- Fourth Quarter Product Sales of $5.8
billion -
- Full Year 2017 Product Sales of $25.7
billion -
- Full Year 2017 Diluted EPS of $3.51 per
share -
- Full Year 2017 Non-GAAP Diluted EPS of
$8.84 per share -
Gilead Sciences, Inc. (Nasdaq: GILD) announced today its results
of operations for the fourth quarter and full year 2017. Total
revenues for the fourth quarter of 2017 were $5.9 billion compared
to $7.3 billion for the same period in 2016. Net loss for the
fourth quarter of 2017 was $3.9 billion, or $2.96 loss per share,
compared to net income of $3.1 billion, or $2.34 per diluted share
for the same period in 2016. The net loss for the fourth quarter
includes an estimated $5.5 billion charge related to the enactment
of the Tax Cuts and Jobs Act (Tax Reform)(1). Non-GAAP net income
for the fourth quarter of 2017 was $2.3 billion, or $1.78 per
diluted share, compared to $3.6 billion, or $2.70 per diluted share
for the same period in 2016. Non-GAAP net income excludes amounts
related to acquisition-related, up-front collaboration, stock-based
compensation and other expenses, and the impact of Tax Reform.
Full year 2017 total revenues were $26.1 billion, compared to
$30.4 billion for 2016. Net income for 2017 was $4.6 billion, or
$3.51 per diluted share, compared to $13.5 billion, or $9.94 per
diluted share for 2016. Non-GAAP net income for 2017 was $11.7
billion, or $8.84 per diluted share, compared to $15.7 billion, or
$11.57 per diluted share for 2016.
Three Months Ended Twelve Months Ended
December 31, December 31, (In millions, except per
share amounts) 2017 2016 2017
2016 Product sales $ 5,837 $ 7,216 $ 25,662 $ 29,953
Royalty, contract and other revenues 112 104 445
437 Total revenues $ 5,949 $ 7,320 $ 26,107
$ 30,390 Net income (loss) attributable to Gilead $
(3,865 ) $ 3,108 $ 4,628 $ 13,501 Non-GAAP net income* $ 2,343 $
3,585 $ 11,654 $ 15,713 Diluted earnings / (loss) per
share** $ (2.96 ) $ 2.34 $ 3.51 $ 9.94 Non-GAAP diluted earnings
per share* $ 1.78 $ 2.70 $ 8.84 $ 11.57 *
Non-GAAP net income and non-GAAP diluted
earnings per share exclude acquisition-related, up-front
collaboration, stock-based compensation and other expenses, and the
impact of Tax Reform. A reconciliation between GAAP and non-GAAP
financial information is provided in the tables on pages 8, 9 and
10.
**
Shares used in loss per share calculation
for the three months ended December 31, 2017 exclude 13 million
shares from dilutive equity awards.
___________________________________
(1) Refer to page 3 for details.
Product Sales
Total product sales for the fourth quarter of 2017 were $5.8
billion, compared to $7.2 billion for the same period in 2016.
Product sales for the fourth quarter of 2017 were $4.1 billion in
the United States, $1.1 billion in Europe and $553 million in other
locations. Product sales for the fourth quarter of 2016 were $4.9
billion in the United States, $1.4 billion in Europe and $870
million in other locations.
Total product sales during 2017 were $25.7 billion, compared to
$30.0 billion in 2016. For 2017, product sales were $18.1 billion
in the United States, $5.0 billion in Europe and $2.6 billion in
other locations. For 2016, product sales were $19.3 billion in the
United States, $6.1 billion in Europe and $4.6 billion in other
locations.
Antiviral Product Sales
Antiviral product sales, which include sales of our HIV, chronic
hepatitis B (HBV) and chronic hepatitis C (HCV) products, were $5.2
billion for the fourth quarter of 2017 compared to $6.6 billion for
the same period in 2016. For 2017, antiviral product sales were
$23.3 billion compared to $27.7 billion in 2016.
- HIV and HBV product sales for the
fourth quarter of 2017 were $3.7 billion compared to $3.4 billion
for the same period in 2016 and $14.2 billion for the full year
2017 compared to $12.9 billion in 2016. The increases were
primarily driven by the continued uptake of our tenofovir
alafenamide (TAF)-based products, Genvoya® (elvitegravir 150
mg/cobicistat 150 mg/emtricitabine 200 mg/tenofovir alafenamide 10
mg), Descovy® (emtricitabine 200 mg/tenofovir alafenamide 25 mg)
and Odefsey® (emtricitabine 200 mg/rilpivirine 25 mg/tenofovir
alafenamide 25 mg).
