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For Immediate Release

GILEAD SCIENCES ANNOUNCES THIRD QUARTER 2018 FINANCIAL RESULTS

- Product Sales of $5.5 billion -
- Diluted EPS of $1.60 per share -
- Non-GAAP Diluted EPS of $1.84 per share -
- Revised Full Year 2018 Guidance -

Foster City, CA, October 25, 2018 - Gilead Sciences, Inc. (Nasdaq: GILD) announced today its results of operations for the third quarter ended September 30, 2018. The financial results that follow represent a year-over-year comparison of the third quarter 2018 to the third quarter 2017. Total revenues were $5.6 billion in 2018 compared to $6.5 billion in 2017. Net income was $2.1 billion or $1.60 per diluted share in 2018 compared to $2.7 billion or $2.06 per diluted share in 2017. Non-GAAP net income was $2.4 billion or $1.84 per diluted share in 2018 compared to $3.0 billion or $2.27 per diluted share in 2017.
 
 
Three Months Ended
 
Nine Months Ended
 
 
September 30,
 
September 30,
(In millions, except per share amounts)
 
2018
 
2017
 
2018
 
2017
Product sales
 
$
5,455

 
$
6,402

 
$
15,996

 
$
19,825

Royalty, contract and other revenues
 
141

 
110

 
336

 
333

Total revenues
 
$
5,596

 
$
6,512

 
$
16,332

 
$
20,158

 
 
 
 
 
 
 
 
 
Net income attributable to Gilead
 
$
2,097

 
$
2,718

 
$
5,452

 
$
8,493

Non-GAAP net income
 
$
2,403

 
$
2,990

 
$
6,855

 
$
9,311

 
 
 
 
 
 
 
 
 
Diluted earnings per share
 
$
1.60

 
$
2.06

 
$
4.15

 
$
6.44

Non-GAAP diluted earnings per share
 
$
1.84

 
$
2.27

 
$
5.22

 
$
7.06

Product Sales
Total product sales for the third quarter of 2018 were $5.5 billion compared to $6.4 billion for the same period in 2017. Product sales for the third quarter of 2018 were $4.1 billion in the United States, $873 million in Europe and $451 million in other locations. Product sales for the third quarter of 2017 were $4.5 billion in the United States, $1.2 billion in Europe and $663 million in other locations.
___________________________________
Note: Non-GAAP financial information excludes acquisition-related, up-front collaboration, stock-based compensation and other expenses, fair value adjustments of marketable equity securities and measurement period adjustments relating to the enactment of the 2017 Tax Cuts and Jobs Act (Tax Reform). A reconciliation between GAAP and non-GAAP financial information is provided in the tables on page 7, 8 and 9.

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Gilead Sciences, Inc. 333 Lakeside Drive Foster City, CA 94404 USA
www.gilead.com
phone (650) 574-3000 facsimile (650) 578-9264
 


October 25, 2018
 
2
 
 
 

HIV product sales(1) were $3.7 billion for the third quarter of 2018 compared to $3.3 billion for the same period in 2017. The increase was primarily due to the continued uptake of products containing emtricitabine (FTC) and tenofovir alafenamide (TAF), which include Biktarvy® (bictegravir 50 mg/emtricitabine 200 mg/tenofovir alafenamide 25 mg), Descovy® (emtricitabine 200 mg/tenofovir alafenamide 25 mg), Genvoya® (elvitegravir 150 mg/cobicistat 150 mg/emtricitabine 200 mg/tenofovir alafenamide 10 mg) and Odefsey® (emtricitabine 200 mg/rilpivirine 25 mg/tenofovir alafenamide 25 mg).
Chronic hepatitis C (HCV) product sales, which consist of Epclusa® (sofosbuvir 400 mg/velpatasvir 100 mg), Harvoni® (ledipasvir 90 mg/sofosbuvir 400 mg), Vosevi® (sofosbuvir 400 mg/velpatasvir 100 mg/voxilaprevir 100 mg) and Sovaldi® (sofosbuvir 400 mg), were $902 million for the third quarter of 2018 compared to $2.2 billion for the same period in 2017. The decline was primarily due to lower sales of Harvoni and Epclusa across all major markets as a result of increased competition.
Yescarta® (axicabtagene ciloleucel), which was launched in the United States in October 2017, generated $75 million in sales during the third quarter of 2018.
Other product sales, which include products from Gilead’s chronic hepatitis B (HBV), cardiovascular, oncology and other categories inclusive of Vemlidy® (tenofovir alafenamide 25 mg), Viread® (tenofovir disoproxil fumarate 300 mg), Letairis® (ambrisentan 5 mg and 10 mg), Ranexa® (ranolazine 500 mg and 1000 mg), Zydelig® (idelalisib 150 mg) and AmBisome® (amphotericin B liposome for injection 50 mg/vial), were $751 million for the third quarter of 2018 compared to $874 million for the same period in 2017.
Operating Expenses
 
