Gilead Sciences Announces First Quarter 2014 Financial Results

  Gilead Sciences Announces First Quarter 2014 Financial Results                        - Product Sales of $4.87 billion -                        - Sovaldi Sales of $2.27 billion -                       - Non-GAAP EPS of $1.48 per share -                      - Reiterates Full Year 2014 Guidance -  Business Wire  FOSTER CITY, Calif. -- April 22, 2014  Gilead Sciences, Inc. (Nasdaq: GILD) announced today its results of operations for the quarter ended March 31, 2014. Total revenues for the first quarter of 2014 increased to $5.00 billion from $2.53 billion for the first quarter of 2013. Product sales increased to $4.87 billion for the first quarter of 2014 compared to $2.39 billion for the first quarter of 2013. Net income for the first quarter of 2014 was $2.23 billion, or $1.33 per diluted share compared to $722.2 million, or $0.43 per diluted share for the first quarter of 2013. Non-GAAP net income for the first quarter of 2014, which excludes acquisition-related, restructuring and stock-based compensation expenses, was $2.49 billion, or $1.48 per diluted share compared to $801.9 million, or $0.48 per diluted share for the first quarter of 2013.                                                                                           Three Months Ended                                              March 31, (In thousands, except per share amounts)    2014             2013 Product sales                                $  4,870,974     $  2,393,568 Royalty, contract and other revenues         127,982          138,067 Total revenues                               $   4,998,956    $   2,531,635                                                                 Net income attributable to Gilead            $   2,227,410     $   722,186 Non-GAAP net income attributable to Gilead   $   2,487,809     $   801,943                                                                 Diluted EPS                                  $   1.33          $   0.43 Non-GAAP diluted EPS                         $   1.48          $   0.48                                                                      Product Sales  Compared to the first quarter of 2013, U.S. product sales for the first quarter of 2014 increased to $3.63 billion from $1.40 billion and Europe product sales increased to $1.02 billion from $818.3 million.  Antiviral Product Sales  Antiviral product sales increased to $4.51 billion for the first quarter of 2014, up from $2.06 billion for the first quarter of 2013 largely due to sales of Sovaldi^® (sofosbuvir 400 mg), which launched in December 2013, and increases in sales of Stribild^® (elvitegravir 150 mg/cobicistat 150 mg/emtricitabine 200 mg/tenofovir disoproxil fumarate 300 mg)and Complera/Eviplera^® (emtricitabine 200 mg/rilpivirine 25 mg/tenofovir disoproxil fumarate 300 mg). This increase was partially offset by a decrease in wholesaler and sub-wholesaler inventories in the United States associated primarily with our HIV products, which also impacted antiviral product sales in the first quarter of 2014 compared to the fourth quarter of 2013.                                                                                                          Three Months Ended                                     March 31, (In thousands, except               2014            2013             % Change percentages) Antiviral product sales             $  4,508,497    $  2,061,078    119    % Sovaldi                             2,274,349        —                —      % Atripla                             779,594          877,073          (11  ) % Truvada                             759,700          700,242          8      % Complera/Eviplera                   250,733          148,189          69     % Stribild                            215,271          92,148           134    % Viread                              210,625          210,332          —      %                                                                                Cardiovascular Product Sales  Cardiovascular product sales increased to $234.5 million for the first quarter of 2014, up from $214.4 million for the first quarter of 2013 primarily driven by strong Ranexa^® (ranolazine) sales.                                                                                                    Three Months Ended                                      March 31, (In thousands, except percentages)   2014        2013         % Change Cardiovascular product sales         $ 234,503    $ 214,393    9    % Letairis                             122,885      118,107      4    % Ranexa                               111,618      96,286       16   %                                                                       Operating Expenses and Other  During the first quarter of 2014, compared to the same period in 2013:    *Non-GAAP research and development (R&D) expenses increased due to the     progression of Gilead's clinical studies, particularly in oncology and     HIV.   *Non-GAAP selling, general and administrative (SG&A) expenses increased to     support the expansion of Gilead's business, particularly in hepatitis C     virus (HCV) and in preparation for the anticipated launch of idelalisib.                                                                                                                 Three Months Ended                                                         March 31, (In thousands)                                          2014        2013 Non-GAAP research and development expenses              $ 557,805    $ 459,976 Non-GAAP selling, general and administrative expenses   $ 500,105    $ 333,064  Note: Non-GAAP R&D and SG&A expenses exclude the impact of acquisition-related, restructuring and stock-based compensation expenses.  