Gilead Sciences Earnings 2019-09-30

GILD 10Q Quarterly Report

Balance Sheet	Income Statement	Cash Flow

Comparables ($MM TTM)
Ticker	M Cap	Assets	Liab	Rev	G Profit	Net Inc	EBITDA	EV	G Margin	EV/EBITDA	ROA
AMGN	113,199	59,373	48,579	23,562	19,133	7,958	11,144	138,288	81%	12.4	13%
GILD	85,862	63,210	40,594	22,357	17,630	5,957	10,182	100,705	79%	9.9	9%
BIIB	46,443	26,288	13,339	14,072	12,044	5,294	7,912	50,669	86%	6.4	20%
SGEN	10,884	1,568	296	758	0	-280	-258	10,820	0%	-42.0	-18%
NBIX	8,009	1,067	583	605	599	18	55	7,862	99%	142.2	2%
TECH	7,914	1,884	719	714	473	96	218	8,306	66%	38.0	5%
QGEN	7,622	5,748	3,113	0	0	0	0	8,637			0%
BLUE	6,843	2,023	387	57	55	-655	-638	6,507	97%	-10.2	-32%
MRNA	4,732	1,685	347	65	0	-268	-253	4,568	0%	-18.0	-16%
AUTL	3,969	254	22	0	0	-21	-23	3,752	0%	-161.3	-8%

Document

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, 2019



☐	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)	(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 29, 2019: 1,265,145,612

GILEAD SCIENCES, INC.

INDEX



PART I.	FINANCIAL INFORMATION		2

	Item 1.	Condensed Consolidated Financial Statements	2

		Condensed Consolidated Balance Sheets at September 30, 2019 and December 31, 2018 (unaudited)	2

		Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2019 and 2018 (unaudited)	3

		Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months Ended September 30, 2019 and 2018 (unaudited)	4

		Condensed Consolidated Statements of Stockholders’ Equity for the Three and Nine Months Ended September 30, 2019 and 2018 (unaudited)	5

		Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2019 and 2018 (unaudited)	7

		Notes to Condensed Consolidated Financial Statements (unaudited)	8

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	37

	Item 4.	Controls and Procedures	37

PART II.	OTHER INFORMATION		38

	Item 1.	Legal Proceedings	38

	Item 1A.	Risk Factors	38

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	50

	Item 3.	Defaults Upon Senior Securities	50

	Item 4.	Mine Safety Disclosures	50

	Item 5.	Other Information	50

	Item 6.	Exhibits	50

SIGNATURES			54

We own or have rights to various trademarks, copyrights and trade names used in our business, including the following: GILEAD^®, GILEAD SCIENCES^®, AMBISOME^®, ATRIPLA^®, BIKTARVY^®, CAYSTON^®, COMPLERA^®, DESCOVY^®, DESCOVY FOR PREP^™, EMTRIVA^®, EPCLUSA^®, EVIPLERA^®, GENVOYA^®, HARVONI^®, HEPSERA^®, LETAIRIS^®, ODEFSEY^®, RANEXA^®, SOVALDI^®, STRIBILD^®, TRUVADA^®, TRUVADA FOR PREP^®, TYBOST^®, VEMLIDY^®, VIREAD^®, 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. TAMIFLU^® is a registered trademark of Hoffmann-La Roche Inc. This report also includes other trademarks, service marks and trade names of other companies.

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, 2019		December 31, 2018
Assets
Current assets:
Cash and cash equivalents	$	9,474	$	17,940
Short-term marketable securities	13,382		12,149
Accounts receivable, net of allowances of $613 and $583, respectively	3,315		3,327
Inventories	882		814
Prepaid and other current assets	1,308		1,606
Total current assets	28,361		35,836
Property, plant and equipment, net	4,377		4,006
Long-term marketable securities	2,195		1,423
Intangible assets, net	14,864		15,738
Goodwill	4,117		4,117
Other long-term assets	5,232		2,555
Total assets	$	59,146	$	63,675
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	632	$	790
Accrued government and other rebates	3,652		3,928
Other accrued liabilities	2,785		3,139
Current portion of long-term debt and other obligations, net	2,498		2,748
Total current liabilities	9,567		10,605
Long-term debt, net	22,090		24,574
Long-term income taxes payable	5,852		5,922
Other long-term obligations	901		1,040
Commitments and contingencies (Note 11)
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; 1,266 and 1,282 shares issued and outstanding, respectively	1		1
Additional paid-in capital	2,870		2,282
Accumulated other comprehensive income	117		80
Retained earnings	17,616		19,024
Total Gilead stockholders’ equity	20,604		21,387
Noncontrolling interest	132		147
Total stockholders’ equity	20,736		21,534
Total liabilities and stockholders’ equity	$	59,146	$	63,675

See accompanying notes.

