10-QPeriod: Q2 FY2011

GILEAD SCIENCES, INC. Quarterly Report for Q2 Ended Jun 30, 2011

Filed August 5, 2011For Securities:GILD

Summary

Gilead Sciences, Inc. reported strong performance for the second quarter of 2011, with total revenues reaching $2.14 billion, a 11% increase year-over-year. Product sales were the primary driver, up 13% to $2.04 billion, fueled by robust demand for its HIV medications, particularly Atripla and Truvada, which saw 15% and 11% sales growth, respectively. This growth was observed across key geographies, including the United States and Europe, despite some headwinds like austerity measures in Europe and the impact of U.S. healthcare reform. The company also made significant strategic moves, including acquisitions of Arresto Biosciences and Calistoga Pharmaceuticals, bolstering its pipeline in oncology and inflammation. Gilead's financial position remains solid, with a substantial cash and marketable securities balance, and the company continued its share repurchase program. Despite the positive revenue trends, Gilead's cost of goods sold increased by 17% in the quarter, leading to a slight compression in gross margin to 74%. Research and Development (R&D) and Selling, General, and Administrative (SG&A) expenses also saw notable increases of 22% and 23%, respectively, driven by acquisitions, collaborations, and increased headcount. The company's effective tax rate decreased to 24.4% compared to the prior year. Overall, Gilead demonstrated strong operational performance, driven by its core antiviral franchise, while strategically investing in future growth through acquisitions and R&D.

Financial Highlights

50 data points
Beta

Revenue

$2.14B

70.5% Gross Margin

Net Income

$746.23M

34.9% Net Margin

EPS (Diluted)

$0.47

Total Assets

$12.69B

Cash & Equivalents

$905.78M

Free Cash Flow

$943.25M

Financial Statements
Beta
Revenue$2.14B
Cost of Revenue$533.86M
Gross Profit$1.51B
SG&A Expenses$304.27M
Operating Expenses$1.12B
Operating Income$1.02B
Interest Expense$46.11M
Net Income$746.23M
EPS (Basic)$0.48
EPS (Diluted)$0.47
Shares Outstanding (Basic)1.57B
Shares Outstanding (Diluted)1.60B

Key Highlights

  • 1Total revenues increased by 11% to $2.14 billion for Q2 2011, driven by strong product sales.
  • 2Product sales grew 13% to $2.04 billion, with HIV products (Atripla and Truvada) leading the growth at 15% and 11% respectively.
  • 3Acquisitions of Arresto Biosciences and Calistoga Pharmaceuticals were completed, strengthening the pipeline in oncology and inflammation.
  • 4Operating income decreased by 2% to $1.02 billion, impacted by increased R&D and SG&A expenses.
  • 5Net income attributable to Gilead increased by 4.7% to $746.2 million, or $0.93 per diluted share.
  • 6The company repurchased $1.27 billion of its common stock in the first six months of 2011 under its share repurchase program.
  • 7Cash and cash equivalents and marketable securities increased to $5.5 billion at the end of Q2 2011.

Frequently Asked Questions

The primary driver of Gilead's revenue growth in the second quarter of 2011 was its product sales, which increased by 13% to $2.04 billion. This growth was largely attributed to strong performance in its HIV medications, specifically Atripla and Truvada, which saw significant year-over-year sales increases.

Gilead experienced increases in its operating expenses during Q2 2011. Cost of goods sold rose by 17%, while Research and Development (R&D) and Selling, General, and Administrative (SG&A) expenses increased by 22% and 23%, respectively. These increases were attributed to factors such as acquisitions, ongoing business growth, increased headcount, and the impact of U.S. healthcare reform.

Gilead completed the acquisitions of Arresto Biosciences, Inc. in January 2011 and Calistoga Pharmaceuticals, Inc. in April 2011. These acquisitions were aimed at strengthening Gilead's pipeline and expertise in the areas of oncology, inflammation, and fibrotic diseases.

Gilead's capital resources remain strong, with cash, cash equivalents, and marketable securities totaling $5.5 billion as of June 30, 2011. The company generated substantial cash flow from operations and also raised capital through the issuance of $1.00 billion in 2021 senior unsecured notes. Additionally, Gilead actively repurchased its common stock under its authorized share repurchase program.