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 June 30, 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 July 31, 2023: 1,246,014,353

GILEAD SCIENCES, INC.

INDEX

PART I.	FINANCIAL INFORMATION		3
	Item 1.	Condensed Consolidated Financial Statements	3
		Condensed Consolidated Balance Sheets as of June 30, 2023 and December 31, 2022	3
		Condensed Consolidated Statements of Income for the Three and Six Months Ended June 30, 2023 and 2022	4
		Condensed Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2023 and 2022	5
		Condensed Consolidated Statements of Stockholders’ Equity for the Three and Six Months Ended June 30, 2023 and 2022	6
		Condensed Consolidated Statements of Cash Flows for the Three and Six Months Ended June 30, 2023 and 2022	8
		Notes to Condensed Consolidated Financial Statements	9
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	29
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	35
	Item 4.	Controls and Procedures	35
PART II.	OTHER INFORMATION		36
	Item 1.	Legal Proceedings	36
	Item 1A.	Risk Factors	36
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	49
	Item 3.	Defaults Upon Senior Securities	49
	Item 4.	Mine Safety Disclosures	49
	Item 5.	Other Information	49
	Item 6.	Exhibits	49
SIGNATURES			53

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; 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)	June 30, 2023		December 31, 2022
Assets
Current assets:
Cash and cash equivalents	$	5,704	$	5,412
Short-term marketable debt securities	963		973
Accounts receivable, net	4,229		4,777
Inventories	1,633		1,507
Prepaid and other current assets	1,757		1,774
Total current assets	14,287		14,443
Property, plant and equipment, net	5,540		5,475
Long-term marketable debt securities	1,334		1,245
Intangible assets, net	27,750		28,894
Goodwill	8,314		8,314
Other long-term assets	5,113		4,800
Total assets	$	62,337	$	63,171
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	622	$	905
Accrued rebates	3,494		3,479
Other current liabilities	5,810		4,580
Current portion of long-term debt and other obligations, net	4,037		2,273
Total current liabilities	13,964		11,237
Long-term debt, net	21,209		22,957
Long-term income taxes payable	2,610		3,916
Deferred tax liability	2,106		2,673
Other long-term obligations	1,354		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; 1,247 shares issued and outstanding	1		1
Additional paid-in capital	6,008		5,550
Accumulated other comprehensive income	10		2
Retained earnings	15,138		15,687
Total Gilead stockholders’ equity	21,158		21,240
Noncontrolling interest	(64)		(31)
Total stockholders’ equity	21,094		21,209
Total liabilities and stockholders’ equity	$	62,337	$	63,171

See accompanying notes.

3

GILEAD SCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(unaudited)

	Three Months Ended				Six Months Ended
	June 30,				June 30,
(in millions, except per share amounts)	2023		2022		2023		2022
Revenues:
Product sales	$	6,564	$	6,138	$	12,870	$	12,672
Royalty, contract and other revenues	35		122		81		178
Total revenues	6,599		6,260		12,951		12,850
Costs and expenses:
Cost of goods sold	1,442		1,442		2,843		2,866
Research and development expenses	1,407		1,102		2,854		2,280
Acquired in-process research and development expenses	236		330		717		338
In-process research and development impairment	—		—		—		2,700
Selling, general and administrative expenses	1,849		1,357		3,168		2,440
Total costs and expenses	4,934		4,231		9,581		10,624
Operating income	1,665		2,029		3,370		2,226
Interest expense	(230)		(242)		(459)		(480)
Other income (expense), net	152		(284)		(22)		(395)
Income before income taxes	1,588		1,503		2,888		1,351
Income tax expense	(549)		(368)		(865)		(204)
Net income	1,039		1,135		2,024		1,147
Net loss attributable to noncontrolling interest	6		9		32		16
Net income attributable to Gilead	$	1,045	$	1,144	$	2,055	$	1,163
Basic earnings per share attributable to Gilead	$	0.84	$	0.91	$	1.65	$	0.93
Shares used in basic earnings per share attributable to Gilead calculation	1,249		1,256		1,249		1,255
Diluted earnings per share attributable to Gilead	$	0.83	$	0.91	$	1.63	$	0.92
Shares used in diluted earnings per share attributable to Gilead calculation	1,258		1,260		1,260		1,261

See accompanying notes.