 
Three Months Ended
 
Nine Months Ended
 
 
September 30,
 
September 30,
(In millions)
 
2018
 
2017
 
2018
 
2017
Research and development expenses (R&D)
 
$
939

 
$
789

 
$
3,068

 
$
2,584

Non-GAAP R&D expenses
 
$
844

 
$
745

 
$
2,579

 
$
2,446

 
 
 
 
 
 
 
 
 
Selling, general and administrative expenses (SG&A)
 
$
948

 
$
879

 
$
2,925

 
$
2,626

Non-GAAP SG&A expenses
 
$
852

 
$
806

 
$
2,576

 
$
2,440

 
 
 
 
 
 
 
 
 
During the third quarter of 2018, compared to the same period in 2017:
R&D and SG&A expenses increased primarily due to higher costs to support the growth of Gilead’s business following the acquisition of Kite Pharma, Inc. (Kite) and stock-based compensation expenses associated with Gilead’s acquisition of Kite.
Non-GAAP R&D and non-GAAP SG&A expenses increased primarily due to higher costs to support the growth of Gilead’s business following the acquisition of Kite.
Cash, Cash Equivalents and Marketable Securities
As of September 30, 2018, Gilead had $30.8 billion of cash, cash equivalents and marketable securities compared to $31.7 billion as of June 30, 2018. During the third quarter of 2018, Gilead generated $2.2 billion in operating cash flow. Gilead repaid $1.8 billion principal amount of senior unsecured notes due in September 2018, paid cash dividends of $742 million and utilized $449 million on stock repurchases.

___________________________________
(1) 
Excludes sales of Viread as Viread is primarily used for treatment of chronic HBV.


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October 25, 2018
 
3
 
 
 

Revised Full Year 2018 Guidance
Gilead revised its full year 2018 guidance, initially provided on February 6, 2018 and revised on July 25, 2018:
(In millions, except percentages and per share amounts)
 
Initially Provided
February 6, 2018
Reiterated
May 1, 2018
 
Updated
July 25, 2018
 

Updated
October 25, 2018
Net Product Sales
 
$20,000 - $21,000
 
$20,000 - $21,000
 
$20,800 - $21,300
Non-GAAP
 
 
 
 
 
 
Product Gross Margin
 
85% - 87%
 
85% - 87%
 
85% - 87%
R&D Expenses
 
$3,400 - $3,600
 
$3,400 - $3,600
 
$3,400 - $3,600
SG&A Expenses
 
$3,400 - $3,600
 
$3,400 - $3,600
 
$3,400 - $3,600
Effective Tax Rate
 
21.0% - 23.0%
 
19.0% - 21.0%
 
18.0% - 20.0%
Diluted EPS Impact of Acquisition-related, Up-front Collaboration, Stock-based Compensation and Other Expenses
 