- HCV product sales, which consist of
Harvoni® (ledipasvir 90 mg/sofosbuvir 400 mg), Sovaldi® (sofosbuvir
400 mg), Epclusa® (sofosbuvir 400 mg/velpatasvir 100 mg) and
Vosevi® (sofosbuvir 400 mg/velpatasvir 100 mg/voxilaprevir 100 mg),
were $1.5 billion for the fourth quarter of 2017 compared to $3.2
billion for the same period in 2016 and $9.1 billion for the full
year 2017 compared to $14.8 billion in 2016. The declines were
across all major markets.
Other Product Sales
Other product sales, which include Letairis® (ambrisentan),
Ranexa® (ranolazine) and AmBisome® (amphotericin B for liposome
injection), were $624 million for the fourth quarter of 2017
compared to $621 million for the same period in 2016. For 2017,
other product sales were $2.3 billion compared to $2.2 billion in
2016.
Operating Expenses
Three Months Ended Twelve Months Ended
December 31, December 31, (In millions)
2017 2016 2017 2016
Research and development (R&D) expenses $ 1,150 $ 1,208 $ 3,734
$ 5,098 Non-GAAP R&D expenses* $ 845 $ 959 $ 3,291 $ 3,749
Selling, general and administrative (SG&A) expenses $
1,252 $ 992 $ 3,878 $ 3,398 Non-GAAP SG&A expenses* $ 923 $ 938
$ 3,363 $ 3,194 *
Non-GAAP R&D and SG&A expenses
exclude acquisition-related, up-front collaboration, stock-based
compensation and other expenses. A reconciliation between GAAP and
non-GAAP financial information is provided in the tables on pages
8, 9 and 10.
During the fourth quarter of 2017, compared to the same period
in 2016:
- R&D expenses decreased primarily
due to the 2016 impacts of ongoing milestone payments and an
impairment charge related to in-process R&D (IPR&D),
partially offset by Gilead’s purchase of Cell Design Labs, Inc.
(Cell Design Labs) in 2017.
- Non-GAAP R&D expenses* decreased
primarily due to the 2016 impact of ongoing milestone
payments.
- SG&A expenses increased primarily
due to acquisition-related costs associated with Gilead’s
acquisition of Kite Pharma, Inc. (Kite).
For 2017 compared to 2016:
- R&D expenses decreased primarily
due to the 2016 impacts of impairment charges related to IPR&D,
ongoing milestone payments, up-front collaboration expenses related
to Gilead’s license and collaboration agreement with Galapagos NV
and Gilead’s purchase of Nimbus Apollo, Inc., partially offset by
Gilead’s purchase of Cell Design Labs in 2017.
- Non-GAAP R&D expenses* decreased
primarily due to the 2016 impact of ongoing milestone
payments.
- SG&A expenses increased primarily
due to acquisition-related costs associated with Gilead’s
acquisition of Kite.
- Non-GAAP SG&A expenses* increased
primarily due to higher branded prescription drug fee expense.
Provision for Income Taxes and Tax
Reform
Provision for income taxes was $6.0 billion for the fourth
quarter of 2017 compared to $821 million for the same period in
2016 and $8.9 billion for the full year 2017 compared to $3.6
billion in 2016. The increases were primarily due to an estimated
charge of $5.5 billion from Tax Reform, which was enacted on
December 22, 2017 and lowers U.S. corporate income tax rates as of
January 1, 2018, implements a territorial tax system and imposes a
repatriation tax on deemed repatriated earnings of foreign
subsidiaries. This estimate is provisional and based on our initial
analysis and current interpretation. Given the complexity of the
legislation, anticipated guidance from the U.S. Treasury, and the
potential for additional guidance from the Securities and Exchange
Commission (“SEC”) or the Financial Accounting Standards Board,
this estimate may be adjusted during 2018.
Non-GAAP provision for income taxes excludes the estimated
charge of $5.5 billion from Tax Reform. A reconciliation between
GAAP and non-GAAP financial information is provided in the tables
on pages 8, 9 and 10.
Cash, Cash Equivalents and Marketable
Securities
As of December 31, 2017, Gilead had $36.7 billion of cash, cash
equivalents and marketable securities compared to $32.4 billion as
of December 31, 2016. During 2017, Gilead generated $11.9 billion
in operating cash flow and in connection with the acquisition of
Kite, Gilead issued $3.0 billion aggregate principal amount of
senior unsecured notes and $6.0 billion aggregate principal amount
of term loan facilities, of which $1.5 billion was repaid in
December 2017. Additionally, Gilead paid cash dividends of $2.7
billion and utilized $954 million on stock repurchases.
