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Bristol-Myers Squibb’s Valuation Is Improving from 2016 Levels

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Part 8
Bristol-Myers Squibb’s Valuation Is Improving from 2016 Levels PART 8 OF 8

Changes in Bristol-Myers Squibb’s Profitability in 2016

Bristol-Myers Squibb’s profitability

Bristol-Myers Squibb (BMY) reported a rise of 17% in revenue to ~$19.4 billion in 2016, compared to $16.6 billion in 2015. 

The company reported a net profit of ~$4.5 million in 2016, compared to a profit of $1.6 billion in 2015.

Changes in Bristol-Myers Squibb’s Profitability in 2016

Changes in Bristol-Myers Squibb’s Profitability in 2016

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The company’s 2016 revenue included $17.7 billion from net product sales and $1.7 billion from alliances and other revenues. In 2015, BMY’s net product sales were $14.0 billion, and its alliance and other revenues brought in $2.5 billion.

Expenses and profit margins

BMY’s gross margin was 74.5% in 2016, compared to 76.4% in 2015. The fall was partly due to higher revenue sharing on Eliquis sales and a higher excise tax in Puerto Rico.

The company’s research and development expenses fell to $4.9 billion in 2016, compared to $5.9 billion in 2015. The fall was due to lower spending on clinical trials and research alliances for Opdivo and other drugs in the pipeline during 2Q16 and 4Q16.

BMY’s marketing, selling, and administrative expenses rose 1.4% to $4.9 billion in 2016 due to a rise in overall spending on Opdivo, Empliciti, Eliquis, and other products. The company’s other income was reported to be $1.3 billion in 2016, compared to $187 million in 2015.

To divest risk, investors can consider ETFs such as the Guggenheim S&P Equal Weight Health Care ETF (RYH), which holds 1.4% of its total assets in Bristol-Myers Squibb, 1.9% in Allergan (AGN), 1.8% in Eli Lilly (LLY), 1.7% in Becton, Dickinson and Company (BDX), and 1.7% in Mylan (MYL).

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