Core business achieves fastest growth in over a decade! Gilead (GILD.US) Q3 is a mix of good and bad news: Raises full-year sales guidance but Biktarvy will face a 38% price cut pressure from U.S. Medicare

According to Zhitong Finance APP, US biopharmaceutical giant Gilead Sciences (GILD.US) released its Q3 2026 financial report on local time October 29 (Thursday). Driven by double-digit growth in its flagship HIV drug portfolio, the company’s product sales grew 13% year-on-year to $8.3 billion, exceeding market expectations. Excluding the COVID-19 drug Veklury (Remdesivir), its "core business" sales rose 16% year-on-year to $8.2 billion, marking the fastest annual growth rate of the core business in more than a decade. Based on strong performance, the company has once again raised its full-year sales guidance.

Earnings comprehensively beat Wall Street expectations, shares continue to rise after hours

According to the financial report, Gilead’s non-GAAP earnings per share (EPS) for the third quarter was $2.55, significantly higher than analysts’ average expectation of $2.19; revenue was $8.3 billion, also above the expected $7.8 billion. After the financial report was released, the company’s stock price rose 4% during regular trading hours and climbed another 2.2% after hours to $169.25, representing a year-to-date increase of 36%.

Under US Generally Accepted Accounting Principles (GAAP), the company’s net profit for the third quarter was $2.43 billion (or $1.94 per share), down from $3.05 billion ($2.43 per share) a year earlier. The decline in profit was mainly due to a net loss in equity investments for the period (compared to a net gain the previous year), higher operating and income tax expenses, and a one-off royalty income from an intellectual property sale last year that did not recur.

In terms of cash flow, the company generated $5 billion in operating cash flow in the third quarter; as of September 30, the cash and marketable securities balance was $6.4 billion, down from $10.6 billion at the end of 2025, mainly due to $11.3 billion spent on M&A during the year, $2.8 billion in debt repayment, $3.1 billion in dividends, and $1.1 billion in stock buybacks.

HIV business leads, oncology and liver disease show multiple growth engines

In the third quarter, sales of HIV products, the company’s main revenue driver, increased 18% year-on-year to $6.2 billion, mainly driven by higher average realized prices, growing demand for HIV prevention drugs, and favorable inventory dynamics, with sales of HIV prevention drugs nearly doubling. Flagship combination drug Biktarvy recorded sales of $4.1 billion, up 10% year-on-year, surpassing market expectation of $3.86 billion.

Non-HIV business also performed strongly: oncology drug Trodelvy posted a 42% year-on-year surge in sales to $506 million due to strong demand; liver disease portfolio sales grew 13% to $927 million, with new liver disease drug Livdelzi sales rising from $105 million a year ago to $203 million.

On the downside, the cell therapy business saw sales fall 18% year-on-year to $355 million due to continued competition; sales of COVID-19 treatment drug Veklury shrank significantly as hospitalization numbers dropped.

Concern: Medicare price cuts hanging over Biktarvy

On the earnings call, Chief Financial Officer Andrew Dickinson disclosed that, according to the third round of annual drug pricing negotiations under the Inflation Reduction Act (IRA), the Centers for Medicare & Medicaid Services (CMS) will reduce the Medicare payment price for Biktarvy for people over 65 by 38% to a "maximum fair price" of $2,600 per 30-day supply starting January 1, 2028. This is expected to reduce Gilead’s 2028 Biktarvy sales by about $1.5 billion, but the company still expects overall HIV business revenue to grow compared to 2027.

RBC Capital Markets analyst Brian Abrahams pointed out in a research note that Gilead’s quarterly results "met or exceeded the continually raised market expectations," but also cautioned that after the share price surge, "considering potential brand/generic competition and IRA pricing impacts, the market may begin to question the sustainability of revenue growth from its HIV pipeline over the long term."

Full-year guidance raised, but loss outlook widens due to M&A expenses

Based on its strong performance, Gilead raised its full-year 2026 product sales guidance to a range of $31 billion – $31.3 billion (previously $30.1 billion – $30.4 billion), which is part of a cumulative $1.6 billion guidance increase since the beginning of the year. Chairman and CEO Daniel O'Day stated: "Gilead delivered an outstanding third quarter, achieving the strongest year-over-year core business growth in more than a decade... We have multiple pipeline and potential new products in the HIV and oncology fields, significant progress in inflammation, and we are confident about our business growth and patient impact."

However, due to approximately $12.4 billion in transaction-related expenses from a series of M&A deals during the year (including the acquisitions of Arcellx, Tubulis, Ouro Medicines, etc.), the company has widened its full-year 2026 non-GAAP per-share loss forecast to $0.85–$1.20 (previously a loss of $0.30–$0.65).