01—Abstract
Summary
Summary of the 10-Q filed November 3, 2022. Cited figures are marked; the original filing is the authoritative source.
Moderna, Inc. reported a decrease in revenue for the third quarter of 2022 compared to the prior year, primarily driven by lower sales volumes of its COVID-19 vaccine, Spikevax.
This was attributed to the timing of regulatory approvals and manufacturing ramp-up for new Omicron-targeting bivalent boosters. Despite the quarterly dip, year-to-date revenue showed a significant increase, bolstered by strong initial 2022 sales. Operationally, the company experienced a notable increase in cost of sales, largely due to inventory write-downs for the COVID-19 vaccine, unutilized manufacturing capacity, and losses on firm purchase commitments, reflecting a shift in product demand towards the newer bivalent boosters.
Research and development expenses also saw a substantial increase, reflecting continued investment in its diverse pipeline, including advanced COVID-19 vaccine candidates, RSV, flu, and CMV programs. Moderna ended the quarter with a strong liquidity position, though cash reserves decreased compared to the end of 2021, partly due to significant share repurchases.
02—Key points
Key Highlights
- Total revenue for Q3 2022 was $3.36 billion, a 32% decrease compared to $4.97 billion in Q3 2021, primarily due to a decline in COVID-19 vaccine product sales.
- Year-to-date (nine months) revenue increased by 26% to $14.18 billion from $11.26 billion in the prior year, driven by higher COVID-19 vaccine product sales.
- Cost of sales significantly increased by 52% year-over-year for Q3 2022 and 110% year-over-date, impacted by inventory write-downs, unutilized manufacturing capacity, and losses on purchase commitments.
- Research and Development (R&D) expenses rose by 57% for Q3 2022 and 55% year-to-date, reflecting increased investment in clinical trials and pipeline development, including advanced COVID-19 vaccine candidates.
- Selling, General, and Administrative (SG&A) expenses increased by 65% for Q3 2022 and 107% year-to-date, driven by commercialization activities for COVID-19 vaccines and increased headcount.
- Cash and cash equivalents decreased to $3.03 billion as of September 30, 2022, from $6.85 billion at the end of 2021. Net cash provided by operating activities for the first nine months of 2022 was $3.32 billion, down from $10.31 billion in the prior year.
- Moderna repurchased $2.9 billion of its common stock during the first nine months of 2022 under its share repurchase programs.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2022, Moderna, Inc. kept $0.31.
- Revenue$3.36B100.0%
- Cost of revenue−$1.10B32.7%
- Gross profit$2.26B67.3%
- Operating costs−$1.10B32.6%
- Operating income$1.17B34.7%
- Interest, other & tax−$123.0M3.7%
- Net income$1.04B31.0%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2022filed November 3, 2022Financial Statements
Q3 FY2022 against Q3 FY2021
| Line item | Q3 FY2022Q3 FY2021 | Change |
|---|---|---|
| Revenue | $3.36B$4.97B | −32.3% |
| Cost of Revenue | $1.10B$722.00M | +52.4% |
| Gross Profit | $2.26B$4.25B | −46.7% |
| R&D Expenses | $820.00M$521.00M | +57.4% |
| Operating Expenses | $2.20B$1.41B | +55.8% |
| Operating Income | $1.17B$3.56B | −67.2% |
| Net Income | $1.04B$3.33B | −68.7% |
| EPS (Basic) | $2.67$8.27 | −67.7% |
| EPS (Diluted) | $2.53$7.70 | −67.1% |
| Shares Outstanding (Basic) | 390.00M404.00M | −3.5% |
| Shares Outstanding (Diluted) | 412.00M434.00M | −5.1% |
05—Questions
Frequently Asked Questions
What is the main driver behind the year-over-year revenue decline in the third quarter?
The primary reason for the 32% decrease in total revenue for the third quarter of 2022 compared to the same period in 2021 is the decline in product sales of Moderna's COVID-19 vaccine, Spikevax. This was mainly due to the timing of regulatory authorizations and the manufacturing ramp-up for their new Omicron-targeting bivalent booster vaccines.
Why did the Cost of Sales increase so significantly, especially compared to revenue?
The substantial increase in Cost of Sales (52% in Q3 and 110% year-to-date) relative to revenue is largely attributed to specific factors affecting inventory and production. These include write-downs for excess and obsolete COVID-19 vaccine inventory, costs associated with unutilized manufacturing capacity, and losses recognized on firm purchase commitments for raw materials. This situation was exacerbated by a shift in product demand towards the newer bivalent boosters, impacting the cost structure of older vaccine inventory.
How is Moderna funding its extensive R&D pipeline and share repurchase programs?
Moderna is funding its operations and investments through a combination of sources. These include cash generated from its operations, substantial cash and cash equivalents on hand (though reduced year-over-year), and a significant balance of investments. The company also maintains a strong retained earnings balance from prior periods. The cash generated from operations is being strategically allocated to R&D for its diverse pipeline, capital expenditures, and significant share repurchase programs.
What is the outlook for product sales given the shift towards bivalent boosters?
Moderna anticipates that product sales will be greater in the fourth quarter of 2022 than the third quarter, driven by the timing of marketing authorizations and the release of their Omicron-targeting bivalent booster vaccines. However, for the full year 2022, COVID-19 vaccine product sales are expected to be slightly lower in the second half compared to the first half, partly due to deferred deliveries into early 2023. The company expects manufacturing costs to increase as the market shifts towards a seasonal environment for COVID-19 vaccines.
06—Continue