10-QPeriod: Q1 FY2014

GILEAD SCIENCES, INC. Quarterly Report for Q1 Ended Mar 31, 2014

Filed May 7, 2014For Securities:GILD

Summary

Gilead Sciences, Inc. reported a significant increase in revenue and net income for the first quarter of 2014, primarily driven by the launch of its new hepatitis C treatment, Sovaldi. Total revenues nearly doubled year-over-year to $5.00 billion, with Sovaldi generating an impressive $2.27 billion in sales in its first full quarter post-launch. This strong performance in the antiviral segment, coupled with continued growth in HIV products like Stribild and Complera/Eviplera, led to a substantial rise in profitability, with net income attributable to Gilead soaring by 208% to $2.23 billion. The company also strengthened its financial position by issuing $4.00 billion in senior unsecured notes and increasing its cash reserves to $6.86 billion. While R&D and SG&A expenses increased to support pipeline progression and market expansion, the overwhelming success of Sovaldi has positioned Gilead for continued growth. Investors should monitor the ongoing patent litigations, particularly concerning sofosbuvir, and the market uptake of new HCV combination therapies.

Financial Highlights

52 data points
Beta

Revenue

$5.00B

81.2% Gross Margin

Net Income

$2.23B

44.5% Net Margin

EPS (Diluted)

$1.33

Total Assets

$28.08B

Cash & Equivalents

$6.40B

Free Cash Flow

$1.57B

Financial Statements
Beta
Revenue$5.00B
Cost of Revenue$813.00M
Gross Profit$4.06B
R&D Expenses$595.00M
SG&A Expenses$548.00M
Operating Expenses$1.96B
Operating Income$3.04B
Interest Expense$76.00M
Net Income$2.23B
EPS (Basic)$1.45
EPS (Diluted)$1.33
Shares Outstanding (Basic)1.54B
Shares Outstanding (Diluted)1.68B

Key Highlights

  • 1Total revenues increased by 97% to $5.00 billion for the first quarter of 2014, driven by the successful launch of Sovaldi.
  • 2Sovaldi sales reached $2.27 billion in its first full quarter, becoming a major revenue driver.
  • 3Net income attributable to Gilead increased by 208% to $2.23 billion ($1.33 per diluted share).
  • 4Cash, cash equivalents, and marketable securities increased significantly to $6.86 billion.
  • 5The company issued $4.00 billion in senior unsecured notes in March 2014.
  • 6R&D expenses increased by 20% to $595.0 million, and SG&A expenses increased by 46% to $548.1 million to support growth.
  • 7The company is facing multiple patent litigations related to sofosbuvir and other key products.

Frequently Asked Questions

The primary driver of Gilead's strong financial performance was the launch and significant sales of Sovaldi, its new treatment for chronic hepatitis C virus (HCV) infection. Sovaldi generated $2.27 billion in sales during the first quarter of 2014, contributing significantly to the company's nearly doubled revenue and substantial increase in net income.

Gilead significantly improved its liquidity in Q1 2014. The company issued $4.00 billion in senior unsecured notes and generated strong operating cash flows, leading to a substantial increase in its cash, cash equivalents, and marketable securities to $6.86 billion from $2.57 billion at the end of 2013. The company also repaid $843.4 million in debt.

Gilead highlighted several significant risks and ongoing legal matters. These include potential competition from generic drugs, pricing pressures from payers, the dependence on a few key products like Sovaldi and HIV treatments, and numerous patent litigations related to sofosbuvir and other products, notably with Idenix Pharmaceuticals, Roche, Merck, and AbbVie. The company also mentioned ongoing investigations by the Department of Justice.

Research and Development (R&D) expenses increased by 20% to $595.0 million, primarily due to the progression of clinical studies in oncology and HIV. Selling, General, and Administrative (SG&A) expenses rose by 46% to $548.1 million, reflecting increased headcount and support for the growth in the HCV market and preparation for the launch of new products like idelalisib.