Non-GAAP product gross margin 87.3 % 86.3 %
 
Research and development expenses reconciliation:
GAAP research and development expenses $ 1,057 $ 937
Up-front collaboration expenses (126 ) —
Acquisition-related – other costs — (16 )
Stock-based compensation expenses(1) (61 ) (103 )
Other(2) 1   (4 )
Non-GAAP research and development expenses $ 871   $ 814

 

 
Selling, general and administrative expenses reconciliation:
GAAP selling, general and administrative expenses $ 1,030 $ 997
Acquisition-related – other costs — (6

)

Stock-based compensation expenses(1) (68 ) (104 )
Other(2)

—

 

(3 )
Non-GAAP selling, general and administrative expenses $ 962   $ 884  
 
Operating margin reconciliation:
GAAP operating margin 42.4 % 42.3 %
Up-front collaboration expenses 2.4 % — %
Acquisition-related – amortization of purchased intangibles 5.4 % 5.9 %
Acquisition-related – other costs — % 0.4 %
Stock-based compensation expenses(1) 2.7 % 4.3 %
Other(2) — % 0.1 %
Non-GAAP operating margin(3) 52.8 % 53.1 %
 
Other income (expense), net reconciliation:
GAAP other income (expense), net $ 367 $ 170
Unrealized gains from equity securities, net (197 ) (45 )
Non-GAAP other income (expense), net $ 170   $ 125  
 
 
GILEAD SCIENCES, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION –
(Continued)
(unaudited)
(in millions, except percentages and per share amounts)
 
Three Months Ended
March 31,
2019   2018
Effective tax rate reconciliation:
GAAP effective tax rate 16.3 % 24.3 %
Up-front collaboration expenses 0.3 % — %
Acquisition-related – amortization of purchased intangibles

(1.0)

%

(2.3)

%

Acquisition-related – other costs — %

(0.1)

%

Stock-based compensation expenses(1) 0.1 % 0.3 %
Unrealized gains from equity securities, net 1.1 % 0.6 %
Non-GAAP effective tax rate(3) 16.7 % 22.8 %
 
Net income attributable to Gilead reconciliation:
GAAP net income attributable to Gilead $ 1,975 $ 1,538
Up-front collaboration expenses 98 —
Acquisition-related – amortization of purchased intangibles 260 281
Acquisition-related – other costs — 18
Stock-based compensation expenses(1) 117 160
Unrealized gains from equity securities, net

(191)

 

(45)

 

Other(2)

(1)

 

6  
Non-GAAP net income attributable to Gilead $ 2,258   $ 1,958  
 
Diluted earnings per share reconciliation:
GAAP diluted earnings per share $ 1.54 $ 1.17
Up-front collaboration expenses 0.08 —
Acquisition-related – amortization of purchased intangibles 0.20 0.21
Acquisition-related – other costs — 0.01
Stock-based compensation expenses(1) 0.09 0.12
Unrealized gains from equity securities, net

(0.15)

 

(0.03 )
Non-GAAP diluted earnings per share $ 1.76   $ 1.48  
 
Non-GAAP adjustment summary:
Cost of goods sold adjustments $ 297 $ 314
Research and development expenses adjustments 186 123
Selling, general and administrative expenses adjustments 68 113
Other income (expense), net adjustments

(197)

 

(45 )
Total non-GAAP adjustments before tax 354 505
Income tax effect

(71)

 

(85 )
Total non-GAAP adjustments after tax $ 283   $ 420  

Contacts

Investors
Robin Washington
(650) 522-5688

Sung
Lee
(650) 524-7792

Media
Amy
Flood
(650) 522-5643

Read full story here

Exit mobile version