Amgen Reports Third Quarter 2019 Financial Results
THOUSAND OAKS, Calif., Oct. 29, 2019 /PRNewswire/ -- Amgen (NASDAQ:AMGN) today announced financial results for the third quarter of 2019. Key results include:
-- Total revenues decreased 3% to $5.7 billion in comparison to the third
quarter of 2018, reflecting the impact of biosimilar and generic
competition against key products.
-- Although product sales declined 1% globally, units grew double
digits or better for Prolia(®) (denosumab), Repatha(®)
(evolocumab), Aimovig(®) (erenumab-aooe), Parsabiv(®
)(etelcalcetide), KYPROLIS(®) (carfilzomib) and BLINCYTO(®
)(blinatumomab).
-- GAAP earnings per share (EPS) increased 14% to $3.27 benefited by lower
weighted-average shares outstanding and higher operating income.
-- GAAP operating income increased 7% to $2.5 billion and GAAP
operating margin increased 3.1 percentage points to 45.3%.
-- Non-GAAP EPS decreased 1% to $3.66 as a result of lower revenue, offset
partially by lower weighted-average shares outstanding.
-- Non-GAAP operating income decreased 6% to $2.8 billion and non-GAAP
operating margin decreased 2.8 percentage points to 51.1%.
-- The Company generated $3.2 billion of free cash flow in the third
quarter of 2019 versus $3.1 billion in the third quarter of 2018.
-- 2019 total revenues guidance revised to $22.8-$23.0 billion; EPS
guidance to $12.50-$12.80 on a GAAP basis and $14.20-$14.45 on a
non-GAAP basis. This guidance excludes the impact of the Otezla(®
)(apremilast) acquisition.
-- The Company expects the Otezla acquisition to close before the end of
the fourth quarter.
"Amgen continues to execute well in a dynamic environment, with many of our innovative medicines delivering double-digit, volume-driven growth, complemented by the strong performance of our recently launched biosimilar products," said Robert A. Bradway, chairman and chief executive officer. "We continue to advance numerous first-in-class medicines in our pipeline, while also pursuing external opportunities that will contribute to our long-term growth, such as our pending acquisition of Otezla."
$Millions, except EPS, dividend per share and percentages Q3'19 Q3'18 YOY
Total Revenues $
5,737 $
5,904 (3%)
GAAP Operating
Income $
2,476 $
2,323 7%
GAAP Net Income $
1,968 $
1,859 6%
GAAP EPS $
3.27 $
2.86 14%
Non-GAAP
Operating Income $
2,793 $
2,971 (6%)
Non-GAAP Net
Income $
2,201 $
2,392 (8%)
Non-GAAP EPS $
3.66 $
3.69 (1%)
Dividend Per
Share $
1.45 $
1.32 10%
---
References in this release to "non-GAAP"
measures, measures presented "on a non-
GAAP basis" and to "free cash flow"
(computed by subtracting capital
expenditures from operating cash flow)
refer to non-GAAP financial measures.
Adjustments to the most directly
comparable GAAP financial measures and
other items are presented on the
attached reconciliations.
Product Sales Performance
-- Total product sales decreased 1% for the third quarter of 2019 versus
the third quarter of 2018.
-- Prolia sales increased 18% driven by higher unit demand.
-- EVENITY(® )(romosozumab-aqqg) was launched in the first half of this
year and generated $59 million of sales in the third quarter of 2019.
-- Repatha sales increased 40% driven by higher unit demand, offset
partially by lower net selling price.
-- Aimovig generated $66 million in sales in the third quarter of 2019.
-- Parsabiv sales increased 54% driven by higher unit demand, offset
partially by lower net selling price.
-- KYPROLIS sales increased 15% driven primarily by higher unit demand.
-- XGEVA(®) (denosumab) sales increased 10% driven primarily by higher
unit demand.
-- Vectibix(®) (panitumumab) sales increased 8% driven primarily by higher
unit demand.
-- Nplate(®) (romiplostim) sales increased 10% driven primarily by higher
unit demand.
-- BLINCYTO sales increased 47% driven by higher unit demand.
