01—Abstract
Summary
Summary of the 10-Q filed April 25, 2024. Cited figures are marked; the original filing is the authoritative source.
Bristol-Myers Squibb's first-quarter 2024 results were dominated by a one-time, non-cash-to-EPS-neutral but cash-relevant acquisition charge.
Total revenues rose 5% to $11.9 billiona, led by Growth Portfolio products such as Reblozyl (+72%), Opdualag (+76%) and Camzyos, along with Eliquis (+9%). However, GAAP net loss attributable to BMS was $(11.9) billion, or $(5.89) per diluted share, versus $2.26 billion ($1.07) a year earlier. The swing reflects $12.9 billion of Acquired IPRD expense, principally the $12.1 billion Karuna asset acquisition (KarXT), plus the $800 million SystImmune upfront payment.
Non-GAAP diluted EPS was $(4.40) versus $2.05b in the prior year, a $6.45 decline driven by the same IPRD charges and higher operating and interest expense from recent deals. The quarter marked a significant shift in the balance sheet. BMS spent roughly $20.1 billion on acquisitions, collaborations and milestones (Karuna, RayzeBio, Mirati, SystImmune), funded primarily through $13.0 billion of new senior unsecured notes and $3.0 billion of commercial paper.
Total debt rose to about $52.4 billionc, and the net debt position increased by $18.5 billion to $45.6 billion. Operating cash flow was still healthy at $2.8 billion, but it covered only a fraction of dividend and investment needs in the period, and the company is now explicitly prioritizing deleveraging. Management reaffirmed its investment-grade rating goal and its commitment to growing the dividend.
Investors should weigh the headline loss against underlying franchise trends. Eliquis and the Growth Portfolio are offsetting erosion in Revlimid, Sprycel and Opdivo, with Abecma and Opdivo U.S. sales both declining.
Key forward risks include Eliquis's IRA-driven government price negotiation beginning in 2026, European generic challenges to Eliquis, Revlimid generic erosion, and the pending litigation and tax matters disclosed in the filing. The strategic productivity program targeting about $1.5 billiond in annual savings by end-2025 is a key lever for restoring margins.
02—Key points
Key Highlights
- GAAP diluted EPS was $(5.89), versus $1.07 a year ago, driven by $12.9 billion of Acquired IPRD charges, of which $12.1 billion related to the Karuna acquisition.
- Non-GAAP diluted EPS was $(4.40), versus $2.05 in Q1 2023, a $6.45 decline after excluding specified items.
- Total revenues grew 5% to $11.9 billion; U.S. revenues rose 7% while International was down 1% (down 4% excluding FX tailwinds in the opposite direction, reflecting a negative 4% FX impact).
- Growth Portfolio revenues rose 8% to $4.8 billion, led by Reblozyl (+72%), Opdualag (+76%), Camzyos (nearly tripled) and Breyanzi (+51%), partly offset by Opdivo (-6%) and Abecma (-44%).
- Net debt rose by $18.5 billion to $45.6 billion after issuing $13.0 billion of senior notes and drawing $3.0 billion in commercial paper to fund roughly $20.1 billion of acquisition and milestone payments.
- Operating cash flow was $2.8 billion, down slightly from $3.0 billion, as acquisition-related expenses of about $600 million weighed on results.
- Legacy erosion continued in Revlimid (-5%) and Sprycel (-13%), while Eliquis grew 9% to $3.7 billion, and management expects 2024 Revlimid revenue of $4.5 to $5.0 billion.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2024filed April 25, 2024Financial Statements
Q1 FY2024 against Q1 FY2023
| Line item | Q1 FY2024Q1 FY2023 | Change |
|---|---|---|
| Revenue | $11.87B$11.34B | +4.7% |
| Cost of Revenue | $2.93B$2.57B | +14.3% |
| Gross Profit | $8.93B$8.77B | +1.8% |
| R&D Expenses | $2.69B$2.32B | +16.1% |
| SG&A Expenses | $2.37B$1.76B | +34.3% |
| Operating Expenses | $23.38B$8.57B | +172.9% |
| Interest Expense | $425.00M$288.00M | +47.6% |
| Net Income | -$11.91B$2.26B | −626.6% |
| EPS (Basic) | $-5.89$1.08 | −645.4% |
| EPS (Diluted) | $-5.89$1.07 | −650.5% |
| Shares Outstanding (Basic) | 2.02B2.10B | −3.6% |
| Shares Outstanding (Diluted) | 2.02B2.11B | −4.3% |
05—Questions
Frequently Asked Questions
Why did BMS report a large GAAP net loss this quarter?
The loss was driven by $12.9 billion of Acquired IPRD expense, mainly the $12.1 billion charge for the Karuna asset acquisition, which was accounted for as an asset acquisition and therefore expensed immediately. The $800 million SystImmune upfront fee was also expensed. These are one-time, non-tax-deductible charges, which is why the effective tax rate was (3.4)%.
How is BMS financing its recent acquisitions and what does it mean for the balance sheet?
BMS issued $13.0 billion of unsecured senior notes in February 2024, with net proceeds of $12.9 billion, and used commercial paper borrowings of $3.0 billion. It also terminated a $10.0 billion bridge loan facility after the notes were issued. Total debt rose to about $52.4 billion, and net debt increased to $45.6 billion from $27.1 billion at year-end 2023. Management has stated its intention to reduce the debt added for these transactions while maintaining an investment-grade credit rating.
Is the dividend at risk given the increased debt and reported loss?
The dividend is not shown as being cut. BMS paid $1.2 billion in dividends in the quarter and declared $0.60 per share. Management said it remains committed to growing the dividend. Dividends are declared quarterly by the Board. Investors should monitor free cash flow, since operating cash flow of $2.8 billion covers the dividend but leaves limited room for both debt reduction and further large business development.
What are the biggest revenue risks for the company going forward?
Key risks include the IRA price negotiation for Eliquis starting in 2026, generic competition to Eliquis in Europe where several courts have ruled on patent validity with mixed outcomes, Revlimid generic erosion in the U.S. and Europe, and Sprycel generic entry in the U.S. starting September 2024. Opdivo U.S. sales declined 10% and Abecma U.S. sales fell 56% on competition, so these franchises also bear watching.
What is the outlook for the Growth Portfolio and new launches?
The Growth Portfolio grew 8% to $4.8 billion, and its key launches continue to ramp, including Reblozyl, Camzyos, Breyanzi and Krazati. Several regulatory decisions are pending, including FDA PDUFA dates for Augtyro (June 15, 2024), Krazati in colorectal cancer (June 21, 2024), and Breyanzi in follicular and mantle cell lymphoma (May 23 and May 31, 2024). The KarXT schizophrenia application has a PDUFA date of September 26, 2024.
06—Continue