Gilead Sciences : View Second Quarter 2021 Supplementary Info

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)

						2019								2020							2021
(in millions)		Mar 31		Jun 30		Sep 30		Dec 31		Mar 31		Jun 30		Sep 30		Dec 31		Mar 31		Jun 30
Assets	$	30,125	$	30,234	$	25,051				$	24,314	$ 21,190	$	26,049				$	6,245	$	7,361
Cash, cash equivalents and marketable securities		$	25,840		$	7,910
Accounts receivable, net		3,283			3,396			3,315			3,582			3,907	3,194			3,913			4,892			3,925			4,149
Inventories		898			884			882			2,067			2,021	1,967			1,953			3,014			2,996			2,988
Property, plant and equipment, net		4,116			4,249			4,377			4,502			4,564	4,653			4,810			4,967			4,990			4,996
Intangible assets, net		15,438			15,152			14,864			13,786			13,502	13,225			12,939			33,126			34,781			34,341
Goodwill		4,117			4,117			4,117			4,117			4,117	4,117			4,117			8,108			8,334			8,334
Other assets		4,860			5,178			6,540			7,733			7,316		7,588			7,097			6,390			6,221			5,815
Total assets	$	62,837	$	63,210	$	59,146		$	61,627	$	59,741	$ 55,934	$	60,878		$	68,407	$	67,492	$	67,984
Liabilities and Stockholders' Equity
Current liabilities	$	9,397	$	8,961	$	9,567		$	9,759	$	8,879	$ 10,564	$	9,509		$	11,397	$	9,705	$	10,214
Long‐term liabilities		31,349			31,498			28,843			29,218			28,683	27,228			33,898			38,789			38,823			38,060
Stockholders' equity		22,091			22,751			20,736			22,650			22,179		18,142			17,471			18,221			18,964			19,710
Total liabilities and stockholders' equity	$	62,837		$	63,210		$	59,146		$	61,627		$	59,741		$ 55,934		$	60,878		$	68,407		$	67,492		$	67,984

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1

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS ‐ GAAP

(unaudited)

(in millions, except per share amounts)									2019													2020									2021
	Q1			Q2			Q3			Q4			FY19			Q1			Q2			Q3			Q4			FY20			Q1			Q2
Revenues:
Product sales	$	5,200	$	5,607	$	5,516	$	5,796		$	22,119	$	5,467	$	5,067	$	6,493	$	7,328		$	24,355	$	6,340	$	6,152
Royalty, contract and other revenues		81			78			88			83			330			81			76			84			93			334			83			65
Total revenues		5,281			5,685			5,604			5,879			22,449			5,548			5,143			6,577			7,421			24,689			6,423			6,217
Costs and expenses:
Cost of goods sold		957			1,000			1,035			1,683			4,675			969			1,064			1,141			1,398			4,572			1,361			1,390
Research and development expenses		931			995			1,030			1,099			4,055			1,004			1,299			1,158			1,578			5,039			1,055			1,134
Acquired in‐process research and development expenses		126			165			3,960			800			5,051			97			4,524			1,171			64			5,856			62			96
Selling, general and administrative expenses		1,030			1,095			1,052			1,204			4,381			1,076			1,239			1,106			1,730			5,151			1,055			1,351
Total costs and expenses		3,044			3,255			7,077			4,786			18,162			3,146			8,126			4,576			4,770			20,618			3,533			3,971
Income (loss) from operations		2,237			2,430			(1,473)			1,093			4,287			2,402			(2,983)			2,001			2,651			4,071			2,890			2,246
Interest expense		(254)			(248)			(250)			(243)			(995)			(241)			(240)			(236)			(267)			(984)			(257)			(256)
Other income (expense), net		367			228			222			1,051			1,868			(158)			250			(940)			(570)			(1,418)			(369)			(173)
Income (loss) before income taxes		2,350			2,410			(1,501)			1,901			5,160			2,003			(2,973)			825			1,814			1,669			2,264			1,817
Income tax (expense) benefit		(382)			(535)			333			788			204			(465)			(373)			(472)			(270)			(1,580)			(542)			(300)
Net income (loss)		1,968			1,875			(1,168)			2,689			5,364			1,538			(3,346)			353			1,544			89			1,722			1,517
Net loss attributable to noncontrolling interest		7			5			3			7			22			13			7			7			7			34			7			5
Net income (loss) attributable to Gilead	$	1,975		$	1,880		$	(1,165)		$	2,696		$	5,386		$	1,551		$	(3,339)		$	360		$	1,551		$	123		$	1,729		$	1,522
Net income (loss) per share attributable to Gilead common																								$	1.24		$	0.10	$	1.38	$	1.21
stockholders ‐ basic	$	1.55	$	1.48	$	(0.92)	$	2.13		$	4.24	$	1.23	$	(2.66)	$	0.29
Shares used in per share calculation ‐ basic		1,276			1,270			1,267			1,266			1,270			1,262			1,255			1,255			1,255			1,257			1,256			1,255
Net income (loss) per share attributable to Gilead common
stockholders ‐ diluted	$	1.54	$	1.47	$	(0.92)	$	2.12		$	4.22	$	1.22	$	(2.66)	$	0.29	$	1.23		$	0.10	$	1.37	$	1.21
Shares used in per share calculation ‐ diluted		1,283			1,277			1,267			1,273			1,277			1,270			1,255			1,261			1,259			1,263			1,262			1,260
Cash dividends declared per share	$	0.63	$	0.63	$	0.63	$	0.63		$	2.52	$	0.68	$	0.68	$	0.68	$	0.68		$	2.72	$	0.71	$	0.71
GAAP:
Product gross margin	81.6 %	82.2 %			81.2 %			71.0 %			78.9 %	82.3 %			79.0 %	82.4 %	80.9 %			81.2 %	78.5 %	77.4 %
Research and development expenses as a % of revenues	17.6 %	17.5 %			18.4 %			18.7 %			18.1 %	18.1 %			25.3 %	17.6 %	21.3 %			20.4 %	16.4 %	18.2 %
Acquired in‐process research and development expenses as a % of
revenues		2.4 %			2.9 %			70.7 %			13.6 %			22.5 %			1.7 %			88.0 %	17.8 %			0.9 %			23.7 %			1.0 %			1.5 %
Selling, general and administrative expenses as a % of revenues	19.5 %	19.3 %			18.8 %			20.5 %			19.5 %	19.4 %			24.1 %	16.8 %	23.3 %			20.9 %	16.4 %	21.7 %
Operating expenses as a % of revenues	39.5 %	39.7 %	107.8 %			52.8 %			60.1 %	39.2 %	137.3 %	52.2 %	45.4 %			65.0 %	33.8 %	41.5 %
Operating margin	42.4 %	42.7 %	(26.3)%			18.6 %			19.1 %	43.3 %	(58.0)%	30.4 %	35.7 %			16.5 %	45.0 %	36.1 %
Effective tax rate	16.3 %	22.2 %			22.2 %	(41.5)%			(4.0)%	23.2 %	(12.5)%	57.2 %	14.9 %			94.7 %	23.9 %	16.5 %

