UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2023

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________

Commission File No. 0-19731

GILEAD SCIENCES, INC.

(Exact Name of Registrant as Specified in Its Charter)

Delaware	94-3047598
(State or Other Jurisdiction of Incorporation or Organization)	(IRS Employer Identification No.)

333 Lakeside Drive, Foster City, California 94404

(Address of principal executive offices) (Zip Code)

650-574-3000

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value, $0.001 per share	GILD	The Nasdaq Global Select Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes x    No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x    No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer x Accelerated filer ¨ Non-accelerated filer ¨    

Smaller reporting company ☐ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐    No x

Number of shares outstanding of the issuer’s common stock, par value $0.001 per share, as of April 28, 2023: 1,247,352,689

GILEAD SCIENCES, INC.

INDEX

PART I.	FINANCIAL INFORMATION		3
	Item 1.	Condensed Consolidated Financial Statements	3
		Condensed Consolidated Balance Sheets at March 31, 2023 and December 31, 2022	3
		Condensed Consolidated Statements of Income for the Three Months Ended March 31, 2023 and 2022	4
		Condensed Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2023 and 2022	5
		Condensed Consolidated Statements of Stockholders’ Equity for the Three Months Ended March 31, 2023 and 2022	6
		Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2023 and 2022	7
		Notes to Condensed Consolidated Financial Statements	8
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	32
	Item 4.	Controls and Procedures	32
PART II.	OTHER INFORMATION		33
	Item 1.	Legal Proceedings	33
	Item 1A.	Risk Factors	33
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	46
	Item 3.	Defaults Upon Senior Securities	46
	Item 4.	Mine Safety Disclosures	46
	Item 5.	Other Information	46
	Item 6.	Exhibits	46
SIGNATURES			50

We own or have rights to various trademarks and trade names used in our business, including the following: GILEAD®, GILEAD SCIENCES®, KITE™, AMBISOME®, ATRIPLA®, BIKTARVY®, CAYSTON®, COMPLERA®, DESCOVY®, DESCOVY FOR PREP®, EMTRIVA®, EPCLUSA®, EVIPLERA®, GENVOYA®, HARVONI®, HEPCLUDEX®, HEPSERA®, JYSELECA®, LETAIRIS®, ODEFSEY®, RANEXA®, SOVALDI®, STRIBILD®, SUNLENCA®, TECARTUS®, TRODELVY®, TRUVADA®, TRUVADA FOR PREP®, TYBOST®, VEKLURY®, VEMLIDY®, VIREAD®, VOSEVI®, YESCARTA® and ZYDELIG®. This report also refers to trademarks, service marks and trade names of other companies, which are the property of their respective owners.

Certain amounts and percentages in this Quarterly Report on Form 10-Q may not sum or recalculate due to rounding.

This Quarterly Report on Form 10-Q, including Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations and Part II, Item 1A. Risk Factors, contains forward-looking statements regarding future events and our future results that are subject to the safe harbors created under the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended. Words such as “expect,” “anticipate,” “target,” “goal,” “project,” “hope,” “intend,” “plan,” “believe,” “seek,” “estimate,” “continue,” “may,” “could,” “should,” “might,” “forecast” and variations of such words and similar expressions are intended to identify such forward-looking statements. In addition, any statements other than statements of historical fact are forward-looking statements, including statements regarding overall trends; operating cost and revenue trends; liquidity and capital needs; plans and expectations with respect to products, product candidates, corporate strategy, business and operations, financial projections and the use of capital; collaboration and licensing arrangements; patent protection and estimated loss of exclusivity for our products and product candidates; ongoing litigation and investigation matters; statements regarding the anticipated future impact on our business of the coronavirus disease 2019 (“COVID-19”); and other statements of expectations, beliefs, future plans and strategies, anticipated events or trends and similar expressions.

