01—Abstract
Summary
Summary of the 8-K filed July 30, 2024. Cited figures are marked; the original filing is the authoritative source.
Pfizer reported second-quarter 2024 results on July 30, 2024, with revenues of $13.3 billiona, up 2% reported and 3% operationally year-over-year.
Growth was modest on a headline basis because Comirnaty revenue fell 87% operationally, but excluding Comirnaty and Paxlovid, revenues grew 14% operationally, driven by legacy Seagen oncology products, Vyndaqel, Eliquis, and Nurtec. This was the first year-over-year topline revenue growth since the fourth quarter of 2022, when COVID revenues peaked. Reported GAAP diluted EPS was just $0.01b, versus $0.41 a year earlier, reflecting a $1.3 billion one-time restructuring charge for the new Manufacturing Optimization Program, a $1.1 billion swing in other deductions (including net equity securities losses and higher net interest expense), and a 130.2% effective tax rate.
Adjusted diluted EPS was $0.60c, down 11% from $0.67. Management raised full-year 2024 guidance to revenues of $59.5–62.5 billion (up $1 billion at the midpoint) and Adjusted diluted EPS of $2.45–2.65 (up $0.30 at the midpoint), with the effective tax rate on Adjusted income lowered to about 13% from 15%.
For investors, the key takeaways are the underlying strength of the non-COVID portfolio, the roughly $1.5 billiond of expected manufacturing savings by 2027 against about $1.7 billion of one-time costs, and continued dividend payments of $4.8 billion in the first half with no share repurchases planned for 2024. Pipeline setbacks included the failed CIFFREO Phase 3 trial of fordadistrogene movaparvovec for Duchenne muscular dystrophy and a $240 million related impairment, while the giroctocogene fitelparvovec hemophilia A Phase 3 study succeeded.
02—Key points
Key Highlights
- Q2 2024 revenues of $13.3B, up 2% reported and 3% operationally; excluding Comirnaty and Paxlovid, revenues grew 14% operationally to $12.8B
- GAAP diluted EPS of $0.01 vs. $0.41 prior year, including a $1.3B one-time Manufacturing Optimization Program charge (-$0.18 per share)
- Adjusted diluted EPS of $0.60, down 11% year-over-year from $0.67
- Full-year 2024 guidance raised: revenues to $59.5–62.5B (from $58.5–61.5B) and Adjusted diluted EPS to $2.45–2.65 (from $2.15–2.35)
- Adjusted effective tax rate guidance lowered to about 13% from about 15%
- Manufacturing Optimization Program targets about $1.5B in savings by end of 2027 on about $1.7B of one-time costs; on track for at least $4B in net cost savings from the cost realignment program by end of 2024
- Setback in DMD gene therapy fordadistrogene movaparvovec Phase 3 trial (missed primary endpoint) with a $240M impairment; positive Phase 3 AFFINE data for giroctocogene fitelparvovec in hemophilia A
03—Questions
Frequently Asked Questions
Why did Pfizer's reported EPS fall so sharply in Q2 2024?
Reported diluted EPS was $0.01 versus $0.41 a year earlier. The main drivers were a $1.3B restructuring charge tied to the Manufacturing Optimization Program ($0.18 per share), a $1.2B unfavorable change in other deductions (net losses on equity securities, higher net interest expense, and a $240M impairment), and a 130.2% effective tax rate, which was affected by the non-recurrence of prior-year tax benefits. Adjusted EPS, which excludes many of these items, was $0.60.
How much of Pfizer's revenue decline is due to COVID products?
Comirnaty revenue fell to $195M in Q2 2024, down 87% operationally, as demand and contractual deliveries declined. Paxlovid revenue rose 79% operationally to $251M. Excluding both products, revenue grew 14% operationally, which suggests the non-COVID business is growing well even though total revenue growth is only 3%.
What did Pfizer change in its 2024 guidance?
Revenue guidance rose by $1B at the midpoint to $59.5–62.5B, and Adjusted diluted EPS guidance rose by $0.30 at the midpoint to $2.45–2.65. The effective tax rate on Adjusted income was lowered to about 13% from 15%. Guidance assumes no share repurchases in 2024 and about 5.7 billion diluted shares, and includes roughly $0.6B of unfavorable FX impact on revenue.
What is the Manufacturing Optimization Program and what will it cost and save?
It is a multi-year, multi-phase program to reduce cost of goods sold. The first phase focuses on operational efficiencies and is expected to deliver about $1.5B in savings by the end of 2027, with some benefit starting in 2025. One-time costs are about $1.7B, mostly recorded in 2024, with cash outlays mainly in 2025 and 2026.
Is Pfizer still returning capital to shareholders?
Yes, through dividends. Pfizer paid $4.8B in cash dividends in the first six months of 2024, or $0.84 per share. No share repurchases were made in 2024 to date, and guidance assumes none for the year. Pfizer had $3.3B remaining under its repurchase authorization as of July 30, 2024.
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