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2

SELECTED CASH FLOW INFORMATION

(unaudited)

					2019									2020							2021
(in millions)		Q1		Q2		Q3		Q4		FY19		Q1		Q2		Q3		Q4			FY20		Q1		Q2
Net cash provided by operating activities	$ 1,577	$ 2,342	$ 2,645	$ 2,580		$ 9,144	$ 1,436	$ 2,566	$ 2,250	$ 1,916		$	8,168	$ 2,610	$ 2,316
Net cash provided by (used in) investing activities	(244)	(6,163)	(1,841)	431		(7,817)	(344)	(5,023)	(271)	(8,977)		(14,615)	(2,042)	(577)
Net cash provided by (used in) financing activities	(2,366)	(1,857)	(2,515)	(896)		(7,634)	(2,611)	(874)	4,124	131			770	(2,477)	(931)
Effect of exchange rate changes on cash and cash equivalents	20		(9)		(55)		42		(2)		(61)		26		37		41			43		(23)		20
Net change in cash and cash equivalents	(1,013)	(5,687)	(1,766)	2,157		(6,309)	(1,580)	(3,305)	6,140	(6,889)			(5,634)	(1,932)	828
Cash and cash equivalents at beginning of period	17,940		16,927		11,240		9,474		17,940		11,631		10,051		6,746		12,886			11,631		5,997		4,065
Cash and cash equivalents at end of period	$ 16,927		$ 11,240		$ 9,474		$ 11,631		$ 11,631		$ 10,051		$ 6,746		$ 12,886		$ 5,997		$	5,997		$ 4,065		$ 4,893

							2019														2020							2021
(in millions)			Q1			Q2		Q3			Q4			FY19			Q1		Q2			Q3		Q4			FY20		Q1		Q2
Net cash provided by operating activities	$	1,577	$	2,342	$ 2,645	$	2,580		$	9,144	$	1,436	$ 2,566	$	2,250	$ 1,916		$	8,168	$ 2,610	$ 2,316
Capital expenditures		(237)			(185)		(200)			(203)			(825)			(171)		(143)			(155)		(181)			(650)		(165)		(119)
Free cash flow	$	1,340		$	2,157		$ 2,445		$	2,377		$	8,319		$	1,265		$ 2,423		$	2,095		$ 1,735		$	7,518		$ 2,445		$ 2,197

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3

NON‐GAAP FINANCIAL INFORMATION(1)

(unaudited)

