Summary
Vertex Pharmaceuticals Inc. reported total revenues of $640.8 million for the three months ended March 31, 2018, a decrease of 10% compared to $714.7 million in the same period of 2017. This decline was primarily driven by a significant drop in collaborative revenues, largely due to a one-time $230 million upfront payment from Merck KGaA recognized in the prior year's quarter. However, product revenues showed strong growth, increasing by 33% to $637.7 million, driven by the continued success of KALYDECO and ORKAMBI, and the recent launch of SYMDEKO. Net income attributable to Vertex decreased by 15% to $210.3 million ($0.81 per diluted share) from $247.8 million ($0.99 per diluted share) in the prior year. This decrease was influenced by the aforementioned revenue drop and increased operating expenses, particularly in research and development and cost of sales. Despite these challenges, the company's cash position remains robust, with cash, cash equivalents, and marketable securities totaling $2.5 billion, an increase of $388 million from the previous quarter. The company's strategic investments, notably in CRISPR Therapeutics, also saw a significant increase in fair value, contributing to other income. Vertex is advancing its next-generation CFTR corrector compounds, VX-659 and VX-445, in Phase 3 clinical trials, which have the potential to treat a broader patient population. The company also highlighted ongoing label expansion efforts for its existing CF medicines. Despite the revenue dip primarily from a one-time event, the core business of product sales is growing, and the company maintains a strong financial position to fund its extensive R&D pipeline.
Financial Highlights
50 data points| Revenue | $640.80M |
| Cost of Revenue | $71.61M |
| Gross Profit | $569.19M |
| R&D Expenses | $310.55M |
| SG&A Expenses | $129.81M |
| Operating Expenses | $511.90M |
| Operating Income | $128.90M |
| Interest Expense | $16.89M |
| Net Income | $210.26M |
| EPS (Basic) | $0.83 |
| EPS (Diluted) | $0.81 |
| Shares Outstanding (Basic) | 253.23M |
| Shares Outstanding (Diluted) | 258.53M |
Key Highlights
- 1Total revenues decreased by 10% to $640.8 million, primarily due to a significant drop in collaborative revenues from a large one-time payment in the prior year.
- 2Product revenues increased by a strong 33% to $637.7 million, driven by KALYDECO, ORKAMBI, and the new launch of SYMDEKO.
- 3Net income attributable to Vertex decreased by 15% to $210.3 million, impacted by lower total revenues and increased operating expenses.
- 4Diluted EPS decreased to $0.81 from $0.99 year-over-year.
- 5Cash, cash equivalents, and marketable securities increased to $2.5 billion, demonstrating a healthy liquidity position.
- 6Significant progress in the cystic fibrosis pipeline with Phase 3 trials for next-generation corrector compounds (VX-659 and VX-445) underway.
- 7Adoption of new accounting standards (ASC 606 for revenue recognition and ASU 2016-01 for equity investments) impacted financial reporting, notably increasing 'Other income (expense), net' due to fair value changes in equity investments.