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Gilead Sciences: How 3Q17 Turned Out

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Gilead Sciences: How 3Q17 Turned Out PART 1 OF 5

How Gilead Sciences Performed in 3Q17

Gilead Sciences’ revenue trends

In 3Q17, Gilead Sciences (GILD) generated revenues of $6.5 billion, a ~13% fall YoY (year-over-year) and a ~9% fall QoQ (quarter-over-quarter). The company generated $6.4 billion from product sales and $110 million from royalty, contract, and other revenues.

In 3Q17, Gilead Sciences reported net income of $2.7 billion compared to $3.3 billion in 3Q16. In 3Q17, it reported non-GAAP (generally accepted accounting principles) diluted EPS (earnings per share) of $2.27 compared to $2.75 in 3Q16.

In 3Q17, Gilead Sciences reported a non-GAAP product gross margin of ~87.2% compared to ~87.6% in 3Q16.

How Gilead Sciences Performed in 3Q17

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3Q16 expenses

In 3Q17, Gilead Sciences reported cost of goods sold of $1.0 billion compared to $1.1 billion in 3Q16.

In 3Q17, it reported non-GAAP R&D (research and development) expenses and non-GAAP SG&A (selling, general, and administrative) expenses of $745 million and $806 million, respectively, compared to $981 million and $780 million, respectively, in 3Q16. The impact of $200 million in milestone expenses related to Nimbus Apollo in 2016 primarily contributed to the fall in R&D expenses in 3Q17. An increase in marketing expenses primarily contributed to the rise in non-GAAP SG&A expenses. The increase in marketing expenses in 3Q17 was partially offset by the decrease in the branded prescription drug fee.

Revenue guidance for 2017

Gilead Sciences anticipates revenues from net product sales in fiscal 2017 of $24.5 billion–$25.5 billion. After 3Q17, it anticipates non-HCV (hepatitis C virus) product sales of $16 billion–$16.5 billion and HCV product sales of $8.5 billion–$9.0 billion.

Recently, the FDA (US Food & Drug Administration) approved Gilead’s HCV drug Vosevi, which had revenues of $123 million in 3Q17. Vosevi competes with Johnson & Johnson’s (JNJ) Olysio, AbbVie’s (ABBV) Viekira and Technivie, Bristol-Myers Squibb’s (BMY) Daklinza, and Merck’s Zepatier. The SPDR S&P 500 ETF (SPY) invests ~0.44% of its total portfolio holdings in Gilead Sciences.

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