01—Abstract
Summary
Summary of the 10-Q filed July 26, 2024. Cited figures are marked; the original filing is the authoritative source.
Bristol-Myers Squibb's Q2 2024 10-Q shows a sharp GAAP swing driven by one-time acquisition accounting.
Six-month total revenues rose 7% to $24.1 billiona (U.S. +10%, International flat, FX-hit by ~5% from the Argentine peso), with the Growth Portfolio up 13% to $10.4 billion, led by Opdivo, Reblozyl, Camzyos, Breyanzi and Krazati, while Legacy Portfolio grew 2%, with Eliquis up 8% offsetting Revlimid's decline. However, year-to-date GAAP results turned to a net loss of $10.2 billion (diluted EPS of -$5.05, versus +$2.06 a year earlier), primarily due to $13.1 billion of Acquired IPRD charges, including $12.1 billion for the Karuna asset acquisition, which is not tax-deductible. Excluding specified items, non-GAAP diluted EPS was -$2.33 year-to-date versus $3.80 in 2023, and Q2 non-GAAP EPS was $2.07, up from $1.75.
The balance sheet and cash flow picture has changed materially. Long-term debt rose to $48.9 billionb (total debt about $52.4 billion including current portion), up from roughly $36.7 billion at year-end 2023, after BMS issued $13.0 billion of senior notes to fund the RayzeBio and Karuna acquisitions. Net debt climbed to $45.4 billion from $27.1 billion, and shareholders' equity fell to $17.0 billion from $29.4 billion, largely reflecting the large IPRD charge.
Operating cash flow of $5.2 billionc (up modestly year-over-year) continued to cover the $2.4 billion dividend, but the company's focus has shifted toward deleveraging, with the $1.5 billion annual productivity program and portfolio prioritization (including a $590 million alnuctamab IPRD impairment) as near-term levers. Key items for investors to monitor include the Eliquis European generic challenges and Medicare price negotiation starting in 2026, the Karuna KarXT FDA decision (PDUFA September 26, 2024), Revlimid and Abecma erosion, and the ongoing Plavix and Thalomid/Revlimid litigation. The company also recognized a $644 million tax reserve release related to Celgene's IRS audit, which benefited Q2 GAAP results.
02—Key points
Key Highlights
- Year-to-date total revenues rose 7% to $24.1B (U.S. +10%, International flat, with ~5% FX headwind); Q2 revenues up 9% to $12.2B.
- Growth Portfolio revenue increased 13% YTD to $10.4B, led by Opdivo (+3%), Reblozyl (+77%), Camzyos, Breyanzi and Krazati; Eliquis grew 8% to $7.1B.
- YTD GAAP net loss of $10.2B (diluted EPS -$5.05) driven by $13.1B Acquired IPRD charges, including $12.1B for the Karuna acquisition; non-GAAP diluted EPS was -$2.33 YTD vs. $3.80 in 2023, while Q2 non-GAAP EPS rose to $2.07 from $1.75.
- Long-term debt increased to $48.9B (from $36.7B at year-end 2023) after $13.0B of senior notes issued to fund RayzeBio and Karuna; net debt rose to $45.4B from $27.1B.
- Shareholders' equity fell to $17.0B from $29.4B, mainly due to the IPRD charge and lower retained earnings; the dividend of $0.60 per share was maintained.
- Q2 GAAP results were boosted by a $644M tax reserve release tied to Celgene's 2017-2019 IRS audit, while Q2 also carried a $590M alnuctamab IPRD impairment and a $280M Inrebic impairment.
- Eliquis faces growing European generic challenges and was selected for Medicare price negotiation effective 2026; Revlimid international sales fell 15% YTD and Abecma U.S. sales fell 55% YTD.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2024filed July 26, 2024Financial Statements
Q2 FY2024 against Q2 FY2023
| Line item | Q2 FY2024Q2 FY2023 | Change |
|---|---|---|
| Revenue | $12.20B$11.23B | +8.7% |
| Cost of Revenue | $3.27B$2.88B | +13.6% |
| Gross Profit | $8.93B$8.35B | +7.0% |
| R&D Expenses | $2.90B$2.26B | +28.4% |
| SG&A Expenses | $1.93B$1.93B | −0.3% |
| Operating Expenses | $10.91B$9.37B | +16.5% |
| Net Income | $1.68B$2.07B | −19.0% |
| EPS (Basic) | $0.83$0.99 | −16.2% |
| EPS (Diluted) | $0.83$0.99 | −16.2% |
| Shares Outstanding (Basic) | 2.03B2.09B | −3.2% |
| Shares Outstanding (Diluted) | 2.03B2.10B | −3.5% |
05—Questions
Frequently Asked Questions
Why did BMS report a large GAAP net loss for the first half of 2024?
The loss was driven mainly by $13.1 billion of Acquired IPRD charges, most notably $12.1 billion expensed for the Karuna asset acquisition, which was accounted for as an asset acquisition and is not tax-deductible. Excluding these and other specified items, such as intangible impairments and restructuring, the company's non-GAAP diluted EPS was -$2.33 for the six months, compared with $3.80 a year earlier.
How has BMS's debt position changed?
Total debt rose to about $52.4 billion at June 30, 2024 from about $39.5 billion at year-end 2023, including $48.9 billion of long-term debt. BMS issued $13.0 billion of senior unsecured notes in February 2024 to partially fund the RayzeBio and Karuna acquisitions, and net debt rose to $45.4 billion. The company says it remains committed to a strong investment-grade rating and to reducing the debt issued for these transactions.
Which products are driving growth, and which are declining?
Growth came from Reblozyl (up 77% YTD), Camzyos, Breyanzi, Sotyktu, Zeposia, Opdualag and Opdivo (in the U.S.), along with Eliquis (up 8% YTD). Declines were concentrated in Abecma (down 37% YTD, on BCMA competition), Revlimid (down 6% YTD, on generic erosion), and Sprycel and Abraxane internationally, as well as in Legacy international markets generally.
What are the key upcoming catalysts and risks?
Near-term catalysts include the FDA decision on KarXT for schizophrenia (PDUFA date September 26, 2024), the subcutaneous Opdivo BLA (PDUFA December 29, 2024), and the cendakimab Phase 3 results in eosinophilic esophagitis. Key risks include European generic challenges to Eliquis, the Medicare negotiation of Eliquis prices beginning in 2026, pricing pressure from the IRA, Revlimid generic erosion, and litigation including the Plavix penalties in Hawaii, Revlimid/Thalomid antitrust suits, and the Celgene CVR claims.
06—Continue