Gilead Sciences, Inc. (GILD) Earnings Preview: Hepatitis C Vaccines Hold Key

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When Gilead Sciences, Inc. (NASDAQ:GILD) announces its fourth quarter numbers on Tuesday after the bell, the focus will be on the performance of Hepatitis C vaccines. The company was the dominant force until AbbVie Inc (NYSE:ABBV) entered the fray. Both the companies are fighting for larger market share.

States Seek Discount

There were already murmurs that Gilead Sciences, Inc. (NASDAQ:GILD)’s charges were higher for the hepatitis C drugs medication period. AbbVie Inc (NYSE:ABBV) entering the fray helped to cool its prices to some extent. Now that AbbVie’s earnings topped the Street expectations, there was a sense of fear that Gilead might have shed its share and that it might have impacted its results.

At least two States, Connecticut and Missouri, were in discussions with both the companies for securing price cut on the expensive hepatitis C drugs. The two States were ready to accord them a preferred status for the State’s Medicaid recipients in exchange. The discussion preceded by similar negotiations with pharmacy-benefit managers and insurance companies.

Baird analyst said that Gilead Sciences, Inc. (NASDAQ:GILD)’s Sovaldi and Harvoni have generated sales of $1.2 billion and $2.0 billion respectively in the fourth quarter in the United States. The brokerage was also confident that the company’s HCV franchise would return to form.

Revenue Combination

The company generates over 95% of its total revenue from antiviral products while revenue from royalty, contract, and others accounted for little over one percent. This was based on the company’s third quarter financial results.

Of the total antivirus drugs, Sovaldi, which was unveiled in December 2013, was the big contributor to total revenue with 46.3%. Other drugs form rest of the contributions to the overall revenue.

Expected Earnings

The drug maker has been predicted to earn $2.20 a share on revenues of $6.73 billion in the fourth quarter by Wall Street analysts’ surveyed by Thomson Reuters. In the previous year quarter, the company’s profit per share was 55 cents while revenue was $3.12 billion. The significant growth in the current year expectation was mainly because of Sovaldi.

Gilead Sciences, Inc. (NASDAQ:GILD)’s earnings missed predictions in the third quarter and in the preceding three quarters, its EPS topped expectations.

Viraj Shah

Viraj Shah has completed M.Com (Finance) and is currently pursuing his CFP. He tracks US markets along with other global markets like India very closely. He is very passionate about stocks, real estate, and technology. He also believes that money can always be made in the market.

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