10-QPeriod: Q3 FY2020

GILEAD SCIENCES, INC. Quarterly Report for Q3 Ended Sep 30, 2020

Filed November 4, 2020For Securities:GILD

Summary

Gilead Sciences, Inc. reported robust revenue growth in the third quarter of 2020, driven by strong performance in its HIV and cell therapy segments, as well as significant contributions from Veklury (remdesivir) for COVID-19 treatment. Total revenues increased by 17% year-over-year to $6.6 billion. The company swung to a net income of $360 million ($0.29 per diluted share) from a net loss in the prior-year period, largely influenced by substantial acquired in-process research and development (IPR&D) expenses and a significant unrealized loss on equity investments. Gilead also announced its agreement to acquire Immunomedics for approximately $21 billion, a strategic move to bolster its oncology pipeline, which closed shortly after the quarter's end. Despite challenges posed by the COVID-19 pandemic on certain product lines like HCV, Gilead demonstrated resilience and strategic execution. The company's ability to scale Veklury production and distribution globally highlights its operational capabilities during a critical public health crisis. Key investments in its oncology portfolio and ongoing pipeline development signal a strategic focus on long-term growth.

Financial Highlights

57 data points
Beta

Revenue

$6.58B

81.4% Gross Margin

Net Income

$360.00M

5.5% Net Margin

EPS (Diluted)

$0.29

Total Assets

$60.88B

Cash & Equivalents

$12.89B

Free Cash Flow

$2.10B

Financial Statements
Beta
Revenue$6.58B
Cost of Revenue$1.14B
Gross Profit$5.35B
SG&A Expenses$1.11B
Operating Expenses$4.58B
Operating Income$2.00B
Interest Expense$236.00M
Net Income$360.00M
EPS (Basic)$0.29
EPS (Diluted)$0.29
Shares Outstanding (Basic)1.25B
Shares Outstanding (Diluted)1.26B

Key Highlights

  • 1Total revenues increased by 17% to $6.6 billion for the third quarter of 2020 compared to $5.6 billion in Q3 2019, driven by Veklury and HIV products.
  • 2Net income attributable to Gilead was $360 million ($0.29 per diluted share) for Q3 2020, a significant improvement from a net loss of $1.2 billion ($0.92 per diluted share) in Q3 2019.
  • 3The company announced a definitive agreement to acquire Immunomedics for approximately $21 billion, a strategic move to expand its oncology portfolio with the addition of Trodelvy.
  • 4Veklury (remdesivir) generated $873 million in sales for the third quarter of 2020, underscoring its role in treating COVID-19 patients.
  • 5HIV product sales increased by 8% to $4.5 billion in Q3 2020, primarily driven by Biktarvy and Descovy for PrEP, despite a decline in Truvada (FTC/TDF) based products.
  • 6HCV product sales decreased by 31% to $464 million in Q3 2020, impacted by reduced patient starts due to the COVID-19 pandemic.
  • 7Gilead's cash, cash equivalents, and marketable debt securities remained strong at $26.0 billion as of September 30, 2020.

Frequently Asked Questions

The primary driver of Gilead's revenue growth in the third quarter of 2020 was the strong performance of Veklury (remdesivir) for the treatment of COVID-19, along with continued growth in its HIV franchise, particularly from Biktarvy and Descovy for PrEP.

The acquisition of Immunomedics was announced in Q3 2020 for approximately $21 billion. While the transaction closed in October 2020 (subsequent to the reporting period), it was a significant strategic development during the quarter, indicating a strong focus on expanding the oncology portfolio. The financial impact of the acquisition will be reflected in Gilead's financial results from the fourth quarter of 2020 onwards.

HCV product sales saw a significant decline of 31% in Q3 2020 compared to the prior year, largely due to reduced patient starts caused by the COVID-19 pandemic's impact on healthcare provider visits and screenings. Management expects this trend to continue to be affected by the pandemic, though specific future performance remains subject to evolving public health conditions and healthcare access.

Gilead maintained a strong liquidity position with $26.0 billion in cash, cash equivalents, and marketable debt securities as of September 30, 2020. During the quarter, the company generated substantial operating cash flow, issued $7.25 billion in senior unsecured notes, repaid $2.0 billion in debt, and utilized $1.0 billion for acquisitions. These activities were part of a strategy to fund operations, strategic investments, and debt management.