Gilead Sciences Inc.'s earnings fell less than expected in the most recent quarter as declining drug sales were partially offset by cost cuts.
Shares dropped 3.8% to $74.90 in after-hours trading on Thursday as executives warned on a conference call that the worst is yet to come for the pharmaceutical company's hepatitis C treatments, which saw a 33% sales decline during the quarter. Sales were hurt by more competition from generic drugs as the company's patents expired.
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James Meyers, Gilead's executive vice president of worldwide commercial operations, said on a call with analysts that the impact of competition and price erosion was only partially reflected in the third-quarter results and the full impact will come in the fourth quarter.
Antiviral sales fell $1 billion to $5.8 billion as declines in treatments for hepatitis C offset growth in sales of HIV and hepatitis B treatments.
On the expected sales growth of non-hepatitis C treatments, Gilead on Thursday raised the low end of its full-year revenue forecast. It also raised its adjusted per-share earnings outlook to a range of $1.02 to $1.17, from 86 cents to 93 cents.
Earlier this month, Gilead closed its $11 billion acquisition of Kite Pharma Inc. Gilead announced plans to buy the company in late August in a bid to diversify its portfolio and add new streams of revenue to quell investor concerns about flagging sales for certain drugs.
California-based Kite is a leader among several companies that aim to use genetic engineering to weaponize a patient's T-cells and then deploy them to attack lymphoma and other blood cancers.
In all, for the third quarter the Foster City, Calif.-based Gilead reported earnings of $2.72 billion, or $2.06 a share, down from earnings of $3.33 billion, or $2.49 a share, a year earlier. On an adjusted per-share basis, earnings fell to $2.27 from $2.75.
Revenue dropped 13% from a year ago to $6.51 billion. Operating expenses also decreased 14%.
Analysts polled by Thomson Reuters had forecast earnings of $2.13 a share on $6.39 billion in sales.
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(END) Dow Jones Newswires
October 26, 2017 19:02 ET (23:02 GMT)