What are the main reasons Amgen uses non-GAAP financial measures?

Amgen uses non-GAAP financial measures to provide investors with supplementary information that facilitates a better understanding of the company's ongoing business operations and future prospects. They believe these measures enhance comparability across different periods by excluding items that may be volatile or not directly related to core operational performance, such as acquisition-related costs, licensing expenses, and certain investment gains/losses.

How has Amgen's approach to non-GAAP reporting changed in 2021?

Starting January 1, 2021, Amgen began excluding gains and losses from investments in equity securities (recorded in other income and expense) from its non-GAAP financial measures. This change was implemented because increased investments led to greater variability, potentially impeding the comparability of ongoing business operations between periods. Prior year (2020) non-GAAP figures were restated to reflect this updated policy for consistency.

What is Free Cash Flow (FCF) and why does Amgen report it?

Free Cash Flow (FCF) is calculated by subtracting capital expenditures from operating cash flow, both determined in accordance with GAAP. Amgen reports FCF as an additional measure of the company's liquidity, providing insight into the cash generated from its operations that is available after investing in its business.

Are the financial results presented in this 8-K final and audited?

No, the 8-K filing on November 2, 2021, reports Amgen's unaudited results of operations for the three and nine months ended September 30, 2021. The information furnished in this report, including the press release, is not considered 'filed' for certain regulatory purposes, such as Section 18 of the Securities Exchange Act of 1934.

AMGN 8-K: Earnings & Results

Summary

Amgen Inc. (AMGN) filed an 8-K on November 2, 2021, to report its unaudited financial results for the third quarter and the first nine months of 2021, as well as its financial position as of September 30, 2021. The filing primarily furnished a press release detailing these results. A key aspect of the disclosure is Amgen's use of non-GAAP financial measures, which the company believes provide a more insightful view of its ongoing business operations by excluding certain items like acquisition-related expenses, licensing-related expenses, costs from cost savings initiatives, and certain investment and legal-related gains/losses. Amgen also highlights its calculation of Free Cash Flow (FCF) as a measure of liquidity. Investors should note that Amgen has refined its non-GAAP reporting for 2021, specifically by excluding gains and losses on equity investments that are recorded to other income and expense, beginning January 1, 2021. This change was made to improve comparability between reporting periods, as increased investments in certain companies led to greater variability. Prior year (2020) non-GAAP figures have been restated to reflect this updated policy, ensuring consistency. The provided information is furnished and not considered 'filed' for certain regulatory purposes.

Key Highlights

1Amgen released its unaudited Q3 and year-to-date 2021 financial results via an 8-K filing.
2The company utilizes non-GAAP financial measures to offer supplemental insights into operational performance.
3Key excluded items from non-GAAP measures include acquisition-related costs, licensing expenses, cost-saving initiative costs, and certain investment/legal gains/losses.
4Free Cash Flow (FCF) is presented as a measure of the company's liquidity.
5Effective January 1, 2021, Amgen began excluding gains and losses on equity investments from its non-GAAP measures to enhance comparability.
6Prior year (2020) non-GAAP financial data has been revised to align with the updated 2021 policy for consistency.
7The information in the 8-K is furnished and not deemed filed under Section 18 of the Securities Exchange Act.

AMGEN INC 8-K Report, Financial Results (Nov 2, 2021)

Summary

Key Highlights

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