Gilead Sciences Inc. Q2 Earnings: Harvoni Delivers Again

Source: Gilead Sciences.

A few days ago, I suggested that there were three scenarios that could potentially unfold with Gilead Sciences' second-quarter results -- high fives, ho-hum, or heave-ho. The big biotech announced those results after the market closed on Tuesday. Which scenario came to pass? Gilead's stock jumped more than 3% in after-hours trading, so high fives definitely appear to be in order. Here are the highlights of the company's tremendous second quarter.

By the numbersWall Street expected Gilead to post second-quarter revenue of $7.61 billion. That proved to be a quite pessimistic forecast, with the biotech recording revenue of $8.2 billion -- up 26% compared with the $6.5 billion generated in the same quarter of 2014.

A lot of those dollars went straight to Gilead's bottom line. The company reported GAAP earnings of $4.5 billion, or $2.92 per diluted share. This performance reflected a big increase from the $3.7 billion, or $2.20 per diluted share, posted in the second quarter of last year.

Non-GAAP earnings came in at$4.8 billion, or $3.15 per diluted share, up from$3.9 billion, or $2.36 per diluted share, in the same quarter of 2014. The consensus analysts' estimate called for earnings of $2.71 per share.

Behind the numbersHepatitis C drug Harvoni continued to be the star for Gilead. Harvoni generated sales of $3.6 billion -- nearly 44% of the biotech's total revenue. And that's with U.S. sales slipping from $3.01 billion in the first quarter of this year to $2.83 billion in the second quarter. The slippage didn't matter, though, with strong sales growth for Harvoni in Europe and elsewhere internationally.

Harvoni's dominating performance also more than made up for slowing sales of Sovaldi, Gilead's first hep C drug on the market. Sovaldi's sales dropped to $1.29 billion from the $3.48 billion reported in the same quarter of 2014. However, this came as no surprise, as observers fully expected Harvoni to eclipse its predecessor.

Gilead's HIV juggernaut kept rolling as well. Truvada's sales for the second quarter increased more than 5% year over year to $849 million. Stribild continued to show tremendous growth, with sales of $447 million versus $270 million in the same quarter of 2014.

Probably the only disappointment in the mix for Gilead came from Zydelig. Gilead's first cancer drug on the market brought in sales of $30 million during the second quarter, up from $26 million in the first quarter. Zydelig at one point was heralded as a potential blockbuster for Gilead, but the drug has struggled somewhat to take off in the face of tough competition.

Looking aheadGilead's shareholders enjoyed other good news. The biotech increased its full-year 2015 revenue guidance for the second time this year. In April, the company projected net product sales would be between $28 billion and $29 billion. Now, Gilead forecasts the range to be between $29 billion and $30 billion.

What's next for Gilead Sciences? For the immediate future, it depends largely on how well Harvoni performs. Some expect the drug's upward momentum to stall, but Harvoni keeps chugging along for now. Over the longer term, Gilead's future hinges on its promising pipeline -- and how it invests its whopping $14.67 billion in cash, cash equivalents, and marketable securities. If the company can execute down the road as it did in the second quarter, the high fives for Gilead's shareholders will continue.

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Keith Speights owns shares of Gilead Sciences. The Motley Fool recommends Gilead Sciences. The Motley Fool owns shares of Gilead Sciences. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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