GILEAD SCIENCES, INC. [GILD] Filings

10-Q 1 gild-20230930.htm FORM 10-Q gild-20230930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________

Commission File No. 0-19731

GILEAD SCIENCES, INC.

(Exact Name of Registrant as Specified in Its Charter)


Delaware			94-3047598
(State or Other Jurisdiction of Incorporation or Organization)			(IRS Employer Identification No.)

333 Lakeside Drive, Foster City, California 94404

(Address of principal executive offices) (Zip Code)

650-574-3000

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value, $0.001 per share

GILD

The Nasdaq Global Select Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer x Accelerated filer ¨ Non-accelerated filer ¨

Smaller reporting company ☐ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No x

Number of shares outstanding of the issuer’s common stock, par value $0.001 per share, as of October 31, 2023: 1,246,041,895

GILEAD SCIENCES, INC.

INDEX

PART I.

FINANCIAL INFORMATION

Item 1.

Condensed Consolidated Financial Statements

Condensed Consolidated Balance Sheets as of September 30, 2023 and December 31, 2022

Condensed Consolidated Statements of Income for the Three and Nine Months Ended September 30, 2023 and 2022

Condensed Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2023 and 2022

Condensed Consolidated Statements of Stockholders’ Equity for the Three and Nine Months Ended September 30, 2023 and 2022

Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2023 and 2022

Notes to Condensed Consolidated Financial Statements

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Item 4.

Controls and Procedures

Unregistered Sales of Equity Securities and Use of Proceeds

Item 3.

Defaults Upon Senior Securities

Item 4.

Mine Safety Disclosures

We own or have rights to various trademarks, copyrights and trade names used in our business, including the following: GILEAD®, GILEAD SCIENCES®, KITE™, AMBISOME®, ATRIPLA®, BIKTARVY®, CAYSTON®, COMPLERA®, DESCOVY®, DESCOVY FOR PREP®, EMTRIVA®, EPCLUSA®, EVIPLERA®, GENVOYA®, HARVONI®, HEPCLUDEX®, HEPSERA®, JYSELECA®, LETAIRIS®, ODEFSEY®, RANEXA®, SOVALDI®, STRIBILD®, SUNLENCA®, TECARTUS®, TRODELVY®, TRUVADA®, TRUVADA FOR PREP®, TYBOST®, VEKLURY®, VEMLIDY®, VIREAD®, VOSEVI®, YESCARTA® and ZYDELIG®. Other trademarks are the property of their respective owners.

Certain amounts and percentages in this Quarterly Report on Form 10-Q may not sum or recalculate due to rounding.

This Quarterly Report on Form 10-Q, including Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations and Part II, Item 1A. Risk Factors, contains forward-looking statements regarding future events and our future results that are subject to the safe harbors created under the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended. Words such as “expect,” “anticipate,” “target,” “goal,” “project,” “hope,” “intend,” “plan,” “believe,” “seek,” “estimate,” “continue,” “may,” “could,” “should,” “might,” “forecast” and variations of such words and similar expressions are intended to identify such forward-looking statements. In addition, any statements other than statements of historical fact are forward-looking statements, including statements regarding overall trends; operating cost and revenue trends; liquidity and capital needs; plans and expectations with respect to products, product candidates, corporate strategy, business and operations, financial projections and the use of capital; collaboration and licensing arrangements; patent protection and estimated loss of exclusivity for our products and product candidates; ongoing litigation and investigation matters; and other statements of expectations, beliefs, future plans and strategies, anticipated events or trends and similar expressions.

We have based these forward-looking statements on our current expectations about future events. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Our actual results may differ materially from those suggested by these forward-looking statements for various reasons, including those identified in Part II, Item 1A. Risk Factors. Given these risks and uncertainties, you are cautioned not to place undue reliance on forward-looking statements. The forward-looking statements included in this report are made only as of the date hereof unless otherwise specified. Except as required under federal securities laws and the rules and regulations of U.S. Securities and Exchange Commission, we do not undertake, and specifically decline, any obligation to update any of these statements or to publicly announce the results of any revisions to any forward-looking statements after the distribution of this report, whether as a result of new information, future events, changes in assumptions or otherwise. In evaluating our business, you should carefully consider the risks described in Part II, Item 1A. Risk Factors of this Quarterly Report on Form 10-Q. Any of the risks contained herein could materially and adversely affect our business, results of operations and financial condition.

