Amgen Reports Fourth Quarter And Full Year 2019 Financial Results
THOUSAND OAKS, Calif., Jan. 30, 2020 /PRNewswire/ -- Amgen (NASDAQ:AMGN) today announced financial results for the fourth quarter and full year 2019 versus comparable periods in 2018. Key results include:
-- For the fourth quarter, total revenues decreased 1% to $6.2 billion in
comparison to the fourth quarter of 2018, reflecting the impact of
biosimilar and generic competition against select products.
-- Product sales declined 2% globally, while units grew double digits
or better for Repatha(®) (evolocumab), Parsabiv(®
)(etelcalcetide), BLINCYTO(®) (blinatumomab), Aimovig(®
)(erenumab-aooe), Prolia(®) (denosumab), Nplate(® )(romiplostim)
and Vectibix(®) (panitumumab).
-- For the full year, total revenues decreased 2% to $23.4 billion, with
product sales decreasing 1%.
-- GAAP earnings per share (EPS) decreased 5% to $2.85 in the fourth
quarter driven by higher operating expenses, offset partially by lower
weighted-average shares outstanding. GAAP EPS increased 2% to $12.88 for
the full year driven by lower weighted-average shares outstanding,
offset partially by lower operating income.
-- For the fourth quarter, GAAP operating income decreased 14% to $2.0
billion and GAAP operating margin decreased 4.9 percentage points to
34.8%. For the full year, GAAP operating income decreased 6% to $9.7
billion and GAAP operating margin decreased 1.9 percentage points to
43.6%.
-- Non-GAAP EPS increased 6% in the fourth quarter to $3.64 and 3% to
$14.82 for the full year benefited by lower weighted-average shares
outstanding. The increase for the full year was offset partially by
lower operating income.
-- For the fourth quarter, non-GAAP operating income decreased 4% to
$2.6 billion and non-GAAP operating margin decreased 0.7 percentage
points to 44.6%. For the full year, non-GAAP operating income
decreased 6% to $11.2 billion and non-GAAP operating margin
decreased 2.4 percentage points to 50.2%.
-- The Company generated $8.5 billion of free cash flow for the full year
versus $10.6 billion in 2018.
-- 2020 total revenues guidance of $25.0-$25.6 billion; EPS guidance of
$10.85-$11.65 on a GAAP basis and $14.85-$15.60 on a non-GAAP basis.
"We are entering a period of new product driven revenue growth," said Robert A. Bradway, chairman and chief executive officer. "Heading into 2020, our capital allocation priorities are clear, and we look forward to several important clinical data readouts from our innovative pipeline this year."
$Millions, except EPS, dividends paid per share and percentages Q4'19 Q4'18 YOY FY'19 FY'18 YOY
Total Revenues $
6,197 $
6,230 (1%) $
23,362 $
23,747 (2%)
GAAP Operating
Income $
2,048 $
2,382 (14%) $
9,674 $
10,263 (6%)
GAAP Net Income $
1,703 $
1,928 (12%) $
7,842 $
8,394 (7%)
GAAP EPS $
2.85 $
3.01 (5%) $
12.88 $
12.62 2%
Non-GAAP
Operating Income $
2,621 $
2,717 (4%) $
11,157 $
11,857 (6%)
Non-GAAP Net
Income $
2,174 $
2,186 (1%) $
9,028 $
9,573 (6%)
Non-GAAP EPS $
3.64 $
3.42 6% $
14.82 $
14.40 3%
Dividends Paid
Per Share $
1.45 $
1.32 10% $
5.80 $
5.28 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 2% for the fourth quarter of 2019 versus
the fourth quarter of 2018. Product sales decreased 1% for the full year
driven by lower net selling price, offset partially by higher unit
demand.
-- Prolia sales increased 15% for the fourth quarter and 17% for the full
year driven by higher unit demand.
-- EVENITY(® )(romosozumab-aqqg) launched in 2019, generating sales of $85
million in the fourth quarter and $189 million for the full year.
