Summary
Gilead Sciences, inc. is a cash cow.
We reckon that $80 billion market value for the company is reasonable .
The acquisitions is an expansion model, which is unpredictable.
It hit the peak of debt.
Gilead Sciences, inc. is a biopharmaceutical company that have two reportable business: product sales ,and royalty, contract and other.
Product sales included HIV,Veklery,HCV,Hbv/Hdv,Cell Therapy,Trodelvy and other.
HIV is the main resource of revenues, which is about $16.3 billion in 2022, accounting for 59.7% of total revenues($27.3b)in 2022.
Balance sheet analysis :
There is a bad news. Intangible asset, net was $28.89 billion in 2022,consisting of 45.7% of total assets($63.1b).Goodwill in 2022 was $8.3 billion, make up of 13% of total assets. Acquisition activities in the past brought on the creation of the both accounts, which would bring about the deterioration of debt ratio.
liquidity and solvency analysis
in 2022,the total current asset was $14.4b and the total current liabilities was $11.2b.You could get current ratio of 1.28,which is a lower number.
The debt ratio for 2022 was 66.4%.if we take off goodwill and intangible asset, Gilead Sciences would have inability to offset debt with assets.
But it generated $8.3 billion in free cash flow in 2022, that would service debt.
Profitability analysis
The total revenue was $27.2b and 27.3b in 2022, and in 2021,respectively.It seem falling into stagnation of revenues.
It’s profitability is strong ,operating income reached $7.3b and $9.9b in 2022 and in 2021,respectively.
The firm reported financial performance for Q3 ending September 30,2023.It’s revenues was $20b ,and $19.8b in the nine months to September 30,2023,and in the nine months to September 30,2022,respectively.This is not surprising .
Cash flow analysis
The free cash flow would not an accurate number ,if the investing activities on statement of cash flow have a item —acquisitions, including in-process research and development ,net of cash acquired. Acquisitions were $1.79b,$1.58b and $2.59b in 2022,in 2021 and in 2020,respectively.That show that the acquisitions is an indispensable part of development for the firm.
We think it is the manifestation of real abilities on making money, repurchase of common stock ($1.39b in 2022) and payment of dividends($3.7b)