What was the main driver of Gilead's revenue growth in Q1 2016?

The main driver of Gilead's revenue growth was an increase in product sales, particularly from its antiviral products. While overall revenues increased by 3% to $7.8 billion, the growth in antiviral product sales, including HIV medications, offset a decline in royalty, contract, and other revenues.

Why did Gilead's net income decrease year-over-year despite revenue growth?

Gilead's net income decreased due to a significant increase in operating expenses. Cost of goods sold rose sharply, impacted by a $200 million litigation charge related to sofosbuvir sales. Research and development expenses more than doubled, largely due to upfront payments for a new collaboration and an impairment charge. Selling, general, and administrative expenses also increased.

What is the significance of the litigation charge and ongoing legal proceedings?

The company recorded a $200 million litigation charge in cost of goods sold related to sales of sofosbuvir-containing products in a case involving Merck. Gilead is also involved in numerous other significant legal proceedings, including those with Idenix Pharmaceuticals (now Merck), AbbVie, and generic manufacturers. These ongoing legal battles represent a substantial financial and operational risk and have increased expenses.

How has Gilead's cash position changed, and what is the company doing with its cash?

Gilead's cash, cash equivalents, and marketable securities decreased significantly to $21.3 billion from $26.2 billion. This reduction was primarily due to $8.0 billion spent on share repurchases, including an accelerated share repurchase program, and strategic investments, such as a $725 million upfront payment and equity investment in Galapagos NV for a collaboration on filgotinib.

GILD 10-Q Quarterly Report Q1 FY2016 — Revenue, Net Income, EPS

Summary

Gilead Sciences, Inc. reported first-quarter 2016 results showing total revenues of $7.8 billion, a modest increase from the prior year, primarily driven by growth in antiviral products. While overall revenue grew, net income attributable to Gilead declined to $3.6 billion, or $2.53 per diluted share, from $4.3 billion, or $2.76 per diluted share, in the first quarter of 2015. This decline was attributed to increased costs in cost of goods sold (including a significant litigation charge), research and development, and selling, general, and administrative expenses. The company's balance sheet showed a decrease in cash, cash equivalents, and marketable securities to $21.3 billion from $26.2 billion at the end of 2015, largely due to substantial share repurchases and strategic investments. Gilead continues to face significant litigation and regulatory scrutiny, particularly concerning its hepatitis C products.

Financial Highlights

58 data points

Beta

Revenue

$7.79B

0.8% Gross Margin

Net Income

$3.57B

0.5% Net Margin

EPS (Diluted)

$2.53

Total Assets

$47.77B

Cash & Equivalents

$6.32B

Free Cash Flow

$3.95B

Financial Statements

Beta

Revenue	$7.79B
Cost of Revenue	$1.19B
Gross Profit	$6.49B
R&D Expenses	$1.26B
SG&A Expenses	$685.00M
Operating Expenses	$3.14B
Operating Income	$4.65B
Interest Expense	$230.00M
Net Income	$3.57B
EPS (Basic)	$2.58
EPS (Diluted)	$2.53
Shares Outstanding (Basic)	1.38B
Shares Outstanding (Diluted)	1.41B

Key Highlights

1Total revenues increased by 3% year-over-year to $7.8 billion, driven by a 4% increase in product sales.
2Net income attributable to Gilead decreased to $3.6 billion ($2.53 per diluted share) from $4.3 billion ($2.76 per diluted share) in the prior year quarter, impacted by higher operating expenses.
3Cost of goods sold increased significantly due to a $200 million litigation charge related to sofosbuvir-containing products.
4Research and development expenses more than doubled to $1.3 billion, driven by upfront payments for a collaboration with Galapagos NV and an impairment charge.
5Cash, cash equivalents, and marketable securities decreased to $21.3 billion from $26.2 billion, reflecting $8.0 billion in share repurchases and other strategic investments.
6The company continues to face substantial litigation related to its hepatitis C drugs, including a recent $200 million jury verdict in a case with Merck.
7Despite challenges, Gilead received several regulatory approvals and submissions for its HIV and Hepatitis B virus (HBV) products.

GILEAD SCIENCES, INC. Quarterly Report for Q1 Ended Mar 31, 2016

Summary

Financial Highlights

Key Highlights

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