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Amgen Reports First Quarter 2017 Financial Results Amgen (NASDAQ:AMGN) today announced financial results for the first quarter of 2017. Key results include: Total revenues decreased 1 percent versus...

Wednesday, April 26, 2017 7 min read
Key Takeaway: THOUSAND OAKS, Calif. , April 26, 2017 /PRNewswire/ -- Amgen (NASDAQ: AMGN ) today announced financial results for the first quarter of 2017. Key results include: "We are well positioned for the long term with our newer products demonstrating volume growth around the world and o

Full Press Release Details

THOUSAND OAKS, Calif. , April 26, 2017 /PRNewswire/ -- Amgen (NASDAQ: AMGN ) today announced financial results for the first quarter of 2017. Key results include:
"We are well positioned for the long term with our newer products demonstrating volume growth around the world and our tight operational expense management of the Company," said Robert A. Bradway , chairman and chief executive officer. "With robust Repatha ® (evolocumab) outcomes data, we are working with payers to improve access to this important therapy for patients at risk for heart attacks and strokes."
$Millions, except EPS and percentages Q1'17 Q1'16 YOY Δ
Total Revenues $ 5,464 $ 5,527 (1%)
GAAP Operating Income $ 2,591 $ 2,402 8%
GAAP Net Income $ 2,071 $ 1,900 9%
GAAP EPS $ 2.79 $ 2.50 12%
Non-GAAP Operating Income $ 2,995 $ 2,859 5%
Non-GAAP Net Income $ 2,333 $ 2,203 6%
Non-GAAP EPS $ 3.15 $ 2.90 9%
Product Sales Performance
$Millions, except percentages Q1'17 Q1'16 YOY Δ
US ROW TOTAL TOTAL TOTAL
Neulasta ® $1,048 $162 $1,210 $1,183 2%
Enbrel ® 1,118 63 1,181 1,385 (15%)
Aranesp ® 278 233 511 532 (4%)
Prolia ® 279 146 425 352 21%
Sensipar ® / Mimpara ® 337 84 421 367 15%
XGEVA ® 298 104 402 378 6%
EPOGEN ® 270 0 270 300 (10%)
KYPROLIS ® 137 53 190 154 23%
Nplate ® 97 57 154 141 9%
NEUPOGEN ® 101 47 148 213 (31%)
Vectibix ® 61 86 147 144 2%
Repatha ® 33 16 49 16 *
BLINCYTO ® 23 11 34 27 26%
Other** 15 42 57 47 21%
Total product sales $4,095 $1,104 $5,199 $5,239 (1%)
* Change in excess of 100%
** Other includes Bergamo, MN Pharma, IMLYGIC ® and Corlanor ®
Operating Expense, Operating Margin and Tax Rate Analysis
On a GAAP basis:
On a non-GAAP basis:
$Millions, except percentages
GAAP Non-GAAP
Q1'17 Q1'16 YOY Δ Q1'17 Q1'16 YOY Δ
Cost of Sales $996 $1,018 (2%) $682 $707 (4%)
% of product sales 19.2% 19.4% (0.2)pts 13.1% 13.5% (0.4) pts
Research & Development $769 $872 (12%) $748 $858 (13%)
% of product sales 14.8% 16.6% (1.8) pts 14.4% 16.4% (2) pts
Selling, General & Administrative $1,064 $1,203 (12%) $1,039 $1,103 (6%)
% of product sales 20.5% 23.0% (2.5) pts 20.0% 21.1% (1.1) pts
Other $44 $32 38% $0 $0 NM
TOTAL Operating Expenses $2,873 $3,125 (8%) $2,469 $2,668 (7%)
Operating Margin
operating income as a % of product sales 49.8% 45.8% 4 pts 57.6% 54.6% 3 pts
Tax Rate 15.8% 15.9% (0.1) pts 18.5% 18.9% (0.4) pts
NM: Not Meaningful pts: percentage points
Cash Flow and Balance Sheet
$Billions, except shares Q1'17 Q1'16 YOY Δ
Operating Cash Flow $2.4 $1.9 $0.5
Capital Expenditures 0.2 0.2 0.0
Free Cash Flow 2.2 1.8 0.5
Dividends Paid 0.8 0.8 0.1
Share Repurchase 0.6 0.7 (0.1)
Avg. Diluted Shares (millions) 741 760 (19)
Cash and Investments 38.4 34.7 3.7
Debt Outstanding 34.1 34.3 (0.2)
Stockholders' Equity 30.6 28.7 2.0
Note: Numbers may not add due to rounding
For the full year 2017, the Company now expects:
Clinical Program Indication Projected Milestone
Repatha Hyperlipidemia Regulatory submissions (CV outcomes data)
KYPROLIS Relapsed or refractory multiple myeloma Phase 3 study initiation with DARZALEX ® Q2 '17
XGEVA Prevention of SREs in multiple myeloma Regulatory reviews
EVENITY™ (romosozumab) † Postmenopausal osteoporosis July 19, 2017, PDUFA target action date in U.S. Active controlled Phase 3 fracture data Q2 2017*
Erenumab (AMG 334) Migraine prevention Regulatory submissions
ABP 215 (biosimilar bevacizumab) Oncology Regulatory reviews Sept. 14, 2017, BsUFA target action date in U.S.