PART I. FINANCIAL INFORMATION

Item 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

GILEAD SCIENCES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)


(in millions, except per share amounts)	September 30, 2023		December 31, 2022
Assets
Current assets:
Cash and cash equivalents	$	5,705	$	5,412
Short-term marketable debt securities	1,159		973
Accounts receivable, net	4,790		4,777
Inventories	1,663		1,507
Prepaid and other current assets	2,662		1,774
Total current assets	15,980		14,443
Property, plant and equipment, net	5,572		5,475
Long-term marketable debt securities	1,156		1,245
Intangible assets, net	27,152		28,894
Goodwill	8,314		8,314
Other long-term assets	4,200		4,800
Total assets	$	62,373	$	63,171
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	586	$	905
Accrued rebates	3,714		3,479
Other current liabilities	5,852		4,580
Current portion of long-term debt and other obligations, net	1,793		2,273
Total current liabilities	11,945		11,237
Long-term debt, net	23,189		22,957
Long-term income taxes payable	2,088		3,916
Deferred tax liability	1,984		2,673
Other long-term obligations	924		1,179
Commitments and contingencies (Note 10)
Stockholders’ equity:
Preferred stock, par value $0.001 per share; 5 shares authorized; none outstanding	—		—
Common stock, par value $0.001 per share; 5,600 shares authorized; 1,247 shares issued and outstanding	1		1
Additional paid-in capital	6,279		5,550
Accumulated other comprehensive income	31		2
Retained earnings	16,002		15,687
Total Gilead stockholders’ equity	22,314		21,240
Noncontrolling interest	(72)		(31)
Total stockholders’ equity	22,242		21,209
Total liabilities and stockholders’ equity	$	62,373	$	63,171

See accompanying notes.

GILEAD SCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(unaudited)


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(in millions, except per share amounts)	2023		2022		2023		2022
Revenues:
Product sales	$	6,994	$	6,978	$	19,864	$	19,650
Royalty, contract and other revenues	56		64		138		242
Total revenues	7,051		7,042		20,002		19,892
Costs and expenses:
Cost of goods sold	1,565		1,395		4,408		4,261
Research and development expenses	1,457		1,149		4,310		3,429
Acquired in-process research and development expenses	91		448		808		786
In-process research and development impairment	—		—		—		2,700
Selling, general and administrative expenses	1,315		1,213		4,482		3,653
Total costs and expenses	4,428		4,205		14,009		14,829
Operating income	2,623		2,837		5,993		5,063
Interest expense	(232)		(229)		(692)		(709)
Other income (expense), net	(72)		(176)		(95)		(571)
Income before income taxes	2,318		2,432		5,206		3,783
Income tax expense	(146)		(646)		(1,010)		(850)
Net income	2,172		1,786		4,196		2,933
Net loss attributable to noncontrolling interest	8		3		40		19
Net income attributable to Gilead	$	2,180	$	1,789	$	4,236	$	2,952
Basic earnings per share attributable to Gilead	$	1.75	$	1.43	$	3.39	$	2.35
Shares used in basic earnings per share attributable to Gilead calculation	1,248		1,255		1,249		1,255
Diluted earnings per share attributable to Gilead	$	1.73	$	1.42	$	3.37	$	2.34
Shares used in diluted earnings per share attributable to Gilead calculation	1,257		1,261		1,259		1,261

See accompanying notes.

GILEAD SCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited)


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(in millions)	2023		2022		2023		2022
Net income	$	2,172	$	1,786	$	4,196	$	2,933
Other comprehensive income, net:
Net foreign currency translation loss	(35)		(81)		(3)		(102)
Available-for-sale debt securities:
Net unrealized gain (loss), net of tax impact of $0, $0, $0 and $0, respectively	4		(7)		10		(38)
Reclassifications to net income, net of tax impact of $0, $0, $0 and $0, respectively	—		—		2		1
Net change	5		(7)		11		(37)
Cash flow hedges:
Net unrealized gain, net of tax impact of $9, $21, $9 and $37, respectively	66		140		65		254
Reclassifications to net income, net of tax impact of $2, $7, $6 and $15, respectively	(14)		(41)		(44)		(100)
Net change	51		99		21		154
Other comprehensive income, net	21		11		30		15
Comprehensive income, net	2,193		1,797		4,226		2,948
Comprehensive loss attributable to noncontrolling interest, net	8		3		40		19
Comprehensive income attributable to Gilead, net	$	2,201	$	1,800	$	4,265	$	2,967

See accompanying notes.