Full Year 2018 Guidance
Gilead provided its full year 2018 guidance:
(In millions, except percentages and per share amounts)
Provided
February 6, 2018
Net Product Sales $20,000 - $21,000 Non-GAAP* Product Gross Margin
85% - 87% R&D Expenses $3,400 - $3,600 SG&A Expenses $3,400
- $3,600 Effective Tax Rate 21.0% - 23.0% Diluted EPS Impact of
Acquisition-related, Up-front Collaboration, Stock-Based
Compensation and Other Expenses $1.41 - $1.51 *
Non-GAAP Product Gross Margin, R&D and
SG&A expenses and effective tax rate exclude
acquisition-related, up-front collaboration, stock-based
compensation and other expenses, and changes to our estimates
relating to Tax Reform during 2018. A reconciliation between GAAP
and non-GAAP full year 2018 guidance is provided in the tables on
page 11.
Corporate Highlights
- Announced that Executive Chairman John
C. Martin, PhD will transition from his current role of Executive
Chairman to Chairman of the Board of Directors effective March 9,
2018.
- Announced the acquisition of Cell
Design Labs, gaining new technology platforms that will enhance
research and development efforts in cellular therapy.
- Announced the launch of the Gilead
COMPASS (COMmitment to Partnership in
Addressing HIV/AIDS in Southern States)
Initiative, a 10-year, $100 million commitment to support
organizations working to address the HIV/AIDS epidemic in the
Southern United States.
- Announced the promotion of Alessandro
Riva, MD, to Executive Vice President, Oncology Therapeutics, with
responsibility for Gilead’s hematology and oncology programs,
including cell therapy research and development.
Product & Pipeline Updates
announced by Gilead during the Fourth Quarter of 2017
include:
HIV and Liver Diseases Programs
- Presented data at The Liver Meeting®
2017 which included the announcement of:
- Results from a Phase 2, randomized,
placebo-controlled trial evaluating two doses of GS-0976, an oral,
investigational inhibitor of Acetyl-CoA carboxylase, in patients
with nonalcoholic steatohepatitis (NASH). The data demonstrate that
the higher dose of GS-0976 (20 mg taken orally once daily) when
administered for 12 weeks was associated with statistically
significant reductions in hepatic steatosis (buildup of fat in the
liver) and a noninvasive marker of fibrosis compared to
placebo.
- Results from an open-label Phase 2
study evaluating once-daily Harvoni for 12 weeks among HCV genotype
1 patients with severe renal impairment (creatinine clearance ≤ 30
mL/min). 100 percent of patients achieved a sustained virologic
response 12 weeks after completing therapy (SVR12), including
patients with compensated cirrhosis and those who had failed prior
treatment.
- Results from an open-label Phase 2
study evaluating once-daily Epclusa for 12 weeks among 79 liver
transplant patients with genotype 1-4 chronic HCV infection.
Treatment with Epclusa resulted in an overall SVR12 rate of 96
percent, including patients with cirrhosis and prior treatment
failure, and was well tolerated.
- Updated results from two Phase 3
studies demonstrating improved long-term bone and renal safety in
HBV-infected patients 48-weeks after switching from Viread®
(tenofovir disoproxil fumarate 300mg) to Vemlidy® (tenofovir
alafenamide 25mg).
- Announced detailed 48-week results from
a Phase 3 study evaluating the efficacy and safety of switching
virologically suppressed HIV-1 infected adult patients from a
multi-tablet regimen containing a boosted protease inhibitor (bPI)
to a fixed-dose combination of bictegravir (50 mg) (BIC), a novel
investigational integrase strand transfer inhibitor, and
emtricitabine/tenofovir alafenamide (200/25 mg) (FTC/TAF), a
dual-NRTI backbone. In the ongoing study, BIC/FTC/TAF was found to
be statistically non-inferior to regimens containing bPIs and
demonstrated no treatment-emergent resistance at 48 weeks. The data
were presented at IDWeek 2017.
- Announced a new licensing agreement
with the Medicines Patent Pool (MPP), a United Nations-backed
public health organization, to expand access to BIC upon regulatory
approval in the United States. Through this agreement, MPP can
sub-license rights to BIC to generic drug companies in India, China
and South Africa to manufacture therapies containing BIC for
distribution in 116 low- and middle-income countries.
Oncology and Cell Therapy Programs
- Announced updated results from the
ongoing Phase 1/2 ZUMA-3 study of KTE-C19, a CD19 chimeric antigen
receptor T (CAR T) cell therapy, which is investigational, for the
treatment of adult patients with relapsed or refractory acute
lymphoblastic leukemia (ALL). With a minimum of eight weeks of
follow-up, 71 percent of ALL patients (n=17/24) who received a
single infusion of KTE-C19 achieved complete tumor remission
(complete remission (CR) or CR with incomplete hematological
recovery). The ZUMA-3 study results were presented in an oral
session at the Annual Meeting of the American Society of
Hematology.