ABP 980 (biosimilar trastuzumab) Breast cancer U.S. regulatory submission
The Company provided the following updates on selected product and pipeline programs:
Parsabiv ™ (etelcalcetide)
AMG 157/MEDI9929 ( tezepelumab)
AMGEVITA™ (biosimilar adalimumab)
ABP 980 (biosimilar trastuzumab)
Erenumab and CNP520 are developed in collaboration with Novartis AG EVENITY™ trade name is provisionally approved by FDA EVENITY™ is developed in collaboration with UCB globally, as well as our joint venture partner Astellas in Japan Tezepelumab is developed in collaboration with AstraZeneca AMGEVITA™ is registered in the U.S. as AMJEVITA™ Velcade ® is a registered trademark of Millennium Pharmaceuticals, Inc.
Non-GAAP Financial Measures
In this news release, management has presented its operating results for the first quarters of 2017 and 2016, in accordance with U.S. Generally Accepted Accounting Principles (GAAP) and on a non-GAAP basis. In addition, management has presented its full year 2017 EPS and tax rate guidance in accordance with GAAP and on a non-GAAP basis. These non-GAAP financial measures are computed by excluding certain items related to acquisitions, restructuring and certain other items from the related GAAP financial measures. Reconciliations for these non-GAAP financial measures to the most directly comparable GAAP financial measures are included in the news release. Management has also presented Free Cash Flow (FCF), which is a non-GAAP financial measure, for the first quarters of 2017 and 2016. FCF is computed by subtracting capital expenditures from operating cash flow, each as determined in accordance with GAAP.
The Company believes that its presentation of non-GAAP financial measures provides useful supplementary information to and facilitates additional analysis by investors. The Company uses certain non-GAAP financial measures to enhance an investor's overall understanding of the financial performance and prospects for the future of the Company's ongoing business activities by facilitating comparisons of results of ongoing business operations among current, past and future periods. The Company believes that FCF provides a further measure of the Company's liquidity.
The Company uses the non-GAAP financial measures set forth in the news release in connection with its own budgeting and financial planning internally to evaluate the performance of the business, including to allocate resources and to evaluate results relative to incentive compensation targets. The non-GAAP financial measures are in addition to, not a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP.
Amgen is committed to unlocking the potential of biology for patients suffering from serious illnesses by discovering, developing, manufacturing and delivering innovative human therapeutics. This approach begins by using tools like advanced human genetics to unravel the complexities of disease and understand the fundamentals of human biology.
Amgen focuses on areas of high unmet medical need and leverages its expertise to strive for solutions that improve health outcomes and dramatically improve people's lives. A biotechnology pioneer since 1980, Amgen has grown to be one of the world's leading independent biotechnology companies, has reached millions of patients around the world and is developing a pipeline of medicines with breakaway potential.
Forward-Looking Statements
This news release contains forward-looking statements that are based on the current expectations and beliefs of Amgen. All statements, other than statements of historical fact, are statements that could be deemed forward-looking statements, including estimates of revenues, operating margins, capital expenditures, cash, other financial metrics, expected legal, arbitration, political, regulatory or clinical results or practices, customer and prescriber patterns or practices, reimbursement activities and outcomes and other such estimates and results. Forward-looking statements involve significant risks and uncertainties, including those discussed below and more fully described in the Securities and Exchange Commission reports filed by Amgen, including our most recent annual report on Form 10-K and any subsequent periodic reports on Form 10-Q and Form 8-K. Unless otherwise noted, Amgen is providing this information as of the date of this news release and does not undertake any obligation to update any forward-looking statements contained in this document as a result of new information, future events or otherwise.