-- Biosimilar sales generated $173 million in the third quarter of 2019.
-- Enbrel(®) (etanercept) sales increased 6% driven by higher net selling
price and favorable changes in accounting estimates, offset partially by
lower unit demand.
-- Neulasta(®) (pegfilgrastim) sales decreased 32% driven by the impact of
biosimilar competition on unit demand and lower net selling price.
-- NEUPOGEN(®) (filgrastim) sales decreased 36% driven primarily by lower
net selling price, unfavorable changes in accounting estimates and the
impact of biosimilar competition on unit demand.
-- EPOGEN(®) (epoetin alfa) sales decreased 15% driven primarily by lower
net selling price.
-- Aranesp(®) (darbepoetin alfa) sales decreased 5% driven primarily by
the impact of competition on unit demand.
-- Sensipar/Mimpara(®) (cinacalcet) sales decreased 73% driven by the
impact of generic competition on unit demand.
Product Sales Detail by Product and Geographic Region
$Millions, except percentages
Q3'19 Q3'18 YOY
US ROW TOTAL TOTAL TOTAL
Prolia(R) $
425 $
205 $
630 $
532 18%
EVENITY(R) 12 47 59
*
Repatha(R) 85 83 168 120 40%
Aimovig(R) 66 66 22
*
Parsabiv(R) 137 20 157 102 54%
KYPROLIS(R) 163 103 266 232 15%
XGEVA(R) 356 120 476 433 10%
Vectibix(R) 79 117 196 181 8%
Nplate(R) 119 76 195 177 10%
BLINCYTO(R) 47 38 85 58 47%
Biosimilars** 81 92 173 19
*
Enbrel(R) 1,323 43 1,366 1,292 6%
Neulasta(R) 619 92 711 1,051 (32%)
NEUPOGEN(R) 32 22 54 85 (36%)
EPOGEN(R) 215 215 252 (15%)
Aranesp(R) 204 248 452 477 (5%)
Sensipar(R)/Mimpara(R) 38 71 109 409 (73%)
Other*** 28 57 85 68 25%
Total product sales $
4,029 $
1,434 $
5,463 $
5,510 (1%)
* Change in excess of 100%
** Biosimilars includes KANJINTI(TM), AMGEVITA(TM) and MVASI(TM).
*** Other includes Bergamo, MN Pharma, IMLYGIC(R) and Corlanor(R).
---
Operating Expense, Operating Margin and Tax Rate Analysis
On a GAAP basis:
-- Total Operating Expenses decreased 9%. Cost of Sales margin increased
0.2 percentage points due primarily to unfavorable product mix, offset
partially by lower manufacturing costs. Research & Development (R&D)
expenses increased 8% driven primarily by increased spending in research
and early pipeline in support of our oncology programs, offset partially
by decreased spending in support of marketed products. Selling, General
& Administrative (SG&A) expenses decreased 5% driven primarily by lower
general and administrative expenses as well as the end of certain
amortization of intangible assets in 2018. Other operating expenses
decreased due primarily to an impairment charge in the prior period
associated with a nonkey intangible asset acquired in a business
combination.
-- Operating Margin increased 3.1 percentage points to 45.3%.
-- Tax Rate increased 2.4 percentage points due primarily to a prior-year
tax benefit associated with intercompany sales under U.S. corporate tax
reform.
On a non-GAAP basis:
-- Total Operating Expenses were flat. Cost of Sales margin increased 0.1
percentage points due primarily to unfavorable product mix, offset
partially by lower manufacturing costs. R&D expenses increased 8% driven
primarily by increased spending in research and early pipeline in
support of our oncology programs, offset partially by decreased spending
in support of marketed products. SG&A expenses decreased 5% driven
primarily by lower general and administrative expenses.
-- Operating Margin decreased 2.8 percentage points to 51.1%.
-- Tax Rate increased 2.2 percentage points due primarily to a prior-year
tax benefit associated with intercompany sales under U.S. corporate tax
reform.
$Millions, except percentages
GAAP
Non-GAAP
Q3'19 Q3'18 YOY Q3'19 Q3'18 YOY
Cost of Sales $
1,036 $
1,037 -% $
760 $
759 -%
% of product sales 19.0% 18.8%
0.2 pts. 13.9% 13.8%
0.1 pts.
