01—Abstract
Summary
Summary of the 10-K filed February 10, 2021. Cited figures are marked; the original filing is the authoritative source.
Bristol-Myers Squibb's FY2020 10-K shows a transformational but earnings-distorting year.
Total revenue rose 63% to $42.5 billiona, driven mainly by the November 2019 Celgene acquisition (which contributed roughly $15.7 billion of revenue growth) and strong demand for Eliquis. Revlimid ($12.1 billion) and Pomalyst ($3.1 billion) became major growth engines, and the company now reports 13 prioritized brands making up about 95% of revenue. Opdivo sales declined 3% to $7.0 billion amid competitive pressure and a withdrawn SCLC indication.
GAAP results swung to a net loss of $9.0 billionb, or $(3.99) per diluted share, versus GAAP EPS of $2.01 in 2019. The loss was driven by an $11.4 billion IPRD charge from the $13.1 billion MyoKardia acquisition, plus heavy amortization of acquired intangibles ($9.7 billion) and unwinding of Celgene inventory fair-value step-ups. Management's non-GAAP diluted EPS was $6.44, up from $4.69.
Investors should weigh the non-GAAP figure against the substantial recurring amortization and integration costs. Balance sheet leverage rose sharply: long-term debt reached about $50.3 billionc, net debt was roughly $34.4 billion, and equity fell to $37.9 billion from $51.7 billion.
Management plans to prioritize debt reduction while continuing business development, and it expects about $3.0 billiond of Celgene synergies through 2022. Key risks include Revlimid and Eliquis generic timing, an unresolved Eliquis patent appeal, pricing pressure in the U.S., and the Celgene CVR termination after the liso-cel FDA delay.
02—Key points
Key Highlights
- Revenue up 63% to $42.5B; Celgene contributed about $15.7B of growth, and Revlimid rose from $1.3B to $12.1B.
- GAAP net loss of $9.0B (EPS -$3.99) due to the $11.4B MyoKardia IPRD charge and about $9.7B of acquired-intangible amortization; non-GAAP diluted EPS was $6.44 (vs. $4.69).
- Eliquis grew 16% to $9.2B; Opdivo fell 3% to $7.0B, with U.S. sales down 9% on second-line erosion and competition.
- Total debt rose to roughly $50.3B from $46.2B, with net debt of about $34.4B; the company also issued $7.0B of notes in November 2020 to fund MyoKardia.
- Intangible assets of $53.2B (down from $64.0B) and goodwill of $20.5B create meaningful future impairment risk, especially given the Inrebic ($575M) and orva-cel ($470M) write-downs in 2020.
- Revlimid generic entry is expected in the UK and key EU markets from early 2022 and in the U.S. in volume-limited form from March 2022; Eliquis U.S. LOE depends on a pending appeal (earliest unrestricted entry as early as November 2026, with a settlement-based 2028 date if the district court ruling holds).
- Share repurchases were about $1.6B in 2020 with roughly $4.4B of authorization remaining (plus a $2.0B increase approved in January 2021); the quarterly dividend rose to $0.49 in Q4 and total dividends paid were $4.1B.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2020filed February 10, 2021Financial Statements
FY2020 against FY2019
| Line item | FY2020FY2019 | Change |
|---|---|---|
| Revenue | $42.52B$26.14B | +62.6% |
| Cost of Revenue | $11.77B$8.08B | +45.7% |
| Gross Profit | $30.75B$18.07B | +70.2% |
| R&D Expenses | $10.05B$6.15B | +63.4% |
| SG&A Expenses | $7.66B$4.87B | +57.3% |
| Operating Expenses | $49.39B$21.17B | +133.3% |
| Interest Expense | $1.42B$656.00M | +116.5% |
| Net Income | -$9.02B$3.44B | −362.1% |
| EPS (Basic) | $-3.99$2.02 | −297.5% |
| EPS (Diluted) | $-3.99$2.01 | −298.5% |
| Shares Outstanding (Basic) | 2.26B1.71B | +32.4% |
| Shares Outstanding (Diluted) | 2.26B1.71B | +31.9% |
05—Questions
Frequently Asked Questions
Why did Bristol-Myers Squibb report a large GAAP loss in 2020 when revenue grew strongly?
The GAAP loss of $9.0 billion was driven mainly by an $11.4 billion in-process R&D charge from the MyoKardia acquisition, which was accounted for as an asset purchase and expensed upfront. Large non-cash amortization of intangibles from the Celgene deal ($9.7 billion) and inventory fair-value unwinding ($2.7 billion) also weighed on results. Management's non-GAAP EPS of $6.44 excludes these items, but investors should consider that some of these costs recur over multiple years.
How dependent is the company on a few products, and what are the key loss-of-exclusivity risks?
Dependence is high: 13 prioritized brands produced about 95% of 2020 revenue, and Revlimid, Eliquis, Opdivo and Pomalyst are expected to account for a large share of future revenue. Revlimid faces generic entry in Europe from early 2022 and in the U.S. in volume-limited form from March 2022, with broader U.S. entry from 2026. Eliquis's U.S. timing depends on a pending Federal Circuit appeal, with possible launch dates ranging from 2026 to 2028 depending on the outcome. Opdivo's core U.S. patent is listed as 2028.
How heavily does the balance sheet now rely on debt, and what is management doing about it?
Long-term debt rose to about $50.3 billion from $46.2 billion, and net debt is roughly $34.4 billion. Equity fell to $37.9 billion from $51.7 billion, mostly due to the 2020 net loss. Credit ratings remain strong (A2/A+), but the S&P outlook is negative. Management says it is committed to reducing debt while still pursuing business development, and it has about $15.8 billion of debt maturing through 2024 with substantial cash and credit facilities to support repayment.
What are the main pricing and regulatory risks to revenue?
The company cites increasing U.S. pricing pressure from Medicare Part D formularies, 340B program expansion, state drug-price transparency laws, and proposed federal rules (including a most-favored-nation-based Part B payment pilot and changes to rebates). It also faces European government price controls and reimbursement delays. GTN adjustments reduced gross product sales by about 31% in 2020 ($18.7 billion), and management expects these pressures to become more acute.
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