GILEAD SCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

(in millions, except per share amounts)



	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2019			2018			2019			2018
Revenues:
Product sales	$	5,516		$	5,455		$	16,323		$	15,996
Royalty, contract and other revenues	88			141			247			336
Total revenues	5,604			5,596			16,570			16,332
Costs and expenses:
Cost of goods sold	1,035			1,086			2,992			3,283
Research and development expenses	4,990			939			7,207			3,068
Selling, general and administrative expenses	1,052			948			3,177			2,925
Total costs and expenses	7,077			2,973			13,376			9,276
Income (loss) from operations	(1,473		)	2,623			3,194			7,056
Interest expense	(250		)	(264		)	(752		)	(820		)
Other income (expense), net	222			305			817			547
Income (loss) before provision (benefit) for income taxes	(1,501		)	2,664			3,259			6,783
Provision (benefit) for income taxes	(333		)	565			584			1,326
Net income (loss)	(1,168		)	2,099			2,675			5,457
Net income (loss) attributable to noncontrolling interest	(3		)	2			(15		)	5
Net income (loss) attributable to Gilead	$	(1,165	)	$	2,097		$	2,690		$	5,452

Net income (loss) per share attributable to Gilead common stockholders - basic	$	(0.92	)	$	1.62		$	2.12		$	4.19
Shares used in per share calculation - basic	1,267			1,296			1,271			1,302
Net income (loss) per share attributable to Gilead common stockholders - diluted	$	(0.92	)	$	1.60		$	2.10		$	4.15
Shares used in per share calculation - diluted	1,267			1,307			1,278			1,313

See accompanying notes.

GILEAD SCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(unaudited)

(in millions)



	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2019			2018			2019			2018
Net income (loss)	$	(1,168	)	$	2,099		$	2,675		$	5,457
Other comprehensive income (loss):
Net foreign currency translation gain (loss), net of tax	(27		)	1			(19		)	(17		)
Available-for-sale debt securities:
Net unrealized gain, net of tax	4			31			53			25
Reclassifications to net income, net of tax	—			—			—			4
Net change	4			31			53			29
Cash flow hedges:
Net unrealized gain (loss), net of tax	70			(6		)	99			51
Reclassifications to net income, net of tax	(32		)	8			(96		)	101
Net change	38			2			3			152
Other comprehensive income	15			34			37			164
Comprehensive income (loss)	(1,153		)	2,133			2,712			5,621
Comprehensive income (loss) attributable to noncontrolling interest	(3		)	2			(15		)	5
Comprehensive income (loss) attributable to Gilead	$	(1,150	)	$	2,131		$	2,727		$	5,616

See accompanying notes.

GILEAD SCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(unaudited)

(in millions, except per share amounts)



	Three Months Ended September 30, 2019
	Gilead Stockholders’ Equity												Noncontrolling Interest			Total Stockholders’ Equity
	Common Stock				Additional Paid-In Capital			Accumulated Other Comprehensive Income		Retained Earnings
	Shares		Amount		Additional Paid-In Capital			Accumulated Other Comprehensive Income		Retained Earnings
Balance at June 30, 2019	1,267		$	1	$	2,684		$	102	$	19,829		$	135		$	22,751
Net loss	—		—		—			—		(1,165		)	(3		)	(1,168		)
Other comprehensive income, net of tax	—		—		—			15		—			—			15
Issuances under employee stock purchase plan	1		—		27			—		—			—			27
Issuances under equity incentive plans	2		—		10			—		—			—			10
Stock-based compensation	—		—		160			—		—			—			160
Repurchases of common stock	(4	)	—		(11		)	—		(241		)	—			(252		)
Dividends declared ($0.63 per share)	—		—		—			—		(807		)	—			(807		)
Balance at September 30, 2019	1,266		$	1	$	2,870		$	117	$	17,616		$	132		$	20,736



	Nine Months Ended September 30, 2019
	Gilead Stockholders’ Equity												Noncontrolling Interest			Total Stockholders’ Equity
	Common Stock				Additional Paid-In Capital			Accumulated Other Comprehensive Income		Retained Earnings
	Shares		Amount		Additional Paid-In Capital			Accumulated Other Comprehensive Income		Retained Earnings
Balance at December 31, 2018	1,282		$	1	$	2,282		$	80	$	19,024		$	147		$	21,534
Net income (loss)	—		—		—			—		2,690			(15		)	2,675
Other comprehensive income, net of tax	—		—		—			37		—			—			37
Issuances under employee stock purchase plan	2		—		90			—		—			—			90
Issuances under equity incentive plans	8		—		92			—		—			—			92
Stock-based compensation	—		—		479			—		—			—			479
Repurchases of common stock	(26	)	—		(73		)	—		(1,675		)	—			(1,748		)
Dividends declared ($1.89 per share)	—		—		—			—		(2,431		)	—			(2,431		)
Cumulative effect from the adoption of new leases standard (Note 1)	—		—		—			—		8			—			8
Balance at September 30, 2019	1,266		$	1	$	2,870		$	117	$	17,616		$	132		$	20,736

See accompanying notes.

