Total revenues of $7.6 billion were much above the year-ago figure of $5 billion. Quarterly revenues were above the Zacks Consensus Estimate of $6.8 billion.
Quarter in Detail
Product sales were up 52% to approximately $7.4 billion driven by the inclusion of sales of hepatitis C virus (HCV) drug, Harvoni.
Antiviral product sales for the quarter registered growth of 55% to $7 billion driven by Harvoni. Harvoni recorded revenues of $3.6 billion, in the first quarter of 2015, up approximately 70% sequentially. Another HCV drug, Sovaldi, registered sales of $972 million, down 57.3% from the year-ago figure, owing to availability of newer HCV therapies.
Other anti-viral products, such as HIV treatments Complera/Eviplera (up 27.5% to $320 million) and Stribild (up 65.6% to $356 million) performed very well. Sales of older HIV drugs like Truvada (up 1.4% to $771 million) and Viread (up 10.9% to $234 million) were also impressive. However, Atripla sales declined 5.9% to $734 million. The company expects Atripla sales to continue to decline.
Other products including Letairis, Ranexa and AmBisome recorded sales of $151 million (up 22.8%), $117 million (up 5.4%) and $82 million (down 7.6%), respectively. Newly launched Zydelig also performed well, recording revenues of $26 million, up 52.9% sequentially.
Research & development (R&D) expenses (including stock-based compensation expenses) climbed 17.1% to $693 million in the first quarter of 2015 due to increased investment in pipeline. Selling, general and administrative (SG&A) expenses (including stock-based compensation expenses) increased 18.5% to $647 million. SG&A expenses shot up primarily due to the increase in expenses associated with HCV products.
2015 Guidance Revised
Gilead upped its product sales guidance. Gilead expects product sales in the range of $28–$29 billion (previous guidance: $26–$27 billion). The Zacks Consensus Estimate of $28 billion is at the low end of the guidance range.
Adjusted product gross margin for 2015 is projected in the range of 87–90%. R&D expenses (excluding stock-based compensation expenses and other special items) are projected in the range of $3–$3.3 billion. SG&A expenses are also projected in the range of $3 –$3.3 billion.
Meanwhile, the company declared its first quarterly dividend. Gilead has declared a quarterly cash dividend of 43 cents per share of common stock, to be paid on Jun 29, 2015, to all stockholders of record as of the close of business on the record date of Jun 16, 2015.
The company also repurchased shares worth $3.0 billion in the first quarter of 2015.
Gilead posted strong first-quarter results with both earnings and revenues beating our expectations. We expect investors to react positively to the news.
We are nevertheless concerned about additional pricing measures in the form of rebates and discounts which could lead to a slowdown in Harvoni sales in 2015. The anticipated continued decline in Atripla sales due to newer HIV therapies is also concerning.
We note that several companies including AbbVie Inc (NYSE:ABBV) have launched their HCV treatments in the market.
Going forward, we expect investor focus to remain on the ramp up of Harvoni. Additionally, we could see some merger & acquisition activity from the company.
Gilead currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the health care sector include Biogen Inc (NASDAQ:BIIB) and Cytori Therapeutics Inc (NASDAQ:CYTX). Both are Zacks Rank #1 (Strong Buy) stocks.