Why was Bristol Myers Squibb's Q1 2024 GAAP loss per share $(5.89)?

The loss was driven by $12.9 billion in Acquired IPRD charges, primarily the roughly $12.1 billion one-time charge for the Karuna Therapeutics acquisition and the SystImmune collaboration. These are one-time, non-cash-like acquisition accounting charges that the company's non-GAAP results exclude, though the non-GAAP loss of $(4.40) per share still reflects the net impact of the IPRD charge and licensing income.

Did the company change its underlying 2024 business outlook?

No. Management stated that revenue guidance (low single-digit increase, reported and ex-FX), gross margin (~74%), and operating expense guidance were unchanged. The EPS reduction to $0.40-$0.70 reflects the approximately $6.73 per-share impact of recently closed transactions, including the acquired IPRD charge and dilution from Karuna and RayzeBio financing costs.

Why did the tax rate guidance change so much?

The Karuna acquisition's $12.1 billion IPRD charge is non-tax-deductible. Because this large charge sits in a relatively small pre-tax base for non-GAAP purposes, the non-GAAP effective tax rate guidance was raised to approximately 69% from about 17.5%. Management said the charge contributes about 51 percentage points to the full-year rate, with an underlying rate of roughly 18%.

How has the company's debt and balance sheet changed?

Net debt rose to about $45.6 billion at March 31, 2024, from $27.1 billion at December 31, 2023. Total debt is about $55.7 billion against roughly $10.0 billion of cash and marketable securities. Management plans to pay down about $10 billion over two years and said it intends to maintain its investment-grade credit rating. Interest expense rose to $425 million from $288 million, and management expects roughly $13 billion of new debt at about a 5.3% rate.

What are the key upcoming catalysts for investors?

Key near-term catalysts include the FDA PDUFA dates for Augtyro (June 15, 2024), Krazati in colorectal cancer (June 21, 2024), KarXT in schizophrenia (September 26, 2024), and neoadjuvant Opdivo in NSCLC (October 8, 2024). Investors will also watch Opdualag Phase 2 NSCLC data later in 2024 and the progress of the $1.5 billion cost-savings program.

BMY 8-K: Earnings & Results & Regulation FD

01—Abstract

Summary

Summary of the 8-K filed April 25, 2024. Cited figures are marked; the original filing is the authoritative source.

Bristol Myers Squibb reported first-quarter 2024 revenues of $11.9 billion^a, up 5% reported (6% excluding foreign exchange), driven by Eliquis, Reblozyl, and Opdualag, partly offset by Opdivo and Revlimid.

Growth Portfolio revenues rose 8% to $4.8 billion^b (11% ex-FX), while the Legacy Portfolio grew 2% to $7.1 billion. The top-line story was solid, but the bottom line was dominated by a one-time charge: GAAP loss per share was $(5.89) and non-GAAP loss per share was $(4.40), versus GAAP EPS of $1.07 and non-GAAP EPS of $2.05 a year earlier. The loss stems from $12.9 billion in Acquired IPRD charges, primarily the roughly $12.1 billion Karuna Therapeutics asset acquisition, plus the SystImmune collaboration.

The Karuna charge is non-tax-deductible, which pushed the non-GAAP effective tax rate to about 9.0% negative for the quarter and drives the revised full-year tax rate assumption to roughly 69%. Management revised 2024 non-GAAP diluted EPS guidance to $0.40^c-$0.70 from $7.10-$7.40, reflecting a ~$6.73 impact from acquired IPRD charges and dilution from the Karuna and RayzeBio transactions. Revenue, gross margin, and operating expense guidance were left unchanged, and management stated there is no change to the underlying business outlook.

Other income/(expense) guidance was revised to roughly ($250M^d) from roughly $250M to reflect acquisition financing costs. Net debt rose sharply to about $45.6 billion at March 31, 2024 from $27.1 billion at year-end 2023, and total debt is roughly $55.7 billion. Management plans to pay down about $10 billion of debt over two years and announced a strategic productivity initiative targeting roughly $1.5 billion in cost savings by the end of 2025, with most savings to be reinvested in growth.