$1.41 - $1.51
 
$1.50 - $1.60
 
$1.50 - $1.60
Corporate Highlights
Announced that John F. Milligan, Ph.D., will step down as President and Chief Executive Officer (CEO).
John C. Martin, Ph.D., announced his intent to step down from the Board at the time a new CEO joins the company.
Announced plans to launch authorized generic versions of Epclusa and Harvoni in the United States through a newly created subsidiary, Asegua Therapeutics LLC.
Announced that Laura Hamill has joined the company as Executive Vice President, Worldwide Commercial Operations.
Announced that Gregg Alton has been appointed Chief Patient Officer and that Diana Brainard, M.D., has been promoted to Senior Vice President, HIV and Emerging Viral Infections. Also announced that Andrew Cheng, M.D., Ph.D., Chief Medical Officer, decided to leave Gilead to pursue another opportunity.
Announced that Michael Amoroso has joined the company as Senior Vice President and Head of Worldwide Commercial, Cell Therapy.
Product and Pipeline Updates announced by Gilead during the Third Quarter of 2018 include:
HIV and Liver Diseases Programs
Announced a strategic collaboration with Precision BioSciences (Precision) to develop therapies targeting the in vivo elimination of HBV virus with Precision’s proprietary genome editing platform, ARCUS.
Announced that the China National Drug Administration has approved Genvoya for the treatment of HIV-1 infection.
Presented data at the 22nd International AIDS Conference, which included the announcement of a retrospective nationwide analysis of the impact of Truvada® (emtricitabine 200mg and tenofovir disoproxil fumarate 300mg) for pre-exposure prophylaxis (PrEP) use across all 50 U.S. states and the District of Columbia. Conducted in collaboration with researchers at Emory University Rollins School of Public Health and the Centers for Disease Control and Prevention, these data demonstrated that use of once-daily oral Truvada for PrEP has had an independent and significant impact on the number of new HIV infections diagnosed in the United States from 2012 to 2016.
Oncology and Cell Therapy Programs
Announced a license agreement with Trianni, Inc. (Trianni) that grants Gilead the use of the Trianni transgenic human monoclonal antibody discovery platform to support drug discovery efforts.
Announced that the European Commission has granted Marketing Authorization for Yescarta as a treatment

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October 25, 2018
 
4
 
 
 

for adult patients with relapsed or refractory diffuse large B-cell lymphoma and primary mediastinal large
B-cell lymphoma, after two or more lines of systemic therapy.
Announced a strategic collaboration with Gadeta B.V. (Gadeta) to develop novel gamma delta T cell receptor therapies in various cancers.
Inflammation Programs
Announced that FINCH 2, a global, randomized, placebo-controlled, Phase 3 study of filgotinib, an investigational, selective JAK1 inhibitor, in adults with moderately-to-severely active rheumatoid arthritis and prior inadequate response/intolerance to biologic agents, achieved its primary endpoint in the proportion of patients achieving an American College of Rheumatology 20 percent response at week 12.
Announced that the randomized, placebo-controlled Phase 2 TORTUGA study of filgotinib achieved its primary efficacy endpoint in adults with moderately to severely active ankylosing spondylitis (AS). In the study, patients treated with filgotinib achieved significantly greater improvements in AS Disease Activity Score, the primary endpoint, at week 12, with a mean change from baseline of -1.5 versus -0.6 for those treated with placebo (p<0.0001).
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 7, 8 and 9.
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 third quarter 2018 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 1789278 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 October 27, 2018. To access the phone replay, please call (855) 859-2056 (U.S.) or (404) 537-3406 (international) and dial the conference ID 1789278.
About Gilead Sciences
Gilead Sciences, Inc. is a research-based biopharmaceutical company that discovers, develops and commercializes innovative medicines in areas of unmet medical need. The company strives to transform and simplify care for people with life-threatening illnesses around the world. 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

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October 25, 2018
 
5
 
 
 

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 Yescarta, Biktarvy 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, 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; 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 develop products utilizing Precision’s ARCUS platform and Trianni’s transgenic human monoclonal antibody platform; Gilead’s ability to develop products under its collaboration with Gadeta; 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; Gilead’s ability to successfully commercialize its products, including Biktarvy and Yescarta; 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; safety and efficacy data from clinical studies may not warrant further development of Gilead’s product candidates, including filgotinib; 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 U.S. Securities and Exchange Commission (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. There may be other factors of which Gilead is not currently aware that may affect matters discussed in the forward-looking statements and may also cause actual results to differ significantly from these estimates. Further, results for the quarter ended September 30, 2018 are not necessarily indicative of operating results for any future periods. 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 June 30, 2018 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 or supplement any such forward-looking statements other than as required by law. Any forward-looking statements speak only as of the date hereof or as of the dates indicated in the statements.
# # #
Gilead owns or has rights to various trademarks, copyrights and trade names used in its business, including the following: GILEAD®, GILEAD SCIENCES®, AMBISOME®, ATRIPLA®, AXI-CELTM, BIKTARVY®, CAYSTON®, COMPLERA®, DESCOVY®, EMTRIVA®, EPCLUSA®, EVIPLERA®, GENVOYA®, HARVONI®, HEPSERA®, LETAIRIS®, ODEFSEY®, RANEXA®, SOVALDI®, STRIBILD®, TRUVADA®, TYBOST®, VEMLIDY®, VIREAD®, VOLIBRIS®, VOSEVI®, YESCARTA® and ZYDELIG®.
LEXISCAN® is a registered trademark of Astellas U.S. LLC. MACUGEN® is a registered trademark of Eyetech, Inc. SYMTUZA® is a registered trademark of Janssen Sciences Ireland UC (Janssen). 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).

