Gilead Sciences (GILD) reported a 43% dip in earnings for the first quarter due to lower product sales and prescription trends. Higher competition and lower sales of certain hepatitis C products too impacted sales during the quarter. Despite the company reiterating its full-year guidance, shares of Gilead fell 5.60% in the aftermarket trading as earnings and revenue came in below street expectations.
With revenue tumbling 21.8% to $5.09 billion, the company saw a 43% drop in first-quarter earnings to $1.54 billion or $1.17 per share. Non-GAAP EPS plunged 33.6% to $1.48.
Revenue for the quarter was hurt by a dip in product sales and prescription trends. Lower sales of Harvoni and Sovaldi across all major markets and lower sales of Epclusa in the US due to increased competition hurt product sales.
On the other hand, HIV and HBV product sales rose 2%, primarily due to continued uptake of tenofovir alafenamide (TAF)-based products, which include Genvoya, Descovy, and Odefsey.
Looking ahead, the company reiterated its full-year 2018 net product sales outlook of $20 billion to $21 billion and EPS estimate of $1.41 to $1.51. The company continues to expect product gross margin of 85-87%, while R&D expenses are seen in the range of $3.40 billion to $3.60 billion.
The market has huge hopes for the company as HIV drugs are becoming more crucial to Gilead’s top-line and the hepatitis C market is stabilizing. More HIV patients are using regimens that contain a drug known as tenofovir alafenamide, or TAF.
Geographically, Gilead faced a weak quarter as product sales across the globe showed a dip. In the US, sales were down 22.2%, while it declined 23% in Europe and 29% in other locations. Hepatitis C products Harvoni, Sovaldi and Epclusa remained the culprits behind the drop in product sales.
During the first-quarter, Gilead generated $2.3 billion in operating cash flow, fully repaid the $4.5 billion term loans borrowed in connection with Kite purchase, utilized $1 billion on stock repurchases and paid cash dividends of $753 million.
Effective at the end of April 2018, Norbert Bischofberger will step down as the Executive Vice President and Chief Scientific Officer. John McHutchison, Executive Vice President, Clinical Research, will succeed Bischofberger. Andrew Cheng, Executive Vice President, Clinical Research & Development Operations, has been appointed the Chief Medical Officer.
In a separate release, Gilead’s board of directors declared a cash dividend of $0.57 per share for the second quarter of 2018. The dividend is payable on June 28, 2018, to stockholders of record as on June 15, 2018.
Earlier, rival Biogen (BIIB) posted upbeat first-quarter earnings as its drug for spinal muscular atrophy as well as biosimilars drove revenue higher. Celgene (CELG) is scheduled to report first-quarter results on May 4 before the market opens, and analysts are expecting upbeat earnings and revenue.
Shares of Gilead closed Tuesday’s regular trading session up 0.46% at $72.56 on the Nasdaq. The stock had been trading between $63.76 and $89.54 for the past 52 weeks.