-- Repatha sales increased 26% for the fourth quarter and 20% for the full
year driven primarily by higher unit demand, offset partially by net
selling price.
-- Aimovig sales increased 3% for the fourth quarter driven by higher unit
demand, offset partially by unfavorable changes in accounting estimates.
Full year sales grew 157% driven primarily by unit demand.
-- Parsabiv sales increased 49% for the fourth quarter and 88% for the full
year driven primarily by higher unit demand, offset partially by net
selling price.
-- Otezla(® )(apremilast) was acquired on Nov. 21, 2019, and generated
$178 million in sales for the period.
-- Enbrel(®) (etanercept) sales increased 2% for the fourth quarter and 4%
for the full year driven primarily by favorable changes in accounting
estimates and higher net selling price, offset partially by lower unit
demand.
-- AMGEVITA((TM)) (adalimumab) generated $71 million of sales in the fourth
quarter and $215 million for the full year.
-- KYPROLIS(®) (carfilzomib) sales increased 6% for the fourth quarter and
8% for the full year driven by higher unit demand.
-- XGEVA(®) (denosumab) sales increased 7% for the fourth quarter and 8%
for the full year driven primarily by higher unit demand and, to a
lesser extent, higher net selling price.
-- Vectibix sales increased 8% for the fourth quarter and the full year
driven by higher unit demand.
-- Nplate sales increased 15% for the fourth quarter and 11% for the full
year driven primarily by higher unit demand.
-- BLINCYTO sales increased 27% for the fourth quarter and 36% for the full
year driven by higher unit demand.
-- KANJINTI((TM)* )(trastuzumab-anns) generated $103 million of sales in
the fourth quarter and $226 million for the full year.
-- MVASI((TM)* )(bevacizumab-awwb) generated $84 million of sales in the
fourth quarter and $127 million for the full year.
-- Neulasta(®) (pegfilgrastim) sales decreased 43% for the fourth quarter
and 28% for the full year driven by the impact of biosimilar competition
on unit demand and lower net selling price.
-- NEUPOGEN(®) (filgrastim) sales decreased 17% for the fourth quarter
driven by the impact of competition on unit demand. Sales decreased 28%
for the full year driven by the impact of competition on unit demand and
lower net selling price.
-- EPOGEN(®) (epoetin alfa) sales decreased 20% for the fourth quarter
driven by lower net selling price and unit demand. Sales decreased 14%
for the full year driven primarily by lower net selling price.
-- Aranesp(®) (darbepoetin alfa) sales decreased 10% for the fourth
quarter driven by the impact of competition on unit demand and lower net
selling price as well as unfavorable changes in inventory. Sales
decreased 8% for the full year driven primarily by the impact of
competition of unit demand.
-- Sensipar/Mimpara(®) (cinacalcet) sales decreased 76% for the fourth
quarter and 69% for the full year driven by the impact of generic
competition on unit demand.
* Registered in the United States.
Product Sales Detail by Product and Geographic Region
$Millions, except percentages
Q4'19 Q4'18 YOY
US ROW TOTAL TOTAL TOTAL
Prolia(R) $
499 $
253 $
752 $
655 15%
EVENITY(R) 27 58 85
*
Repatha(R) 117 83 200 159 26%
Aimovig(R) 98 98 95 3%
Parsabiv(R) 156 23 179 120 49%
Otezla(R) 139 39 178
*
Enbrel(R) 1,306 40 1,346 1,315 2%
AMGEVITA(TM) 71 71 11
*
KYPROLIS(R) 171 95 266 251 6%
XGEVA(R) 366 123 489 456 7%
Vectibix(R) 80 102 182 168 8%
Nplate(R) 125 85 210 182 15%
BLINCYTO(R) 50 30 80 63 27%
KANJINTI(TM) 79 24 103 23
*
MVASI(TM) 79 5 84
*
Neulasta(R) 583 82 665 1,169 (43%)
NEUPOGEN(R) 41 21 62 75 (17%)
EPOGEN(R) 210 210 264 (20%)
Aranesp(R) 180 247 427 474 (10%)
Sensipar(R)/Mimpara(R) 36 71 107 448 (76%)
Other** 27 60 87 73 19%
Total product sales $
4,369 $
1,512 $
5,881 $
6,001 (2%)
