10-QPeriod: Q3 FY2015

GILEAD SCIENCES, INC. Quarterly Report for Q3 Ended Sep 30, 2015

Filed November 4, 2015For Securities:GILD

Summary

Gilead Sciences, Inc. (GILD) reported strong financial results for the third quarter and first nine months of 2015, driven by significant growth in its Hepatitis C (HCV) products, Harvoni and Sovaldi. Total revenues for the third quarter of 2015 reached $8.3 billion, a substantial increase from $6.0 billion in the prior year's quarter. Net income also saw a significant jump, reaching $4.6 billion ($3.06 per diluted share) in Q3 2015, up from $2.7 billion ($1.67 per diluted share) in Q3 2014. The company's balance sheet reflects robust liquidity, with cash, cash equivalents, and marketable securities totaling $25.1 billion as of September 30, 2015. Gilead also actively managed its capital structure, issuing $10 billion in senior unsecured notes and repurchasing approximately $7.0 billion of its common stock during the nine-month period. The company initiated a quarterly dividend program, demonstrating a commitment to returning value to shareholders.

Financial Highlights

55 data points
Beta

Revenue

$8.29B

86.2% Gross Margin

Net Income

$4.60B

55.5% Net Margin

EPS (Diluted)

$3.06

Total Assets

$50.64B

Cash & Equivalents

$13.96B

Free Cash Flow

$4.10B

Financial Statements
Beta
Revenue$8.29B
Cost of Revenue$1.06B
Gross Profit$7.15B
R&D Expenses$743.00M
SG&A Expenses$903.00M
Operating Expenses$2.71B
Operating Income$5.58B
Interest Expense$165.00M
Net Income$4.60B
EPS (Basic)$3.14
EPS (Diluted)$3.06
Shares Outstanding (Basic)1.46B
Shares Outstanding (Diluted)1.50B

Key Highlights

  • 1Total revenues for the third quarter of 2015 were $8.3 billion, a 37% increase year-over-year, primarily driven by HCV product sales.
  • 2Net income attributable to Gilead increased significantly to $4.6 billion in Q3 2015, compared to $2.7 billion in Q3 2014.
  • 3Diluted earnings per share rose to $3.06 in Q3 2015, from $1.67 in Q3 2014.
  • 4Cash, cash equivalents, and marketable securities stood at $25.1 billion as of September 30, 2015, indicating strong liquidity.
  • 5The company issued $10.0 billion in senior unsecured notes in September 2015.
  • 6Gilead repurchased approximately $7.0 billion of its common stock during the first nine months of 2015.
  • 7The company declared its first quarterly cash dividend of $0.43 per share in Q2 2015.

Frequently Asked Questions

The primary driver of Gilead's revenue growth in Q3 2015 was the significant increase in sales of its Hepatitis C (HCV) products, Harvoni and Sovaldi. These products generated $4.8 billion in sales in Q3 2015, compared to $2.8 billion in Q3 2014.

Gilead ended Q3 2015 with a strong liquidity position, holding $25.1 billion in cash, cash equivalents, and marketable securities. The company raised $10 billion through the issuance of senior unsecured notes in September 2015 and actively engaged in share repurchases, buying back $7.0 billion of its stock during the first nine months of the year. Additionally, Gilead initiated a quarterly dividend program.

Gilead acknowledged that while HCV product sales have been strong, the rate of new patient starts has diminished since Q1 2015. The company anticipates that the rate of new patient starts towards the end of 2015 will be more indicative of 2016 trends. Gilead also noted the ongoing pricing pressure and competition in the HCV market.

Gilead is involved in several significant legal proceedings, primarily related to patent disputes concerning its Hepatitis C drugs, Sovaldi and Harvoni, with companies like Idenix Pharmaceuticals and AbbVie. There are also ongoing litigations with generic manufacturers challenging patents for HIV products. While the company believes these claims are without merit, the outcomes are uncertain and could potentially impact revenues and earnings.