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October 25, 2018
 
6
 
 
 

GILEAD SCIENCES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
(in millions, except per share amounts)

 
 
Three Months Ended
 
Nine Months Ended
 
 
September 30,
 
September 30,
 
 
2018
 
2017
 
2018
 
2017
 Revenues:
 
 
 
 
 
 
 
 
 Product sales
 
$
5,455

 
$
6,402

 
$
15,996

 
$
19,825

 Royalty, contract and other revenues
 
141

 
110

 
336

 
333

 Total revenues
 
5,596

 
6,512

 
16,332

 
20,158

 Costs and expenses:
 
 
 
 
 
 
 
 
 Cost of goods sold
 
1,086

 
1,032

 
3,283

 
3,115

 Research and development expenses
 
939

 
789

 
3,068

 
2,584

 Selling, general and administrative expenses
 
948

 
879

 
2,925

 
2,626

 Total costs and expenses
 
2,973

 
2,700

 
9,276

 
8,325

 Income from operations
 
2,623

 
3,812

 
7,056

 
11,833

 Interest expense
 
(264
)
 
(291
)
 
(820
)
 
(821
)
 Other income (expense), net
 
305

 
150

 
547

 
391

 Income before provision for income taxes
 
2,664

 
3,671

 
6,783

 
11,403

 Provision for income taxes
 
565

 
959

 
1,326

 
2,923

 Net income
 
2,099

 
2,712

 
5,457

 
8,480

 Net income (loss) attributable to noncontrolling interest
 
2

 
(6
)
 
5

 
(13
)
 Net income attributable to Gilead
 
$
2,097

 
$
2,718

 
$
5,452

 
$
8,493

 
 
 
 
 
 
 
 
 
 Net income per share attributable to Gilead common stockholders - basic
 
$
1.62

 
$
2.08

 
$
4.19

 
$
6.50

 Shares used in per share calculation - basic
 
1,296

 
1,306

 
1,302

 
1,307

 Net income per share attributable to Gilead common stockholders - diluted
 
$
1.60

 
$
2.06

 
$
4.15

 
$
6.44

 Shares used in per share calculation - diluted
 
1,307

 
1,319

 
1,313

 
1,319

 Cash dividends declared per share
 
$
0.57

 
$
0.52

 
$
1.71

 
$
1.56

 
 
 
 
 
 
 
 
 



October 25, 2018
 
7
 
 
 

GILEAD SCIENCES, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION
(unaudited)
(in millions, except percentages and per share amounts)
 
 
Three Months Ended
 
Nine Months Ended
 
 
September 30,
 
September 30,
 
 
2018
 
2017
 
2018
 
2017
Cost of goods sold reconciliation:
 
 
 
 
 
 
 
 
GAAP cost of goods sold
 
$
1,086

 
$
1,032

 
$
3,283

 
$
3,115

Acquisition-related – amortization of purchased intangibles
 
(301
)
 
(209
)
 
(902
)
 
(629
)
Stock-based compensation expenses(1)
 
(15
)
 
(4
)
 
(49
)
 
(12
)
Other(2)
 
1

 
2

 
1

 
(18
)
Non-GAAP cost of goods sold
 
$
771

 
$
821

 
$
2,333

 
$
2,456

Product gross margin reconciliation:
 
 
 
 
 
 
 
 
GAAP product gross margin
 
80.1
%
 
83.9
 %
 
79.5
%
 
84.3
%
Acquisition-related – amortization of purchased intangibles
 
5.5
%
 
3.3
 %
 
5.6
%
 
3.2
%
Stock-based compensation expenses(1)
 
0.3
%
 
 %
 
0.3
%
 
%
Other(2)
 
%
 
 %
 
%
 
0.1
%
Non-GAAP product gross margin(4)
 
85.9
%
 
87.2
 %
 
85.4
%
 
87.6
%
Research and development expenses reconciliation:
 
 
 
 
 
 
 
 
GAAP research and development expenses
 
$
939

 
$
789

 
$
3,068

 
$
2,584

Up-front collaboration expenses
 

 

 
(160
)
 

Acquisition-related – other costs
 
3

 

 
(22
)
 

Stock-based compensation expenses(1)
 
(99
)
 
(53
)
 
(304
)
 
(142
)
Other(2)
 
1

 
9

 
(3
)
 