For investors, the key questions are whether the newly acquired pipeline, particularly KarXT (PDUFA September 26, 2024), Krazati, and Opdualag, can offset the Opdivo erosion and Revlimid decline, and how quickly leverage is reduced. The quarter also included several regulatory approvals, including Abecma in earlier-line multiple myeloma and Breyanzi in CLL/SLL, and a positive Phase 3 result for Opdivo plus Yervoy in hepatocellular carcinoma.

02—Key points

Key Highlights

Q1 2024 total revenues of $11.9B, up 5% (6% ex-FX), led by Eliquis (+9%), Reblozyl (+72%), and Opdualag (+76%)
GAAP EPS of $(5.89) and non-GAAP EPS of $(4.40), driven by $12.9B in Acquired IPRD charges, mainly the ~$12.1B non-tax-deductible Karuna Therapeutics acquisition
2024 non-GAAP EPS guidance cut to $0.40-$0.70 from $7.10-$7.40 (about $6.73 impact from deals), while revenue and gross margin guidance were unchanged
Non-GAAP effective tax rate guidance raised to ~69% from ~17.5%, due to the non-deductible Karuna IPRD charge
Net debt rose to $45.6B from $27.1B at year-end 2023; management plans roughly $10B of debt paydown over two years
Strategic productivity initiative targets ~$1.5B in cost savings by end of 2025, with most to be reinvested in growth brands and R&D
Growth Portfolio revenues rose 8% (11% ex-FX) to $4.8B, while Opdivo U.S. sales fell 10% on inventory and order timing

03—Questions

Frequently Asked Questions

Why was Bristol Myers Squibb's Q1 2024 GAAP loss per share $(5.89)?
The loss was driven by $12.9 billion in Acquired IPRD charges, primarily the roughly $12.1 billion one-time charge for the Karuna Therapeutics acquisition and the SystImmune collaboration. These are one-time, non-cash-like acquisition accounting charges that the company's non-GAAP results exclude, though the non-GAAP loss of $(4.40) per share still reflects the net impact of the IPRD charge and licensing income.
Did the company change its underlying 2024 business outlook?
No. Management stated that revenue guidance (low single-digit increase, reported and ex-FX), gross margin (~74%), and operating expense guidance were unchanged. The EPS reduction to $0.40-$0.70 reflects the approximately $6.73 per-share impact of recently closed transactions, including the acquired IPRD charge and dilution from Karuna and RayzeBio financing costs.
Why did the tax rate guidance change so much?
The Karuna acquisition's $12.1 billion IPRD charge is non-tax-deductible. Because this large charge sits in a relatively small pre-tax base for non-GAAP purposes, the non-GAAP effective tax rate guidance was raised to approximately 69% from about 17.5%. Management said the charge contributes about 51 percentage points to the full-year rate, with an underlying rate of roughly 18%.
How has the company's debt and balance sheet changed?
Net debt rose to about $45.6 billion at March 31, 2024, from $27.1 billion at December 31, 2023. Total debt is about $55.7 billion against roughly $10.0 billion of cash and marketable securities. Management plans to pay down about $10 billion over two years and said it intends to maintain its investment-grade credit rating. Interest expense rose to $425 million from $288 million, and management expects roughly $13 billion of new debt at about a 5.3% rate.
What are the key upcoming catalysts for investors?
Key near-term catalysts include the FDA PDUFA dates for Augtyro (June 15, 2024), Krazati in colorectal cancer (June 21, 2024), KarXT in schizophrenia (September 26, 2024), and neoadjuvant Opdivo in NSCLC (October 8, 2024). Investors will also watch Opdualag Phase 2 NSCLC data later in 2024 and the progress of the $1.5 billion cost-savings program.

04—Continue

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