GILEAD SCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(unaudited)


	Three Months Ended September 30, 2023
(in millions, except per share amounts)	Gilead Stockholders’ Equity									Noncontrolling Interest		Total Stockholders’ Equity
	Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Income		Retained Earnings
	Shares	Amount
Balance as of June 30, 2023	1,247	$	1	$	6,008	$	10	$	15,138	$	(64)	$	21,094
Net income (loss)	—	—		—		—		2,180		(8)		2,172
Other comprehensive income, net	—	—		—		21		—		—		21
Issuances under employee stock purchase plan	1	—		62		—		—		—		62
Issuances under equity incentive plans	4	—		21		—		—		—		21
Stock-based compensation	—	—		202		—		—		—		202
Repurchases of common stock under repurchase programs ($77.08 average price per share)	(4)	—		(14)		—		(286)		—		(300)
Repurchases of common stock for employee tax withholding under equity incentive plans and other	(1)	—		—		—		(77)		—		(77)
Dividends declared ($0.75 per share)	—	—		—		—		(953)		—		(953)
Balance as of September 30, 2023	1,247	$	1	$	6,279	$	31	$	16,002	$	(72)	$	22,242


	Nine Months Ended September 30, 2023
(in millions, except per share amounts)	Gilead Stockholders’ Equity									Noncontrolling Interest		Total Stockholders’ Equity
	Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Income		Retained Earnings
	Shares	Amount
Balance as of December 31, 2022	1,247	$	1	$	5,550	$	2	$	15,687	$	(31)	$	21,209
Net income (loss)	—	—		—		—		4,236		(40)		4,196
Other comprehensive income, net	—	—		—		30		—		—		30
Issuances under employee stock purchase plan	2	—		129		—		—		—		129
Issuances under equity incentive plans	11	—		71		—		—		—		71
Stock-based compensation	—	—		566		—		—		—		566
Repurchases of common stock under repurchase programs ($79.92 average price per share)	(11)	—		(38)		—		(812)		—		(850)
Repurchases of common stock for employee tax withholding under equity incentive plans and other	(3)	—		—		—		(245)		—		(245)
Dividends declared ($2.25 per share)	—	—		—		—		(2,864)		—		(2,864)
Balance as of September 30, 2023	1,247	$	1	$	6,279	$	31	$	16,002	$	(72)	$	22,242

See accompanying notes.


	Three Months Ended September 30, 2022
(in millions, except per share amounts)	Gilead Stockholders’ Equity									Noncontrolling Interest		Total Stockholders’ Equity
	Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Income		Retained Earnings
	Shares	Amount
Balance as of June 30, 2022	1,254	$	1	$	5,031	$	87	$	15,117	$	(21)	$	20,215
Net income (loss)	—	—		—		—		1,789		(3)		1,786
Other comprehensive income, net	—	—		—		11		—		—		11
Issuances under employee stock purchase plan	2	—		30		—		—		—		30
Issuances under equity incentive plans	2	—		6		—		—		—		6
Stock-based compensation	—	—		170		—		—		—		170
Repurchases of common stock under repurchase programs ($63.10 average price per share)	(3)	—		(11)		—		(171)		—		(182)
Repurchases of common stock for employee tax withholding under equity incentive plans	(1)	—		—		—		(46)		—		(46)
Dividends declared ($0.73 per share)	—	—		—		—		(933)		—		(933)
Balance as of September 30, 2022	1,254	$	1	$	5,226	$	98	$	15,756	$	(24)	$	21,057


	Nine Months Ended September 30, 2022
(in millions, except per share amounts)	Gilead Stockholders’ Equity									Noncontrolling Interest		Total Stockholders’ Equity
	Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Income		Retained Earnings
	Shares	Amount
Balance as of December 31, 2021	1,254	$	1	$	4,661	$	83	$	16,324	$	(5)	$	21,064
Net income (loss)	—	—		—		—		2,952		(19)		2,933
Other comprehensive income, net	—	—		—		15		—		—		15
Issuances under employee stock purchase plan	3	—		103		—		—		—		103
Issuances under equity incentive plans	9	—		30		—		—		—		30
Stock-based compensation	—	—		465		—		—		—		465
Repurchases of common stock under repurchase programs ($63.34 average price per share)	(10)	—		(33)		—		(572)		—		(605)
Repurchases of common stock for employee tax withholding under equity incentive plans	(2)	—		—		—		(151)		—		(151)
Dividends declared ($2.19 per share)	—	—		—		—		(2,797)		—		(2,797)
Balance as of September 30, 2022	1,254	$	1	$	5,226	$	98	$	15,756	$	(24)	$	21,057

See accompanying notes.