Cash, Cash Equivalents and Marketable Securities  As of March31, 2014, Gilead had $6.86 billion of cash, cash equivalents and marketable securities compared to $2.57 billion as of December31, 2013. This increase was primarily due to the issuance of senior unsecured notes in March 2014 for a total aggregate principal amount of $4.00 billion. These proceeds will be for general corporate purposes, which may include the repayment of debt and related payments, working capital and the repurchase of outstanding common stock under the authorized share repurchase program. During the first three months of 2013, Gilead generated $1.57 billion in operating cash flow.  Full Year 2014 Guidance  Gilead reiterates its full year 2014 guidance, initially provided on February 4, 2014, which excludes the impact of Sovaldi product sales:                                                                                                                           Provided (In millions, except percentages and per share amounts)                                                              February 4, 2014 Net Product Sales                                            $11,300 - $11,500 Non-GAAP* Product Gross Margin                                         75% - 77% R&D                                                          $2,200 - $2,300 SG&A                                                         $2,100 - $2,200 Effective Tax Rate                                           28% - 29%                                                               Diluted EPS Impact of Acquisition-Related, Restructuring     $0.63 - $0.66 and Stock-Based Compensation Expenses  * Non-GAAP product gross margin, expenses and effective tax rate exclude the impact of acquisition-related, restructuring and stock-based compensation expenses, where applicable.  Product & Pipeline Updates Announced by Gilead During the First Quarter of 2014 Include:  Antiviral Program    *The European Commission granted marketing authorization for Sovaldi in     combination with other antiviral agents ribavirin and pegylated interferon     alpha in all 28 countries of the European Union.   *Submitted a New Drug Application (NDA) to the U.S. Food and Drug     Administration (FDA) for a once-daily fixed-dose combination of the NS5A     inhibitor ledipasvir (LDV) 90 mg and the nucleotide analog polymerase     inhibitor sofosbuvir (SOF) 400 mg for the treatment of chronic hepatitis C     genotype 1 infection in adults for eight or 12 weeks, depending on prior     treatment history and whether they have cirrhosis. The FDA has assigned     LDV/SOF a Breakthrough Therapy designation, which is granted to     investigational medicines that may offer major advances in treatment over     existing options. The FDA has set a target review date under the     Prescription Drug User Fee Act (PDUFA) of October 10, 2014.   *Announced that the company’s Marketing Authorisation Application for     LDV/SOF has been fully validated and is now under assessment by the     European Medicines Agency. The application was submitted on February 27,     2014.  Oncology Program    *Announced FDA acceptance for review of the company’s NDA for idelalisib, a     targeted, oral inhibitor of PI3K delta, for the treatment of relapsed     chronic lymphocytic leukemia with priority review and a target review date     under PDUFA of August 6, 2014 and for the treatment of refractory indolent     non-Hodgkin’s lymphoma with a standard review and a target review date     under PDUFA of September 11, 2014.  Conference Call  At 4:15 p.m. Eastern Time today, Gilead's management will host a conference call and a simultaneous webcast to discuss results from its first quarter 2014 as well as provide a general business update. To access the webcast live via the internet, please connect to the company's website at www.gilead.com 15 minutes prior to the conference call to ensure adequate time for any software download that may be needed to hear the webcast. Alternatively, please call 1-844-795-1482 (U.S.) or 1-931-229-4695 (international) and dial the conference ID 17493454 to access the call.  A replay of the webcast will be archived on the company's website for one year, and a phone replay will be available approximately two hours following the call through April 24, 2014. To access the phone replay, please call 1-855-859-2056 (U.S.) or 1-404-537-3406 (international) and dial the conference ID 17493454.  About Gilead  Gilead Sciences is a biopharmaceutical company that discovers, develops and commercializes innovative therapeutics in areas of unmet medical need. The company's mission is to transform and simplify care for people with life-threatening illnesses around the word. Headquartered in Foster City, California, Gilead has operations in North and South America, Europe and Asia-Pacific.  Non-GAAP Financial Information  Gilead has presented certain financial information in accordance with U.S. generally accepted accounting principles (GAAP) and also on a non-GAAP basis. Management believes this non-GAAP information is useful for investors, when considered in conjunction with Gilead's GAAP financial statements, because management uses such information internally for its operating, budgeting and financial planning purposes. Non-GAAP information is not prepared under a comprehensive set of accounting rules and should only be used to supplement an understanding of Gilead's operating results as reported under GAAP. A reconciliation between GAAP and non-GAAP financial information is provided in the table on pages 7 and 8.  