- Announced long-term follow-up data from
the ZUMA-1 study of Yescarta™ (axicabtagene ciloleucel) in patients
with refractory large B-cell lymphoma. With a minimum follow-up of
one year after a single infusion of Yescarta (median follow-up of
15.4 months), 42 percent of patients continued to respond to
therapy, including 40 percent with a complete remission. Detailed
results from this updated analysis were simultaneously presented at
the Annual Meeting of the American Society of Hematology, and
published in The New England Journal of Medicine.
- Announced that U.S. Food and Drug
Administration has granted regular approval to Yescarta, the first
CAR T cell therapy for the treatment of adult patients with
relapsed or refractory large B-cell lymphoma after two or more
lines of systemic therapy, including diffuse large B-cell lymphoma
(DLBCL) not otherwise specified, primary mediastinal large B-cell
lymphoma, high-grade B-cell lymphoma, and DLBCL arising from
follicular lymphoma (transformed follicular lymphoma).
Non-GAAP Financial
Information
The information presented in this document has been prepared by
Gilead in accordance with U.S. generally accepted accounting
principles (GAAP), unless otherwise noted as non-GAAP. Management
believes non-GAAP information is useful for investors, when
considered in conjunction with Gilead’s GAAP financial information,
because management uses such information internally for its
operating, budgeting and financial planning purposes. Non-GAAP
information is not prepared under a comprehensive set of accounting
rules and should only be used to supplement an understanding of
Gilead’s operating results as reported under GAAP. Non-GAAP
measures may be defined and calculated differently by other
companies in the same industry. A reconciliation between GAAP and
non-GAAP financial information is provided in the tables on pages
8, 9, 10 and 11.
Conference Call
At 4:30 p.m. Eastern Time today, Gilead’s management will host a
conference call and a simultaneous webcast to discuss results from
its fourth quarter 2017 and full year 2017 as well as provide 2018
guidance and a general business update. To access the webcast live
via the internet, please connect to the company’s website at
www.gilead.com/investors 15 minutes
prior to the conference call to ensure adequate time for any
software download that may be needed to hear the webcast.
Alternatively, please call (877) 359-9508 (U.S.) or (224) 357-2393
(international) and dial the conference ID 6478317 to access the
call.
A replay of the webcast will be archived on the company’s
website for one year, and a phone replay will be available
approximately two hours following the call through February 8,
2018. To access the phone replay, please call (855) 859-2056 (U.S.)
or (404) 537-3406 (international) and dial the conference ID
6478317.
About Gilead
Gilead Sciences is a biopharmaceutical company that discovers,
develops and commercializes innovative therapeutics in areas of
unmet medical need. The company’s mission is to advance the care of
patients suffering from life-threatening diseases. Gilead has
operations in more than 35 countries worldwide, with headquarters
in Foster City, California.
Forward-looking
Statements
Statements included in this press release that are not
historical in nature are forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995.
Gilead cautions readers that forward-looking statements are subject
to certain risks and uncertainties that could cause actual results
to differ materially. These risks and uncertainties include:
Gilead’s ability to achieve its anticipated full year 2018
financial results; Gilead’s ability to sustain growth in revenues
for its antiviral and other programs; the risk that private and
public payers may be reluctant to provide, or continue to provide,
coverage or reimbursement for new products, including Vosevi,
Yescarta, Epclusa, Harvoni, Genvoya, Odefsey, Descovy and Vemlidy;
austerity measures in European countries that may increase the
amount of discount required on Gilead’s products; an increase in
discounts, chargebacks and rebates due to ongoing contracts and
future negotiations with commercial and government payers; a larger
than anticipated shift in payer mix to more highly discounted payer
segments and geographic regions and decreases in treatment
duration; availability of funding for state AIDS Drug Assistance
Programs (ADAPs); continued fluctuations in ADAP purchases driven
by federal and state grant cycles which may not mirror patient
demand and may cause fluctuations in Gilead’s earnings; market
share and price erosion caused by the introduction of generic
versions of Viread and Truvada outside the United States, an
uncertain global macroeconomic environment; and potential
amendments to the Affordable Care Act or other government action
that could have the effect of lowering prices or reducing the
number of insured patients; the possibility of unfavorable results
from clinical trials involving investigational compounds; Gilead’s
ability to initiate clinical trials in its currently anticipated
timeframes; the levels of inventory held by wholesalers and
retailers which may cause fluctuations in Gilead’s earnings;
Gilead’s ability to submit new drug applications for new product
candidates in the timelines currently anticipated; Gilead’s ability
to receive regulatory approvals in a timely manner or at all, for
new and current products, including BIC/FTC/TAF; Gilead’s ability
to successfully commercialize its products, including Vosevi,
Yescarta, Epclusa, Harvoni, Genvoya, Odefsey, Descovy and Vemlidy;
the risk that physicians and patients may not see advantages of
these products over other therapies and may therefore be reluctant
to prescribe the products; Gilead’s ability to successfully develop
its hematology/oncology and inflammation/respiratory programs;
safety and efficacy data from clinical studies may not warrant
further development of Gilead’s product candidates, including
GS-0976 and KTE-C19; Gilead’s ability to pay dividends or complete
its share repurchase program due to changes in its stock price,
corporate or other market conditions; fluctuations in the foreign
exchange rate of the U.S. dollar that may cause an unfavorable
foreign currency exchange impact on Gilead’s future revenues and
pre-tax earnings; and other risks identified from time to time in
Gilead’s reports filed with the SEC. In addition, Gilead makes
estimates and judgments that affect the reported amounts of assets,
liabilities, revenues and expenses and related disclosures. Gilead
bases its estimates on historical experience and on various other
market specific and other relevant assumptions that it believes to
be reasonable under the circumstances, the results of which form
the basis for making judgments about the carrying values of assets
and liabilities that are not readily apparent from other sources.