									2019															2020									2021
(in millions, except percentages and per share amounts)			Q1			Q2			Q3			Q4			FY19			Q1			Q2			Q3			Q4			FY20			Q1			Q2
Revenues	$	5,281	$	5,685	$	5,604	$	5,879		$	22,449	$	5,548	$	5,143	$	6,577	$	7,421		$	24,689	$	6,423	$	6,217
Non‐GAAP:
Cost of goods sold
$	674	$	727	$	769	$	1,417		$	3,587	$	703	$	798	$	875	$	918		$	3,294	$	855	$	836
Research and development expenses	$	932	$	996	$	1,028	$	1,103		$	4,059	$	1,004	$	1,186	$	1,155	$	1,512		$	4,857	$	1,049	$	1,084
Selling, general and administrative expenses	$	1,030	$	1,096	$	1,045	$	1,204		$	4,375	$	1,076	$	1,164	$	1,095	$	1,499		$	4,834	$	1,033	$	1,121
Operating income	$	2,645	$	2,866	$	2,762	$	2,155		$	10,428	$	2,765	$	1,995	$	3,452	$	3,492		$	11,704	$	3,486	$	3,176
Other income (expense), net	$	170	$	171	$	164	$	122		$	627	$	125	$	49	$	29	$	46		$	249	$	(18)	$	1
Net income attributable to Gilead	$	2,141	$	2,196	$	2,091	$	1,400		$	7,828	$	2,139	$	1,400	$	2,657	$	2,762		$	8,958	$	2,628	$	2,353
Diluted EPS	$	1.67	$	1.72	$	1.64	$	1.10		$	6.13	$	1.68	$	1.11	$	2.11	$	2.19		$	7.09	$	2.08	$	1.87
Shares used in per share calculation ‐ diluted		1,283			1,277			1,274			1,273			1,277			1,270			1,262			1,261			1,259			1,263			1,262			1,260

Product gross margin

Research and development expenses as a % of revenues Selling, general and administrative expenses as a % of revenues Operating expenses as a % of revenues

Operating margin

Effective tax rate

________________________________

87.0 %	87.0 %	86.1 %	75.6 %	83.8 %	87.1 %	84.3 %	86.5 %	87.5 %	86.5 %	86.5 %	86.4 %
17.6 %	17.5 %	18.3 %	18.8 %	18.1 %	18.1 %	23.1 %	17.6 %	20.4 %	19.7 %	16.3 %	17.4 %
19.5 %	19.3 %	18.6 %	20.5 %	19.5 %	19.4 %	22.6 %	16.6 %	20.2 %	19.6 %	16.1 %	18.0 %
37.2 %	36.8 %	37.0 %	39.2 %	37.6 %	37.5 %	45.7 %	34.2 %	40.6 %	39.3 %	32.4 %	35.5 %
50.1 %	50.4 %	49.3 %	36.7 %	46.6 %	49.8 %	38.8 %	52.5 %	47.1 %	47.4 %	54.3 %	51.1 %
16.6 %	21.5 %	22.1 %	31.5 %	22.4 %	19.7 %	22.8 %	18.4 %	15.8 %	18.6 %	18.4 %	19.6 %

1. Non‐GAAP financial information excludes acquisition‐related expenses including amortization of acquired intangible assets and inventory step‐up charges in Cost of goods sold, acquired IPR&D expenses, and other items that are considered unusual or not
   representative of underlying trends of Gilead's business, fair value adjustments of equity securities and discrete and related tax charges or benefits associated with changes in tax related laws and guidelines. A reconciliation between GAAP and non‐GAAP financial information is provided in the tables on pages 5‐6.

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RECONCILIATION OF GAAP TO NON‐GAAP FINANCIAL INFORMATION

(unaudited)

(in millions, except percentages and per share amounts)

Cost of goods sold reconciliation:

GAAP cost of goods sold

Acquisition‐related - amortization of acquired intangibles and inventory step‐up charges

Acquisition‐related - other costs(1) Non‐GAAP cost of goods sold

Product gross margin reconciliation:

GAAP product gross margin

Acquisition‐related - amortization of acquired intangibles and inventory step‐up charges

Acquisition‐related - other costs(1) Non‐GAAP product gross margin(2)

Research and development expenses reconciliation:

GAAP research and development expenses

Acquisition‐related - other costs(1)

Other(3)

Non‐GAAP research and development expenses

Research and development expenses as a % of revenues:

GAAP research and development expenses as a % of revenues

Acquisition‐related - other costs(1) Other(3)

Non‐GAAP research and development expenses as a % of revenues(2)

Acquired IPR&D expenses reconciliation:

GAAP acquired IPR&D expenses

Acquired IPR&D expenses

Non‐GAAP acquired IPR&D expenses

Selling, general and administrative expenses reconciliation:

GAAP selling, general and administrative expenses

Acquisition‐related - other costs(1)