Research & Development $
1,001 $
926 8% $
977 $
906 8%
% of product sales 18.3% 16.8%
1.5 pts. 17.9% 16.4%
1.5 pts.
Selling, General &
Administrative $
1,223 $
1,293 (5%) $
1,207 $
1,268 (5%)
% of product sales 22.4% 23.5%
(1.1) pts. 22.1% 23.0%
(0.9) pts.
Other $
1 $
325 (100%)
$
$ -%
Total Operating Expenses $
3,261 $
3,581 (9%) $
2,944 $
2,933 -%
Operating Margin
operating income as % of product
sales 45.3% 42.2%
3.1 pts. 51.1% 53.9%
(2.8) pts.
Tax Rate 13.6% 11.2% 2.4 pts. 15.2% 13.0% 2.2 pts.
pts: percentage points
---
Cash Flow and Balance Sheet
-- The Company generated $3.2 billion of free cash flow in the third
quarter of 2019 versus $3.1 billion in the third quarter of 2018 driven
primarily by favorable changes in working capital.
-- The Company's third quarter 2019 dividend of $1.45 per share was
declared on Aug. 2, 2019, and was paid on Sept. 6, 2019, to all
stockholders of record as of Aug. 15, 2019, representing a 10% increase
from 2018.
-- During the third quarter of 2019, the Company repurchased 6.2 million
shares of common stock at a total cost of $1.2 billion. At the end of
the third quarter, the Company had $3.6 billion remaining under its
stock repurchase authorization.
$Billions, except shares Q3'19 Q3'18 YOY
Operating Cash
Flow $
3.4 $
3.3 $
0.1
Capital
Expenditures 0.2 0.2 0.0
Free Cash Flow 3.2 3.1 0.1
Dividends Paid 0.9 0.9 0.0
Share
Repurchase 1.2 1.7 (0.5)
Average Diluted
Shares
(millions) 602 649 (47)
Cash and
Investments 20.9 29.9 (9.1)
Debt
Outstanding 29.8 34.4 (4.6)
Stockholders'
Equity 10.9 14.3 (3.4)
Note: Numbers may not add due to rounding
---
2019 Guidance
For the full year 2019, the Company now expects:
-- Total revenues in the range of $22.8 billion to $23.0 billion.
-- Previously, the Company expected total revenues in the range of
$22.4 billion to $22.9 billion.
-- On a GAAP basis, EPS in the range of $12.50 to $12.80 and a tax rate in
the range of 13% to 14%.
-- Previously, the Company expected GAAP EPS in the range of $12.10 to
$12.71 and a tax rate in the range of 13% to 14%.
-- On a non-GAAP basis, EPS in the range of $14.20 to $14.45 and a tax rate
in the range of 14% to 15%.
-- Previously, the Company expected non-GAAP EPS in the range of $13.75
to $14.30 and a tax rate in the range of 14% to 15%.
-- Capital expenditures to be approximately $650 million.
-- 2019 Guidance does not include the Otezla acquisition which is expected
to close by the end of the fourth quarter.
Third Quarter Product and Pipeline Update
The Company provided the following updates on selected product and pipeline programs:
Research
-- In September, the Company announced that it joined a consortium to
perform the whole genome sequencing of approximately 500,000
participants in the UK Biobank. deCODE Genetics, a wholly-owned
subsidiary of Amgen, will provide the whole genome sequencing for the
project, along with the Wellcome Sanger Institute.
Tezepelumab
-- A Phase 3 Study evaluating the efficacy and safety of tezepelumab in
adults and adolescents with severe uncontrolled asthma has completed
enrollment, with the primary analysis expected in late 2020.
-- A Phase 2 study evaluating the efficacy and safety of tezepelumab in
adults with moderate to very severe chronic obstructive pulmonary
disease is enrolling patients.
AMG 570
-- A Phase 2 study of AMG 570, a bispecific inhibitor of ICOSL and BAFF, is
enrolling patients with systemic lupus erythematosus.