Actual results may differ significantly from these estimates. You
are urged to consider statements that include the words may, will,
would, could, should, might, believes, estimates, projects,
potential, expects, plans, anticipates, intends, continues,
forecast, designed, goal, or the negative of those words or other
comparable words to be uncertain and forward-looking. Gilead
directs readers to its press releases, Quarterly Report on Form
10-Q for the quarter ended September 30, 2017 and other subsequent
disclosure documents filed with the SEC. Gilead claims the
protection of the Safe Harbor contained in the Private Securities
Litigation Reform Act of 1995 for forward-looking statements.
All forward-looking statements are based on information
currently available to Gilead, and Gilead assumes no obligation to
update any such forward-looking statements.
Gilead owns or has rights to various
trademarks, copyrights and trade names used in our business,
including the following: GILEAD®, GILEAD SCIENCES®, AMBISOME®,
AXI-CELTM, CAYSTON®, COMPLERA®, DESCOVY®, EMTRIVA®, EPCLUSA®,
EVIPLERA®, GENVOYA®, HARVONI®, HEPSERA®, LETAIRIS®, ODEFSEY®,
RANEXA®, SOVALDI®, STRIBILD®, TRUVADA®, TYBOST®, VEMLIDY®, VIREAD®,
VOLIBRIS®, VOSEVI®, YESCARTATM and ZYDELIG®.
ATRIPLA® is a registered trademark of Gilead Sciences, LLC.
LEXISCAN® is a registered trademark of Astellas U.S. LLC. MACUGEN®
is a registered trademark of Eyetech, Inc. TAMIFLU® is a registered
trademark of Hoffmann-La Roche Inc.
For more information on Gilead Sciences, Inc.,
please visit www.gilead.com or call the Gilead Public Affairs
Department at 1-800-GILEAD-5 (1-800-445-3235).
GILEAD SCIENCES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF
INCOME
(unaudited)
(in millions, except per share
amounts)
Three Months Ended Twelve Months Ended
December 31, December 31, 2017
2016 2017 2016 Revenues: Product sales
$ 5,837 $ 7,216 $ 25,662 $ 29,953 Royalty, contract and other
revenues 112 104 445 437 Total revenues
5,949 7,320 26,107 30,390 Costs and
expenses: Cost of goods sold 1,256 1,075 4,371 4,261 Research and
development expenses 1,150 1,208 3,734 5,098 Selling, general and
administrative expenses 1,252 992 3,878 3,398
Total costs and expenses 3,658 3,275 11,983
12,757 Income from operations 2,291 4,045 14,124
17,633 Interest expense (297 ) (265 ) (1,118 ) (964 ) Other income
(expense), net 132 140 523 428 Income
before provision for income taxes 2,126 3,920 13,529 17,097
Provision for income taxes 5,962 821 8,885
3,609 Net income (loss) (3,836 ) 3,099 4,644 13,488 Net
income (loss) attributable to noncontrolling interest 29 (9
) 16 (13 ) Net income (loss) attributable to Gilead $ (3,865
) $ 3,108 $ 4,628 $ 13,501 Net income
(loss) per share attributable to Gilead common stockholders - basic
$ (2.96 ) $ 2.36 $ 3.54 $ 10.08 Shares used in per share
calculation - basic 1,307 1,316 1,307 1,339 Net income (loss) per
share attributable to Gilead common stockholders - diluted $ (2.96
) $ 2.34 $ 3.51 $ 9.94 Shares used in per share calculation -
diluted 1,307 1,327 1,319 1,358 Cash dividends declared per share $
0.52 $ 0.47 $ 2.08 $ 1.84
GILEAD SCIENCES, INC.
