Gilead Raises Revenue and Non-GAAP Diluted EPS Guidance

Image Source: Gilead 

By Brian Nelson, CFA

On November 6, Gilead Sciences (GILD) reported better than expected third quarter results, with both revenue and non-GAAP earnings per share beating the consensus forecast. Total third quarter product sales advanced 7% on a year-over-year basis thanks to higher sales in HIV (+9%), Veklury (+9%), as well as in Oncology (+6%) and Liver Disease (+4%). Non-GAAP diluted earnings per share came in at $2.02 in the third quarter, down from $2.29 per share in the third quarter of last year due to higher acquired in-process research and development expense as well as higher tax expense.

Management had the following to say about the quarter:

Gilead’s third quarter results are the strongest of the year to date, with 7% year-over-year revenue growth, including 13% year-over-year growth for Biktarvy. Based on this very strong topline growth and disciplined operating expense management, we are increasing our full year revenue, operating income, and earnings per share guidance. We are excited to further increase our impact for patients and communities in the months ahead. This includes building on the momentum from the U.S. launch of Livdelzi for primary biliary cholangitis and preparing for the potential launch of the first twice-yearly option for HIV prevention option, lenacapavir.

During the third quarter, Gilead generated $4.3 billion in operating cash flow, up from $1.76 billion in the same period a year ago, and spent $140 million in capital spending, resulting in free cash flow of $4.17 billion in the quarter, up from $1.6 billion in the year-ago period. For the first nine months of 2024, free cash flow totaled $7.5 billion, up from $5.5 billion in the same period a year ago. In the quarter, the company paid dividends of $983 million and repurchased $300 million of common stock.

At the end of the quarter, Gilead had $5 billion in cash and marketable securities compared to $8.4 billion at the end of the year, the decline primarily due to its $3.9 billion acquisition of CymaBay Therapeutics. For the full year 2024, Gilead raised its guidance for product sales to the range of $27.8-$28.1 billion, up from $27.1-$27.5 billion previously. Non-GAAP diluted earnings per share is now targeted in the range of $4.25-$4.45, up from $3.60-$3.90 previously. We liked Gilead’s revenue growth in the quarter, as well as its raised financial outlook for 2024. The high end of our fair value estimate range stands at $111 per share.

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