We have based these forward-looking statements on our current expectations about future events. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Our actual results may differ materially from those suggested by these forward-looking statements for various reasons, including those identified in Part II, Item 1A. Risk Factors. Given these risks and uncertainties, you are cautioned not to place undue reliance on forward-looking statements. The forward-looking statements included in this report are made only as of the date hereof unless otherwise specified. Except as required under federal securities laws and the rules and regulations of U.S. Securities and Exchange Commission, we do not undertake, and specifically decline, any obligation to update any of these statements or to publicly announce the results of any revisions to any forward-looking statements after the distribution of this report, whether as a result of new information, future events, changes in assumptions or otherwise. In evaluating our business, you should carefully consider the risks described in Part II, Item 1A. Risk Factors of this Quarterly Report on Form 10-Q. Any of the risks contained herein could materially and adversely affect our business, results of operations and financial condition.

2

PART I.    FINANCIAL INFORMATION

Item 1.    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

GILEAD SCIENCES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)

(in millions, except per share amounts)	March 31, 2023		December 31, 2022
Assets
Current assets:
Cash and cash equivalents	$	4,936	$	5,412
Short-term marketable debt securities	936		973
Accounts receivable, net	4,162		4,777
Inventories	1,576		1,507
Prepaid and other current assets	1,846		1,774
Total current assets	13,456		14,443
Property, plant and equipment, net	5,479		5,475
Long-term marketable debt securities	1,327		1,245
Intangible assets, net	28,348		28,894
Goodwill	8,314		8,314
Other long-term assets	4,952		4,800
Total assets	$	61,876	$	63,171
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	627	$	905
Accrued rebates	3,477		3,479
Other current liabilities	4,140		4,580
Current portion of long-term debt and other obligations, net	2,283		2,273
Total current liabilities	10,528		11,237
Long-term debt, net	22,956		22,957
Long-term income taxes payable	3,775		3,916
Deferred tax liability	2,401		2,673
Other long-term obligations	1,277		1,179
Commitments and contingencies (Note 10)
Stockholders’ equity:
Preferred stock, par value $0.001 per share; 5 shares authorized; none outstanding	—		—
Common stock, par value $0.001 per share; 5,600 shares authorized; 1,248 and 1,247 shares issued and outstanding, respectively	1		1
Additional paid-in capital	5,793		5,550
Accumulated other comprehensive income (loss)	(20)		2
Retained earnings	15,223		15,687
Total Gilead stockholders’ equity	20,997		21,240
Noncontrolling interest	(58)		(31)
Total stockholders’ equity	20,939		21,209
Total liabilities and stockholders’ equity	$	61,876	$	63,171

See accompanying notes.

3

GILEAD SCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(unaudited)

	Three Months Ended
	March 31,
(in millions, except per share amounts)	2023		2022
Revenues:
Product sales	$	6,306	$	6,534
Royalty, contract and other revenues	46		56
Total revenues	6,352		6,590
Costs and expenses:
Cost of goods sold	1,401		1,424
Research and development expenses	1,447		1,178
Acquired in-process research and development expenses	481		8
In-process research and development impairment	—		2,700
Selling, general and administrative expenses	1,319		1,083
Total costs and expenses	4,647		6,393
Operating income	1,705		197
Interest expense	(230)		(238)
Other income (expense), net	(174)		(111)
Income (loss) before income taxes	1,300		(152)
Income tax benefit (expense)	(316)		164
Net income	985		12
Net loss attributable to noncontrolling interest	26		7
Net income attributable to Gilead	$	1,010	$	19
Basic earnings per share attributable to Gilead	$	0.81	$	0.02
Shares used in basic earnings per share attributable to Gilead calculation	1,248		1,255
Diluted earnings per share attributable to Gilead	$	0.80	$	0.02
Shares used in diluted earnings per share attributable to Gilead calculation	1,261		1,262

See accompanying notes.

4

GILEAD SCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited)

	Three Months Ended
	March 31,
(in millions)	2023		2022
Net income	$	985	$	12
Other comprehensive loss, net:
Net foreign currency translation gain (loss)	(5)		5
Available-for-sale debt securities:
Net unrealized gain (loss), net of tax impact of $0 and $0, respectively	8		(19)
Reclassifications to net income, net of tax impact of $0 and $0, respectively	1		—
Net change	9		(19)
Cash flow hedges:
Net unrealized gain (loss), net of tax impact of $(1) and $3, respectively	(6)		24
Reclassification to net income, net of tax impact of $3 and $3, respectively	(21)		(20)
Net change	(26)		4
Other comprehensive loss, net	(22)		(10)
Comprehensive income, net	962		2
Comprehensive loss attributable to noncontrolling interest, net	26		7
Comprehensive income attributable to Gilead, net	$	988	$	9

See accompanying notes.