RECONCILIATION OF GAAP TO NON-GAAP
FINANCIAL INFORMATION
(unaudited)
(in millions, except percentages and
per share amounts)
Three Months Ended Twelve Months Ended
December 31, December 31, 2017
2016 2017 2016 Cost of goods sold
reconciliation: GAAP cost of goods sold $ 1,256 $ 1,075 $ 4,371
$ 4,261 Acquisition-related – amortization of purchased intangibles
(283 ) (214 ) (912 ) (844 ) Stock-based compensation expenses(1)
(12 ) (3 ) (24 ) (14 ) Other(2) 5 2 (13 ) 11
Non-GAAP cost of goods sold $ 966 $ 860 $ 3,422
$ 3,414
Product gross margin
reconciliation: GAAP product gross margin 78.5 % 85.1 % 83.0 %
85.8 % Acquisition-related – amortization of purchased intangibles
4.8 % 3.0 % 3.6 % 2.8 % Stock-based compensation expenses(1) 0.2 %
— % 0.1 % — % Other(2) (0.1 )% — % 0.1 % — % Non-GAAP product gross
margin(6) 83.5 % 88.1 % 86.7 % 88.6 %
Research and
development expenses reconciliation: GAAP research and
development expenses $ 1,150 $ 1,208 $ 3,734 $ 5,098 Up-front
collaboration expenses — — — (373 ) Acquisition-related expenses –
acquired IPR&D (222 ) — (222 ) (400 ) Acquisition-related –
IPR&D impairment — (201 ) — (432 ) Acquisition-related – other
costs (8 ) — (8 ) — Stock-based compensation expenses(1) (90 ) (47
) (232 ) (176 ) Other(2) 15 (1 ) 19 32
Non-GAAP research and development expenses $ 845 $ 959
$ 3,291 $ 3,749
Selling, general and
administrative expenses reconciliation: GAAP selling, general
and administrative expenses $ 1,252 $ 992 $ 3,878 $ 3,398
Acquisition-related – transaction costs (36 ) — (48 ) —
Acquisition-related – other costs (46 ) — (46 ) — Stock-based
compensation expenses(1) (243 ) (52 ) (393 ) (190 ) Other(2) (4 )
(2 ) (28 ) (14 ) Non-GAAP selling, general and administrative
expenses $ 923 $ 938 $ 3,363 $ 3,194
Operating margin reconciliation: GAAP operating
margin 38.5 % 55.3 % 54.1 % 58.0 % Up-front collaboration expenses
— % — % — % 1.2 % Acquisition-related – amortization of purchased
intangibles 4.8 % 2.9 % 3.5 % 2.8 % Acquisition-related expenses –
acquired IPR&D 3.7 % — % 0.9 % 1.3 % Acquisition-related –
IPR&D impairment — % 2.7 % — % 1.4 % Acquisition-related –
transaction costs 0.6 % — % 0.2 % — % Acquisition-related – other
costs 0.9 % — % 0.2 % — % Stock-based compensation expenses(1) 5.8
% 1.4 % 2.5 % 1.3 % Other(2) (0.3 )% — % 0.1 % (0.1 )% Non-GAAP
operating margin(6) 54.0 % 62.3 % 61.4 % 65.9 %
GILEAD SCIENCES, INC.
RECONCILIATION OF GAAP TO NON-GAAP
FINANCIAL INFORMATION - (Continued)
(unaudited)
(in millions, except percentages and
per share amounts)
Three Months Ended Twelve Months Ended
December 31, December 31, 2017
2016 2017 2016 Interest expense
reconciliation: GAAP interest expense $ (297 ) $ (265 ) $
(1,118 ) $ (964 ) Acquisition-related – transaction costs —
— 18 — Non-GAAP interest expense $ (297 ) $
(265 ) $ (1,100 ) $ (964 )
Effective tax rate
reconciliation: GAAP effective tax rate 280.5 % 20.9 % 65.7 %
21.1 % Up-front collaboration expenses — % — % — % (0.4 )%
Acquisition-related – amortization of purchased intangibles (1.1 )%
(1.5 )% (1.2 )% (0.8 )% Acquisition-related expenses – acquired
IPR&D (2.1 )% — % (0.4 )% (0.4 )% Acquisition-related –
transaction costs 0.2 % — % — % — % Acquisition-related – other
costs 0.3 % — % — % — % Stock-based compensation expenses(1)(3) 2.6
% — % 0.8 % — % Tax Reform impact(5) (258.3 )% — % (40.6 )% — %
Other(2) 0.2 % — % — % — % Non-GAAP effective tax rate(6) 22.2 %
19.4 % 24.5 % 19.5 %
Net income (loss) attributable to
Gilead reconciliation: GAAP net income (loss) attributable to
Gilead $ (3,865 ) $ 3,108 $ 4,628 $ 13,501 Up-front collaboration
expenses — — — 373 Acquisition-related – amortization of purchased
intangibles 246 206 851 818 Acquisition-related expenses – acquired
IPR&D 222 — 222 400 Acquisition-related – IPR&D impairment
— 198 — 371 Acquisition-related – transaction costs 24 — 48 —
Acquisition-related – other costs 36 — 36 — Stock-based
compensation expenses(1)(3) 208 73 369 276 Tax Reform impact(5)
5,490 — 5,490 — Other(2) (18 ) — 10 (26 ) Non-GAAP
net income attributable to Gilead $ 2,343 $ 3,585 $
11,654 $ 15,713
Diluted earnings / (loss)
per share reconciliation: GAAP diluted earnings / (loss) per
share(4) $ (2.96 ) $ 2.34 $ 3.51 $ 9.94 Up-front collaboration
expenses — — — 0.27 Acquisition-related – amortization of purchased
intangibles 0.19 0.16 0.65 0.60 Acquisition-related expenses –
acquired IPR&D 0.17 — 0.17 0.29 Acquisition-related – IPR&D
impairment — 0.15 — 0.27 Acquisition-related – transaction costs
0.02 — 0.04 — Acquisition-related – other costs 0.03 — 0.03 —
Stock-based compensation expenses(1)(3) 0.16 0.06 0.28 0.20 Tax
Reform impact(5) 4.16 — 4.16 — Other(2) (0.01 ) — 0.01
(0.02 ) Non-GAAP diluted earnings per share(6) $ 1.78
$ 2.70 $ 8.84 $ 11.57
GILEAD SCIENCES, INC.