4

Non-GAAP research and development expenses
 
$
844

 
$
745

 
$
2,579

 
$
2,446

Selling, general and administrative expenses reconciliation:
 
 
 
 
 
 
 
 
GAAP selling, general and administrative expenses
 
$
948

 
$
879

 
$
2,925

 
$
2,626

Acquisition-related – transaction costs
 

 
(12
)
 

 
(12
)
Acquisition-related – other costs
 
(8
)
 

 
(23
)
 

Stock-based compensation expenses(1)
 
(84
)
 
(56
)
 
(317
)
 
(150
)
Other(2)
 
(4
)
 
(5
)
 
(9
)
 
(24
)
Non-GAAP selling, general and administrative expenses
 
$
852

 
$
806

 
$
2,576

 
$
2,440

Operating margin reconciliation:
 
 
 
 
 
 
 
 
GAAP operating margin
 
46.9
%
 
58.5
 %
 
43.2
%
 
58.7
%
Up-front collaboration expenses
 
%
 
 %
 
1.0
%
 
%
Acquisition-related – amortization of purchased intangibles
 
5.4
%
 
3.2
 %
 
5.5
%
 
3.1
%
Acquisition-related – transaction costs
 
%
 
0.2
 %
 
%
 
0.1
%
Acquisition-related – other costs
 
0.1
%
 
 %
 
0.3
%
 
%
Stock-based compensation expenses(1)
 
3.5
%
 
1.7
 %
 
4.1
%
 
1.5
%
Other(2)
 
%
 
(0.1
)%
 
0.1
%
 
0.2
%
Non-GAAP operating margin(4)
 
55.9
%
 
63.6
 %
 
54.2
%
 
63.6
%
Interest expense reconciliation:
 
 
 
 
 
 
 
 
GAAP interest expense
 
$
(264
)
 
$
(291
)
 
$
(820
)
 
$
(821
)
Acquisition-related – transaction costs
 

 
18

 

 
18

Non-GAAP interest expense
 
$
(264
)
 
$
(273
)
 
$
(820
)
 
$
(803
)
Other income (expense), net reconciliation:
 
 
 
 
 
 
 
 
GAAP other income (expense), net
 
$
305

 
$
150

 
$
547

 
$
391

Unrealized gains from marketable equity securities(3)
 
(168
)
 

 
(149
)
 

Non-GAAP other income (expense), net
 
$
137

 
$
150

 
$
398

 
$
391

 
 
 
 
 
 
 
 
 



October 25, 2018
 
8
 
 
 

GILEAD SCIENCES, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION - (Continued)
(unaudited)
(in millions, except percentages and per share amounts)
 
 
Three Months Ended
 
Nine Months Ended
 
 
September 30,
 
September 30,
 
 
2018
 
2017
 
2018
 
2017
Effective tax rate reconciliation:
 
 
 
 
 
 
 
 
GAAP effective tax rate
 
21.2
 %
 
26.1
 %
 
19.5
 %
 
25.6
 %
Up-front collaboration expenses
 
 %
 
 %
 
0.1
 %
 
 %
Acquisition-related – amortization of purchased intangibles
 
(1.5
)%
 
(1.2
)%
 
(1.5
)%
 
(1.2
)%
Stock-based compensation expenses(1)
 
(1.0
)%
 
0.8
 %
 
(0.1
)%
 
0.6
 %
Unrealized gains from marketable equity securities(3)
 
1.3
 %
 
 %
 
0.4
 %
 
 %
Tax Reform adjustments
 
 %
 
 %
 
0.1
 %
 
 %
Non-GAAP effective tax rate(4)
 
19.9
 %
 
25.7
 %
 
18.5
 %
 
25.0
 %
Net income attributable to Gilead reconciliation:
 
 
 
 
 
 
 
 
GAAP net income attributable to Gilead
 
$
2,097

 
$
2,718

 
$
5,452

 
$
8,493

Up-front collaboration expenses
 

 

 
125

 

Acquisition-related – amortization of purchased intangibles
 
281

 
201

 
843

 
605

Acquisition-related – transaction costs
 

 
24

 

 
24

Acquisition-related – other costs
 
4

 

 
36

 

Stock-based compensation expenses(1)
 
184

 
55

 
546

 
161

Unrealized gains from marketable equity securities(3)
 
(164
)
 

 
(146
)
 

Tax Reform adjustments
 

 

 
(10
)
 

Other(2)
 
