10-QPeriod: Q3 FY2016

BRISTOL MYERS SQUIBB CO Quarterly Report for Q3 Ended Sep 30, 2016

Filed October 27, 2016For Securities:BMYCELG-RIBMYMP

Summary

Bristol-Myers Squibb (BMY) reported strong third-quarter and year-to-date results for 2016, driven significantly by robust growth in key products like Opdivo and Eliquis. Total revenues increased by 21% for the quarter and 16% for the nine months, reaching $4.9 billion and $14.2 billion, respectively. Net earnings attributable to BMS saw a substantial rise to $1.2 billion for the quarter and $3.6 billion for the nine months, leading to diluted EPS of $0.72 and $2.12, respectively. The company also enhanced its financial flexibility by increasing its cash and marketable securities position to $8.6 billion and approving a new $3.0 billion share repurchase program. While the company reported disappointing Phase III results for Opdivo in first-line non-small cell lung cancer (CheckMate-026), it continues to explore combination therapies and other indications for its immuno-oncology portfolio. BMS also continued its strategic acquisitions, including Cormorant Pharmaceuticals and Padlock Therapeutics, to bolster its pipeline in oncology and autoimmune diseases. The company is also undergoing an operating model evolution to streamline operations and focus investments, which is expected to incur restructuring charges but maintain non-GAAP operating expenses.

Financial Highlights

56 data points
Beta

Revenue

$4.92B

73.5% Gross Margin

Net Income

$1.20B

24.4% Net Margin

EPS (Diluted)

$0.72

Total Assets

$33.73B

Cash & Equivalents

$3.43B

Free Cash Flow

$1.06B

Financial Statements
Beta
Revenue$4.92B
Cost of Revenue$1.30B
Gross Profit$3.62B
R&D Expenses$1.14B
SG&A Expenses$1.14B
Operating Expenses$3.36B
Interest Expense$42.00M
Net Income$1.20B
EPS (Basic)$0.72
EPS (Diluted)$0.72
Shares Outstanding (Basic)1.67B
Shares Outstanding (Diluted)1.68B

Key Highlights

  • 1Total revenues surged by 21% to $4.9 billion in Q3 2016 compared to the prior year, driven by strong performance in key products.
  • 2Net earnings attributable to BMS increased significantly to $1.2 billion in Q3 2016, representing a substantial improvement over the prior year's $706 million.
  • 3Diluted EPS rose to $0.72 in Q3 2016, up from $0.42 in Q3 2015, reflecting improved profitability.
  • 4Opdivo and Eliquis were major growth drivers, with Opdivo sales increasing over 200% year-over-year for the quarter and Eliquis sales up 90%.
  • 5The company completed strategic acquisitions of Cormorant Pharmaceuticals and Padlock Therapeutics to strengthen its pipeline in oncology and autoimmune diseases.
  • 6BMY announced an operating model evolution expected to cost between $1.5 to $2.0 billion in restructuring charges, aimed at improving focus and agility.
  • 7The company's cash, cash equivalents, and marketable securities stood at $8.6 billion as of September 30, 2016, providing significant financial flexibility.

Frequently Asked Questions

Revenue growth in the third quarter of 2016 was primarily driven by strong demand for key products such as Opdivo (nivolumab) and Eliquis (apixaban). Opdivo sales more than tripled year-over-year, and Eliquis sales increased by 90%, reflecting their growing market acceptance and strategic importance for Bristol-Myers Squibb.

While disappointed by the negative Phase III results for Opdivo as a first-line monotherapy in non-small cell lung cancer (NSCLC) (CheckMate-026), Bristol-Myers Squibb stated that the results provided valuable scientific information. The company is continuing to investigate Opdivo in combination therapies for first-line NSCLC and remains confident in the broader immuno-oncology portfolio. The overall strategy remains unchanged.

Bristol-Myers Squibb maintains a disciplined approach to capital allocation. As of September 30, 2016, the company held $8.6 billion in cash, cash equivalents, and marketable securities. In October 2016, the Board of Directors approved a new $3.0 billion share repurchase program, in addition to the remaining capacity under prior programs, indicating a commitment to returning value to shareholders.

The company announced an evolution of its operating model designed to drive future success through focused investment in commercial opportunities, an agile R&D organization, and streamlined operations. This transformation is expected to incur substantial restructuring and other pre-tax charges, estimated between $1.5 billion to $2.0 billion, but the company anticipates non-GAAP operating expenses to remain relatively flat through 2020.