RECONCILIATION OF GAAP TO NON-GAAP
FINANCIAL INFORMATION - (Continued)
(unaudited)
(in millions, except percentages and
per share amounts)
Three Months Ended Twelve Months
Ended December 31, December 31, 2017
2016 2017 2016 Non-GAAP
adjustment summary: Cost of goods sold adjustments $ 290 $ 215
$ 949 $ 847 Research and development expenses adjustments 305 249
443 1,349 Selling, general and administrative expenses adjustments
329 54 515 204 Interest expense adjustments — — 18
— Total non-GAAP adjustments before tax 924 518 1,925
2,400 Income tax effect(3) (206 ) (40 ) (389 ) (191 ) Tax Reform
impact(5) 5,490 — 5,490 — Other(2) — (1 ) — 3
Total non-GAAP adjustments after tax $ 6,208 $ 477 $
7,026 $ 2,212 Notes: (1) Stock-based
compensation expenses for the three and twelve months ended
December 31, 2017 include $238 million associated with Gilead’s
acquisition of Kite (2) Amounts related to restructuring,
contingent consideration, consolidation of a contract manufacturer
and/or other individually insignificant amounts (3) Income tax
effect related to stock-based compensation expenses for the three
and twelve months ended December 31, 2017 includes the incremental
tax benefit of $31 million and $91 million, respectively,
recognized from the adoption of Accounting Standards Update 2016-09
“Improvements to Employee Share-Based Payment Accounting” (4)
Shares used in loss per share calculation for the three months
ended December 31, 2017 exclude 13 million shares from dilutive
equity awards (5) Amounts for the three and twelve months ended
December 31, 2017 include an estimated charge of $5.8 billion
relating to the deemed repatriation of unremitted earnings of
foreign subsidiaries and an estimated benefit of $308 million
relating to the re-measurement of deferred taxes (6) Amounts may
not sum due to rounding
GILEAD SCIENCES, INC.
RECONCILIATION OF GAAP TO NON-GAAP 2018
FULL YEAR GUIDANCE
(unaudited)
(in millions, except percentages and
per share amounts)
ProvidedFebruary 6, 2018
Projected product gross margin GAAP to non-GAAP
reconciliation: GAAP projected product gross margin 78% - 80%
Acquisition-related expenses 7% - 7% Non-GAAP projected product
gross margin(1) 85% - 87%
Projected research and
development expenses GAAP to non-GAAP reconciliation: GAAP
projected research and development expenses $3,785 - $4,050
Stock-based compensation expenses(2) (315) - (350)
Acquisition-related expenses / up-front collaboration expenses (70)
- (100) Non-GAAP projected research and development expenses $3,400
- $3,600
Projected selling, general and administrative
expenses GAAP to non-GAAP reconciliation: GAAP projected
selling, general and administrative expenses $3,865 - $4,110
Stock-based compensation expenses(2) (425) - (450)
Acquisition-related – other costs (40) - (60) Non-GAAP projected
selling, general and administrative expenses $3,400 - $3,600
Projected diluted EPS impact of acquisition-related, up-front
collaboration, stock-based compensation and other
expenses(3): Acquisition-related expenses /
up-front collaboration expenses $0.91 - $0.95 Stock-based
compensation expenses(2) 0.50 - 0.56 Projected diluted EPS impact
of acquisition-related, up-front collaboration, stock-based
compensation and other expenses(3) $1.41 - $1.51 Notes: (1)
Stock-based compensation expenses have a less than one percent
impact on non-GAAP projected product gross margin (2) Includes
stock-based compensation expenses associated with Gilead’s
acquisition of Kite (3) Excludes changes to our estimates relating
to Tax Reform during 2018. As a result, we are unable to project an
effective tax rate on a GAAP basis
GILEAD SCIENCES, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(unaudited)
(in millions)
December 31, December 31, 2017
2016 (1) Cash, cash equivalents and marketable
securities $ 36,694 $ 32,380 Accounts receivable, net 3,851 4,514
Inventories 801 1,587 Property, plant and equipment, net 3,295
2,865 Intangible assets, net 17,100 8,971 Goodwill 4,159 1,172
Other assets 4,383 5,488 Total assets $ 70,283 $
56,977 Current liabilities $ 11,635 $ 9,218 Long-term
liabilities 38,147 28,396 Stockholders’ equity(2) 20,501
19,363 Total liabilities and stockholders’ equity $ 70,283 $
56,977
Notes: (1) Derived from the audited consolidated financial
statements as of December 31, 2016. Certain amounts have been
reclassified to conform to current year presentation (2) As of
December 31, 2017, there were 1,308 million shares of common stock
issued and outstanding
GILEAD SCIENCES, INC.