1

 
(8
)
 
9

 
28

Non-GAAP net income attributable to Gilead
 
$
2,403

 
$
2,990

 
$
6,855

 
$
9,311

Diluted earnings per share reconciliation:
 
 
 
 
 
 
 
 
GAAP diluted earnings per share
 
$
1.60

 
$
2.06

 
$
4.15

 
$
6.44

Up-front collaboration expenses
 

 

 
0.10

 

Acquisition-related – amortization of purchased intangibles
 
0.21

 
0.15

 
0.64

 
0.46

Acquisition-related – transaction costs
 

 
0.02

 

 
0.02

Acquisition-related – other costs
 

 

 
0.03

 

Stock-based compensation expenses(1)
 
0.14

 
0.04

 
0.42

 
0.12

Unrealized gains from marketable equity securities(3)
 
(0.13
)
 

 
(0.11
)
 

Tax Reform adjustments
 

 

 
(0.01
)
 

Other(2)
 

 
(0.01
)
 
0.01

 
0.02

Non-GAAP diluted earnings per share(4)
 
$
1.84

 
$
2.27

 
$
5.22

 
$
7.06

Non-GAAP adjustment summary:
 
 
 
 
 
 
 
 
Cost of goods sold adjustments
 
$
315

 
$
211

 
$
950

 
$
659

Research and development expenses adjustments
 
95

 
44

 
489

 
138

Selling, general and administrative expenses adjustments
 
96

 
73

 
349

 
186

Interest expense adjustments
 

 
18

 

 
18

Other income (expense), net adjustments
 
(168
)
 

 
(149
)
 

Total non-GAAP adjustments before tax
 
338

 
346

 
1,639

 
1,001

Income tax effect
 
(32
)
 
(74
)
 
(226
)
 
(183
)
Tax Reform adjustments
 

 

 
(10
)
 

Total non-GAAP adjustments after tax
 
$
306

 
$
272

 
$
1,403

 
$
818

Notes:
 
 
 
 
 
 
 
 
(1)     Stock-based compensation expenses for the three and nine months ended September 30, 2018 include $63 million and $323 million, respectively, associated with Gilead’s acquisition of Kite
(2)     Amounts represent restructuring, contingent consideration and/or other individually insignificant amounts
(3)     Amounts represent fair value adjustments of marketable equity securities recorded in Other income (expense), net, on Gilead’s Condensed Consolidated Statements of Income as a result of the adoption of Accounting Standards Update No. 2016-01 “Financial Instruments - Overall: Recognition and Measurement of Financial Assets and Financial Liabilities” in 2018
(4)     Amounts may not sum due to rounding



October 25, 2018
 
9
 
 
 

GILEAD SCIENCES, INC.
RECONCILIATION OF GAAP TO NON-GAAP 2018 FULL YEAR GUIDANCE
(unaudited)
(in millions, except percentages and per share amounts)

 
 
Initially Provided
February 6, 2018
Reiterated
May 1, 2018
 
Updated
July 25, 2018
Reiterated
October 25, 2018
Projected product gross margin GAAP to non-GAAP reconciliation:
 
 
 
 
GAAP projected product gross margin
 
78% - 80%
 
78% - 80%
Acquisition-related expenses
 
7% - 7%
 
7% - 7%
Non-GAAP projected product gross margin(1)
 
85% - 87%
 
85% - 87%
Projected research and development expenses GAAP to non-GAAP reconciliation:
 
 
 
 
GAAP projected research and development expenses
 
$3,785 - $4,050
 
$3,965 - $4,260
Stock-based compensation expenses(2)
 
(315) - (350)
 
(365) - (400)
Acquisition-related expenses / up-front collaboration expenses
 
(70) - (100)
 
(200) - (260)
Non-GAAP projected research and development expenses
 
$3,400 - $3,600
 
$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
 
$3,835 - $4,080
Stock-based compensation expenses(2)
 
(425) - (450)
 
(395) - (420)
Acquisition-related expenses
 
(40) - (60)
 
(40) - (60)
Non-GAAP projected selling, general and administrative expenses
 
$3,400 - $3,600
 
$3,400 - $3,600
Projected diluted EPS impact of acquisition-related, up-front collaboration, stock-based compensation and other expenses(3):
 
 
 
 
Stock-based compensation expenses(2)
 