EVENITY
-- In October, the Committee for Medicinal Products for Human Use of the
European Medicines Agency adopted a positive opinion recommending
Marketing Authorization for EVENITY for the treatment of severe
osteoporosis in postmenopausal women at high risk of fracture, with a
contraindication for patients with a history of myocardial infarction or
stroke.
KYPROLIS
-- In September, the Phase 3 CANDOR study evaluating KYPROLIS in
combination with dexamethasone and DARZALEX(®) (daratumumab) (KdD)
compared to KYPROLIS and dexamethasone alone (Kd) met its primary
endpoint of progression-free survival (PFS), demonstrating a 37%
reduction in the risk of disease progression or death in patients with
relapsed or refractory multiple myeloma treated with KdD. The median PFS
for patients treated with Kd alone was 15.8 months, while the median PFS
for patients treated with KdD had not been reached by the cut-off date.
BLINCYTO
-- In September, an open-label, randomized, controlled global multicenter
Phase 3 trial evaluating BLINCYTO compared to conventional consolidation
chemotherapy in pediatric patients with high-risk, B-cell acute
lymphoblastic leukemia (ALL) at first relapse met its primary endpoint
of event-free survival at a prespecified interim analysis.
-- In September, an open-label, randomized, controlled multicenter Phase 3
trial in Australia, Canada, New Zealand and the U.S. conducted by the
Children's Oncology Group (COG) in pediatric B-cell ALL patients at
first relapse closed to accrual for the high-risk and intermediate
risk-arm based on the recommendation of the COG Data Monitoring
Committee. The closure decision was based on a strong trend towards
improved disease-free survival and improved overall survival, markedly
lower toxicity and better minimal residual disease clearance for
BLINCYTO compared to chemotherapy.
Nplate
-- In October, the U.S. Food and Drug Administration approved a
Supplemental Biologics License Application for Nplate to include new
data in its U.S. prescribing information showing sustained platelet
responses in adults with immune thrombocytopenia. The updated indication
expands treatment to newly diagnosed and persistent adult ITP patients
who have had an insufficient response to corticosteroids,
immunoglobulins or splenectomy.
-- A Phase 3 trial evaluating Nplate for the treatment of
chemotherapy-induced thrombocytopenia in patients receiving chemotherapy
for the treatment of non-small cell lung cancer, ovarian cancer or
breast cancer is enrolling patients.
AMG 510
-- The Company discussed clinical data from the first-in-human study that
was presented at medical conferences in Q3.
-- The Phase 2 non-small cell lung cancer monotherapy study continues to
enroll patients.
-- Initial cohort of colorectal cancer patients has been enrolled at the
target dose in a Phase 2 monotherapy study, and as the data mature, the
Company will determine the development path for colorectal cancer.
-- The next clinical data update for AMG 510 is expected in 2020.
ABP 798 (biosimilar rituximab)
-- In August, a Phase 3 study in patients with CD20-positive B-cell
non-Hodgkin's lymphoma met its primary endpoint. The primary endpoint,
as assessment of overall response rate by week 28, was within the
prespecified margin for ABP 798 compared to Rituxan(®) (rituximab),
showing clinical equivalence.
-- Submission of a Biologics License Application in the U.S. for ABP 798 is
expected in Q1 2020.
Tezepelumab is being developed in collaboration with AstraZeneca PLC
EVENITY is developed in collaboration with UCB globally, as well as our joint venture partner Astellas in Japan
Rituxan is a registered trademark of Genentech
Non-GAAP Financial Measures
In this news release, management has presented its operating results for the third quarters of 2019 and 2018, in accordance with U.S. Generally Accepted Accounting Principles (GAAP) and on a non-GAAP basis. In addition, management has presented its full year 2019 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 third quarters of 2019 and 2018. 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.
About Amgen
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.
For more information, visit www.amgen.com and follow us on www.twitter.com/amgen.
