01—Abstract
Summary
Summary of the 8-K filed May 2, 2024. Cited figures are marked; the original filing is the authoritative source.
Amgen's first quarter 2024 results show strong top-line momentum but a sharply weaker GAAP profile.
Total revenues rose 22% to $7.4 billiona and product sales grew 22% on 25% volume growth, with the Horizon Therapeutics acquisition contributing $914 million. Excluding Horizon, product sales grew 6%, driven by 9% volume growth. Key growth drivers included Repatha (+33%), TEZSPIRE (+80%), EVENITY (+35%) and BLINCYTO (+26%), while Enbrel, Nplate, Neulasta and EPOGEN declined.
Profitability was significantly pressured by acquisition accounting and the Horizon integration. GAAP EPS was a loss of $0.21b versus $5.28 a year earlier, driven by a $510 million mark-to-market loss on the BeiGene equity stake, higher amortization of Horizon-acquired intangibles, and incremental Horizon operating costs. GAAP operating income fell from $1.9 billion to $1.0 billion.
On a non-GAAP basis, EPS declined 1% to $3.96c and non-GAAP operating margin fell 5.1 points to 43.2%, reflecting higher operating and interest expenses. Free cash flow was $0.5 billion versus $0.7 billion, reflecting an $800 million tax deposit.
Management raised full-year guidance for total revenues ($32.5d-33.8 billion) and non-GAAP EPS ($19.00-20.20), while GAAP EPS guidance is $7.15-8.40. For investors, the central question is whether Horizon-driven revenue growth and the pipeline (including tarlatamab and MariTide, with PDUFA dates in June 2024) can offset margin compression, rising debt of $64.0 billion, and continued erosion in legacy products.
02—Key points
Key Highlights
- Total revenues up 22% to $7.4 billion; product sales up 22% on 25% volume growth, or 6% growth excluding Horizon's $914 million contribution.
- GAAP EPS of $(0.21) vs. $5.28 a year ago, driven by a $510 million BeiGene equity mark-to-market loss and higher Horizon-related amortization and operating expenses.
- Non-GAAP EPS of $3.96, down 1% from $3.98; non-GAAP operating margin of 43.2%, down 5.1 points.
- Free cash flow of $0.5 billion vs. $0.7 billion, reduced by an $800 million tax deposit; cash and investments of $9.7 billion against debt of $64.0 billion.
- Strong growth from Repatha (+33%), TEZSPIRE (+80%), EVENITY (+35%) and BLINCYTO (+26%); Enbrel (-2%), Neulasta (-53%) and Nplate (-12%) declined.
- Full-year 2024 guidance: total revenues of $32.5-33.8 billion, non-GAAP EPS of $19.00-20.20, GAAP EPS of $7.15-8.40, capex of about $1.1 billion, and share repurchases up to $500 million.
- Key catalysts: FDA PDUFA dates of June 12, 2024 (tarlatamab) and June 21, 2024 (early-stage B-ALL BLINCYTO), plus MariTide Phase 2 topline data expected in late 2024.
03—Questions
Frequently Asked Questions
Why did GAAP EPS swing to a loss while non-GAAP EPS was roughly flat?
GAAP results include about $2.1 billion of adjustments, mainly noncash amortization of Horizon-acquired intangibles and inventory step-up ($1.86 billion in cost of sales), plus a $510 million BeiGene equity mark-to-market loss. Non-GAAP results exclude these items, so they show a much smaller decline ($3.96 vs. $3.98).
How much of the revenue growth came from the Horizon acquisition?
Horizon contributed $914 million of product sales in the quarter. Excluding Horizon, product sales grew 6%, driven by 9% volume growth. This means the organic business was growing modestly while the acquisition accounted for most of the headline increase.
Why was free cash flow lower this quarter?
Free cash flow fell to $0.5 billion from $0.7 billion, mainly due to an $800 million tax deposit. This was partially offset by timing of working capital items. Operating cash flow was $689 million versus $1,064 million a year earlier.
Did Amgen change its full-year outlook?
Yes, the company updated its 2024 guidance. Total revenues are expected at $32.5-33.8 billion, non-GAAP EPS at $19.00-20.20 and the non-GAAP tax rate at 15.0-16.0%. GAAP EPS is guided to $7.15-8.40, with the gap driven largely by known acquisition-related amortization of about $11 per share.
Which pipeline events could matter most for investors in 2024?
Near-term catalysts include the FDA decision on tarlatamab for previously treated small cell lung cancer (PDUFA June 12, 2024), the BLINCYTO early-stage B-ALL decision (PDUFA June 21, 2024), and MariTide Phase 2 obesity topline data expected in late 2024. Several Phase 3 readouts, including TEZSPIRE CRSwNP and rocatinlimab HORIZON, are expected in the second half of 2024.
04—Continue