* Change in excess of 100%
** Other includes GENSENTA, Bergamo, Corlanor(R) and IMLYGIC(R).
---
$Millions, except percentages
FY'19 FY'18 YOY
US ROW TOTAL TOTAL TOTAL
Prolia(R) $
1,772 $
900 $
2,672 $
2,291 17%
EVENITY(R) 42 147 189
*
Repatha(R) 376 285 661 550 20%
Aimovig(R) 306 306 119
*
Parsabiv(R) 550 80 630 336 88%
Otezla(R) 139 39 178
*
Enbrel(R) 5,050 176 5,226 5,014 4%
AMGEVITA(TM) 215 215 11
*
KYPROLIS(R) 654 390 1,044 968 8%
XGEVA(R) 1,457 478 1,935 1,786 8%
Vectibix(R) 316 428 744 691 8%
Nplate(R) 480 315 795 717 11%
BLINCYTO(R) 176 136 312 230 36%
KANJINTI(TM) 118 108 226 44
*
MVASI(TM) 121 6 127
*
Neulasta(R) 2,814 407 3,221 4,475 (28%)
NEUPOGEN(R) 178 86 264 365 (28%)
EPOGEN(R) 867 867 1,010 (14%)
Aranesp(R) 758 971 1,729 1,877 (8%)
Sensipar(R)/Mimpara(R) 252 299 551 1,774 (69%)
Other** 105 207 312 275 13%
Total product sales $
16,531 $
5,673 $
22,204 $
22,533 (1%)
* Change in excess of 100%
** Other includes GENSENTA, Bergamo, IMLYGIC(R) and Corlanor(R).
---
Operating Expense, Operating Margin and Tax Rate Analysis
On a GAAP basis:
-- Total Operating Expenses increased 8% in the fourth quarter and 2% for
the full year. Cost of Sales margin increased 3 percentage points in the
fourth quarter driven primarily by amortization of intangible assets
acquired in the Otezla acquisition. For the full year, Cost of Sales
margin increased 1.4 percentage points driven primarily by unfavorable
product mix and amortization of intangible assets acquired in the Otezla
acquisition, offset partially by lower royalties and lower manufacturing
costs. Research & Development (R&D) expenses increased 11% in the fourth
quarter and 10% for the full year driven by higher spending in research
and early pipeline in support of our oncology programs. The full year
was offset partially by lower spend in support of marketed programs.
Selling, General & Administrative (SG&A) expenses decreased 3% in the
fourth quarter driven by lower spend for launched and marketed products
and lower general and administrative expenses, offset partially by
Otezla commercial-related expenses. For the full year, SG&A expenses
decreased 3% driven by lower general and administrative expenses, the
end of certain amortization of intangible assets in 2018 and lower spend
for launched and marketed products, offset partially by Otezla
commercial-related expenses. Other expenses increased in the fourth
quarter driven primarily by restructuring costs in 2019. For the full
year, other operating expenses decreased driven primarily by an
impairment charge in 2018 of an intangible asset.
-- Operating Margin decreased 4.9 percentage points in the fourth quarter
to 34.8% driven primarily by the Otezla acquisition, and decreased 1.9
percentage points for the full year to 43.6%.
-- Tax Rate increased 2.3 percentage points in the fourth quarter and 2.1
percentage points for the full year 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 Increased 2% in the fourth quarter and 3% for
the full year. Cost of Sales margin decreased 0.2 percentage points in
the fourth quarter. For the full year, Cost of Sales margin increased
0.5 percentage points driven primarily by unfavorable product mix,
offset partially by lower royalties and lower manufacturing costs. R&D
expenses increased 11% for the fourth quarter and 10% for the full year
driven by higher spending in research and early pipeline in support of
our oncology programs. The full year was offset partially by lower spend
in support of marketed programs. SG&A expenses decreased 2% in the
fourth quarter driven by lower spend for launched and marketed products
and lower general and administrative expenses, offset partially by
Otezla commercial-related expenses. For the full year, SG&A expenses
decreased 2% driven by lower general and administrative expenses and
lower spend for launched and marketed products, offset partially by
Otezla commercial-related expenses.