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 any statements on the outcome, benefits and synergies of the acquisition of Otezla, including anticipated Otezla sales growth and the timing of non-GAAP EPS accretion, as well as 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 current reports on 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, including our devices, 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, including in Puerto Rico, 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. We rely on collaborations with third parties for the development of some of our product candidates and for the commercialization and sales of some of our commercial products. 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 or development of new indications for existing products cannot be guaranteed and movement from concept to product is uncertain; consequently, there can be no guarantee that any particular product candidate or development of a new indication for an existing product 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. A breakdown, cyberattack or information security breach could compromise the confidentiality, integrity and availability of our systems and our data. 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. We may not be able to access the capital and credit markets on terms that are favorable to us, or at all.
CONTACT: Amgen, Thousand Oaks
Trish Hawkins, 805-447-5631 (media)
Arvind Sood, 805-447-1060 (investors)
Amgen Inc.
Consolidated Statements of Income - GAAP
(In millions, except per-share data)
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
2019 2018 2019 2018
---
Revenues:
Product sales $
5,463 $
5,510 $
16,323 $
16,532
Other revenues 274 394 842 985
Total revenues 5,737 5,904 17,165 17,517
Operating expenses:
Cost of sales 1,036 1,037 3,103 3,005
Research and
development 1,001 926 2,804 2,555
Selling, general and
administrative 1,223 1,293 3,637 3,773
Other 1 325 (5) 303
Total operating
expenses 3,261 3,581 9,539 9,636
Operating income 2,476 2,323 7,626 7,881
Interest expense, net 313 355 988 1,040
Interest and other
income, net 114 126 517 519
Income before income
taxes 2,277 2,094 7,155 7,360
Provision for income
taxes 309 235 1,016 894
Net income $
1,968 $
1,859 $
6,139 $
6,466
Earnings per share:
Basic $
3.29 $
2.88 $
10.08 $
9.67
Diluted $
3.27 $
2.86 $
10.01 $
9.61
Weighted-average shares used in
calculation of earnings per share:
Basic 599 645 609 669
Diluted 602 649 613 673
Amgen Inc.
Consolidated Balance Sheets - GAAP
(In millions)
September 30, December 31,
2019 2018
---
(Unaudited)
Assets
Current assets:
Cash, cash
equivalents and
marketable
securities $
20,853 $
29,304
Trade receivables,
net 3,606 3,580
Inventories 3,243 2,940
Other current
assets 3,349 1,794
Total current
assets 31,051 37,618
Property, plant
and equipment,
net 4,901 4,958
Intangible assets,
net 6,702 7,443
Goodwill 14,705 14,699
Other assets 2,176 1,698
Total assets $
59,535 $
66,416
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable
and accrued
liabilities $
8,688 $
9,069
Current portion of
long-term debt 2,049 4,419
Total current
liabilities 10,737 13,488
Long-term debt 27,742 29,510
Long-term
deferred tax
liabilities 665 864
Long-term tax
liabilities 7,921 8,770
Other noncurrent
liabilities 1,543 1,284
Total
stockholders'
equity 10,927 12,500
Total liabilities
and stockholders'
equity $
59,535 $
66,416
Shares outstanding 596 630
Amgen Inc.