4

GILEAD SCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited)

	Three Months Ended				Six Months Ended
	June 30,				June 30,
(in millions)	2023		2022		2023		2022
Net income	$	1,039	$	1,135	$	2,024	$	1,147
Other comprehensive income, net:
Net foreign currency translation gain (loss)	37		(26)		32		(21)
Available-for-sale debt securities:
Net unrealized gain (loss), net of tax impact of $0, $0, $0 and $0, respectively	(3)		(12)		6		(31)
Reclassifications to net income, net of tax impact of $0, $0, $0 and $0, respectively	1		1		1		1
Net change	(2)		(11)		7		(30)
Cash flow hedges:
Net unrealized gain (loss), net of tax impact of $1, $13, $0 and $16, respectively	5		90		(1)		114
Reclassification to net income, net of tax impact of $1, $5, $4 and $8, respectively	(9)		(39)		(29)		(59)
Net change	(4)		51		(30)		55
Other comprehensive income, net	31		14		9		4
Comprehensive income, net	1,070		1,149		2,032		1,151
Comprehensive loss attributable to noncontrolling interest, net	6		9		32		16
Comprehensive income attributable to Gilead, net	$	1,076	$	1,158	$	2,064	$	1,167

See accompanying notes.

5

GILEAD SCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(unaudited)

	Three Months Ended June 30, 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 March 31, 2023	1,248	$	1	$	5,793	$	(20)	$	15,223	$	(58)	$	20,939
Net income (loss)	—	—		—		—		1,045		(6)		1,039
Other comprehensive income, net	—	—		—		31		—		—		31
Issuances under equity incentive plans	2	—		23		—		—		—		23
Stock-based compensation	—	—		198		—		—		—		198
Repurchases of common stock under repurchase programs ($79.68 average price per share)	(2)	—		(7)		—		(143)		—		(150)
Repurchases of common stock for employee tax withholding under equity incentive plans and other	—	—		—		—		(33)		—		(33)
Dividends declared ($0.75 per share)	—	—		—		—		(954)		—		(954)
Balance as of June 30, 2023	1,247	$	1	$	6,008	$	10	$	15,138	$	(64)	$	21,094

	Six Months Ended June 30, 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		Retained Earnings
	Shares	Amount
Balance as of December 31, 2022	1,247	$	1	$	5,550	$	2	$	15,687	$	(31)	$	21,209
Net income (loss)	—	—		—		—		2,055		(32)		2,024
Other comprehensive income, net	—	—		—		9		—		—		9
Issuances under employee stock purchase plan	1	—		67		—		—		—		67
Issuances under equity incentive plans	7	—		50		—		—		—		50
Stock-based compensation	—	—		363		—		—		—		363
Repurchases of common stock under repurchase programs ($81.56 average price per share)	(7)	—		(24)		—		(526)		—		(550)
Repurchases of common stock for employee tax withholding under equity incentive plans and other	(2)	—		—		—		(168)		—		(168)
Dividends declared ($1.50 per share)	—	—		—		—		(1,911)		—		(1,911)
Balance as of June 30, 2023	1,247	$	1	$	6,008	$	10	$	15,138	$	(64)	$	21,094

See accompanying notes.

6

	Three Months Ended June 30, 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		Retained Earnings
	Shares	Amount
Balance as of March 31, 2022	1,255	$	1	$	4,867	$	73	$	14,986	$	(12)	$	19,915
Net income (loss)	—	—		—		—		1,144		(9)		1,135
Other comprehensive income, net	—	—		—		14		—		—		14
Issuances under equity incentive plans	—	—		3		—		—		—		3
Stock-based compensation	—	—		164		—		—		—		164
Repurchases of common stock under repurchase programs ($61.83 average price per share)	(1)	—		(3)		—		(67)		—		(70)
Repurchases of common stock for employee tax withholding under equity incentive plans	—	—		—		—		(14)		—		(14)
Dividends declared ($0.73 per share)	—	—		—		—		(932)		—		(932)
Balance as of June 30, 2022	1,254	$	1	$	5,031	$	87	$	15,117	$	(21)	$	20,215

	Six Months Ended June 30, 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		Retained Earnings
	Shares	Amount
Balance as of December 31, 2021	1,254	$	1	$	4,661	$	83	$	16,324	$	(5)	$	21,064
Net income (loss)	—	—		—		—		1,163		(16)		1,147
Other comprehensive income, net	—	—		—		4		—		—		4
Issuances under employee stock purchase plan	1	—		73		—		—		—		73
Issuances under equity incentive plans	7	—		24		—		—		—		24
Stock-based compensation	—	—		295		—		—		—		295
Repurchases of common stock under repurchase programs ($63.44 average price per share)	(6)	—		(22)		—		(402)		—		(424)
Repurchases of common stock for employee tax withholding under equity incentive plans	(2)	—		—		—		(104)		—		(104)
Dividends declared ($1.46 per share)	—	—		—		—		(1,864)		—		(1,864)
Balance as of June 30, 2022	1,254	$	1	$	5,031	$	87	$	15,117	$	(21)	$	20,215

See accompanying notes.