5

GILEAD SCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(unaudited)

	Three Months Ended March 31, 2023
(in millions, except per share amounts)	Gilead Stockholders’ Equity									Noncontrolling Interest		Total Stockholders’ Equity
	Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Retained Earnings
	Shares	Amount
Balance as of December 31, 2022	1,247	$	1	$	5,550	$	2	$	15,687	$	(31)	$	21,209
Net income (loss)	—	—		—		—		1,010		(26)		985
Other comprehensive loss, net	—	—		—		(22)		—		—		(22)
Issuances under employee stock purchase plan	1	—		67		—		—		—		67
Issuances under equity incentive plans	6	—		27		—		—		—		27
Stock-based compensation	—	—		165		—		—		—		165
Repurchases of common stock under repurchase programs ($82.29 average price per share)	(5)	—		(17)		—		(383)		—		(400)
Repurchases of common stock for employee tax withholding under equity incentive plans	(2)	—		—		—		(135)		—		(135)
Dividends declared ($0.75 per share)	—	—		—		—		(957)		—		(957)
Balance as of March 31, 2023	1,248	$	1	$	5,793	$	(20)	$	15,223	$	(58)	$	20,939

	Three Months Ended March 31, 2022
(in millions, except per share amounts)	Gilead Stockholders’ Equity									Noncontrolling Interest		Total Stockholders’ Equity
	Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Retained Earnings
	Shares	Amount
Balance as of December 31, 2021	1,254	$	1	$	4,661	$	83	$	16,324	$	(5)	$	21,064
Net income (loss)	—	—		—		—		19		(7)		12
Other comprehensive loss, net	—	—		—		(10)		—		—		(10)
Issuances under employee stock purchase plan	1	—		73		—		—		—		73
Issuances under equity incentive plans	7	—		21		—		—		—		21
Stock-based compensation	—	—		131		—		—		—		131
Repurchases of common stock under repurchase programs ($63.78 average price per share)	(6)	—		(19)		—		(334)		—		(353)
Repurchases of common stock for employee tax withholding under equity incentive plans	(2)	—		—		—		(91)		—		(91)
Dividends declared ($0.73 per share)	—	—		—		—		(932)		—		(932)
Balance as of March 31, 2022	1,255	$	1	$	4,867	$	73	$	14,986	$	(12)	$	19,915

See accompanying notes.

6

GILEAD SCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

	Three Months Ended
	March 31,
(in millions)	2023		2022
Operating Activities:
Net income	$	985	$	12
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation expense	94		80
Amortization expense	546		445
Stock-based compensation expense	165		130
Acquired in-process research and development expenses	481		8
In-process research and development impairment	—		2,700
Deferred income taxes	(303)		(651)
Net loss from equity securities	256		96
Other	63		182
Changes in operating assets and liabilities:
Accounts receivable, net	635		699
Inventories	(227)		53
Prepaid expenses and other	26		(54)
Accounts payable	(272)		(91)
Income tax assets and liabilities, net	(161)		(112)
Accrued and other liabilities	(543)		(1,657)
Net cash provided by operating activities	1,744		1,840
Investing Activities:
Purchases of marketable debt securities	(527)		(613)
Proceeds from sales of marketable debt securities	167		119
Proceeds from maturities of marketable debt securities	324		506
Acquisitions, including in-process research and development, net of cash acquired	(551)		(807)
Purchases of equity securities	(125)		(28)
Capital expenditures	(109)		(247)
Other	(5)		—
Net cash used in investing activities	(826)		(1,070)
Financing Activities:
Proceeds from issuances of common stock	97		94
Repurchases of common stock under repurchase programs	(400)		(352)
Repayments of debt and other obligations	—		(500)
Payments of dividends	(969)		(945)
Other	(135)		(91)
Net cash used in financing activities	(1,406)		(1,794)
Effect of exchange rate changes on cash and cash equivalents	13		(18)
Net change in cash and cash equivalents	(476)		(1,042)
Cash and cash equivalents at beginning of period	5,412		5,338
Cash and cash equivalents at end of period	$	4,936	$	4,296

See accompanying notes.