Forward-looking Statements  Statements included in this press release that are not historical in nature are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Gilead cautions readers that forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially. These risks and uncertainties include: Gilead's ability to achieve its anticipated full year 2014 financial results; Gilead's ability to sustain growth in revenues for its antiviral, cardiovascular and respiratory programs; availability of funding for state AIDS Drug Assistance Programs (ADAPs); continued fluctuations in ADAP purchases driven by federal and state grant cycles which may not mirror patient demand and may cause fluctuations in Gilead's earnings; the possibility of unfavorable results from clinical trials involving sofosbuvir, including in combination with other product candidates such as LDV; the levels of inventory held by wholesalers and retailers which may cause fluctuations in Gilead's earnings; Gilead's ability to submit NDAs for new product candidates in the timelines currently anticipated; Gilead's ability to receive regulatory approvals in a timely manner or at all, for new and current products, including the fixed-dose combination of LDV/SOF and idelalisib; Gilead's ability to successfully commercialize its products, including Sovaldi, Stribild, Vitekta and Tybost; the risk that estimates of patients with HCV or anticipated patient demand may not be accurate; Gilead's ability to successfully develop its respiratory, cardiovascular and oncology/inflammation programs; safety and efficacy data from clinical studies may not warrant further development of Gilead's product candidates; the potential for additional austerity measures in European countries that may increase the amount of discount required on Gilead's products; fluctuations in the foreign exchange rate of the U.S. dollar that may cause an unfavorable foreign currency exchange impact on Gilead's future revenues and pre-tax earnings; and other risks identified from time to time in Gilead's reports filed with the U.S. Securities and Exchange Commission (SEC). In addition, Gilead makes estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosures. Gilead bases its estimates on historical experience and on various other market specific and other relevant assumptions that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ significantly from these estimates. You are urged to consider statements that include the words may, will, would, could, should, might, believes, estimates, projects, potential, expects, plans, anticipates, intends, continues, forecast, designed, goal, or the negative of those words or other comparable words to be uncertain and forward-looking. Gilead directs readers to its press releases, Annual Report on Form 10-K for the year ended December 31, 2013 and other subsequent disclosure documents filed with the SEC. Gilead claims the protection of the Safe Harbor contained in the Private Securities Litigation Reform Act of 1995 for forward-looking statements. All forward-looking statements are based on information currently available to Gilead, and Gilead assumes no obligation to update any such forward-looking statements.   Gilead owns or has rights to various trademarks, copyrights and trade names  used in our business, including the following: GILEAD^®, GILEAD SCIENCES^®, SOVALDI^®, STRIBILD^®, COMPLERA^®, EVIPLERA^®, TRUVADA^®, VIREAD^®, EMTRIVA^®,  TYBOST^®, HEPSERA^®, VITEKTA^®, LETAIRIS^®, RANEXA^®, CAYSTON^®, AMBISOME^®,                     VISTIDE^®, VOLIBRIS^®, and RAPISCAN^®.  ATRIPLA^® is a registered trademark belonging to Bristol-Myers Squibb& Gilead Sciences, LLC. LEXISCAN^® is a registered trademark belonging to Astellas U.S. LLC. MACUGEN^® is a registered trademark belonging to Eyetech, Inc. SUSTIVA^® is a registered trademark of Bristol-Myers Squibb Pharma Company. TAMIFLU^® is           a registered trademark belonging to Hoffmann-La Roche Inc.  For more information on Gilead Sciences, Inc., please visit www.gilead.com or call the Gilead Public Affairs Department at 1-800-GILEAD-5 (1-800-445-3235).   GILEAD SCIENCES, INC.  CONSOLIDATED STATEMENTS OF INCOME  (unaudited)  (in thousands, except per share amounts)                                                                                                 Three Months Ended                                                  March 31,                                                  2014           2013 Revenues: Product sales                                    $ 4,870,974     $ 2,393,568 Royalty, contract and other revenues             127,982        138,067      Total revenues                                   4,998,956      2,531,635    Costs and expenses: Cost of goods sold                               813,205         634,448 Research and development                         594,978         497,632 Selling, general and administrative              548,123        374,296      Total costs and expenses                         1,956,306      1,506,376    Income from operations                           3,042,650       1,025,259 Interest expense                                 (76,269     )   (81,787     ) Other income (expense), net                      (17,912     )   (3,324      ) Income before provision for income taxes         2,948,469       940,148 Provision for income taxes                       725,882        222,438      Net income                                       2,222,587       717,710 Net loss attributable to noncontrolling          4,823          4,476        interest Net income attributable to Gilead                $ 2,227,410    $ 722,186    Net income per share attributable to Gilead      $ 1.45         $ 0.47       common stockholders - basic Net income per share attributable to Gilead      $ 1.33         $ 0.43       common stockholders - diluted Shares used in per share calculation - basic     1,536,525      1,521,372    Shares used in per share calculation - diluted   1,679,871      1,665,060                                                                                   GILEAD SCIENCES, INC.  RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION  (unaudited)  (in thousands, except percentages and per share amounts)                                                                                                          Three Months Ended                                                      March 31,                                                      2014         2013 Cost of goods sold reconciliation: GAAP cost of goods sold                              $ 813,205     $ 634,448 Stock-based compensation expenses                    (2,642    )   (1,841    ) Acquisition related-amortization of purchased        (199,230  )   (21,264   ) intangibles Non-GAAP cost of goods sold                          $ 611,333    $ 611,343                                                                      Product gross margin reconciliation: GAAP product gross margin                            83.3      %   73.5      % Stock-based compensation expenses                    0.1       %   0.1       % Acquisition related-amortization of purchased        4.1       %   0.9       % intangibles Non-GAAP product gross margin^(1)                    87.4      %   74.5      %                                                                     Research and development expenses reconciliation: GAAP research and development expenses               $ 594,978     $ 497,632 Stock-based compensation expenses                    (34,350   )   (26,875   ) Restructuring expenses                               (145      )   (4,757    ) Acquisition related-contingent consideration         (2,678    )   (6,024    ) remeasurement Non-GAAP research and development expenses           $ 557,805    $ 459,976                                                                      Selling, general and administrative expenses reconciliation: GAAP selling, general and administrative expenses    $ 548,123     $ 374,296 Stock-based compensation expenses                    (45,233   )   (33,051   ) Restructuring expenses                               (3        )   (744      ) Acquisition related-transaction costs                (448      )   (7,156    ) Acquisition related-amortization of purchased        (2,334    )   (281      ) intangibles Non-GAAP selling, general and administrative         $ 500,105    $ 333,064  expenses                                                                     Operating margin reconciliation: GAAP operating margin                                60.9      %   40.5      % Stock-based compensation expenses                    1.6       %   2.4       % Restructuring expenses                               0.0       %   0.2       % Acquisition related-transaction costs                0.0       %   0.3       % Acquisition related-amortization of purchased        4.0       %   0.9       % intangibles Acquisition related-contingent consideration         0.1       %   0.2       % remeasurement Non-GAAP operating margin^(1)                        66.6      %   44.5      %                                                                     Other income (expense) reconciliation: GAAP other income (expense), net                     $ (17,912 )   $ (3,324  ) Acquisition related-transaction costs                (1,853    )   —          Non-GAAP other income (expense), net                 $ (19,765 )   $ (3,324  )                                                                                GILEAD SCIENCES, INC.  RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION - (Continued)  (unaudited)  (in thousands, except percentages and per share amounts)                                                                                                  Three Months Ended                                                  March 31,                                                  2014            2013 Effective tax rate reconciliation: GAAP effective tax rate                          24.6        %    23.7      % Restructuring expenses                           —           %    (0.1      )% Acquisition related-amortization of purchased    (1.4        )%   —         % intangibles Acquisition related-contingent consideration     —           %    (0.1      )% remeasurement Non-GAAP effective tax rate^(1)                  23.2        %    23.5      %                                                                    Net income attributable to Gilead reconciliation: GAAP net income attributable to Gilead, net of   $ 2,227,410      $ 722,186 tax Stock-based compensation expenses                63,136           45,380 Restructuring expenses                           148              5,368 Acquisition related-transaction costs            (975        )    7,156 Acquisition related-amortization of purchased    195,412          15,829 intangibles Acquisition related-contingent consideration     2,678           6,024      remeasurement Non-GAAP net income attributable to Gilead,      $ 2,487,809     $ 801,943  net of tax                                                                    Diluted earnings per share reconciliation: GAAP diluted earnings per share                  $ 1.33           $ 0.43 Stock-based compensation expenses                0.04             0.03 Restructuring expenses                           0.00             0.00 Acquisition related-transaction costs            (0.00       )    0.00 Acquisition related-amortization of purchased    0.12             0.01 intangibles Acquisition related-contingent consideration     0.00            0.00       remeasurement Non-GAAP diluted earnings per share^(1)          $ 1.48          $ 0.48                                                                        Shares used in per share calculation (diluted) reconciliation: GAAP shares used in per share calculation        1,679,871        1,665,060 (diluted) Share impact of current stock-based              (911        )    (1,716    ) compensation rules Non-GAAP shares used in per share calculation    1,678,960       1,663,344  (diluted)                                                                    Non-GAAP adjustment summary: Cost of goods sold adjustments                   $ 201,872        $ 23,105 Research and development expenses adjustments    37,173           37,656 Selling, general and administrative expenses     48,018           41,232 adjustments Other income (expense) adjustments               (1,853      )    —          Total non-GAAP adjustments before tax            285,210          101,993 Income tax effect                                (24,811     )    (22,236   ) Total non-GAAP adjustments after tax             $ 260,399       $ 79,757                                                                      ^(1) Amounts may not sum due to rounding.                                                                     