-- Operating Margin decreased 0.7 percentage points to 44.6% in the fourth
quarter, and decreased 2.4 percentage points to 50.2% for the full year.
-- Tax Rate increased 1.6 percentage points in the fourth quarter and 1.5
percentage points for the full year due primarily to a prior-year tax
benefit associated with intercompany sales under U.S. corporate tax
reform.
$Millions, except percentages
GAAP
Non-GAAP
Q4'19 Q4'18 YOY Q4'19 Q4'18 YOY
Cost of Sales $
1,253 $
1,096 14% $
790 $
819 (4%)
% of product sales 21.3 18.3
3 pts. 13.4 13.6
% % % %
(0.2) pts.
Research & Development $
1,312 $
1,182 11% $
1,285 $
1,162 11%
% of product sales 22.3 19.7
2.6 pts. 21.9 19.4
% % % %
2.5 pts.
Selling, General &
Administrative $
1,513 $
1,559 (3%) $
1,501 $
1,532 (2%)
% of product sales 25.7 26.0
(0.3) pts. 25.5 25.5
% % % %
0.0 pts.
Other $
71 $
11
*
$
$ -%
Total Operating Expenses $
4,149 $
3,848 8% $
3,576 $
3,513 2%
Operating Margin
operating income as % of product 34.8 39.7
(4.9) pts. 44.6 45.3
sales % % % %
(0.7) pts.
Tax Rate 14.1 11.8 2.3 pts. 14.9 13.3
%
%
%
% 1.6 pts.
* Change in excess of 100%
pts: percentage points
---
$Millions, except percentages
GAAP
Non-GAAP
FY'19 FY'18 YOY FY'19 FY'18 YOY
Cost of Sales $
4,356 $
4,101 6% $
3,065 $
3,001 2%
% of product sales 19.6
% 18.2
%
1.4 pts. 13.8
% 13.3
%
0.5 pts.
Research &
Development $
4,116 $
3,737 10% $
4,027 $
3,657 10%
% of product sales 18.5
% 16.6
%
1.9 pts. 18.1
% 16.2
%
1.9 pts.
Selling, General &
Administrative $
5,150 $
5,332 (3%) $
5,113 $
5,232 (2%)
% of product sales 23.2
% 23.7
%
(0.5) pts. 23.0
% 23.2
%
(0.2) pts.
Other $
66 $
314 (79%)
$
$ 0.0%
Total Operating
Expenses $
13,688 $
13,484 2% $
12,205 $
11,890 3%
Operating Margin
operating income as
% of product sales 43.6
% 45.5
%
(1.9) pts. 50.2
% 52.6
%
(2.4) pts.
Tax Rate 14.2 12.1 2.1 pts. 15.0 13.5
%
%
%
% 1.5 pts.
pts: percentage
points
---
Cash Flow and Balance Sheet
-- The Company generated $2.3 billion of free cash flow in the fourth
quarter of 2019 versus $3.0 billion in the fourth quarter of 2018 due
primarily to timing of tax payments. The Company generated $8.5 billion
of free cash flow for the full year 2019 versus $10.6 billion in 2018
due primarily to unfavorable changes in working capital, an advanced tax
deposit and lower net income.
-- The Company's fourth quarter 2019 dividend of $1.45 per share was
declared on Oct. 22, 2019, and was paid on Dec. 6, 2019, to all
stockholders of record as of Nov. 15, 2019, representing a 10% increase
from the fourth quarter of 2018. The Company's first quarter 2020
dividend of $1.60 per share declared on Dec. 11, 2019, will be paid on
March 6, 2020, to all stockholders of record as of Feb. 14, 2020,
representing a 10% increase from that paid in each of the previous four
quarters of 2019.
