10-QPeriod: Q2 FY2023

GILEAD SCIENCES, INC. Quarterly Report for Q2 Ended Jun 30, 2023

Filed August 4, 2023For Securities:GILD

Summary

Gilead Sciences, Inc. (GILD) reported revenues of $6.60 billion for the third quarter of 2023, a 5% increase year-over-year, driven by growth in HIV and Oncology segments. However, net income attributable to Gilead saw a significant decrease of 9% to $1.045 billion, or $0.83 per diluted share. This decline was primarily influenced by a $525 million litigation accrual for settlements related to HIV antitrust litigation, coupled with higher operating costs and tax expenses. For the first six months of 2023, revenues grew 1% to $12.95 billion, while net income more than doubled to $2.06 billion, largely due to the absence of a significant $2.7 billion IPR&D impairment charge recognized in the prior year's comparable period. The company's strategic focus continues to be on advancing innovative medicines for life-threatening diseases. Acquisitions in the oncology space, such as XinThera and Tmunity, alongside collaborations like Arcellx, highlight Gilead's commitment to expanding its pipeline. Despite a challenging legal environment and increased R&D spending, Gilead's core HIV franchise remains robust, and its cell therapy and oncology products are demonstrating strong growth.

Financial Highlights

56 data points
Beta

Revenue

$6.60B

78.1% Gross Margin

Net Income

$1.04B

15.8% Net Margin

EPS (Diluted)

$0.83

Total Assets

$62.34B

Cash & Equivalents

$5.70B

Free Cash Flow

$2.20B

Financial Statements
Beta
Revenue$6.60B
Cost of Revenue$1.44B
Gross Profit$5.16B
SG&A Expenses$1.85B
Operating Expenses$4.93B
Operating Income$1.67B
Interest Expense$230.00M
Net Income$1.04B
EPS (Basic)$0.84
EPS (Diluted)$0.83
Shares Outstanding (Basic)1.25B
Shares Outstanding (Diluted)1.26B

Key Highlights

  • 1Total revenues increased by 5% to $6.6 billion in Q3 2023 compared to the prior year, with first half revenues up 1% to $13.0 billion.
  • 2Net income attributable to Gilead decreased by 9% to $1.045 billion ($0.83 EPS) for Q3 2023, primarily due to a $525 million litigation accrual.
  • 3For the first six months of 2023, net income attributable to Gilead increased significantly to $2.055 billion ($1.63 EPS), largely due to the absence of a $2.7 billion IPR&D impairment from the prior year.
  • 4Product sales in the HIV segment increased by 9% and 11% for the three and six months ended June 30, 2023, respectively, driven by Biktarvy and Descovy.
  • 5Oncology product sales, particularly Cell Therapy (Yescarta, Tecartus) and Trodelvy, showed strong growth, increasing by 27% and 63% respectively for the quarter.
  • 6Veklury (COVID-19 treatment) sales declined significantly by 43% and 58% for the three and six months ended June 30, 2023, due to lower demand as COVID-19 hospitalizations decreased.
  • 7Research and Development expenses increased by 28% and 25% for the three and six months ended June 30, 2023, reflecting investments in oncology clinical activities and acquisitions/collaborations.

Frequently Asked Questions

Research and Development expenses increased by 28% for the three months ended June 30, 2023, and 25% for the six months ended June 30, 2023. This increase was primarily driven by expanded clinical activities in oncology, including the progression and acceleration of trials, as well as new study launches. Additionally, acquired in-process R&D expenses were notable due to acquisitions and collaborations, such as the acquisition of XinThera and Tmunity, and the collaboration with Arcellx.

Veklury sales decreased by 43% for the quarter and 58% for the six-month period. This decline is attributed to lower demand, which is directly linked to reduced COVID-19 hospitalization rates globally. Sales of Veklury are highly sensitive to the prevalence and severity of COVID-19 infections and hospitalizations, as well as the effectiveness of vaccinations and alternative treatments.

The company recorded a $525 million litigation accrual in 'Other current liabilities' related to settlements with certain plaintiffs in the HIV antitrust litigation. This accrual significantly impacted the current quarter's profitability, contributing to the 9% decrease in net income attributable to Gilead for the three months ended June 30, 2023.

Gilead is actively diversifying its portfolio, particularly through its Oncology segment. Cell therapies (Yescarta and Tecartus) and Trodelvy have shown substantial growth. Furthermore, strategic acquisitions like XinThera and collaborations such as Arcellx demonstrate a commitment to expanding the pipeline in oncology and other areas, signaling a strategic shift towards new growth drivers.