10-QPeriod: Q3 FY2023

GILEAD SCIENCES, INC. Quarterly Report for Q3 Ended Sep 30, 2023

Filed November 7, 2023For Securities:GILD

Summary

Gilead Sciences, Inc. reported steady revenues for the third quarter and the first nine months of 2023, with total revenues reaching $7.05 billion and $20.0 billion, respectively, showing a slight increase of 1% year-over-year for the nine-month period. Net income attributable to Gilead saw significant growth, up 22% to $2.18 billion for the quarter and 44% to $4.24 billion for the nine months, driven by increased product sales in Oncology and HIV, along with a favorable year-over-year comparison due to the absence of a large IPR&D impairment charge recognized in the prior year. Product sales within the HIV segment demonstrated robust growth, particularly Biktarvy, contributing to a 4% increase in HIV product sales for the quarter. The Oncology segment also performed strongly, with significant year-over-year increases in both Cell Therapy (Yescarta and Tecartus) and Trodelvy sales, reflecting continued demand and successful market penetration. However, sales of Veklury, the company's COVID-19 treatment, declined substantially due to decreased COVID-19 hospitalizations and the availability of alternative treatments. The company also addressed a significant legal settlement related to HIV antitrust litigation, paying $525 million in the second half of the year, which impacted operating expenses.

Financial Highlights

56 data points
Beta

Revenue

$7.05B

77.8% Gross Margin

Net Income

$2.18B

30.9% Net Margin

EPS (Diluted)

$1.73

Total Assets

$62.37B

Cash & Equivalents

$5.71B

Free Cash Flow

$1.63B

Financial Statements
Beta
Revenue$7.05B
Cost of Revenue$1.56B
Gross Profit$5.49B
SG&A Expenses$1.31B
Operating Expenses$4.43B
Operating Income$2.62B
Interest Expense$232.00M
Net Income$2.18B
EPS (Basic)$1.75
EPS (Diluted)$1.73
Shares Outstanding (Basic)1.25B
Shares Outstanding (Diluted)1.26B

Key Highlights

  • 1Total revenues remained stable at $7.05 billion for the third quarter and increased 1% to $20.0 billion for the first nine months of 2023 compared to the prior year.
  • 2Net income attributable to Gilead increased significantly by 22% to $2.18 billion for the quarter and 44% to $4.24 billion for the nine months, benefiting from the absence of prior year impairment charges and higher interest income.
  • 3HIV product sales grew 4% year-over-year for the quarter to $4.67 billion, primarily driven by strong performance of Biktarvy.
  • 4Oncology product sales showed substantial growth, with Cell Therapy up 22% and Trodelvy sales up 58% for the quarter.
  • 5Veklury sales experienced a significant decline of 31% for the quarter, attributed to reduced COVID-19 hospitalizations.
  • 6The company paid a $525 million settlement for HIV antitrust litigation in the second half of the year, impacting operating expenses.
  • 7Research and development expenses increased by 27% for the quarter, driven by investments in oncology clinical trials and new study launches.

Frequently Asked Questions

The significant increase in net income for the nine months ended September 30, 2023, compared to the same period in 2022, was primarily driven by the absence of a substantial $2.7 billion in-process research and development (IPR&D) impairment charge recorded in the first quarter of 2022. Additionally, higher interest income and lower unrealized losses on equity investments contributed to the improvement, partially offset by increased operating costs, including a $525 million litigation expense for settlements in the HIV antitrust litigation.

The HIV segment showed solid growth, with product sales increasing by 4% to $4.67 billion for the quarter, largely due to Biktarvy. Oncology products also performed very strongly, with Cell Therapy sales up 22% and Trodelvy sales up 58% for the quarter, indicating successful market penetration and demand for these treatments. Conversely, Veklury sales saw a significant 31% decline due to reduced COVID-19 hospitalizations, and Liver Disease product sales decreased by 10% for the quarter, influenced by pricing dynamics and a prior year rebate claim resolution.

The decline in Veklury sales by 31% for the quarter and 50% for the nine months is primarily attributed to the decreasing rates and severity of COVID-19 hospitalizations globally, along with the increased availability and effectiveness of vaccinations and alternative treatments. The company acknowledges that future sales of Veklury remain uncertain, as they are heavily influenced by the ongoing impact of COVID-19 and the evolving public health landscape.

During the second quarter of 2023, Gilead recorded a $525 million accrual for settlements with certain plaintiffs in the HIV antitrust litigation, which was paid in the second half of the year. The company also continues to defend against patent infringement lawsuits related to generic versions of Symtuza, Biktarvy, and Genvoya, with trials scheduled for 2024. In other legal proceedings, the company believes it has strong defenses or favorable outcomes, such as a jury verdict in its favor in a patent infringement lawsuit related to Pre-Exposure Prophylaxis (PrEP).