-- During the fourth quarter of 2019, the Company repurchased 5.1 million
shares of common stock at a total cost of $1.1 billion. For the full
year, the Company repurchased 40.2 million shares of common stock at a
total cost of $7.6 billion. At the end of the fourth quarter, the
Company had $6.5 billion remaining under its stock repurchase
authorization.
$Billions, except shares Q4'19 Q4'18 YOY FY'19 FY'18 YOY
Operating Cash Flow $
2.5 $
3.2 $
(0.7) $
9.2 $
11.3 $
(2.1)
Capital Expenditures 0.2 0.2 0.0 0.6 0.7 (0.1)
Free Cash Flow 2.3 3.0 (0.6) 8.5 10.6 (2.0)
Dividends Paid 0.9 0.8 0.0 3.5 3.5 0.0
Share Repurchases 1.1 2.2 (1.1) 7.6 17.9 (10.2)
Average Diluted Shares
(millions) 598 640 (42) 609 665 (56)
Cash and Investments 8.9 29.3 (20.4) 8.9 29.3 (20.4)
Debt Outstanding 29.9 33.9 (4.0) 29.9 33.9 (4.0)
Stockholders' Equity 9.7 12.5 (2.8) 9.7 12.5 (2.8)
Note: Numbers may not add due to rounding
---
2020 Guidance
For the full year 2020, the Company expects:
-- Total revenues in the range of $25.0 billion to $25.6 billion.
-- On a GAAP basis, EPS in the range of $10.85 to $11.65 and a tax rate in
the range of 10.5% to 11.5%.
-- On a non-GAAP basis, EPS in the range of $14.85 to $15.60 and a tax rate
in the range of 13.5% to 14.5%.
-- Capital expenditures to be approximately $700 million.
Fourth Quarter Product and Pipeline Update
The Company provided the following updates on selected product and pipeline programs:
Otezla
-- Data from the Phase 3 study in patients with mild-to-moderate psoriasis
are expected by mid-year 2020.
-- A supplemental New Drug Application (sNDA) to expand the Prescribing
Information to include data from the Phase 3 scalp psoriasis study is
under review by the U.S. Food and Drug Administration (FDA) with a
Prescription Drug User Fee Act target action date in April 2020.
EVENITY
-- In December 2019, the European Commission (EC) granted marketing
authorization for EVENITY for the treatment of severe osteoporosis in
postmenopausal women at high risk of fracture.
KYPROLIS
-- In January, an sNDA was submitted to the FDA to expand the Prescribing
Information to include KYPROLIS in combination with dexamethasone and
DARZALEX(®) (daratumumab) for patients with relapsed or refractory
multiple myeloma based on data from the Phase 3 CANDOR study.
-- In November, a marketing authorization application (MAA) was accepted by
the China National Medical Products Administration (NMPA) for the use of
KYPROLIS plus dexamethasone for the treatment of relapsed and refractory
multiple myeloma.
BLINCYTO
-- In December, the China NMPA granted priority review for the MAA for the
treatment of adults with relapsed or refractory B-cell acute
lymphoblastic leukemia.
AMG 510
-- A potentially pivotal Phase 2 monotherapy study in advanced non-small
cell lung cancer (NSCLC) completed enrollment and data are expected in
2020.
-- A Phase 2 monotherapy study is enrolling advanced colorectal cancer
patients.
-- A Phase 1b study in combination with MEK inhibition is enrolling
advanced colorectal and non-small cell lung cancer patients.
-- The ongoing Phase 1 monotherapy study is also enrolling treatment naïve
NSCLC patients.
-- In 2020, additional data are expected from the first-in-human
monotherapy study in patients with multiple solid tumors, and initial
data are expected from a Phase 1 study in combination with KEYTRUDA(®)
(pembrolizumab) in patients with advanced NSCLC.
-- In January, the Company announced strategic collaborations with leading
diagnostic companies, Guardant Health, Inc. and QIAGEN N.V., to develop
blood- and tissue-based companion diagnostics, respectively.
Omecamtiv mecarbil
-- Data from the event driven Phase 3 GALACTIC-HF cardiovascular outcomes
study are expected in Q4 2020.
