10-QPeriod: Q2 FY2022

GILEAD SCIENCES, INC. Quarterly Report for Q2 Ended Jun 30, 2022

Filed August 8, 2022For Securities:GILD

Summary

Gilead Sciences, Inc. (GILD) reported its second-quarter 2022 financial results, showing a slight increase in total revenues to $6.26 billion, up 1% year-over-year. This growth was primarily driven by strong performance in its HIV, Cell Therapy, and Trodelvy segments, which offset declines in Veklury and Hepatitis C virus (HCV) sales. However, net income attributable to Gilead decreased significantly by 25% to $1.14 billion, resulting in diluted earnings per share of $0.91. This decline was mainly due to a substantial $2.7 billion in-process research and development (IPR&D) impairment charge recorded in the first quarter related to Trodelvy, and an upfront payment for the Dragonfly collaboration. The company's balance sheet remains robust, with total assets of $62.87 billion as of June 30, 2022. While cash and cash equivalents decreased to $4.74 billion, Gilead generated positive operating cash flow of $3.64 billion for the first six months of the year. The company also continues to actively manage its capital structure, repaying debt and returning capital to shareholders through dividends and share repurchases. Gilead also announced a pending acquisition of MiroBio Ltd. for $405 million, signaling continued investment in pipeline expansion.

Financial Highlights

58 data points
Beta

Revenue

$6.26B

77.0% Gross Margin

Net Income

$1.14B

18.3% Net Margin

EPS (Diluted)

$0.91

Total Assets

$62.87B

Cash & Equivalents

$4.74B

Free Cash Flow

$1.66B

Financial Statements
Beta
Revenue$6.26B
Cost of Revenue$1.44B
Gross Profit$4.82B
SG&A Expenses$1.36B
Operating Expenses$4.23B
Operating Income$2.03B
Interest Expense$242.00M
Net Income$1.14B
EPS (Basic)$0.91
EPS (Diluted)$0.91
Shares Outstanding (Basic)1.26B
Shares Outstanding (Diluted)1.26B

Key Highlights

  • 1Total revenues increased by 1% to $6.26 billion for the three months ended June 30, 2022, and by 2% to $12.85 billion for the six months ended June 30, 2022.
  • 2Net income attributable to Gilead decreased significantly by 25% to $1.14 billion for the three months ended June 30, 2022, and by 64% to $1.16 billion for the six months ended June 30, 2022, primarily due to a $2.7 billion IPR&D impairment charge.
  • 3Diluted EPS decreased by 25% to $0.91 for the three months ended June 30, 2022, and by 64% to $0.92 for the six months ended June 30, 2022.
  • 4HIV product sales increased by 7% and 5% for the three and six months ended June 30, 2022, respectively, driven by Biktarvy.
  • 5Veklury sales decreased by 46% and 13% for the three and six months ended June 30, 2022, respectively, due to lower demand.
  • 6Cell Therapy product sales increased by 68% and 57% for the three and six months ended June 30, 2022, respectively, driven by Yescarta and Tecartus.
  • 7Gilead announced its agreement to acquire MiroBio Ltd. for $405 million, subject to customary conditions.

Frequently Asked Questions

The substantial decrease in net income for the first six months of 2022, down 64% year-over-year, was primarily attributed to a $2.7 billion in-process research and development (IPR&D) impairment charge recognized in the first quarter. This impairment was related to acquired IPR&D intangible assets for Trodelvy following updated fair value estimates after reviewing Phase 3 study data. Additionally, an upfront payment for the Dragonfly collaboration also contributed to higher expenses.

Gilead's HIV business continues to show strength with a 7% increase in sales for the quarter, mainly driven by Biktarvy. Cell Therapy sales also saw robust growth of 68%, fueled by Yescarta and Tecartus. However, Veklury sales experienced a significant decline of 46% due to reduced demand, and Hepatitis C virus (HCV) product sales decreased by 18%.

Veklury sales decreased significantly in the second quarter of 2022 due to lower demand, linked to reduced COVID-19 hospitalization rates in the U.S. and Europe. Management noted that Veklury sales are generally affected by COVID-19 infection rates, hospitalization rates, the effectiveness of vaccines and alternative treatments, and the emergence of new variants. Consequently, future sales of Veklury are difficult to predict and may fluctuate considerably.

The announcement of the agreement to acquire MiroBio Ltd. for $405 million indicates Gilead's continued strategic focus on expanding its pipeline, particularly in areas related to immune system restoration. This acquisition, if completed, aligns with Gilead's commitment to investing in innovative biotechnologies to address significant unmet medical needs.