Other(3)

Non‐GAAP selling, general and administrative expenses

Selling, general and administrative expenses as a % of revenues:

GAAP selling, general and administrative expenses as a % of revenues

Acquisition‐related - other costs(1) Other(3)

Non‐GAAP selling, general and administrative expenses as a % of revenues(2)

							2019															2020									2021
	Q1			Q2			Q3			Q4		FY19			Q1			Q2			Q3			Q4		FY20			Q1			Q2
$	957	$ 1,000	$ 1,035	$	1,683		$	4,675	$	969	$ 1,064	$ 1,141	$ 1,398		$	4,572	$ 1,361	$ 1,390
	(283)			(273)			(266)			(266)			(1,088)			(266)			(266)			(266)			(417)			(1,215)			(506)			(554)
	‐			‐			‐			‐			‐			‐			‐			‐			(63)			(63)			‐			‐
$	674		$	727		$	769		$	1,417		$	3,587		$	703		$	798		$	875		$	918		$	3,294		$	855		$	836
																													78.5 %	77.4 %
81.6 %	82.2 %	81.2 %			71.0 %			78.9 %	82.3 %	79.0 %	82.4 %	80.9 %			81.2 %
	5.4 %			4.9 %			4.8 %			4.6 %			4.9 %			4.9 %			5.2 %			4.1 %			5.7 %			5.0 %			8.0 %			9.0 %
	‐ %			‐ %			‐ %			‐ %			‐ %			‐ %			‐ %			‐ %			0.9 %			0.3 %			‐ %			‐ %
87.0 %	87.0 %	86.1 %	75.6 %			83.8 %	87.1 %	84.3 %	86.5 %	87.5 %			86.5 %	86.5 %	86.4 %
$	931	$	995	$ 1,030	$	1,099		$	4,055	$ 1,004	$ 1,299	$ 1,158	$ 1,578		$	5,039	$ 1,055	$ 1,134
	‐			‐			‐			‐		‐			‐			(113)			(3)			(66)			(182)			(6)			(6)
	1			1			(2)			4			4			‐			‐			‐			‐			‐			‐			(44)
$	932		$	996		$ 1,028		$	1,103		$	4,059		$ 1,004		$ 1,186		$ 1,155		$ 1,512		$	4,857		$ 1,049		$ 1,084
17.6 %	17.5 %	18.4 %			18.7 %				18.1 %	25.3 %	17.6 %	21.3 %				16.4 % 18.2 %
			18.1 %		20.4 %
	‐ %			‐ %			‐ %			‐ %		‐ %			‐ %			(2.2)%			‐ %			(0.9)%			(0.7)%			(0.1)%			(0.1)%
	‐ %			‐ %			‐ %			0.1 %			‐ %			‐ %			‐ %			‐ %			‐ %			‐ %			‐ %			(0.7)%
17.6 %	17.5 %	18.3 %	18.8 %			18.1 %	18.1 %	23.1 %	17.6 %	20.4 %			19.7 %	16.3 %	17.4 %
$	126	$	165	$ 3,960	$	800		$	5,051	$	97	$ 4,524	$ 1,171	$	64		$	5,856	$	62	$	96
	(126)			(165)		(3,960)			(800)			(5,051)			(97)		(4,524)		(1,171)			(64)			(5,856)			(62)			(96)
$	‐	$	‐	$	‐	$	‐	$	‐	$	‐	$	‐	$	‐	$	‐	$	‐	$	‐	$	‐
$ 1,030	$ 1,095	$ 1,052	$	1,204		$	4,381	$ 1,076	$ 1,239	$ 1,106	$ 1,730		$	5,151	$ 1,055	$ 1,351
	‐			‐			‐			‐		‐			‐			(77)			(12)			(230)			(319)			(22)			(10)
	‐			1			(7)			‐			(6)			‐			2			1			(1)			2			‐			(220)
$ 1,030	$ 1,096	$ 1,045	$	1,204		$	4,375	$ 1,076	$ 1,164	$ 1,095	$ 1,499		$	4,834	$ 1,033	$ 1,121
19.5 %	19.3 %	18.8 %			20.5 %			19.5 %	19.4 %	24.1 %	16.8 %	23.3 %			20.9 %	16.4 % 21.7 %
	‐ %			‐ %			‐ %			‐ %		‐ %			‐ %			(1.5)%			(0.2)%			(3.1)%			(1.3)%			(0.3)%			(0.2)%
	‐ %			‐ %			(0.1)%			‐ %			‐ %			‐ %			‐ %			‐ %			‐ %			‐ %			‐ %			(3.5)%
19.5 %		19.3 %		18.6 %		20.5 %			19.5 %		19.4 %		22.6 %		16.6 %		20.2 %			19.6 %		16.1 %		18.0 %

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5