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Gilead Sciences - $GILD - Earnings Analysis: Strong growth in HIV, Oncology, and Liver Disease portfolios.

By sagebytes in Business —

Business Model

Gilead Sciences generates revenue from the sale of pharmaceutical products, primarily in the areas of HIV, Liver Disease, Oncology, and Other therapeutic areas, along with royalty, contract and other revenues.

Revenue Sources

  • HIV Product Sales: Driven by Biktarvy and Descovy.
  • Liver Disease Portfolio: Including products for HBV, HDV, and PBC (Livdelzi).
  • Oncology: Driven by Cell Therapy (Yescarta and Tecartus) and Trodelvy.
  • Veklury (remdesivir): Sales related to COVID-19 treatment.

Income Statement Analysis

  • Total Revenues increased by 6.38% from Q4 2023 to Q4 2024, driven by higher sales in HIV, Oncology, and Liver Disease.
  • Cost of Goods Sold decreased by 24.35% from Q4 2023 to Q4 2024, contributing to higher gross profit.
  • Research and Development Expenses increased by 16.55% reflecting increased investment in the pipeline.
  • Acquired In-Process Research and Development Expenses saw a significant decrease, impacting operating income positively.
  • Selling, General, and Administrative Expenses increased by 18.53%, driven by litigation accrual and launch preparation activities.
  • Operating Income increased by 52.05% from Q4 2023 to Q4 2024, primarily due to higher revenues and lower cost of goods sold.
  • Net Income Attributable to Gilead increased by 24.77% from Q4 2023 to Q4 2024, reflecting higher operating income.
  • Basic Earnings per Share Attributable to Gilead increased by 24.35% from Q4 2023 to Q4 2024, aligning with the increase in net income.

Balance Sheet Analysis

  • Cash, Cash Equivalents and Marketable Debt Securities increased by 18.55%, indicating stronger liquidity.
  • Accounts Receivable, Net decreased by 5.15%.
  • Inventories increased by 6.63%.
  • Property, Plant and Equipment, Net increased by 1.83%.
  • Intangible Assets, Net decreased by 24.60%, potentially due to amortization and impairments.
  • Goodwill remained consistent year over year.
  • Other Assets increased by 31.03%.
  • Total Liabilities increased 0.94%, driven by decrease in Long Term Liabilities.
  • Total Assets decreased by 5.04%, indicating a reduction in the company's overall asset base.
  • Stockholders’ Equity decreased by 15.40%, potentially due to share repurchases and other equity transactions.

Cash Flow Analysis

  • Net Cash Provided by Operating Activities increased by 37.22%, driven by strong business performance.
  • Net Cash Used in Investing Activities decreased by 69.01%, potentially indicating fewer investments during the period.
  • Net Cash Used in Financing Activities showing big difference from previous year reflecting different financing activities.
  • Net Change in Cash and Cash Equivalents increased substantially by 1203.68%, reflecting improved cash position.
  • Cash and Cash Equivalents at End of Period increased by 64.19%, indicating a stronger financial position.

Capital Allocation

Gilead is committed to returning capital to shareholders, as evidenced by dividend payments and share repurchases. They also prioritize investments in their business both internally and externally through partnerships and business development transactions. For 2025, a 2.6% increase in the quarterly cash dividend was announced, and share repurchases will continue to offset equity dilution with opportunistic additional repurchases.

Management Commentary

Gilead delivered another exceptionally strong full year and fourth quarter, with growth in our base business product sales of 8% for 2024 and 13% year-over-year for the fourth quarter

From this foundation of commercial strength, we are planning for the potential launch of lenacapavir for HIV PrEP in Summer 2025, with its unique opportunity to extend the reach of HIV prevention.

This potential in HIV, along with our strong and diverse portfolio, and improved operational efficiencies, positions Gilead to deliver increasing patient impact and compelling shareholder returns in the years ahead.

During the fourth quarter 2024, Gilead issued senior unsecured notes in an aggregate principal amount of $3.5 billion

Overall Sentiment: Positive, reflecting confidence in current performance, future growth opportunities, and pipeline development.

Recommendation

Rating: Buy

Reason for Rating: Based on strong financial results, robust pipeline, and positive management outlook, Gilead shows potential for future growth and shareholder value.

Disclaimer: This report is for informational purposes only and not investment advice. The analysis is based on limited information and subject to change. Investing in securities involves risks, including potential loss of principal. Past performance doesn't guarantee future results. Always conduct your own research, understand the risks, and consult a financial professional before making investment decisions.

Generated on: 2/12/2025, 2:38:25 AM