10-QPeriod: Q2 FY2020

AMGEN INC Quarterly Report for Q2 Ended Jun 30, 2020

Filed July 29, 2020For Securities:AMGN

Summary

Amgen Inc. reported total revenues of $6.2 billion for the second quarter of 2020, a 6% increase compared to the same period last year, driven primarily by a 9% increase in total product sales. The company's net income for the quarter was $1.8 billion, or $3.05 per diluted share, representing a decrease of 17% and 15% respectively, from the prior year. This decline in profitability was influenced by higher operating expenses, notably cost of sales which rose significantly due to the amortization of expenses related to the Otezla acquisition. Despite the decrease in net income, the company demonstrated robust operating cash flow and maintained a strong liquidity position with $11.4 billion in cash, cash equivalents, and marketable securities. The acquisition of Otezla in late 2019 continues to significantly impact the financial results, contributing to revenue growth but also increasing operating expenses. The company also experienced a decrease in sales for some of its established products like ENBREL and Neulasta due to market dynamics and biosimilar competition. However, newer products such as Repatha and Otezla, along with contributions from other products, have shown strong growth, offsetting some of these declines. Amgen continues to manage its capital effectively through dividends and share repurchases while also investing in its pipeline and strategic collaborations, notably with BeiGene for oncology products in China.

Financial Highlights

54 data points
Beta

Revenue

$6.21B

71.2% Gross Margin

Net Income

$1.80B

29.1% Net Margin

EPS (Diluted)

$3.05

Total Assets

$65.01B

Cash & Equivalents

$9.14B

Free Cash Flow

$2.68B

Financial Statements
Beta
Revenue$6.21B
Cost of Revenue$1.49B
Gross Profit$4.42B
SG&A Expenses$1.29B
Operating Expenses$3.88B
Operating Income$2.32B
Interest Expense$296.00M
Net Income$1.80B
EPS (Basic)$3.07
EPS (Diluted)$3.05
Shares Outstanding (Basic)588.00M
Shares Outstanding (Diluted)592.00M

Key Highlights

  • 1Total revenues for Q2 2020 increased by 6% to $6.2 billion, driven by a 9% rise in product sales.
  • 2Net income decreased by 17% to $1.8 billion ($3.05 per diluted share) compared to Q2 2019, impacted by higher operating expenses.
  • 3Cost of sales increased significantly to 25.2% of product sales, primarily due to Otezla acquisition-related expenses and amortization.
  • 4Otezla contributed $561 million in sales in Q2 2020, a significant increase as it was acquired in late 2019.
  • 5Established products like ENBREL and Neulasta saw sales declines of 9% and 28% respectively, attributed to market factors and biosimilar competition.
  • 6Repatha sales increased by 32% to $200 million, indicating strong growth in the cardiovascular segment.
  • 7Amgen's liquidity remains strong with $11.4 billion in cash, cash equivalents, and marketable securities as of June 30, 2020.

Frequently Asked Questions

Amgen's revenue growth in Q2 2020 was primarily driven by an increase in total product sales, up 9% year-over-year. This growth was fueled by contributions from the recently acquired Otezla, as well as strong performance from Repatha and a diverse portfolio of other products. The company also noted increased unit demand for newer brands.

The decrease in net income was primarily due to a significant increase in operating expenses. Cost of sales, in particular, rose substantially, driven by amortization of expenses related to the Otezla acquisition and the prior year's benefit from Hurricane Maria insurance proceeds. Research and development (R&D) and Selling, General & Administrative (SG&A) expenses also increased, partly due to Otezla-related activities.

The COVID-19 pandemic has created volatility in product demand, with some products initially seeing reduced sales due to patients avoiding healthcare settings. While demand has started to recover for certain products, the company anticipates continued fluctuations. The pandemic has also impacted clinical trials, R&D timelines, and supply chains. Amgen is actively managing these impacts and has implemented measures to ensure business continuity.

Amgen continues to return capital to shareholders through dividend payments and stock repurchases. The company declared a quarterly cash dividend of $1.60 per share and has an active stock repurchase program. As of June 30, 2020, approximately $4.9 billion remained authorized for future repurchases. Amgen also reported issuing $9.0 billion in long-term debt during the first half of 2020, partially for general corporate purposes and to enhance its working capital position.