No forward-looking statement can be guaranteed and actual results may differ materially from those we project. Our results may be affected by our ability to successfully market both new and existing products domestically and internationally, clinical and regulatory developments involving current and future products, sales growth of recently launched products, competition from other products including biosimilars, difficulties or delays in manufacturing our products and global economic conditions. In addition, sales of our products are affected by pricing pressure, political and public scrutiny and reimbursement policies imposed by third-party payers, including governments, private insurance plans and managed care providers and may be affected by regulatory, clinical and guideline developments and domestic and international trends toward managed care and healthcare cost containment. Furthermore, our research, testing, pricing, marketing and other operations are subject to extensive regulation by domestic and foreign government regulatory authorities. We or others could identify safety, side effects or manufacturing problems with our products after they are on the market. Our business may be impacted by government investigations, litigation and product liability claims. In addition, our business may be impacted by the adoption of new tax legislation or exposure to additional tax liabilities. If we fail to meet the compliance obligations in the corporate integrity agreement between us and the U.S. government, we could become subject to significant sanctions. Further, while we routinely obtain patents for our products and technology, the protection offered by our patents and patent applications may be challenged, invalidated or circumvented by our competitors, or we may fail to prevail in present and future intellectual property litigation. We perform a substantial amount of our commercial manufacturing activities at a few key facilities and also depend on third parties for a portion of our manufacturing activities, and limits on supply may constrain sales of certain of our current products and product candidate development. In addition, we compete with other companies with respect to many of our marketed products as well as for the discovery and development of new products. Discovery or identification of new product candidates cannot be guaranteed and movement from concept to product is uncertain; consequently, there can be no guarantee that any particular product candidate will be successful and become a commercial product. Further, some raw materials, medical devices and component parts for our products are supplied by sole third-party suppliers. Certain of our distributors, customers and payers have substantial purchasing leverage in their dealings with us. The discovery of significant problems with a product similar to one of our products that implicate an entire class of products could have a material adverse effect on sales of the affected products and on our business and results of operations. Our efforts to acquire other companies or products and to integrate the operations of companies we have acquired may not be successful. We may not be able to access the capital and credit markets on terms that are favorable to us, or at all. We are increasingly dependent on information technology systems, infrastructure and data security. Our stock price is volatile and may be affected by a number of events. Our business performance could affect or limit the ability of our Board of Directors to declare a dividend or our ability to pay a dividend or repurchase our common stock.
Amgen Inc.
Consolidated Statements of Income - GAAP
(In millions, except per share data)
(Unaudited)
Three months ended
March 31,
2017 2016
Revenues:
Product sales $ 5,199 $ 5,239
Other revenues 265 288
Total revenues 5,464 5,527
Operating expenses:
Cost of sales 996 1,018
Research and development 769 872
Selling, general and administrative 1,064 1,203
Other 44 32
Total operating expenses 2,873 3,125
Operating income 2,591 2,402
Interest expense, net 326 294
Interest and other income, net 195 150
Income before income taxes 2,460 2,258
Provision for income taxes 389 358
Net income $ 2,071 $ 1,900
Earnings per share:
Basic $ 2.81 $ 2.52
Diluted $ 2.79 $ 2.50
Weighted average shares used in calculation of earnings per share:
Basic 737 753
Diluted 741 760
Amgen Inc.
Consolidated Balance Sheets - GAAP
(In millions)
(Unaudited)
March 31, December 31,
2017 2016
Assets
Current assets:
Cash, cash equivalents and marketable securities $ 38,398 $ 38,085
Trade receivables, net 3,248 3,165
Inventories 2,871 2,745
Other current assets 1,939 2,015
Total current assets 46,456 46,010
Property, plant and equipment, net 4,960 4,961
Intangible assets, net 9,922 10,279
Goodwill 14,757 14,751
Other assets 1,767 1,625
Total assets $ 77,862 $ 77,626
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued liabilities $ 6,724 $ 6,801
Current portion of long-term debt 3,799 4,403
Total current liabilities 10,523 11,204
Long-term debt 30,293 30,193
Long-term deferred tax liabilities 2,370 2,436
Long-term tax liabilities 2,542 2,419
Other noncurrent liabilities 1,497 1,499
Stockholders' equity 30,637 29,875
Total liabilities and stockholders' equity $ 77,862 $ 77,626
Shares outstanding 736 738
Amgen Inc.
