10-QPeriod: Q1 FY2021

AMGEN INC Quarterly Report for Q1 Ended Mar 31, 2021

Filed April 28, 2021For Securities:AMGN

Summary

Amgen Inc. reported total revenues of $5.901 billion for the first quarter of 2021, a decrease of 4% compared to $6.161 billion in the prior year period. This decline was primarily driven by a 5% decrease in total product sales, largely due to lower net selling prices for certain products, particularly Enbrel and Neulasta, and the ongoing impact of the COVID-19 pandemic on patient access and diagnoses. Despite the revenue dip, operating expenses saw a slight decrease of 1%, and net income stood at $1.646 billion, resulting in diluted Earnings Per Share (EPS) of $2.83, down from $3.07 in the prior year. The company demonstrated its commitment to returning capital to shareholders by repurchasing $865 million of common stock and declaring a quarterly dividend of $1.76 per share. Cash flow from operations remained robust at $2.104 billion. Amgen also advanced its strategic growth initiatives, notably completing the acquisition of Five Prime Therapeutics for approximately $1.9 billion to bolster its oncology pipeline. The company continues to navigate the uncertainties of the COVID-19 pandemic, which has impacted patient interactions and product demand, but believes its financial position remains adequate to meet its obligations and pursue future opportunities.

Financial Highlights

53 data points
Beta

Revenue

$5.90B

74.8% Gross Margin

Net Income

$1.65B

27.9% Net Margin

EPS (Diluted)

$2.83

Total Assets

$62.54B

Cash & Equivalents

$6.11B

Free Cash Flow

$1.94B

Financial Statements
Beta
Revenue$5.90B
Cost of Revenue$1.49B
Gross Profit$4.41B
SG&A Expenses$1.25B
Operating Expenses$3.77B
Operating Income$2.13B
Interest Expense$285.00M
Net Income$1.65B
EPS (Basic)$2.85
EPS (Diluted)$2.83
Shares Outstanding (Basic)577.00M
Shares Outstanding (Diluted)581.00M

Key Highlights

  • 1Total revenues decreased by 4% year-over-year to $5.901 billion, primarily due to a 5% decline in product sales.
  • 2Net income decreased by 10% to $1.646 billion, with diluted EPS falling to $2.83 from $3.07 in the prior year.
  • 3Enbrel sales saw a significant 20% decrease, and Neulasta sales dropped by 21%, largely due to patent expirations, biosimilar competition, and prior-year favorable adjustments.
  • 4Prolia and Repatha showed strong growth, with sales increasing by 16% and 25% respectively, driven by higher unit demand.
  • 5The company returned $1.0 billion in dividends and repurchased $865 million in stock during the quarter, demonstrating a commitment to shareholder returns.
  • 6Operating expenses decreased slightly by 1% due to lower amortization, though R&D expenses increased to support pipeline development and acquisitions.
  • 7Amgen completed the acquisition of Five Prime Therapeutics for approximately $1.9 billion to strengthen its oncology pipeline.

Frequently Asked Questions

The primary driver for the 4% decrease in total revenues to $5.901 billion was a 5% decline in total product sales. This was mainly attributed to lower net selling prices for certain products, particularly Enbrel and Neulasta, and the ongoing impact of the COVID-19 pandemic on patient visits and new diagnoses.

The COVID-19 pandemic continued to impact Amgen's sales by disrupting physician-patient interactions, leading to delayed diagnoses and treatments. This affected patient access to certain drugs, particularly those requiring administration by healthcare providers or that target conditions where patients may avoid medical facilities. While demand has shown some recovery, the cumulative effect of missed patient visits continues to influence sales trends.

Amgen continues to return capital to shareholders through a combination of quarterly cash dividends and stock repurchases. In the first quarter of 2021, the company declared a dividend of $1.76 per share and repurchased approximately $865 million of its common stock. The Board of Directors also increased the authorized amount under the stock repurchase program.

Amgen is involved in several legal proceedings, including patent litigations related to key products like Kyprolis and Otezla, and biosimilar challenges for Enbrel and Neulasta. Additionally, the company is engaged in ongoing disputes with the IRS regarding the allocation of profits between U.S. and Puerto Rico entities, which could potentially lead to material adverse impacts on its financial statements if not resolved favorably. The company is also monitoring potential changes in tax legislation.

Amgen is investing in future growth through research and development, as evidenced by the increase in R&D expenses. A significant strategic move in this quarter was the completion of the acquisition of Five Prime Therapeutics for approximately $1.9 billion, aimed at enhancing its oncology pipeline, demonstrating a commitment to acquiring innovative assets.