7

GILEAD SCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

	Six Months Ended
	June 30,
(in millions)	2023		2022
Operating Activities:
Net income	$	2,024	$	1,147
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation expense	177		160
Amortization expense	1,144		890
Stock-based compensation expense	363		295
Acquired in-process research and development expenses	717		338
In-process research and development impairment	—		2,700
Deferred income taxes	(524)		(944)
Net loss from equity securities	187		399
Other	205		420
Changes in operating assets and liabilities:
Accounts receivable, net	549		247
Inventories	(453)		61
Prepaid expenses and other	66		(81)
Accounts payable	(275)		(104)
Income tax assets and liabilities, net	(189)		(591)
Accrued and other liabilities	91		(1,295)
Net cash provided by operating activities	4,082		3,642
Investing Activities:
Purchases of marketable debt securities	(1,105)		(1,090)
Proceeds from sales of marketable debt securities	317		323
Proceeds from maturities of marketable debt securities	719		955
Acquisitions, including in-process research and development, net of cash acquired	(794)		(1,131)
Purchases of equity securities	(192)		(44)
Capital expenditures	(248)		(390)
Other	(6)		(1)
Net cash used in investing activities	(1,309)		(1,378)
Financing Activities:
Proceeds from issuances of common stock	123		97
Repurchases of common stock under repurchase programs	(550)		(424)
Repayments of debt and other obligations	—		(500)
Payments of dividends	(1,913)		(1,865)
Other	(167)		(105)
Net cash used in financing activities	(2,507)		(2,797)
Effect of exchange rate changes on cash and cash equivalents	26		(66)
Net change in cash and cash equivalents	292		(599)
Cash and cash equivalents at beginning of period	5,412		5,338
Cash and cash equivalents at end of period	$	5,704	$	4,739

See accompanying notes.

8

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 $51 million from Prepaid expenses and other for the six months ended June 30, 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.

9

2.    REVENUES

Disaggregation of Revenues

The following table summarizes our Total revenues:

	Three Months Ended June 30, 2023								Three Months Ended June 30, 2022
(in millions)	U.S.		Europe		Other International		Total		U.S.		Europe		Other International		Total
Product sales:
HIV
Biktarvy	$	2,439	$	302	$	237	$	2,979	$	2,095	$	268	$	193	$	2,556
Complera/Eviplera	13		16		3		32		20		31		3		54
Descovy	460		25		31		516		397		32		32		460
Genvoya	455		56		29		540		482		72		29		582
Odefsey	267		74		11		351		255		97		12		364
Stribild	19		5		2		26		24		8		2		33
Truvada	32		3		7		42		24		5		5		34
Revenue share - Symtuza(1)	84		33		3		120		80		42		4		126
Other HIV(2)	10		7		3		20		5		9		4		18
Total HIV	3,778		521		326		4,626		3,383		562		282		4,228
Oncology
Cell Therapy
Tecartus	56		29		4		88		53		20		—		73
Yescarta	217		133		30		380		193		85		17		295
Total Cell Therapy	272		162		34		469		246		105		17		368
Trodelvy	189		53		17		260		120		35		3		159
Total Oncology	462		215		51		728		366		141		21		527
Liver Disease
Chronic hepatitis C virus (“HCV”)
Ledipasvir/Sofosbuvir(3)	8		2		5		15		6		4		13		23
Sofosbuvir/Velpatasvir(4)	223		84		90		397		227		75		74		376
Other HCV(5)	28		9		3		40		30		16		3		49
Total HCV	259		95		98		452		263		94		91		448
Chronic hepatitis B virus (“HBV”) / hepatitis delta virus (“HDV”)
Vemlidy	96		10		113		219		97		9		89		195
Viread	1		6		14		21		3