PRODUCT SALES SUMMARY
(unaudited)
(in millions)
Three Months Ended Twelve Months Ended
December 31, December 31, 2017
2016 2017 2016 Antiviral products:
Genvoya – U.S. $ 844 $ 485 $ 3,033 $ 1,301 Genvoya – Europe 176 68
534 160 Genvoya – Other International 40 10 107
23 1,060 563 3,674 1,484 Truvada
– U.S. 631 604 2,266 2,384 Truvada – Europe 117 200 644 913 Truvada
– Other International 49 64 224 269 797
868 3,134 3,566 Harvoni – U.S. 425 976 3,053
4,941 Harvoni – Europe 121 363 704 1,810 Harvoni – Other
International 98 301 613 2,330 644
1,640 4,370 9,081 Epclusa – U.S. 262 934 2,404
1,591 Epclusa – Europe 220 101 869 141 Epclusa – Other
International 83 13 237 20 565 1,048
3,510 1,752 Atripla – U.S. 314 444 1,288 1,898
Atripla – Europe 76 108 335 520 Atripla – Other International 50
55 183 187 440 607 1,806
2,605 Descovy – U.S. 276 112 958 226 Descovy – Europe 77 34
226 69 Descovy – Other International 12 3 34 3
365 149 1,218 298 Odefsey – U.S. 276
138 964 302 Odefsey – Europe 45 17 132 27 Odefsey – Other
International 4 — 10 — 325 155
1,106 329 Stribild – U.S. 179 296 811 1,523 Stribild
– Europe 34 71 195 314 Stribild – Other International 9 20
47 77 222 387 1,053 1,914
Complera / Eviplera – U.S. 91 146 406 821 Complera / Eviplera –
Europe 118 135 503 580 Complera / Eviplera – Other International 13
16 57 56 222 297 966
1,457 Viread – U.S. 119 171 514 591 Viread – Europe 36 68
238 302 Viread – Other International 57 85 294
293 212 324 1,046 1,186 Vosevi – U.S.
150 — 267 — Vosevi – Europe 17 — 22 — Vosevi – Other International
3 — 4 — 170 — 293 —
GILEAD SCIENCES, INC.
PRODUCT SALES SUMMARY -
(Continued)
(unaudited)
(in millions)
Three Months Ended Twelve Months Ended
December 31, December 31, 2017
2016 2017 2016 Sovaldi – U.S. $ 10 $
112 $ 130 $ 1,895 Sovaldi – Europe 20 164 258 891 Sovaldi – Other
International 87 265 576 1,215 117 541
964 4,001 Other Antiviral – U.S. 56 12 157 48
Other Antiviral – Europe 7 4 24 22 Other Antiviral – Other
International 11 — 15 2 74 16
196 72 Total antiviral products – U.S. 3,633 4,430
16,251 17,521 Total antiviral products – Europe 1,064 1,333 4,684
5,749 Total antiviral products – Other International 516 832
2,401 4,475 5,213 6,595 23,336
27,745 Other products: Letairis 233 226 887 819 Ranexa 200
210 717 677 AmBisome 90 94 366 356 Zydelig 39 39 149 168 Other 62
52 207 188 624 621 2,326
2,208 Total product sales $ 5,837 $ 7,216 $
25,662 $ 29,953
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version on businesswire.com: http://www.businesswire.com/news/home/20180206006337/en/
Gilead Sciences, Inc.InvestorsRobin Washington, 650-522-5688Sung
Lee, 650-524-7792MediaAmy
Flood, 650-522-5643
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