01—Abstract
Summary
Summary of the 8-K filed May 7, 2026. Cited figures are marked; the original filing is the authoritative source.
Gilead Sciences reported first quarter 2026 results that were strong at the operating level, with total revenues up 4% to $7.0 billiona and product sales excluding Veklury up 8% to $6.8 billion, led by HIV (up 10% to $5.0 billion, with Biktarvy at $3.4 billion and Descovy up 38%) and Trodelvy (up 37% to $402 million).
Non-GAAP diluted EPS rose 12% to $2.03b, and non-GAAP operating margin expanded to 46.9% from 43.4%, helped by a higher product gross margin (87.5% non-GAAP) following the expiration of a royalty-related obligation. Veklury sales fell 52% as COVID-19 hospitalizations declined, and Cell Therapy sales fell 12% amid competition. GAAP diluted EPS of $1.61 benefited from $142 million of net gains on equity securities versus losses a year earlier.
The most consequential item for investors is the guidance change. Gilead raised full-year 2026 product sales guidance to $30.0c-30.4 billion, but cut GAAP diluted EPS guidance to a loss of $(3.25) to $(2.85) from $6.75-7.15, and non-GAAP EPS guidance to $(1.05) to $(0.65) from $8.45-8.85. The reduction, about $9.50 per share, reflects anticipated acquired IPR&D charges of roughly $11.5 billion tied to the Arcellx ($7.8 billion equity value, now completed), Ouro, and Tubulis acquisitions, plus associated financing costs.
These are largely non-cash, one-time charges, but they materially change reported earnings for 2026. Balance sheet and liquidity moved meaningfully in the quarter. Cash and marketable securities fell to $8.6 billiond from $10.6 billion after $2.8 billion of debt repayments, $1.0 billion of dividends and $419 million of buybacks, while operating cash flow was $2.5 billion.
Management also highlighted regulatory catalysts ahead, including a BIC/LEN PDUFA date of August 27, 2026, and an anito-cel PDUFA date of December 23, 2026. The quarterly dividend was declared at $0.82 per share.
02—Key points
Key Highlights
- Revenue grew 4% to $7.0 billion; product sales excluding Veklury rose 8% to $6.8 billion, driven by HIV, Trodelvy and Livdelzi.
- HIV sales increased 10% to $5.0 billion, with Biktarvy up 7% to $3.4 billion and Descovy up 38% to $807 million; Yeztugo contributed $166 million in its launch quarter.
- Non-GAAP diluted EPS rose 12% to $2.03 (GAAP $1.61), and non-GAAP operating margin expanded 356 bps to 46.9%.
- FY2026 GAAP diluted EPS guidance cut to $(3.25)-$(2.85) from $6.75-$7.15, and non-GAAP EPS guidance cut to $(1.05)-$(0.65) from $8.45-$8.85, due to ~$11.5 billion of expected acquired IPR&D charges.
- FY2026 product sales guidance raised to $30.0-$30.4 billion from $29.6-$30.0 billion.
- Cash and marketable securities declined to $8.6 billion from $10.6 billion after $2.8 billion of debt repayments, reflecting active deleveraging and capital returns.
- Veklury sales fell 52% to $144 million and Cell Therapy sales fell 12% to $407 million, highlighting continued revenue pressure in these areas.
03—Questions
Frequently Asked Questions
Why did Gilead's full-year EPS guidance turn negative despite higher product sales guidance?
The guidance change is driven by acquired in-process R&D charges of approximately $11.5 billion linked to the Arcellx, Ouro and Tubulis acquisitions, plus related financing costs. Acquired IPR&D is expensed immediately under GAAP and is generally not tax deductible, so it reduces reported earnings sharply even though underlying product sales are improving. The company estimates these charges reduced EPS guidance by about $9.50 per share.
Are the acquisition charges a cash cost to investors?
Not entirely. The IPR&D charge is an accounting expense that reflects the value of acquired development-stage assets, and it is excluded from non-GAAP EPS guidance adjustments only in part as presented. The actual cash paid for acquisitions, such as the $7.8 billion Arcellx equity purchase and the shared $1.675 billion Ouro upfront, will affect cash and debt levels, which is why the drop in cash and the new financing costs merit attention.
What is driving the strength in HIV, and what risks should investors watch?
HIV growth was driven by higher demand and average realized price, the Yeztugo launch, and Descovy strength, partially offset by unfavorable inventory dynamics. Key risks flagged in the forward-looking statements include Medicare Part D pricing reform under the Inflation Reduction Act, expiration of Affordable Care Act subsidies, the most-favored-nation pricing agreement with the U.S. government, and potential generic competition.
What upcoming catalysts could affect Gilead's outlook in 2026?
Key catalysts include the FDA decision on bictegravir/lenacapavir (BIC/LEN) for virologically suppressed people with HIV, with a PDUFA date of August 27, 2026, and the decision on anito-cel for 4L+ relapsed or refractory multiple myeloma, with a PDUFA date of December 23, 2026. Management also cited up to four potential launches and five Phase 3 updates expected in 2026.
Is the dividend at risk given the cash decline and earnings guidance?
The Board declared a $0.82 per share quarterly dividend for Q2 2026, payable June 29, 2026, and the dividend was unchanged from the company's prior quarterly level, which was $0.79 in the prior-year quarter, indicating a modest increase year over year. The company noted that future dividends remain subject to Board approval. Operating cash flow of $2.5 billion covered the $1.0 billion dividend payment in the quarter, though the GAAP loss guidance for 2026 is a factor investors should monitor.
04—Continue