10-QPeriod: Q3 FY2018

AMGEN INC Quarterly Report for Q3 Ended Sep 30, 2018

Filed October 31, 2018For Securities:AMGN

Summary

Amgen Inc. reported a slight increase in total revenues for the nine months ended September 30, 2018, reaching $17.5 billion, a 3% rise from the prior year. This growth was primarily driven by product sales, which increased by 2% to $16.5 billion, with notable growth in Prolia®, XGEVA®, and 'Other products', partially offset by declines in ENBREL®, Neulasta®, Aranesp®, Sensipar®/Mimpara®, and EPOGEN®. The company's net income saw a more significant increase of 4% to $6.5 billion for the nine-month period, leading to a substantial 14% rise in diluted Earnings Per Share (EPS) to $9.61, reflecting the benefits of U.S. corporate tax reform. However, the third quarter of 2018 showed a slight dip in net income and a modest increase in diluted EPS compared to the prior year's quarter, highlighting sequential pressures. Financially, Amgen significantly strengthened its cash position, ending the period with $11.96 billion in cash and cash equivalents, a substantial increase from $3.8 billion at the end of 2017, primarily due to strong operating cash flows and strategic management of marketable securities. The company also continued its aggressive capital return strategy, repurchasing approximately $15.7 billion of its stock in the first nine months of 2018. The company is navigating patent expiries and increasing biosimilar competition for some of its key legacy products, which is reflected in sales trends for drugs like ENBREL and Neulasta®.

Financial Highlights

55 data points
Beta

Revenue

$5.90B

75.8% Gross Margin

Net Income

$1.86B

31.5% Net Margin

EPS (Diluted)

$2.86

Total Assets

$67.33B

Cash & Equivalents

$11.96B

Free Cash Flow

$3.10B

Financial Statements
Beta
Revenue$5.90B
Cost of Revenue$1.04B
Gross Profit$4.47B
SG&A Expenses$1.29B
Operating Expenses$3.58B
Operating Income$2.32B
Interest Expense$355.00M
Net Income$1.86B
EPS (Basic)$2.88
EPS (Diluted)$2.86
Shares Outstanding (Basic)645.00M
Shares Outstanding (Diluted)649.00M

Key Highlights

  • 1Total revenues grew 2% year-over-year to $16.5 billion for the first nine months of 2018, driven by product sales increase.
  • 2Net income for the first nine months of 2018 increased by 4% to $6.5 billion, while diluted EPS saw a significant 14% jump to $9.61.
  • 3The company's cash and cash equivalents dramatically increased to $11.96 billion by September 30, 2018, up from $3.8 billion at the end of 2017.
  • 4Amgen returned substantial capital to shareholders, repurchasing $15.7 billion of its stock in the first nine months of 2018.
  • 5Product sales for ENBREL and Neulasta® experienced declines, reflecting ongoing patent expiries and increasing biosimilar competition.
  • 6Conversely, Prolia® and XGEVA® demonstrated strong growth, with 17% and 12% increases in sales, respectively, for the nine-month period.
  • 7The effective tax rate decreased significantly in 2018 to 12.1% (year-to-date) from 15.4% in the prior year, primarily due to the U.S. corporate tax reform.

Frequently Asked Questions

For the first nine months of 2018, Amgen reported total revenues of $17.5 billion, a 3% increase from $17.0 billion in the prior year. Product sales grew 2% to $16.5 billion. Net income rose by 4% to $6.5 billion, and diluted Earnings Per Share (EPS) increased by a substantial 14% to $9.61, benefiting from lower effective tax rates due to U.S. corporate tax reform.

Amgen's financial position strengthened considerably. Cash and cash equivalents surged to $11.96 billion by September 30, 2018, a significant increase from $3.8 billion at the end of 2017. The company actively returned capital to shareholders, repurchasing $15.7 billion of its stock in the first nine months of 2018 and continuing to pay quarterly dividends.

Product sales performance was varied. Strong growth was observed in Prolia® (17%) and XGEVA® (12%) for the first nine months. However, legacy products like ENBREL and Neulasta® saw sales declines due to patent expirations and increasing competition from biosimilars. Sensipar®/Mimpara® also experienced a decrease in sales for the three-month period.

The U.S. corporate tax reform enacted in late 2017 had a positive impact on Amgen's profitability. The company's effective tax rate decreased significantly to 12.1% for the first nine months of 2018, compared to 15.4% in the same period of 2017, contributing to the increase in net income and EPS.