$0.50 - $0.56
 
$0.50 - $0.54
Acquisition-related expenses / up-front collaboration expenses
 
$0.91 - $0.95
 
$1.00 - $1.06
Projected diluted EPS impact of acquisition-related, up-front collaboration, stock-based compensation and other expenses(3)
 
$1.41 - $1.51
 
$1.50 - $1.60
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 fair value adjustments of marketable equity securities, as Gilead is unable to project future fair value adjustments, and measurement period adjustments during 2018 relating to Tax Reform. Gilead is unable to project an effective tax rate on a GAAP basis




October 25, 2018
 
10
 
 
 

GILEAD SCIENCES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
(in millions)
 
 
September 30,
 
December 31,
 
 
2018
 
2017
 
 
 
 
 
Cash, cash equivalents and marketable securities
 
$
30,844

 
$
36,694

Accounts receivable, net
 
3,465

 
3,851

Inventories
 
816

 
801

Property, plant and equipment, net
 
3,791

 
3,295

Intangible assets, net
 
16,314

 
17,100

Goodwill
 
4,117

 
4,159

Other assets
 
4,958

 
4,383

Total assets
 
$
64,305

 
$
70,283

 
 
 
 
 
Current liabilities
 
$
10,116

 
$
11,635

Long-term liabilities
 
31,182

 
38,147

Stockholders’ equity(1)
 
23,007

 
20,501

Total liabilities and stockholders’ equity
 
$
64,305

 
$
70,283

 
 
 
 
 
Note:
 
 
 
 
(1)     As of September 30, 2018, there were 1,294 million shares of common stock issued and outstanding





October 25, 2018
 
11
 
 
 

GILEAD SCIENCES, INC.
PRODUCT SALES SUMMARY
(unaudited)
(in millions)
 
 
Three Months Ended
 
Nine Months Ended
 
 
September 30,
 
September 30,
 
 
2018
 
2017
 
2018
 
2017
 
 
 
 
 
 
 
 
 
Atripla – U.S.
 
$
221

 
$
324

 
$
723

 
$
974

Atripla – Europe
 
29

 
79

 
119

 
259

Atripla – Other International
 
8

 
36

 
79

 
133

 
 
258

 
439

 
921

 
1,366

 
 
 
 
 
 
 
 
 
Biktarvy – U.S.
 
375

 

 
593

 

Biktarvy – Europe
 
11

 

 
13

 

Biktarvy – Other International
 

 

 

 

 
 
386

 

 
606

 

 
 
 
 
 
 
 
 
 
Complera / Eviplera – U.S.
 
61

 
91

 
210

 
315

Complera / Eviplera – Europe
 
67

 
133

 
279

 
385

Complera / Eviplera – Other International
 
11

 
13

 
39

 
44

 
 
139

 
237

 
528

 
744

 
 
 
 
 
 
 
 
 
Descovy – U.S.
 
310

 
241

 
895

 
682

Descovy – Europe
 
81

 
65

 
234

 
149

Descovy – Other International
 
15

 
10

 
41

 
22

 
 
406

 
316

 
1,170

 
853

 
 
 
 
 
 
 
 
 
Genvoya – U.S.
 
921

 
810

 
2,678

 
2,189

Genvoya – Europe
 
203

 
146

 
596

 
358

Genvoya – Other International
 
52

 
32

 
144

 
67

 
 
1,176

 
988

 
3,418

 
2,614

 
 
 
 
 
 
 
 
 
Odefsey – U.S.
 
323

 
255

 
905

 
688

Odefsey – Europe
 
95

 
37

 
230

 
87

Odefsey – Other International
 
5

 
4

 
15

 
6

 
 
423

 
296

 
1,150

 
781

 
 
 
 
 
 
 
 
 
Stribild – U.S.
 
111

 
181

 
388

 
632

Stribild – Europe
 
20

 
40

 
83

 
161

Stribild – Other International
 
15

 
8

 
36

 
38

 
 
146

 
229

 
507

 
831

 
 
 
 
 
 
 
 
 
Truvada – U.S.
 
665

 
604

 
1,821

 
1,635

Truvada – Europe
 
62

 
154

 
245

 
527

Truvada – Other International
 
30

 
53

 
108

 
175

 
 
757

 
811

 
2,174

 
2,337

 
 
 
 
 
 
 
 
 
Other HIV(1) – U.S.
 
10

 
13

 
30

 
34

Other HIV(1) – Europe
 
2

 
2

 
6

 
5

Other HIV(1) – Other International
 
2

 

 
10

 
2

 
 
14

 
15

 
46

 
41

 
 
 
 
 
 
 
 
 
Revenue share – Symtuza(2) – U.S.
 
