01—Abstract
Summary
Summary of the 10-K filed February 14, 2023. Cited figures are marked; the original filing is the authoritative source.
Bristol Myers Squibb's 2022 Form 10-K shows a company whose top line was essentially flat: total revenues were $46.2 billiona, down 0.5% from $46.4 billion in 2021, with a 3% foreign exchange drag.
U.S. revenues grew 9% to $31.8 billionb, driven by Eliquis, Opdivo and the New Product Portfolio, while international revenues fell 17% to $13.5 billion, largely because of Revlimid generic erosion in Europe and currency headwinds. GAAP diluted EPS was $2.95, down from $3.12, while non-GAAP EPS rose 8% to $7.70, reflecting lower share count and higher royalty income. Reported profitability was pressured by $9.6 billion of acquired intangible amortization and a $2.4 billion swing in other expense tied to equity investment losses.
The filing's central investor theme is the loss-of-exclusivity cliff. Revlimid fell 22% to $10.0 billionc and is guided to about $6.5 billion in 2023, while Abraxane sales dropped 31%. Management expects growth in In-Line and New Product Portfolio brands to more than offset these declines through 2025.
Key growth drivers include Eliquis (up 10% to $11.8 billiond, now the top-selling novel oral anticoagulant globally), Opdivo (up 10% to $8.2 billion), and early launches such as Opdualag, Abecma, Reblozyl and Camzyos. Concentration risk is significant, with Revlimid, Eliquis and Opdivo expected to drive most revenue and earnings in the near term, and Eliquis faces European generic challenges. Capital allocation remained shareholder-focused but balance-sheet constrained.
BMS generated $13.1 billion of operating cash flow, which was lower than 2021 because of a $1.9 billion increase in cash taxes from capitalized R&D under the TCJA. The company paid $4.6 billion in dividends, repurchased $8.0 billion of stock, and acquired Turning Point Therapeutics for $4.1 billion. Net debt rose to $30.1 billion, with total debt of $39.3 billion.
Credit ratings remain strong at A2/A+. Ongoing risks include IRA-driven Medicare price negotiation starting in 2026, a $35.9 billion intangible asset base that could face impairment if launches underperform, and several material litigation matters, including a Plavix-related Hawaii penalty and CVR-related claims.
02—Key points
Key Highlights
- Total 2022 revenues of $46.2B were roughly flat (-0.5%) versus 2021, with U.S. growth of 9% offset by a 17% decline in international sales, including a 3-point foreign exchange headwind.
- Eliquis grew 10% to $11.8B and Opdivo grew 10% to $8.2B; together they anchor the In-Line Products franchise, which is central to offsetting Revlimid erosion.
- Revlimid revenue fell 22% to $10.0B amid generic entry in the U.S. (volume-limited licenses) and Europe; management guides to about $6.5B in 2023.
- GAAP diluted EPS declined to $2.95 from $3.12, while non-GAAP EPS rose 8% to $7.70 after excluding $9.6B of acquired intangible amortization and other specified items.
- Operating cash flow fell to $13.1B from $16.2B, mainly due to a $1.9B increase in U.S. cash taxes from capitalized R&D costs under the TCJA.
- Capital returns totaled $12.6B in 2022 ($8.0B buybacks and $4.6B dividends, with $0.54 per quarter), funded partly by debt, with net debt rising to $30.1B.
- Pipeline and launch momentum include 18 major approvals in 2022, the first-in-class launches of Opdualag, Camzyos and Sotyktu, and $815M in Acquired IPRD charges, including $295M for a mavacamten royalty buyout.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2022filed February 14, 2023Financial Statements
FY2022 against FY2021
| Line item | FY2022FY2021 | Change |
|---|---|---|
| Revenue | $46.16B$46.38B | −0.5% |
| Cost of Revenue | $10.14B$9.94B | +2.0% |
| Gross Profit | $36.02B$36.45B | −1.2% |
| R&D Expenses | $9.51B$10.20B | −6.7% |
| SG&A Expenses | $7.81B$7.69B | +1.6% |
| Operating Expenses | $38.45B$38.29B | +0.4% |
| Interest Expense | $1.23B$1.33B | −7.6% |
| Net Income | $6.33B$6.99B | −9.5% |
| EPS (Basic) | $2.97$3.15 | −5.7% |
| EPS (Diluted) | $2.95$3.12 | −5.4% |
| Shares Outstanding (Basic) | 2.13B2.22B | −4.1% |
| Shares Outstanding (Diluted) | 2.15B2.25B | −4.4% |
05—Questions
Frequently Asked Questions
How much revenue is at risk from loss of exclusivity, and can growth brands offset it?
Revlimid and Abraxane declined by $3.0B combined in 2022 and Revlimid is guided lower again in 2023, to about $6.5B. Management says growth in In-Line and New Product Portfolio brands will more than offset these declines through 2025. Investors should watch execution on Eliquis (facing European generics and a 2028 U.S. settlement date for some generic challengers), Opdivo (increasing competition and declining second-line eligibility), and the new launches.
Why did GAAP EPS fall while non-GAAP EPS rose?
GAAP EPS fell to $2.95 from $3.12, mainly due to a $1.3B swing in Other (income)/expense, including $801M of equity investment losses in 2022 versus gains in 2021, and higher contingent consideration effects. Non-GAAP EPS excludes these items, along with intangible amortization, integration costs and IPRD impairments. Non-GAAP EPS rose to $7.70 from $7.16, helped by lower weighted-average shares (2,146M diluted versus 2,245M) and higher royalty income.
Is the balance sheet a constraint on future business development?
Partly. Long-term debt was $35.1B and net debt was $30.1B at year-end 2022, up $2.5B, after funding the Turning Point acquisition and $12.6B of shareholder returns. Ratings are A2/A+ with stable outlooks, and there is a $5.0B revolver and $5.0B commercial paper program. Management says it is committed to deleveraging, and the 10-K notes that further large deals could require new equity or debt financing and possibly a ratings downgrade.
What are the biggest regulatory and legal risks disclosed?
The main regulatory risk is the Inflation Reduction Act, which allows Medicare price negotiation starting in 2026 for Part D drugs, adds Part D rebates tied to inflation, and imposes a 1% excise tax on buybacks from 2023. Key legal exposures include Eliquis European patent challenges, the Hawaii Plavix penalty (about $417M attributed to BMS, under appeal), CVR-related securities and contract suits tied to Breyanzi's FDA approval timing, and Revlimid antitrust claims. The company says it cannot estimate losses for most of these matters.
Are there impairment risks on the intangible asset base?
Yes. Other intangible assets were $35.9B at December 31, 2022, down from $42.5B, after $9.6B of amortization, and they are expected to decline further to about $9.2B of annual amortization in 2023. Impairments are most likely if launches underperform, if exclusivity ends earlier than expected, or if pipeline programs are discontinued. The company recorded $101M of impairments in 2022, compared with $1.2B in 2021.
06—Continue