GILEAD SCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)


	Nine Months Ended
	September 30,
(in millions)	2023		2022
Operating Activities:
Net income	$	4,196	$	2,933
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation expense	263		240
Amortization expense	1,742		1,335
Stock-based compensation expense	565		463
Acquired in-process research and development expenses	808		786
In-process research and development impairment	—		2,700
Deferred income taxes	(592)		(1,214)
Net loss from equity securities	356		596
Other	260		546
Changes in operating assets and liabilities:
Accounts receivable, net	(63)		(125)
Inventories	(535)		(34)
Prepaid expenses and other	71		(69)
Accounts payable	(304)		(38)
Income tax assets and liabilities, net	(1,070)		(483)
Accrued and other liabilities	141		(1,131)
Net cash provided by operating activities	5,837		6,505
Investing Activities:
Purchases of marketable debt securities	(1,474)		(1,398)
Proceeds from sales of marketable debt securities	412		370
Proceeds from maturities of marketable debt securities	985		1,232
Acquisitions, including in-process research and development, net of cash acquired	(873)		(1,579)
Purchases of equity securities	(218)		(166)
Capital expenditures	(370)		(547)
Other	—		(3)
Net cash used in investing activities	(1,538)		(2,091)
Financing Activities:
Proceeds from debt financing, net of issuance costs	1,979		—
Proceeds from issuances of common stock	206		133
Repurchases of common stock under repurchase programs	(850)		(604)
Repayments of debt and other obligations	(2,250)		(1,500)
Payments of dividends	(2,866)		(2,794)
Other	(245)		(150)
Net cash used in financing activities	(4,026)		(4,915)
Effect of exchange rate changes on cash and cash equivalents	20		(138)
Net change in cash and cash equivalents	293		(639)
Cash and cash equivalents at beginning of period	5,412		5,338
Cash and cash equivalents at end of period	$	5,705	$	4,699

See accompanying notes.

GILEAD SCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accompanying Condensed Consolidated Financial Statements and related Notes to Condensed Consolidated Financial Statements of Gilead Sciences, Inc. (“Gilead,” “we,” “our” or “us”) should be read in conjunction with the audited Consolidated Financial Statements and the related notes thereto for the year ended December 31, 2022, included in our Annual Report on Form 10-K filed with U.S. Securities and Exchange Commission. There have been no material changes to our organization or summary of significant accounting policies as disclosed in that filing. Beginning in the first quarter of 2023, we reclassified changes in income taxes prepaid and receivable from Prepaid expenses and other to combine them with changes in income taxes payable as Income tax assets and liabilities, net within Operating Activities on our Condensed Consolidated Statements of Cash Flows. We believe this presentation assists users of the financial statements to better understand cash flow movements. Prior periods have been revised to reflect this change, resulting in a reclassification of $81 million from Prepaid expenses and other for the nine months ended September 30, 2022.

These interim financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and include all adjustments consisting of normal recurring adjustments that the management of Gilead believes are necessary for a fair presentation of the periods presented and are not necessarily indicative of results expected for the full fiscal year or for any subsequent interim period. Certain amounts and percentages in these Condensed Consolidated Financial Statements and accompanying notes may not sum or recalculate due to rounding.

2. REVENUES

Disaggregation of Revenues

The following table summarizes our Total revenues:


	Three Months Ended September 30, 2023								Three Months Ended September 30, 2022
(in millions)	U.S.		Europe		Other International		Total		U.S.		Europe		Other International		Total
Product sales:
HIV
Biktarvy	$	2,504	$	313	$	268	$	3,085	$	2,286	$	278	$	201	$	2,766
Complera/Eviplera	13		18		3		34		20		21		3		43
Descovy	460		25		26		511		444		28		28		500
Genvoya	433		47		23		503		502		71		27		600
Odefsey	257		74		11		343		276		86		12		374
Stribild	18		5		2		25		22		7		3		32
Truvada	15		3		4		22		24		3		2		30
Revenue share - Symtuza(1)	96		32		3		131		85		40		4		130
Other HIV(2)	10		3		—		13		1		6		5		12
Total HIV	3,807		519		341		4,667		3,661		541		285		4,487
Oncology
Cell Therapy
Tecartus	64		27		4		96		60		20		1		81
Yescarta	197		154		40		391		210		91		16		317
Total Cell Therapy	261		181		45		486		270		111		17		398

Trodelvy	201		62		21		283		139		38		3