01—Abstract
Summary
Summary of the 10-K filed February 26, 2019. Cited figures are marked; the original filing is the authoritative source.
Gilead Sciences, Inc. reported 2018 revenues of $22.1 billiona, a decrease from $26.1 billion in 2017, primarily driven by a significant decline in Hepatitis C (HCV) product sales, which were down 60% to $3.7 billion.
This was partially offset by a 12% increase in HIV product sales, reaching $14.6 billionb, boosted by the strong performance of Biktarvy and other TAF-based regimens. The company made significant investments in research and development, increasing by 34% to $5.0 billion, including an $820 million impairment charge for the KITE-585 program. Gilead also advanced its cell therapy pipeline with the European Commission approval of Yescarta.
The company's outlook for 2019 anticipates continued growth in HIV products and Truvada for PrEP, while expecting further declines in HCV sales, albeit at a slower rate. Gilead also announced a significant leadership transition with Daniel O'Day taking over as CEO.
02—Key points
Key Highlights
- Total revenues decreased by 15% to $22.1 billion in 2018, driven by a substantial drop in HCV product sales.
- HIV product sales increased by 12% to $14.6 billion, fueled by the successful launch of Biktarvy and the continued strong uptake of TAF-based regimens.
- HCV product sales experienced a significant decline of 60% to $3.7 billion due to increased competition and lower patient starts.
- Research and development expenses rose by 34% to $5.0 billion, impacted by an $820 million impairment charge for the KITE-585 program and increased collaboration expenses.
- Yescarta, a cell therapy product, generated $264 million in sales in 2018, up from $7 million in 2017.
- Gilead returned $5.8 billion to shareholders through dividends and share repurchases in 2018.
- The company is strategically positioning for future growth by investing in its HIV pipeline and advancing its cell therapy and inflammation programs.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2018, Gilead Sciences, Inc. kept $0.25.
- Revenue$22.13B100.0%
- Cost of revenue−$4.85B21.9%
- Gross profit$17.27B78.1%
- Operating costs−$9.07B41.0%
- Operating income$8.20B37.1%
- Interest, other & tax−$2.75B12.4%
- Net income$5.46B24.7%
Where FY2018 revenue went
$22.13B- Net income: $5.46B, 25% of revenue
- R&D: $5.02B, 23% of revenue
- Cost of revenue: $4.85B, 22% of revenue
- SG&A: $4.06B, 18% of revenue
- Interest, other & tax: $2.75B, 12% of revenue
Kept 25% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2018filed February 26, 2019Financial Statements
FY2018 against FY2017
| Line item | FY2018FY2017 | Change |
|---|---|---|
| Revenue | $22.13B$26.11B | −15.2% |
| Cost of Revenue | $4.85B$4.37B | +11.0% |
| Gross Profit | $17.27B$21.74B | −20.5% |
| R&D Expenses | $5.02B$3.73B | +34.4% |
| SG&A Expenses | $4.06B$3.88B | +4.6% |
| Operating Expenses | $13.93B$11.98B | +16.2% |
| Operating Income | $8.20B$14.12B | −41.9% |
| Interest Expense | $1.08B$1.12B | −3.7% |
| Net Income | $5.46B$4.63B | +17.9% |
| EPS (Basic) | $4.20$3.54 | +18.6% |
| EPS (Diluted) | $4.17$3.51 | +18.8% |
| Shares Outstanding (Basic) | 1.30B1.31B | −0.7% |
| Shares Outstanding (Diluted) | 1.31B1.32B | −0.8% |
05—Questions
Frequently Asked Questions
What was the primary driver of Gilead's revenue decline in 2018?
The primary driver of Gilead's revenue decline in 2018 was a significant decrease in Hepatitis C (HCV) product sales, which fell by 60% to $3.7 billion, due to increased competition and a reduction in patient starts. This decline was partially offset by a 12% increase in HIV product sales.
How is Gilead addressing the decline in HCV sales?
Gilead announced plans to launch authorized generic versions of its HCV products, Epclusa and Harvoni, in the United States through its subsidiary Asegua Therapeutics LLC. This strategy aims to provide lower-priced alternatives and increase patient access to these medications.
What is the outlook for Gilead's HIV business?
Gilead expects continued growth in its HIV business in 2019, driven by the strong performance of Biktarvy and other single-tablet regimens containing tenofovir alafenamide (TAF). Truvada for pre-exposure prophylaxis (PrEP) is also anticipated to remain a key growth driver in the U.S.
What are the key R&D investments and developments mentioned in the report?
Gilead significantly increased its R&D expenses by 34% to $5.0 billion in 2018. Key developments include advancing its cell therapy pipeline, with Yescarta receiving European Commission approval, and positive data on filgotinib for inflammatory diseases. However, the company also incurred an $820 million impairment charge related to the discontinuation of the KITE-585 program.
06—Continue