GAAP to Non-GAAP Reconciliations
(In millions)
(Unaudited)
Three months ended
March 31,
2017 2016
GAAP cost of sales $ 996 $ 1,018
Adjustments to cost of sales:
Acquisition-related expenses (a) (314) (311)
Total adjustments to cost of sales (314) (311)
Non-GAAP cost of sales $ 682 $ 707
GAAP cost of sales as a percentage of product sales 19.2% 19.4%
Acquisition-related expenses (a) -6.1 -5.9
Non-GAAP cost of sales as a percentage of product sales 13.1% 13.5%
GAAP research and development expenses $ 769 $ 872
Adjustments to research and development expenses:
Acquisition-related expenses (a) (19) (19)
Certain net charges pursuant to our restructuring initiative (2) 5
Total adjustments to research and development expenses (21) (14)
Non-GAAP research and development expenses $ 748 $ 858
GAAP research and development expenses as a percentage of product sales 14.8% 16.6%
Acquisition-related expenses (a) -0.4 -0.3
Certain net charges pursuant to our restructuring initiative 0.0 0.1
Non-GAAP research and development expenses as a percentage of product sales 14.4% 16.4%
GAAP selling, general and administrative expenses $1,064 $ 1,203
Adjustments to selling, general and administrative expenses:
Acquisition-related expenses (b) (25) (101)
Certain net charges pursuant to our restructuring initiative - 1
Total adjustments to selling, general and administrative expenses (25) (100)
Non-GAAP selling, general and administrative expenses $1,039 $ 1,103
GAAP selling, general and administrative expenses as a percentage of product sales 20.5% 23.0%
Acquisition-related expenses (b) -0.5 -1.9
Certain net charges pursuant to our restructuring initiative 0.0 0.0
Non-GAAP selling, general and administrative expenses as a percentage of product sales 20.0% 21.1%
GAAP operating expenses $2,873 $ 3,125
Adjustments to operating expenses:
Adjustments to cost of sales (314) (311)
Adjustments to research and development expenses (21) (14)
Adjustments to selling, general and administrative expenses (25) (100)
Certain net charges pursuant to our restructuring initiative (c) (37) (2)
Expense related to various legal proceedings - (27)
Acquisition-related adjustments (7) (3)
Total adjustments to operating expenses (404) (457)
Non-GAAP operating expenses $2,469 $ 2,668
GAAP operating income $2,591 $ 2,402
Adjustments to operating expenses 404 457
Non-GAAP operating income $2,995 $ 2,859
GAAP operating income as a percentage of product sales 49.8% 45.8%
Adjustments to cost of sales 6.1 5.9
Adjustments to research and development expenses 0.4 0.2
Adjustments to selling, general and administrative expenses 0.5 1.9
Certain net charges pursuant to our restructuring initiative (c) 0.7 0.1
Expense related to various legal proceedings 0.0 0.6
Acquisition-related adjustments 0.1 0.1
Non-GAAP operating income as a percentage of product sales 57.6% 54.6%
GAAP income before income taxes $2,460 $ 2,258
Adjustments to operating expenses 404 457
Non-GAAP income before income taxes $2,864 $ 2,715
GAAP provision for income taxes $ 389 $ 358
Adjustments to provision for income taxes:
Income tax effect of the above adjustments to operating expenses (d) 119 139
Other income tax adjustments (e) 23 15
Total adjustments to provision for income taxes 142 154
Non-GAAP provision for income taxes $ 531 $ 512
GAAP tax rate as a percentage of income before taxes 15.8% 15.9%
Adjustments to provision for income taxes:
Income tax effect of the above adjustments to operating expenses (d) 1.9 2.5
Other income tax adjustments (e) 0.8 0.5
Total adjustments to provision for income taxes 2.7 3.0
Non-GAAP tax rate as a percentage of income before taxes 18.5% 18.9%
GAAP net income $2,071 $ 1,900
Adjustments to net income:
Adjustments to income before income taxes, net of the income tax effect 285 318
Other income tax adjustments (e) (23) (15)
Total adjustments to net income 262 303
Non-GAAP net income $2,333 $ 2,203
Amgen Inc.