GAAP to Non-GAAP Reconciliations
(Dollars in millions)
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
2019 2018 2019 2018
---
GAAP cost of sales $
1,036 $
1,037 $
3,103 $
3,005
Adjustments to cost of sales:
Acquisition-related expenses
(a) (276) (278) (828) (823)
Total adjustments to cost of
sales (276) (278) (828) (823)
Non-GAAP cost of sales $
760 $
759 $
2,275 $
2,182
GAAP cost of sales as a 19.0 18.8 19.0 18.2
percentage of product sales % % % %
Acquisition-related expenses
(a) -5.1 -5.0 -5.1 -5.0
Non-GAAP cost of sales as a 13.9 13.8 13.9 13.2
percentage of product sales % % % %
===
GAAP research and development
expenses $
1,001 $
926 $
2,804 $
2,555
Adjustments to research and development
expenses:
Acquisition-related expenses
(a) (24) (19) (62) (59)
Certain net charges pursuant to
our restructuring initiative - (1) (1)
Total adjustments to research
and development expenses (24) (20) (62) (60)
Non-GAAP research and
development expenses $
977 $
906 $
2,742 $
2,495
GAAP research and development
expenses as a percentage of % % % %
product sales 18.3 16.8 17.2 15.5
Acquisition-related expenses
(a) -0.4 -0.4 -0.4 -0.4
Certain net charges pursuant to
our restructuring initiative 0.0 0.0 0.0 0.0
Non-GAAP research and
development expenses as a % % % %
percentage of product sales 17.9 16.4 16.8 15.1
===
GAAP selling, general and
administrative expenses $
1,223 $
1,293 $
3,637 $
3,773
Adjustments to selling, general and
administrative expenses:
Acquisition-related expenses
(a) (17) (20) (26) (65)
Certain net charges pursuant to
our restructuring initiative 1 (5) 1 (8)
Total adjustments to selling,
general and administrative
expenses (16) (25) (25) (73)
Non-GAAP selling, general and
administrative expenses $
1,207 $
1,268 $
3,612 $
3,700
GAAP selling, general and
administrative expenses as a % % % %
percentage of product sales 22.4 23.5 22.3 22.8
Acquisition-related expenses
(a) -0.3 -0.4 -0.2 -0.4
Certain net charges pursuant to
our restructuring initiative 0.0 -0.1 0.0 0.0
Non-GAAP selling, general and
administrative expenses as a % % % %
percentage of product sales 22.1 23.0 22.1 22.4
===
GAAP operating expenses $
3,261 $
3,581 $
9,539 $
9,636
Adjustments to operating expenses:
Adjustments to cost of sales (276) (278) (828) (823)
Adjustments to research and
development expenses (24) (20) (62) (60)
Adjustments to selling, general
and administrative expenses (16) (25) (25) (73)
Certain net charges pursuant to
our restructuring initiative - 2 2 8
Certain other expenses - (25)
Acquisition-related
adjustments (b) (1) (327) 3 (286)
Total adjustments to operating
expenses (317) (648) (910) (1,259)
Non-GAAP operating expenses $
2,944 $
2,933 $
8,629 $
8,377
GAAP operating income $
2,476 $
2,323 $
7,626 $
7,881
Adjustments to operating
expenses 317 648 910 1,259
Non-GAAP operating income $
2,793 $
2,971 $
8,536 $
9,140
Three months ended Nine months ended
September 30, September 30,
2019 2018 2019 2018
---
GAAP operating income as a 45.3 42.2 46.7 47.7
percentage of product sales % % % %
Adjustments to cost of sales 5.1 5.0 5.1 5.0
Adjustments to research and
development expenses 0.4 0.4 0.4 0.4
Adjustments to selling, general
and administrative expenses 0.3 0.5 0.2 0.4
Certain net charges pursuant to
our restructuring initiative 0.0 -0.1 0.0 0.0
Certain other expenses 0.0 0.0 0.0 0.1
Acquisition-related
adjustments (b) 0.0 5.9 -0.1 1.7
Non-GAAP operating income as a 51.1 53.9 52.3 55.3
percentage of product sales % % % %
===
GAAP interest and other income,
net $
114 $
126 $
517 $
519
Adjustments to other income (c) - 7 (68)
Non-GAAP interest and other
income, net $
114 $
133 $
517 $
451
GAAP income before income taxes $
2,277 $
2,094 $
7,155 $
7,360
Adjustments to operating
expenses 317 648 910 1,259
Adjustments to other income (c) - 7 (68)
Non-GAAP income before income
taxes $
2,594 $
2,749 $
8,065 $
8,551
GAAP provision for income taxes $
309 $
235 $
1,016 $
894
Adjustments to provision for income taxes:
Income tax effect of the above
adjustments (d) 92 147 230 285
Other income tax adjustments
(e) (8) (25) (35) (15)
Total adjustments to provision
