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A Look at Gilead Sciences’ Financial Performance

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Gilead Sciences’ (GILD) total revenues decreased from $6.5 billion in Q1 2017 to $5.1 billion in Q1 2018, primarily due to lower product sales. The company earns a small part of its revenues from royalty, contract, and other sources. While product sales were $6.3 billion in Q1 2017 and $5 billion in Q1 2018, royalty, contract, and other revenues were $128 million in Q1 2017 and $87 million in Q1 2018.

It incurred cost of goods sold of $957 million in Q1 2017 compared to $1 billion in Q1 2018.

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Operating expenses

Gilead Sciences incurred research and development expenses of $937 million in the first quarter compared to $931 million in Q1 2017. That increase was attributable to stock-based compensation expenses related to Gilead’s acquisition of Kite Pharma. The company’s selling, general, and administrative expenses increased from $850 million in 1Q17 to $997 million in 1Q18. The increase was mainly due to higher expenses to support product launches, including Biktarvy and Yescarta, increased expenses after the acquisition of Kite, and geographic expansion.

Its total costs and expenses increased from $2.7 billion in Q1 2017 to $2.9 billion in Q1 2018. As a result of the decrease in revenues, operating income decreased from $3.8 billion in Q1 2017 to $2.2 billion in Q1 2018.

Bottom line

Gilead Sciences incurred interest expenses of $290 million in Q1 2018 compared to $261 million in Q1 2017. It generated net income of $1.5 billion in Q1 2018 compared to $2.7 billion in Q1 2017. That translates to a net income per share of $1.17 in Q1 2018 compared to $2.05 in Q1 2017.

The company declared a higher cash dividend of $0.57 in Q1 2018 compared to $0.52 in Q1 2017.

In the next part of this series, we’ll take a look at Gilead Sciences’ cash flow and valuation metrics.

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