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How Is Celgene Positioned after Its 3Q17 Earnings?

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How Is Celgene Positioned after Its 3Q17 Earnings? PART 1 OF 5

How Did Celgene Perform in 3Q17?

Celgene’s revenue trends

In 3Q17, Celgene (CELG) generated revenues of $3.3 billion, which reflected ~10.0% growth year-over-year (or YoY) and 1.0% growth quarter-over-quarter. In 3Q17, Celgene reported GAAP1 net income of $988.0 million compared to $171.0 million in 3Q16. 

In 3Q17, Celgene reported adjusted net income of ~$1.6 billion, which reflects ~23.0% growth YoY.

How Did Celgene Perform in 3Q17?

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In 3Q17, Celgene reported GAAP diluted earnings per share (or EPS) of $1.21 compared to $0.21 in 3Q16. In 3Q17, Celgene reported adjusted EPS of $1.91, which reflected ~21.0% growth on a YoY basis.

In 3Q17, Celgene reported an operating margin of ~59.5%. In 3Q17, the company reported operating income of $1.1 billion compared to $412.0 million in 3Q16.

In 3Q17, Celgene’s Revlimid, Pomalyst, and Otezla primarily pushed its revenue growth. In 3Q17, Revlimid, Pomalyst, and Otezla witnessed 10.0%, 22.0%, and 12.0% growth, respectively, on a YoY basis. During the third quarter, Celgene’s Idhifa, Thalomid, Istodax, and Vidaza together generated revenues of ~$226.0 million. 

Celgene’s multiple myeloma franchise competes with Takeda Pharmaceuticals’ Velcade, Novartis’s Farydak, Bristol-Myers Squibb’s Empliciti, and Johnson & Johnson’s Darzalex. Among Celgene’s competitors in the multiple myeloma drugs market, Amgen (AMGN), Bristol-Myers Squibb (BMY), Novartis (NVS), and Johnson & Johnson (JNJ) reported revenues of ~$5.8 billion, ~$5.3 billion, ~$12.4 billion, and $19.3 billion, respectively in 3Q17.

Celgene comprises ~1.3% of the PowerShares QQQ Trust ETF’s (QQQ) total portfolio holdings.

3Q17 expenses

In 3Q17, Celgene reported its cost of goods sold at ~$118.0 million compared to ~$108.0 million in 3Q16. In 3Q17, Celgene reported R&D (research and development) expenses and SG&A2 expenses of $1.3 billion and $608.0 million, respectively, compared to ~$1.7 billion and $698.0 million in 3Q16.

Revenue guidance after 3Q17

After 3Q17, Celgene reduced the previous revenue estimates of Otezla from $1.5 billion–$1.7 billion to ~$1.3 billion. After 3Q17, Celgene anticipates total revenues from product sales to be ~$13.0 billion.

Celgene updated its GAAP operating margin from ~41.5% to 37.5%. It updated its GAAP diluted EPS from $5.36–$5.62 to $4.78–$5.19. The company also updated its previous adjusted diluted EPS from $7.25–$7.35 to $7.30–$7.35.

  1. generally accepted accounting principles
  2. selling, general, and administrative
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