8

 

 
8

 

Revenue share – Symtuza(2) – Europe
 
14

 

 
34

 

 
 
22

 

 
42

 

 
 
 
 
 
 
 
 
 
Total HIV – U.S.
 
3,005

 
2,519

 
8,251

 
7,149

Total HIV – Europe
 
584

 
656

 
1,839

 
1,931

Total HIV – Other International
 
138

 
156

 
472

 
487

 
 
$
3,727

 
$
3,331

 
$
10,562

 
$
9,567

 
 
 
 
 
 
 
 
 



October 25, 2018
 
12
 
 
 

GILEAD SCIENCES, INC.
PRODUCT SALES SUMMARY - (Continued)
(unaudited)
(in millions)
 
 
Three Months Ended
 
Nine Months Ended
 
 
September 30,
 
September 30,
 
 
2018
 
2017
 
2018
 
2017
 
 
 
 
 
 
 
 
 
AmBisome – U.S.
 
$
9

 
$
9

 
$
40

 
$
26

AmBisome – Europe
 
59

 
51

 
170

 
153

AmBisome – Other International
 
34

 
32

 
102

 
97

 
 
102

 
92

 
312

 
276

 
 
 
 
 
 
 
 
 
Epclusa – U.S.
 
225

 
543

 
733

 
2,142

Epclusa – Europe
 
136

 
263

 
502

 
649

Epclusa – Other International
 
116

 
76

 
278

 
154

 
 
477

 
882

 
1,513

 
2,945

 
 
 
 
 
 
 
 
 
Harvoni – U.S.
 
185

 
718

 
649

 
2,628

Harvoni – Europe
 
38

 
110

 
116

 
583

Harvoni – Other International
 
88

 
145

 
225

 
515

 
 
311

 
973

 
990

 
3,726

 
 
 
 
 
 
 
 
 
Letairis – U.S.
 
241

 
213

 
689

 
654

 
 
 
 
 
 
 
 
 
Ranexa – U.S.
 
178

 
164

 
581

 
517

 
 
 
 
 
 
 
 
 
Vemlidy – U.S.
 
66

 
34

 
172

 
66

Vemlidy – Europe
 
2

 
2

 
8

 
3

Vemlidy – Other International
 
19

 
1

 
41

 
1

 
 
87

 
37

 
221

 
70

 
 
 
 
 
 
 
 
 
Viread – U.S.
 
17

 
137

 
40

 
395

Viread – Europe
 
10

 
55

 
72

 
202

Viread – Other International
 
43

 
82

 
137

 
237

 
 
70

 
274

 
249

 
834

 
 
 
 
 
 
 
 
 
Vosevi – U.S.
 
78

 
117

 
250

 
117

Vosevi – Europe
 
21

 
5

 
57

 
5

Vosevi – Other International
 
4

 
1

 
12

 
1

 
 
103

 
123

 
319

 
123

 
 
 
 
 
 
 
 
 
Yescarta – U.S.
 
75

 

 
183

 

 
 
 
 
 
 
 
 
 
Zydelig – U.S.
 
15

 
18

 
46

 
52

Zydelig – Europe
 
4

 
22

 
44

 
57

Zydelig – Other International
 
1

 

 
2

 
1

 
 
20

 
40

 
92

 
110

 
 
 
 
 
 
 
 
 
Other(3) – U.S.
 
37

 
70

 
93

 
228

Other(3) – Europe
 
19

 
33

 
75

 
279

Other(3) – Other International
 
8

 
170

 
117

 
496

 
 
64

 
273

 
285

 
1,003

 
 
 
 
 
 
 
 
 
Total product sales – U.S.
 
4,131

 
4,542

 
11,727

 
13,974

Total product sales – Europe
 
873

 
1,197

 
2,883

 
3,862

Total product sales – Other International
 
451

 
663

 
1,386

 
1,989

 
 
$
5,455

 
$
6,402

 
$
15,996

 
$
19,825

 
 
 
 
 
 
 
 
 
Notes:
 
 
 
 
 
 
 
 
(1)     Includes Emtriva and Tybost
(2)     Represents Gilead’s revenue from cobicistat (C), FTC and TAF in Symtuza (darunavir/C/FTC/TAF), a fixed dose combination product commercialized by Janssen
(3)     Includes Cayston, Hepsera and Sovaldi

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