Gilead Sciences Earnings Call Highlights Growth, Deal Drag

Gilead Sciences ((GILD)) has held its Q1 earnings call. Read on for the main highlights of the call.

Gilead Sciences’ latest earnings call struck a cautiously optimistic tone, as management highlighted strong commercial execution and a deepening pipeline even while acknowledging headline earnings pressure from hefty deal-related charges. Investors heard a story of solid underlying growth in HIV, oncology, and new launches, set against near‑term noise from tax and transaction impacts.

Top-line growth and raised full-year guidance

Gilead reported total product sales excluding Veklury of $6.8 billion, an 8% year‑over‑year increase that underscored momentum in its core portfolio. Including Veklury, sales reached $6.9 billion, up 5%, prompting management to lift 2026 revenue guidance by $400 million and signal 5%–6% base‑business growth.

Robust HIV franchise and PrEP momentum

The HIV franchise remained the company’s primary growth engine, with HIV sales rising 10% to $5.0 billion and Biktarvy maintaining more than half of the U.S. market. Prevention demand surged as the U.S. PrEP business jumped 87% year‑over‑year, supporting an upgraded outlook for roughly 8% full‑year HIV sales growth.

Oncology momentum — Trodelvy and strategic acquisitions

In oncology, Trodelvy sales climbed 37% year‑over‑year to $402 million, helped by expanding use in breast cancer and new guideline support in metastatic triple‑negative disease. Management also pointed to the Tubulis acquisition and its TUB‑40 program as key steps in building a differentiated antibody‑drug conjugate platform ahead of several Phase 3 readouts in the back half of 2026.

Successful specialty launches — Libdelzi

Libdelzi continued its breakout, delivering $133 million in first‑quarter revenue, more than tripling from a year ago and securing over half of the U.S. second‑line primary biliary cholangitis market. Executives flagged a Phase 3 IDEAL update in the second half of 2026 as a potential catalyst to expand the drug’s label and eligible patient pool.

Profitability, margins, and shareholder returns

Despite heavy investment, Gilead’s underlying profitability remained robust, with product gross margin hitting 87% and operating margin at 47%. Non‑GAAP diluted EPS grew 12% to $2.03, and the company returned more than $1.4 billion to shareholders in the quarter, including over $400 million in buybacks.

Broad and advancing pipeline

The pipeline swelled to 47 clinical programs following the Arcellx deal and pending acquisitions of Oral Medicines and Tubulis, broadening exposure across HIV, oncology, and cell therapy. Key regulatory and clinical milestones in 2026 include decisions on Biclen, anitocel, and bulevirtide, along with multiple late‑stage readouts that could reshape the company’s growth profile.

Strategic cell therapy positioning for anitocel

Gilead is doubling down on cell therapy via Arcellx’s anitocel, which management says offers differentiated efficacy and safety as it integrates into the Kite franchise. The company is targeting initial anitocel revenue in early 2027 and sees a roughly $3.5 billion market opportunity in fourth‑line‑plus CAR‑T, with the IMagine‑3 trial enrolling ahead of plan.

Large transaction-related charges depress full-year EPS

A major theme of the call was the impact of roughly $11.5 billion to $11.8 billion in upfront IPR&D and financing costs tied to recent acquisitions, which will swing Gilead to a full‑year non‑GAAP loss per share of $1.05 to $0.65. Management stressed that excluding these deal costs, non‑GAAP EPS would land between $8.45 and $8.85, implying about a $9.50 per‑share hit to reported earnings.

Extremely high effective tax rate from nondeductible costs

The accounting drag is compounded by a highly unusual full‑year effective tax rate of 140% to 190%, driven by nondeductible expenses from the Arcellx, Oral Medicines, and Tubulis deals. While the first‑quarter non‑GAAP tax rate was a more normal 18.3%, management cautioned that the elevated full‑year tax burden is a one‑time distortion tied to the transactions.

Seasonality and inventory drawdowns weigh on sequential trends

Sequentially, product sales fell 12% in the first quarter, a move executives characterized as consistent with typical seasonal patterns. HIV sales slipped 13% and Biktarvy declined 15% quarter‑over‑quarter, while Libdelzi and liver disease revenues also edged lower, largely due to inventory drawdowns following year‑end stocking.

Cell therapy revenue pressure from competition

Gilead’s cell therapy business faced tangible headwinds, with sales down 12% year‑over‑year and 11% sequentially to $407 million. Management attributed the decline to “in‑and‑out‑of‑class” competition across geographies, signaling that competitive dynamics will likely constrain near‑term growth even as the company invests in next‑generation assets like anitocel.

Rising SG&A and near-term R&D increases

Operating expenses ticked higher as SG&A rose 12% year‑over‑year, driven mostly by commercial spending behind the Yes2Go launch and broader portfolio support. Gilead also raised R&D guidance to a mid‑single‑digit increase, citing integration and clinical investments from new acquisitions while reaffirming plans to keep R&D below 20% of product sales.

Uncertainties in early adherence data and legacy declines

Management highlighted encouraging but early data on persistence and adherence for Yes2Go, while cautioning that longer‑term behavior patterns are still forming. At the same time, legacy products like Veklury and HCV therapies continued to decline because of fewer COVID‑19 hospitalizations and lower hepatitis C patient starts, partially offsetting gains elsewhere.

Updated guidance and forward-looking outlook

Looking ahead, Gilead raised its 2026 outlook with base‑business revenue now seen at $29.4 billion to $29.8 billion and total product sales at $30.0 billion to $30.4 billion, including about $600 million from Veklury. The company expects operating income of $2.4 billion to $2.9 billion including IPR&D, or $14.0 billion to $14.5 billion excluding those charges, and reaffirmed mid‑single‑digit growth in R&D and SG&A alongside a full‑year non‑GAAP loss per share driven by approximately $9.50 of transaction costs.

Gilead’s earnings call painted a picture of a company balancing strong core franchises and a deepening late‑stage pipeline against the short‑term pain of large deal‑related charges and an anomalous tax rate. For investors, the message was clear: underlying demand in HIV, oncology, and specialty launches remains healthy, but reported earnings in 2026 will understate the operational progress underway.