for income taxes 84 122 195 270
Non-GAAP provision for income
taxes $
393 $
357 $
1,211 $
1,164
GAAP tax as a percentage of 13.6 11.2 14.2 12.1
income before taxes % % % %
Adjustments to provision for income taxes:
Income tax effect of the above
adjustments (d) 1.9 2.7 1.2 1.7
Other income tax adjustments
(e) -0.3 -0.9 -0.4 -0.2
Total adjustments to provision
for income taxes 1.6 1.8 0.8 1.5
Non-GAAP tax as a percentage 15.2 13.0 15.0 13.6
of income before taxes % % % %
===
GAAP net income $
1,968 $
1,859 $
6,139 $
6,466
Adjustments to net income:
Adjustments to income before
income taxes, net of the
income tax effect 225 508 680 906
Other income tax adjustments
(e) 8 25 35 15
Total adjustments to net income 233 533 715 921
Non-GAAP net income $
2,201 $
2,392 $
6,854 $
7,387
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 earnings per share:
Three months ended Three months ended
September 30, 2019 September 30, 2018
GAAP Non-GAAP GAAP Non-GAAP
---
Net income $
1,968 $
2,201 $
1,859 $
2,392
Weighted-
average
shares for
diluted EPS 602 602 649 649
Diluted EPS $
3.27 $
3.66 $
2.86 $
3.69
Nine months ended Nine months ended
September 30, 2019 September 30, 2018
GAAP Non-GAAP GAAP Non-GAAP
---
Net income $
6,139 $
6,854 $
6,466 $
7,387
Weighted-
average
shares for
diluted EPS 613 613 673 673
Diluted EPS $
10.01 $
11.18 $
9.61 $
10.98
(a) The adjustments related primarily
to noncash amortization of
intangible assets acquired in
business combinations.
(b) For the three and nine months ended
September 30, 2018, the
adjustments related primarily to
an impairment charge associated
with a nonkey in-process research
and development asset.
(c) For the nine months ended September
30, 2018, the adjustment related
to the net gain associated with
the Kirin-Amgen, Inc., share
acquisition.
(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 and nine months ended
September 30, 2019, were 29.0% and
25.3%, compared with 22.4% and
23.9% for the corresponding
periods of the prior year.
(e) The adjustments related primarily
to certain acquisition items and
prior-period items excluded from
GAAP earnings.
Amgen Inc.
Reconciliations of Cash Flows
(In millions)
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
2019 2018 2019 2018
Net cash provided
by operating
activities $
3,377 $
3,273 $
6,636 $
8,102
Net cash provided
by investing
activities 5,372 1,132 11,672 18,976
Net cash used in
financing
activities (2,859) (2,580) (13,838) (18,922)
Increase in cash
and cash
equivalents 5,890 1,825 4,470 8,156
Cash and cash
equivalents at
beginning of
period 5,525 10,131 6,945 3,800
Cash and cash
equivalents at
end of period $
11,415 $
11,956 $
11,415 $
11,956
Three months ended Nine months ended
September 30, September 30,
2019 2018 2019 2018
---
Net cash provided
by operating
activities $
3,377 $
3,273 $
6,636 $
8,102
Capital
expenditures (170) (171) (430) (513)
Free cash flow $
3,207 $
3,102 $
6,206 $
7,589
Amgen Inc.
Reconciliation of GAAP EPS Guidance to Non-GAAP
EPS Guidance for the Year Ending December 31, 2019
(Unaudited)
GAAP diluted EPS guidance $12.50 $12.80
Known adjustment to arrive at
non-GAAP*:
Acquisition-related expenses
(a) (b) 1.59 1.64
Tax adjustments 0.06
Non-GAAP diluted EPS guidance $14.20 $14.45
* The known adjustments are
presented net of their related tax
impact, which amount to
approximately $0.39 to $0.40 per
share.
(a) The adjustments relate
primarily to noncash amortization
of intangible assets acquired in
business combinations.
(b) The adjustments exclude
transactions that have not yet
closed.
Our GAAP diluted EPS guidance does
not include the effect of GAAP
adjustments triggered by events
that may occur subsequent to this
press release such as
acquisitions, asset impairments,
litigation and changes in the fair
value or our contingent
consideration.
Reconciliation of GAAP Tax Rate Guidance to Non-GAAP
Tax Rate Guidance for the Year Ending December 31, 2019
(Unaudited)
GAAP tax rate guidance 13% 14%
Tax rate of known adjustments discussed
above 1%
Non-GAAP diluted EPS guidance 14% 15%
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SOURCE Amgen