GAAP to Non-GAAP Reconciliations
(In millions, except per share data)
(Unaudited)
The following table presents the computations for GAAP and non-GAAP diluted EPS.
Three months ended Three months ended
March 31, 2017 March 31, 2016
GAAP Non-GAAP GAAP Non-GAAP
Net income $2,071 $ 2,333 $1,900 $ 2,203
Weighted-average shares for diluted EPS 741 741 760 760
Diluted EPS $ 2.79 $ 3.15 $ 2.50 $ 2.90
(a) The adjustments related primarily to non-cash amortization of intangible assets acquired in business combinations.
(b) For the three months ended March 31, 2017, the adjustments related primarily to non-cash amortization of intangible assets acquired in business combinations. For the three months ended March 31, 2016, the adjustments related primarily to a $73-million charge resulting from the reacquisition of Prolia ® , XGEVA ® and Vectibix ® license agreements in certain markets from Glaxo Group Limited, as well as non-cash amortization of intangible assets acquired in business combinations.
(c) For the three months ended March 31, 2017, the adjustments related primarily to severance expenses associated with our restructuring initiative.
(d) The tax effect of the adjustments between our GAAP and non-GAAP results takes into account the tax treatment and related tax rate(s) that apply to each adjustment in the applicable tax jurisdiction(s). Generally, this results in a tax impact at the U.S. marginal tax rate for certain adjustments, including the majority of amortization of intangible assets, whereas the tax impact of other adjustments, including restructuring expense, depends on whether the amounts are deductible in the respective tax jurisdictions and the applicable tax rate(s) in those jurisdictions. Due to these factors, the effective tax rates for the adjustments to our GAAP income before income taxes, for the three months ended March 31, 2017 and 2016, were 29.5% and 30.4%, respectively.
(e) The adjustments related to certain acquisition items and prior period items excluded from non-GAAP earnings.
Amgen Inc.
Reconciliations of Cash Flows
(In millions)
(Unaudited)
Three months ended
March 31,
2017 2016
Net cash provided by operating activities $ 2,385 $ 1,915
Net cash used in investing activities (157) (4,390)
Net cash (used in) provided by financing activities (2,111) 1,227
Increase (decrease) in cash and cash equivalents 117 (1,248)
Cash and cash equivalents at beginning of period 3,241 4,144
Cash and cash equivalents at end of period $ 3,358 $ 2,896
Three months ended
March 31,
2017 2016
Net cash provided by operating activities $ 2,385 $ 1,915
Capital expenditures (168) (156)
Free cash flow $ 2,217 $ 1,759
Reconciliation of GAAP EPS Guidance to Non-GAAP
EPS Guidance for the Year Ending December 31, 2017
(Unaudited)
GAAP diluted EPS guidance $ 10.64 - $ 11.32
Known adjustments to arrive at non-GAAP*:
Acquisition-related expenses (a) 1.24
Restructuring charges 0.07 - 0.15
Tax adjustments (b) (0.03)
Non-GAAP diluted EPS guidance $ 12.00 - $ 12.60
* The known adjustments are presented net of their related tax impact which amount to approximately $0.58 to $0.61 per share, in the aggregate.
(a) The adjustments relate primarily to non-cash amortization of intangible assets acquired in prior year business combinations.
(b) The adjustments relate to certain prior period items excluded from non-GAAP earnings.
Reconciliation of GAAP Tax Rate Guidance to Non-GAAP
Tax Rate Guidance for the Year Ending December 31, 2017
(Unaudited)
2017
GAAP tax rate guidance 16.0% - 18.0%
Tax rate effect of known adjustments discussed above 1.5% - 2.5%
Non-GAAP tax rate guidance 18.5% - 19.5%
CONTACT: Amgen, Thousand Oaks Trish Hawkins , 805-447-5631 (media) Arvind Sood , 805-447-1060 (investors)

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Last updated: Apr 26, 2017