GILEAD SCIENCES, INC.  CONDENSED CONSOLIDATED BALANCE SHEETS  (in thousands)                                                                                                              March 31,        December 31,                                                2014             2013^(1)                                                (unaudited) Cash, cash equivalents and marketable          $ 6,858,901      $ 2,570,590 securities Accounts receivable, net                       3,236,195        2,100,286 Inventories                                    2,140,228        2,055,788 Property, plant and equipment, net             1,303,029        1,166,181 Intangible assets, net                         11,707,830       11,900,106 Goodwill                                       1,171,561        1,169,023 Other assets                                   1,659,948       1,534,811     Total assets                                   $ 28,077,692    $ 22,496,785                                                                   Current liabilities                            $ 5,914,776      $ 6,325,421 Long-term liabilities                          8,414,955        4,363,032 Equity component of currently redeemable       45,767           63,831 convertible notes Stockholders’ equity^(2)                       13,702,194      11,744,501    Total liabilities and stockholders’ equity     $ 28,077,692    $ 22,496,785   ^(1) Derived from the audited consolidated financial statements as of December 31, 2013. ^(2) As of March 31, 2014, there were 1,537,642 shares of common stock issued and outstanding.   GILEAD SCIENCES, INC.  PRODUCT SALES SUMMARY  (unaudited)  (in thousands)                                                                                                  Three Months Ended                                                  March 31,                                                  2014           2013 Antiviral products: Sovaldi – U.S.                                   $ 2,097,791     $ — Sovaldi – Europe                                 163,691         — Sovaldi – Other International                    12,867         —                                                  2,274,349      —                                                                   Atripla – U.S.                                   489,929         553,826 Atripla – Europe                                 236,508         278,215 Atripla – Other International                    53,157         45,032                                                  779,594        877,073                                                                   Truvada – U.S.                                   367,782         307,861 Truvada – Europe                                 323,186         332,027 Truvada – Other International                    68,732         60,354                                                  759,700        700,242                                                                   Complera / Eviplera – U.S.                       130,426         103,297 Complera / Eviplera – Europe                     108,994         38,962 Complera / Eviplera – Other International        11,313         5,930                                                  250,733        148,189                                                                   Stribild – U.S.                                  187,090         91,978 Stribild – Europe                                23,630          — Stribild – Other International                   4,551          170                                                  215,271        92,148                                                                   Viread – U.S.                                    81,053          82,628 Viread – Europe                                  84,065          88,206 Viread – Other International                     45,507         39,498                                                  210,625        210,332                                                                   Hepsera – U.S.                                   2,230           12,950 Hepsera – Europe                                 7,718           11,223 Hepsera – Other International                    1,775          2,250                                                  11,723         26,423                                                                   Emtriva – U.S.                                   4,817           4,529 Emtriva – Europe                                 1,560           1,751 Emtriva – Other International                    125            391                                                  6,502          6,671                                                                   Total antiviral products – U.S.                  3,361,118       1,157,069 Total antiviral products – Europe                949,352         750,384 Total antiviral products – Other International   198,027        153,625                                                  4,508,497      2,061,078                                                                   Letairis                                         122,885         118,107 Ranexa                                           111,618         96,286 AmBisome                                         92,093          85,275 Other products                                   35,881         32,822                                                  362,477        332,490                                                                   Total product sales                              $ 4,870,974    $ 2,393,568  Contact:  Gilead Sciences, Inc. Robin Washington, 650-522-5688 (Investors) Patrick O'Brien, 650-522-1936 (Investors) Amy Flood, 650-522-5643 (Media)  
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