AVSOLA(TM) (infliximab-axxq)
-- In December, the FDA approved AVSOLA for all approved indications of the
reference product, Remicade(®) (infliximab).
ABP 798 (biosimilar rituximab)
-- In December, a Biologics License Application was submitted to the FDA
for ABP 798, a biosimilar candidate to Rituxan(®) (rituximab).
EVENITY is developed in collaboration with UCB globally, as well as our joint venture partner Astellas in Japan
Omecamtiv mecarbil is being developed under a collaboration between Amgen and Cytokinetics, with funding and strategic support from Servier
KEYTRUDA is a registered trademark of Merck Sharp & Dohme Corp., a subsidiary of Merck & Co. Inc.
Remicade is a registered trademark of Janssen Biotech Inc.
Rituxan is a registered trademark of Biogen Inc.
Non-GAAP Financial Measures
In this news release, management has presented its operating results for the fourth quarters and full years 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 2020 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 fourth quarters and full years 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 collaborations with any other company, including BeiGene, Ltd., or the Otezla acquisition, 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 collaborate with or acquire other companies, products or technology, and to integrate the operations of companies or in support of products or technology 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 Years ended
December 31, December 31,
---
2019 2018 2019 2018
---
Revenues:
Product sales $
5,881 $
6,001 $
22,204 $
22,533
Other revenues 316 229 1,158 1,214
---
Total revenues 6,197 6,230 23,362 23,747
---
Operating expenses:
Cost of sales 1,253 1,096 4,356 4,101
Research and
development 1,312 1,182 4,116 3,737
Selling, general and
administrative 1,513 1,559 5,150 5,332
Other 71 11 66 314
---
Total operating
expenses 4,149 3,848 13,688 13,484
---
Operating income 2,048 2,382 9,674 10,263
Interest expense, net 301 352 1,289 1,392
Interest and other
income, net 236 155 753 674
---
Income before income
taxes 1,983 2,185 9,138 9,545
Provision for income
taxes 280 257 1,296 1,151
---
Net income $
1,703 $
1,928 $
7,842 $
8,394
===
Earnings per share:
Basic $
2.87 $
3.04 $
12.96 $
12.70
Diluted $
2.85 $
3.01 $
12.88 $
12.62
Weighted-average shares used in
calculation of earnings per
share:
Basic 593 635 605 661
Diluted 598 640 609 665
Amgen Inc.
Consolidated Balance Sheets - GAAP
(In millions)
December 31,
2019 2018
---
(Unaudited)
Assets
Current assets:
Cash, cash
equivalents and
marketable
securities $
8,911 $
29,304
Trade
receivables, net 4,057 3,580
Inventories 3,584 2,940
Other current
assets 1,888 1,794
Total current
assets 18,440 37,618
Property, plant
and equipment,
net 4,928 4,958
Intangible
assets, net 19,413 7,443
Goodwill 14,703 14,699
Other assets 2,223 1,698
Total assets $
59,707 $
66,416
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable
and accrued
liabilities $
9,882 $
9,069
Current portion
of long-term
debt 2,953 4,419
Total current
liabilities 12,835 13,488
Long-term debt 26,950 29,510
Long-term
deferred tax
liabilities 606 864
Long-term tax
liabilities 8,037 8,770
Other noncurrent
liabilities 1,606 1,284
Total
stockholders'
equity 9,673 12,500
Total liabilities
and
stockholders'
equity $
59,707 $
66,416
Shares
outstanding 591 630
Amgen Inc.
