01—Abstract
Summary
Summary of the 10-Q filed October 31, 2024. Cited figures are marked; the original filing is the authoritative source.
Bristol-Myers Squibb's Q3 2024 10-Q shows a sharp swing to a nine-month GAAP net loss of $9.0 billiona (EPS of -$4.45), driven almost entirely by a one-time $12.1 billion non-tax-deductible Acquired IPRD charge for the Karuna asset acquisition (Cobenfy) plus the $0.3B SystImmune upfront and other IPRD items.
Excluding these and other specified items, non-GAAP diluted EPS for the nine months was -$0.53b versus $5.80 a year earlier, while the third quarter itself was stable: GAAP diluted EPS of $0.60 (vs. $0.93) and non-GAAP EPS of $1.80 (vs. $2.00). Underlying sales growth was solid, with total revenues up 8% in Q3 and 7% year-to-date to $35.96 billion, led by the Growth Portfolio (up 18% in Q3) and Eliquis, offset by generic erosion on Sprycel and Revlimid. The balance sheet has been materially reshaped by acquisitions.
Cash used in investing activities rose to $21.2 billionc, funded largely by a $13.0 billion senior unsecured notes issuance and cash on hand. Net debt rose by $14.2 billion to $41.3 billion, long-term debt reached $48.7 billion, and shareholders' equity fell to $17.1 billion from $29.4 billion at year-end 2023, mainly because of the net loss. Operating cash flow of $10.8 billion still covered the $3.6 billion dividend, though interest expense is climbing (about $1.5 billion year-to-date versus $0.85 billion a year earlier).
Investors should weigh the strong launch trajectory of Cobenfy (FDA-approved in September 2024), Breyanzi, Camzyos, Opdivo and Reblozyl against the medium-term pressures: the IRA price-setting for Eliquis effective 2026, European and U.S. generic challenges to Eliquis and Zeposia, rising leverage, and a $1.5 billiond annual cost-savings program targeted by end-2025. The company also disclosed that Keytruda royalty income is declining as the rate steps down to 2.5% in 2024.
02—Key points
Key Highlights
- Nine-month GAAP net loss of $9.0 billion (EPS -$4.45), caused by a $12.1 billion one-time Acquired IPRD charge for the Karuna acquisition; non-GAAP nine-month EPS was -$0.53 versus $5.80 in 2023.
- Q3 2024 GAAP diluted EPS of $0.60 (vs. $0.93) and non-GAAP EPS of $1.80 (vs. $2.00); Q3 total revenues rose 8% to $11.9 billion.
- Growth Portfolio revenues rose 18% in Q3 to $5.8 billion, led by Reblozyl (+80%), Breyanzi (+143%), Camzyos (+129%) and Opdivo (+4%), while Legacy Portfolio grew only 1%, with Eliquis up 11% and Sprycel down 44%.
- Net debt increased $14.2 billion to $41.3 billion after $13.0 billion of 2024 senior notes and $21.8 billion of acquisition and milestone payments; long-term debt is now $48.7 billion.
- Shareholders' equity fell to $17.1 billion from $29.4 billion at year-end 2023, reflecting the net loss; no share repurchases were made in the first nine months of 2024 versus $5.2 billion in 2023.
- Cobenfy received FDA approval for schizophrenia in September 2024; Opdivo received FDA approval for resectable NSCLC in October 2024.
- Operating cash flow was $10.8 billion for nine months, with $3.6 billion in dividends paid; the company remains committed to the dividend and to reducing debt, and targets $1.5 billion of annual cost savings by end-2025.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2024filed October 31, 2024Financial Statements
Q3 FY2024 against Q3 FY2023
| Line item | Q3 FY2024Q3 FY2023 | Change |
|---|---|---|
| Revenue | $11.89B$10.97B | +8.4% |
| Cost of Revenue | $2.96B$2.51B | +18.0% |
| Gross Profit | $8.94B$8.46B | +5.6% |
| R&D Expenses | $2.37B$2.24B | +5.9% |
| SG&A Expenses | $1.98B$2.00B | −1.0% |
| Operating Expenses | $10.22B$8.83B | +15.7% |
| Net Income | $1.21B$1.93B | −37.2% |
| EPS (Basic) | $0.60$0.94 | −36.2% |
| EPS (Diluted) | $0.60$0.93 | −35.5% |
| Shares Outstanding (Basic) | 2.03B2.06B | −1.4% |
| Shares Outstanding (Diluted) | 2.03B2.06B | −1.6% |
05—Questions
Frequently Asked Questions
Why did BMS report a large GAAP net loss for the first nine months of 2024?
The loss was driven by a $12.1 billion one-time, non-tax-deductible Acquired IPRD charge from the Karuna asset acquisition, which was accounted for as an asset purchase because Cobenfy represented substantially all of the fair value acquired. Additional charges included an $800 million SystImmune upfront fee, a $590 million alnuctamab impairment, and a $280 million Inrebic impairment.
How did core business performance look in the third quarter?
Core performance was resilient. Total revenues rose 8% to $11.9 billion, U.S. revenues grew 9%, and the Growth Portfolio increased 18%. Non-GAAP EPS declined to $1.80 from $2.00, mainly because of higher interest expense and a higher effective tax rate excluding specified items.
What are the main revenue risks ahead for BMS?
Key risks include generic erosion of Sprycel, Revlimid and Pomalyst in various markets, European generic challenges to Eliquis, the expected IRA government-set price for Eliquis in Medicare starting January 2026, lower Keytruda royalty rates from 2024 onward, and potential patent challenges to Zeposia in the U.S.
How has BMS's balance sheet and leverage changed?
Total debt rose to about $49.5 billion from $39.5 billion, net debt increased to $41.3 billion from $27.1 billion, and equity declined to $17.1 billion. The company retains a $5.0 billion revolving credit facility, a $2.0 billion 364-day facility and a $7.0 billion commercial paper program, and it reports no borrowings under the revolvers. Interest expense is rising, reaching $1.45 billion for nine months versus $850 million a year earlier.
Is the dividend at risk?
The filing reports $3.6 billion of dividends paid in the first nine months and declared quarterly dividends of $0.60 per share. Management says it remains committed to the dividend, and operating cash flow of $10.8 billion covered it, though the higher debt load and acquisition spending reduce financial flexibility.
06—Continue