7

GILEAD SCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1.    ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accompanying Condensed Consolidated Financial Statements and related Notes to Condensed Consolidated Financial Statements of Gilead Sciences, Inc. (“Gilead,” “we,” “our” or “us”) should be read in conjunction with the audited Consolidated Financial Statements and the related notes thereto for the year ended December 31, 2022, included in our Annual Report on Form 10-K filed with U.S. Securities and Exchange Commission. There have been no material changes to our organization or summary of significant accounting policies as disclosed in that filing. Beginning in the first quarter of 2023, we reclassified changes in income taxes prepaid and receivable from Prepaid expenses and other to combine with changes in income taxes payable as Income tax assets and liabilities, net within Operating Activities on our Condensed Consolidated Statements of Cash Flows. We believe this presentation assists users of the financial statements to better understand cash flow movements. Prior periods have been revised to reflect this change, resulting in a reclassification of $34 million from Prepaid expenses and other for the three months ended March 31, 2022.

These interim financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and include all adjustments consisting of normal recurring adjustments that the management of Gilead believes are necessary for a fair presentation of the periods presented and are not necessarily indicative of results expected for the full fiscal year or for any subsequent interim period. Certain amounts and percentages in these Condensed Consolidated Financial Statements and accompanying notes may not sum or recalculate due to rounding.

8

2.    REVENUES

Disaggregation of Revenues

The following table summarizes our Total revenues:

	Three Months Ended March 31, 2023								Three Months Ended March 31, 2022
(in millions)	U.S.		Europe		Other International		Total		U.S.		Europe		Other International		Total
Product sales:
HIV
Biktarvy	$	2,161	$	304	$	212	$	2,677	$	1,706	$	261	$	184	$	2,151
Complera/Eviplera	14		22		3		39		17		24		4		44
Descovy	395		25		29		449		311		32		31		374
Genvoya	417		55		29		501		457		77		48		582
Odefsey	230		76		11		317		232		96		11		339
Stribild	20		6		2		28		22		8		3		32
Truvada	23		3		5		32		28		4		6		38
Revenue share - Symtuza(1)	98		36		4		138		86		44		3		132
Other HIV(2)	4		1		3		9		5		4		5		14
Total HIV	3,364		528		298		4,190		2,862		550		295		3,707
Oncology
Cell Therapy
Tecartus	59		27		3		89		47		15		1		63
Yescarta	210		121		28		359		125		77		9		211
Total Cell Therapy	269		148		31		448		172		92		10		274
Trodelvy	162		54		6		222		119		25		2		146
Total Oncology	431		202		37		670		292		117		11		420
Liver Disease
Chronic hepatitis C virus (“HCV”)
Ledipasvir/Sofosbuvir(3)	3		7		5		15		13		4		18		35
Sofosbuvir/Velpatasvir(4)	204		90		90		385		162		83		85		330
Other HCV(5)	24		18		4		45		24		8		2		34
Total HCV	232		114		99		445		199		95		105		399
Chronic hepatitis B virus (“HBV”) / hepatitis delta virus (“HDV”)
Vemlidy	87		9		103		199		80		9		111		200
Viread	(1)		6		14		19		—		6		17		23
Other HBV/HDV(6)	—		11		—		11		—		13		—		13
Total HBV/HDV	86		26		117		230		80		28		128		235
Total Liver Disease	318		140		217		675		279		123		233		635
Veklury	252		111		209		573		801		304		430		1,535
Other
AmBisome	6		60		49		116		25		66		53		144
Letairis	32		—		—		32		43		—		—		43
Other(7)	30		12		9		51		26		15		9		50
Total Other	69		72		58		199		94		81		62		236
Total product sales	4,434