10-QPeriod: Q3 FY2019

PFIZER INC Quarterly Report for Q3 Ended Sep 29, 2019

Filed November 7, 2019For Securities:PFE

Summary

Pfizer Inc. reported strong financial performance for the nine months ended September 29, 2019. Total revenues for the period were $39.06 billion, a slight decrease of 2% from the prior year, impacted by foreign exchange rates. However, on an operational basis, revenues increased by 1%. Net income attributable to Pfizer Inc. saw a significant increase of 44% to $16.61 billion, largely driven by a substantial gain from the Consumer Healthcare joint venture transaction with GSK. Earnings per diluted share also grew significantly to $2.92. The company made strategic moves during the period, including the acquisition of Array BioPharma and Therachon Holding AG, bolstering its pipeline in oncology and rare diseases, respectively. Additionally, Pfizer announced its intention to combine its Upjohn business with Mylan, a move expected to create a new global pharmaceutical company. The balance sheet reflects increased debt to fund acquisitions, with total liabilities rising to $105.05 billion. Cash and cash equivalents increased to $2.79 billion. The company's financial position remains solid, supported by strong operating cash flows, though working capital saw a decrease due to strategic investments and the Consumer Healthcare JV transaction. Overall, Pfizer demonstrated resilience and strategic foresight, with significant one-time gains boosting net income while key acquisitions position the company for future growth. Investors should note the impact of ongoing strategic transactions and the company's robust R&D pipeline.

Financial Highlights

55 data points
Beta

Revenue

$12.68B

79.5% Gross Margin

Net Income

$7.68B

60.6% Net Margin

EPS (Diluted)

$1.36

Total Assets

$170.45B

Cash & Equivalents

$2.79B

Free Cash Flow

$3.94B

Financial Statements
Beta
Revenue$12.68B
Cost of Revenue$2.60B
Gross Profit$10.08B
SG&A Expenses$3.26B
Operating Income$16.61B
Interest Expense$409.00M
Net Income$7.68B
EPS (Basic)$1.38
EPS (Diluted)$1.36
Shares Outstanding (Basic)5.54B
Shares Outstanding (Diluted)5.65B

Key Highlights

  • 1Total revenues for the nine months ended September 29, 2019, were $39.06 billion, a 2% decrease year-over-year, or a 1% operational increase.
  • 2Net income attributable to Pfizer Inc. surged by 44% to $16.61 billion, largely due to an $8.09 billion gain from the Consumer Healthcare joint venture with GSK.
  • 3Diluted earnings per share increased to $2.92 for the nine months ended September 29, 2019, up from $1.92 in the prior year.
  • 4The company completed strategic acquisitions of Array BioPharma for $11.2 billion and Therachon Holding AG for $322 million.
  • 5Pfizer announced an agreement to combine its Upjohn business with Mylan, creating a new global pharmaceutical company, expected to close in mid-2020.
  • 6Operating cash flow for the nine months was $8.82 billion, a decrease from $11.09 billion in the prior year.
  • 7The company raised its 2019 financial guidance, expecting revenues between $51.2 to $52.2 billion and Adjusted Diluted EPS between $2.94 to $3.00.

Frequently Asked Questions

Pfizer's performance was significantly influenced by the gain on the completion of the Consumer Healthcare joint venture transaction with GSK, which contributed $8.09 billion to income. Strategic acquisitions of Array BioPharma and Therachon Holding AG also impacted results by expanding the company's portfolio and pipeline. While overall revenues saw a slight decrease, operational revenue growth and strong performance in key Biopharma products like Ibrance, Eliquis, and Xeljanz were positive indicators. The planned combination of Upjohn with Mylan is a major strategic development expected to shape future financial performance.

The formation of the Consumer Healthcare joint venture with GSK on July 31, 2019, resulted in a significant pre-tax gain of $8.09 billion ($5.4 billion net of tax) recognized in the third quarter of 2019. This transaction led to the deconsolidation of Pfizer's Consumer Healthcare business, impacting reported revenues and expenses for the period, as only a partial period's results were included.

The acquisition of Array BioPharma for $11.2 billion significantly strengthens Pfizer's oncology portfolio with drugs like Braftovi and Mektovi and a promising pipeline. The acquisition of Therachon Holding AG for $322 million enhances Pfizer's presence in the rare diseases space with assets targeting achondroplasia. These moves are aligned with Pfizer's strategy to invest in innovative medicines and expand its therapeutic reach.

Pfizer announced an agreement to combine its Upjohn business with Mylan in a Reverse Morris Trust transaction, creating a new global pharmaceutical company. The transaction is expected to close in mid-2020 and is structured to be tax-free to Pfizer and its shareholders. This strategic move aims to create a more focused entity with enhanced growth potential, particularly in emerging markets. The financial and operational impacts will be substantial upon completion.