Key Takeaways
- Q1 revenue reached $6.96 billion, surpassing the Street’s $6.91 billion estimate.
- The company delivered adjusted earnings per share of $2.03, exceeding analyst projections of $1.91.
- Annual EPS outlook was revised downward to a loss between $0.65 and $1.05, versus previous guidance of $8.45 to $8.85 profit.
- Approximately $11.5 billion in IPR&D expenses from recent M&A activity triggered the outlook adjustment.
- Shares declined about 2% in extended trading and traded 1% lower at $132.60 during Friday’s premarket session.
Gilead Sciences delivered first-quarter results that exceeded analyst expectations, yet shareholders reacted negatively. The reason? A shocking downward revision to annual earnings projections that blindsided the investment community.
Shares retreated nearly 2% during Wednesday’s after-hours session and continued sliding, trading down 1% to $132.60 ahead of Friday’s opening bell.
The pharmaceutical giant reported first-quarter revenue of $6.96 billion, narrowly beating the consensus estimate of $6.91 billion. Its adjusted earnings per share of $2.03 also topped Wall Street’s $1.91 projection, according to data compiled by FactSet.
Following these solid results, the company increased its annual revenue projection to a range of $30 billion to $30.4 billion, an upgrade from its previous outlook of $29.6 billion to $30 billion.
However, the earnings forecast painted a starkly different picture.
Management now anticipates a full-year adjusted loss ranging from $0.65 to $1.05 per share. This represents a dramatic departure from the company’s prior guidance of $8.45 to $8.85 in profit. The Street had been modeling $8.65 in earnings.
The pharmaceutical company attributed this revision to approximately $11.5 billion in charges for in-process research and development assets, combined with incremental financing expenses stemming from its recent acquisition activity.
HIV Franchise Drives Growth
Biktarvy, Gilead’s leading HIV therapy, continued its strong performance. Revenue climbed 8% to reach $3.4 billion, representing approximately half of the company’s total sales. The company’s entire HIV franchise registered 10% growth compared to the prior-year period.
The company also significantly raised its sales projection for Yeztugo, its twice-daily injectable HIV prevention therapy, to $1 billion — a substantial increase from its previous $200 million forecast.
Some products underperformed expectations. Veklury, the company’s COVID-19 treatment, experienced a 52% sales decline to $144 million, reflecting reduced COVID-19 hospitalizations according to management.
Epclusa, a hepatitis C medication, generated $283 million compared to $346 million in the year-ago quarter. The company’s cell therapy division also weakened, declining approximately 12% to $407 million from $464 million previously.
Excluding Veklury revenue, total product sales increased 8% to $6.8 billion.
M&A Activity Behind Earnings Revision
Gilead has pursued an aggressive acquisition strategy throughout 2026. In February, the company announced plans to acquire Arcellx for $7.8 billion. The deal builds on an existing partnership with the Maryland-based biotechnology firm to jointly develop anitocabtagene autoleucel.
Late in March, the company reached an agreement to purchase privately held Ouro Medicine, bolstering its autoimmune disease pipeline. The following month brought another announcement: a deal to acquire Tubulis GmbH, enhancing the company’s antibody-drug conjugate platform.
The $11.5 billion IPR&D expense associated with these transactions is the primary factor behind the earnings guidance reversal.
Gilead’s current market capitalization stands at roughly $164.57 billion. The stock trades at a price-to-earnings multiple of 19.8x. Company insiders have sold approximately $10.6 million worth of shares during the past three months, with zero reported insider purchases over that timeframe.
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