GILEAD SCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (CONTINUED)

(unaudited)

(in millions, except per share amounts)



	Three Months Ended September 30, 2018
	Gilead Stockholders’ Equity									Noncontrolling Interest		Total Stockholders’ Equity
	Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Income		Retained Earnings
	Shares	Amount		Additional Paid-In Capital		Accumulated Other Comprehensive Income		Retained Earnings
Balance at June 30, 2018	1,296	$	1	$	1,844	$	2	$	19,825	$	62	$	21,734
Change in noncontrolling interest	—	—		—		—

Closing Price ($)	Shares Out (MM)	Market Cap ($MM)
$0.00	1,280	$85,862

10-Q	2019-11-05	Quarter: 2019-09-30
10-Q	2019-08-06	Quarter: 2019-06-30
10-Q	2019-05-08	Quarter: 2019-03-31
10-K	2019-02-26	Annual: 2018-12-31
10-Q	2018-11-06	Quarter: 2018-09-30
10-Q	2018-08-06	Quarter: 2018-06-30
10-Q	2018-05-09	Quarter: 2018-03-31
10-K	2018-02-27	Annual: 2017-12-31
10-Q	2017-11-07	Quarter: 2017-09-30
10-Q	2017-08-07	Quarter: 2017-06-30
10-Q	2017-05-10	Quarter: 2017-03-31
10-K	2017-02-27	Annual: 2016-12-31
10-Q	2016-11-07	Quarter: 2016-09-30
10-Q	2016-08-05	Quarter: 2016-06-30
10-Q	2016-05-06	Quarter: 2016-03-31
10-K	2016-02-24	Annual: 2015-12-31
10-Q	2015-11-04	Quarter: 2015-09-30
10-Q	2015-08-05	Quarter: 2015-06-30
10-Q	2015-05-08	Quarter: 2015-03-31
10-K	2015-02-25	Annual: 2014-12-31
10-Q	2014-11-05	Quarter: 2014-09-30
10-Q	2014-08-04	Quarter: 2014-06-30
10-Q	2014-05-07	Quarter: 2014-03-31
10-K	2014-02-25	Annual: 2013-12-31
10-Q	2013-10-31	Quarter: 2013-09-30
10-Q	2013-08-01	Quarter: 2013-06-30
10-Q	2013-05-08	Quarter: 2013-03-31
10-K	2013-02-27	Annual: 2012-12-31
10-Q	2012-11-06	Quarter: 2012-09-30
10-Q	2012-08-01	Quarter: 2012-06-30
10-Q	2012-05-04	Quarter: 2012-03-31
10-Q	2011-11-04	Quarter: 2011-09-30
10-Q	2011-08-05	Quarter: 2011-06-30
10-Q	2011-05-09	Quarter: 2011-03-31
10-K	2011-02-28	Annual: 2010-12-31
10-Q	2010-11-08	Quarter: 2010-09-30
10-Q	2010-08-09	Quarter: 2010-06-30
10-Q	2010-05-10	Quarter: 2010-03-31
10-K	2010-03-01	Annual: 2009-12-31

8-K	2019-10-24	Earnings, Exhibits
8-K	2019-10-15	Officers, Exhibits
8-K	2019-08-23	Other Events, Exhibits
8-K	2019-07-30	Earnings, Exhibits
8-K	2019-07-17	Officers, Exhibits
8-K	2019-07-17	Officers, Exhibits
8-K	2019-07-14	Enter Agreement, Exhibits
8-K	2019-05-23	Officers, Exhibits
8-K	2019-05-08	Amend Bylaw, Shareholder Vote, Exhibits
8-K	2019-05-02	Earnings, Exhibits
8-K	2019-04-30	Officers, Exhibits
8-K	2019-03-01	Officers
8-K	2019-02-04	Earnings, Exhibits
8-K	2018-12-10	Officers, Exhibits
8-K	2018-10-25	Earnings, Exhibits
8-K	2018-09-12	Officers
8-K	2018-08-06	Officers, Exhibits
8-K	2018-07-25	Earnings, Exhibits
8-K	2018-07-23	Officers, Exhibits
8-K	2018-05-09	Officers, Shareholder Vote, Exhibits
8-K	2018-05-01	Earnings, Exhibits
8-K	2018-02-06	Earnings, Exhibits
8-K	2018-01-31	Officers, Exhibits

EX-10.5	gildq32019ex105.htm
EX-10.19	gildq32019ex1019.htm
EX-10.20	gildq32019ex1020.htm
EX-10.24	gildq32019ex1024.htm
EX-10.30	gildq32019ex1030.htm
EX-10.31	gildq32019ex1031.htm
EX-10.50	gildq32019ex1050.htm
EX-31.1	gildq32019ex311.htm
EX-31.2	gildq32019ex312.htm
EX-32	gildq32019ex32.htm