01—Abstract
Summary
Summary of the 10-K filed February 13, 2024. Cited figures are marked; the original filing is the authoritative source.
Bristol-Myers Squibb's FY2023 10-K shows a company in a transition year.
Total revenues fell 2% to $45.0 billiona, driven by Revlimid's generic erosion (down 39% to $6.1 billion) and free-goods distribution through the patient assistance foundation. Growth came from the New Product Portfolio (up 77% to $3.6 billion) and In-Line Products (Opdivo up 9%, Eliquis up 4%). GAAP diluted EPS rose to $3.86 from $2.95, mainly from specified items such as a $656 million non-U.S. tax ruling benefit and litigation settlement income, while non-GAAP EPS fell to $7.51 from $7.70.
Operating cash flow was $13.9 billion, and net debt declined to $27.1 billionb. The more important forward-looking issues are the patent cliff and acquisitions. Revlimid guidance calls for a $1.5 to $2.0 billion decline in 2024.
Eliquis faces IRA government price-setting beginning in 2026 and ongoing European generic challenges, and Opdivo's exclusivity is estimated to run only to 2028 in the U.S. Management is also executing large acquisitions: Mirati closed in January 2024, while Karuna ($14.0 billionc) and RayzeBio ($4.1 billion) are expected to close in the first half of 2024 and will be largely debt-funded. S&P downgraded the long-term rating to A from A+, and Moody's placed a negative outlook on its A2 rating.
For investors, the core question is whether the pipeline, the new launches (Reblozyl, Breyanzi, Camzyos, Sotyktu, Augtyro), and the Mirati, Karuna, and RayzeBio assets can offset the roughly $8.7 billiond of 2024 intangible amortization and the loss of exclusivity on major products. The filing presents a credible growth portfolio but a leverage-constrained balance sheet and meaningful near-term revenue erosion risk.
02—Key points
Key Highlights
- Total revenues were $45.0 billion in 2023, down 2% from $46.2 billion, with U.S. revenues down 1% and International down 6%.
- New Product Portfolio revenue grew 77% to $3.6 billion, led by Reblozyl ($1.0 billion, up 41%), Opdualag ($627 million), Abecma ($472 million), and Zeposia ($434 million, up 74%).
- Revlimid sales fell 39% to $6.1 billion due to generic erosion, and Revlimid's global revenue is guided to decline by $1.5 to $2.0 billion in 2024.
- GAAP diluted EPS rose to $3.86 from $2.95, while non-GAAP diluted EPS declined to $7.51 from $7.70, driven by lower revenues and product mix.
- Operating cash flow was $13.9 billion, and net debt fell to $27.1 billion from $30.1 billion; the company repurchased $5.2 billion of stock and paid $4.7 billion in dividends.
- Acquisitions pending in 2024 include Karuna ($14.0 billion) and RayzeBio ($4.1 billion), largely funded with debt; Mirati ($4.8 billion) closed in January 2024.
- Eliquis was selected for IRA Medicare price negotiation effective 2026, and the company estimates a U.S. minimum market exclusivity date of 2026 for Eliquis and 2028 for Opdivo.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2023filed February 13, 2024Financial Statements
FY2023 against FY2022
| Line item | FY2023FY2022 | Change |
|---|---|---|
| Revenue | $45.01B$46.16B | −2.5% |
| Cost of Revenue | $10.69B$10.14B | +5.5% |
| Gross Profit | $34.31B$36.02B | −4.7% |
| R&D Expenses | $9.30B$9.51B | −2.2% |
| SG&A Expenses | $7.77B$7.81B | −0.5% |
| Operating Expenses | $36.57B$38.45B | −4.9% |
| Interest Expense | $1.17B$1.23B | −5.4% |
| Net Income | $8.03B$6.33B | +26.8% |
| EPS (Basic) | $3.88$2.97 | +30.6% |
| EPS (Diluted) | $3.86$2.95 | +30.8% |
| Shares Outstanding (Basic) | 2.07B2.13B | −2.9% |
| Shares Outstanding (Diluted) | 2.08B2.15B | −3.2% |
05—Questions
Frequently Asked Questions
Why did revenue decline in 2023 despite strong growth in newer products?
Revlimid's generic erosion in the U.S. and Europe, together with a rise in free drug given through the Bristol Myers Squibb Patient Assistance Foundation, reduced sales by $3.9 billion. This was partly offset by New Product Portfolio growth of $1.6 billion and In-Line Product growth of $1.0 billion, led by Opdivo and Eliquis.
How significant is the loss of exclusivity risk for BMS?
It is material. Eliquis, Opdivo, and Revlimid together account for a large share of revenue and cash flow, and the filing states that Eliquis faces IRA government-set prices beginning in 2026 and generic challenges in Europe. The company's own estimates put U.S. minimum market exclusivity for Opdivo at 2028 and for Eliquis at 2026, with no assurance that these dates will hold.
What is the impact of the Karuna and RayzeBio acquisitions on the balance sheet?
The acquisitions will be funded primarily with future debt. Management secured a $10.0 billion 364-day bridge term loan, and S&P downgraded BMS's long-term rating to A from A+. Moody's affirmed the A2 rating but moved the outlook to negative, which may raise borrowing costs and constrain future business development.
Why did GAAP EPS rise while non-GAAP EPS fell?
GAAP EPS benefited from specified items, including a $656 million deferred tax benefit from a non-U.S. tax ruling, $400 million of income from the Nimbus TYK2 change-of-control provision, and $384 million from the AstraZeneca settlement. Non-GAAP EPS, which excludes these items as well as large amortization charges, declined because of lower revenue and unfavorable product mix.
What growth drivers should investors monitor in 2024 and beyond?
Key drivers include Reblozyl's expansion into first-line MDS and myelofibrosis, Breyanzi's new indications in follicular and mantle cell lymphoma (PDUFA dates in May 2024), Camzyos in non-obstructive HCM, Sotyktu's additional indications, Augtyro's launch, the Karuna schizophrenia NDA (PDUFA September 2024), and the Mirati KRAS G12C inhibitor Krazati. Commercial execution on these launches will determine whether they can offset Revlimid and Eliquis erosion.
06—Continue