Gilead Sciences — Third Quarter 2026 Earnings Summary

Financial Performance:

• Total product sales increased 13% year-over-year to $8.3 billion, driven by higher sales of HIV products, Trodelvy, and Livdelzi, partially offset by lower sales of Veklury and Cell Therapy products.
• Product sales excluding Veklury increased 16% year-over-year to $8.2 billion.
• Total revenues were $8.3 billion, compared to $7.8 billion in the same period in 2025, with lower royalty, contract, and other revenues primarily due to a non-recurring intellectual property sale revenue in the prior year.
• Diluted GAAP EPS was $1.94, down from $2.43 in the prior year, driven by net losses from equity securities, higher operating expenses, higher income tax expense, and lower royalty revenues.
• Non-GAAP diluted EPS was $2.55, up from $2.47 in the prior year, driven by higher product sales and lower acquired IPR&D expenses.
• Product gross margin was 81.0% (GAAP) and 88.1% (Non-GAAP), compared to 78.6% and 86.5% respectively in the prior year, primarily due to the expiration of a royalty-related obligation.
• Operating cash flow for the quarter was $5.0 billion; year-to-date operating cash flow was $11.2 billion.
• As of September 30, 2026, cash, cash equivalents, and marketable debt securities totaled $6.4 billion, down from $10.6 billion at December 31, 2025, due to $11.3 billion in acquisitions, $2.8 billion in debt repayments, $3.1 billion in dividends, and $1.1 billion in stock repurchases.
• Effective tax rate was 20.7% (GAAP) and 19.0% (Non-GAAP), compared to 16.2% and 17.5% respectively in the prior year.

Guidance and Future Outlook:

• Full-year 2026 product sales guidance raised to $31.0 billion to $31.3 billion (previously $30.1 billion to $30.4 billion).
• Full-year 2026 product sales excluding Veklury guidance raised to $30.7 billion to $31.0 billion (previously $29.8 billion to $30.1 billion).
• Full-year 2026 Veklury sales guidance remains at approximately $300 million.
• Full-year 2026 diluted GAAP loss per share guidance revised to $(4.40) to $(4.05) (previously $(3.75) to $(3.40)).
• Full-year 2026 non-GAAP diluted loss per share guidance revised to $(1.20) to $(0.85) (previously $(0.65) to $(0.30)).
• The full-year guidance includes the impact of approximately $9.88 per share in acquired IPR&D charges related to the Arcellx, Tubulis, Ouro Medicines, and PepStar transactions.
• Management raised full-year base business revenue guidance by a total of $1.6 billion since the start of 2026.

Business Segments and Product Lines:

• HIV product sales increased 18% year-over-year to $6.2 billion, driven by higher average realized price, demand in HIV prevention, and favorable inventory dynamics.
• Biktarvy sales increased 10% year-over-year to $4.1 billion.
• Descovy sales increased 49% year-over-year to $1.0 billion.
• Liver Disease portfolio sales increased 13% year-over-year to $927 million, driven by higher demand for Livdelzi and higher realized prices for chronic HCV and HBV products.
• Veklury sales decreased 69% year-over-year to $86 million due to lower COVID-19-related hospitalizations.
• Cell Therapy product sales decreased 18% year-over-year to $355 million due to ongoing competitive headwinds.
• Trodelvy sales increased 42% year-over-year to $506 million, driven by higher demand.
• Received FDA approval for Bixlenvo (bictegravir/lenacapavir) for the treatment of HIV in virologically suppressed adults.
• Expanded voluntary licensing agreements for lenacapavir to include investigational once-yearly HIV prevention in 120 high-incidence countries.
• Announced a new agreement with PAHO to accelerate access for twice-yearly lenacapavir for HIV prevention in Latin America and the Caribbean.
• Received European Commission marketing authorization for Trodelvy in combination with Keytruda for first-line treatment of metastatic triple-negative breast cancer.
• Announced a definitive agreement to acquire PepStar's oral IL-23R inhibitor program (HCXT-2001) for immune-mediated inflammatory diseases.
• Presented positive Phase 2 results for emvistegrast in ulcerative colitis, supporting initiation of a Phase 3 study in 2027.

Market and Competitive Landscape:

• HIV prevention sales nearly doubled year-over-year.
• Trodelvy is the only approved Trop-2 directed ADC and backbone therapy for first-line metastatic triple-negative breast cancer across PD-L1 status.
• Cell Therapy products face ongoing competitive headwinds.
• The Centers for Medicare and Medicaid Services completed setting the Maximum Fair Price for Biktarvy under Medicare, effective January 1, 2028.

Risks and Challenges:

• Risks include the ability to achieve full-year 2026 financial guidance and future projected results.
• Potential impacts from regulatory or legislative policies, including pricing reform under the Inflation Reduction Act and the Biktarvy Maximum Fair Price determination.
• Risks associated with the execution and realization of benefits from acquisitions, including the PepStar transaction.
• Clinical trial risks, including unfavorable results or delays for candidates such as anito-cel, emvistegrast, and lenacapavir.
• Potential disruptions to manufacturing and supply chains.
• Pricing and reimbursement pressures, including required rebates and discounts.
• Market share and price erosion from generic versions of Gilead products.
• Risks related to patent protection and estimated loss of exclusivity for products.

Management Commentary and Tone:

• CEO Daniel O'Day described the quarter as "exceptional," citing the strongest year-over-year base business growth in more than a decade.
• Management highlighted the strength, breadth, and durability of the business, noting the HIV business grew 18% and HIV prevention sales nearly doubled.
• Management expressed confidence that Gilead is well-positioned for business growth and impact for patients with multiple ongoing and potential launches across HIV and Oncology, progress in Inflammation, and a disciplined operating model.

Other Key Points:

• Gilead paid $1.0 billion in dividends and repurchased $370 million of common stock during the third quarter.
• The Board declared a quarterly dividend of $0.82 per share for the fourth quarter of 2026, payable on December 30, 2026.
• Gilead opened a new Research Center to expand capabilities in oncology, inflammation, and research data science, the first of three projects supporting a $32 billion investment in U.S. R&D and manufacturing through 2030.
• Acquired IPR&D expenses for the quarter were $18 million.
• R&D expenses increased to $1.6 billion (GAAP) and $1.59 billion (Non-GAAP) compared to $1.3 billion in the prior year.
• SG&A expenses increased to $1.6 billion (GAAP) and $1.5 billion (Non-GAAP) compared to $1.4 billion in the prior year.