GAAP to Non-GAAP Reconciliations
(Dollars in millions)
(Unaudited)
Three months ended
Years ended
December 31, December 31,
2019 2018 2019 2018
---
GAAP cost of sales $
1,253 $
1,096 $
4,356 $
4,101
Adjustments to cost of sales:
Acquisition-related expenses
(a) (463) (276) (1,291) (1,099)
Certain net charges pursuant
to our restructuring
initiatives - (1) (1)
Total adjustments to cost of
sales (463) (277) (1,291) (1,100)
Non-GAAP cost of sales $
790 $
819 $
3,065 $
3,001
GAAP cost of sales as a 21.3 18.3 19.6 18.2
percentage of product sales % % % %
Acquisition-related expenses
(a) -7.9 -4.7 -5.8 -4.9
Certain net charges pursuant
to our restructuring
initiatives 0.0 0.0 0.0 0.0
Non-GAAP cost of sales as a 13.4 13.6 13.8 13.3
percentage of product sales % % % %
===
GAAP research and development
expenses $
1,312 $
1,182 $
4,116 $
3,737
Adjustments to research and development
expenses:
Acquisition-related expenses
(a) (25) (19) (87) (78)
Certain net charges pursuant
to our restructuring
initiatives (2) (1) (2) (2)
Total adjustments to research
and development expenses (27) (20) (89) (80)
Non-GAAP research and
development expenses $
1,285 $
1,162 $
4,027 $
3,657
GAAP research and development
expenses as a percentage of % % % %
product sales 22.3 19.7 18.5 16.6
Acquisition-related expenses
(a) -0.4 -0.3 -0.4 -0.4
Certain net charges pursuant
to our restructuring
initiatives 0.0 0.0 0.0 0.0
Non-GAAP research and
development expenses as a % % % %
percentage of product sales 21.9 19.4 18.1 16.2
===
GAAP selling, general and
administrative expenses $
1,513 $
1,559 $
5,150 $
5,332
Adjustments to selling, general and
administrative expenses:
Acquisition-related expenses
(a) (12) (19) (38) (84)
Certain net charges pursuant
to our restructuring
initiatives - (8) 1 (16)
Total adjustments to selling,
general and administrative
expenses (12) (27) (37) (100)
Non-GAAP selling, general and
administrative expenses $
1,501 $
1,532 $
5,113 $
5,232
GAAP selling, general and
administrative expenses as a % % % %
percentage of product sales 25.7 26.0 23.2 23.7
Acquisition-related expenses
(a) -0.2 -0.3 -0.2 -0.4
Certain net charges pursuant
to our restructuring
initiatives 0.0 -0.2 0.0 -0.1
Non-GAAP selling, general and
administrative expenses as a % % % %
percentage of product sales 25.5 25.5 23.0 23.2
===
GAAP operating expenses $
4,149 $
3,848 $
13,688 $
13,484
Adjustments to operating expenses:
Adjustments to cost of sales (463) (277) (1,291) (1,100)
Adjustments to research and
development expenses (27) (20) (89) (80)
Adjustments to selling,
general and administrative
expenses (12) (27) (37) (100)
Certain net charges pursuant
to our restructuring
initiatives (46) (1) (44) 7
Certain other expenses - (25)
Acquisition-related
adjustments (b) (25) (10) (22) (296)
Total adjustments to operating
expenses (573) (335) (1,483) (1,594)
Non-GAAP operating expenses $
3,576 $
3,513 $
12,205 $
11,890
GAAP operating income $
2,048 $
2,382 $
9,674 $
10,263
Adjustments to operating
expenses 573 335 1,483 1,594
Non-GAAP operating income $
2,621 $
2,717 $
11,157 $
11,857
Three months ended
Years ended
December 31, December 31,
2019 2018 2019 2018
---
GAAP operating income as a 34.8 39.7 43.6 45.5
percentage of product sales % % % %
Adjustments to cost of sales 7.9 4.7 5.8 4.9
Adjustments to research and
development expenses 0.4 0.3 0.4 0.4
Adjustments to selling,
general and administrative
expenses 0.2 0.5 0.2 0.5
Certain net charges pursuant
to our restructuring
initiatives 0.8 0.0 0.2 0.0
Certain other expenses 0.0 0.0 0.0 0.0
Acquisition-related
adjustments (b) 0.5 0.1 0.0 1.3
Non-GAAP operating income as 44.6 45.3 50.2 52.6
a percentage of product sales % % % %
===
GAAP interest and other
income, net $
236 $
155 $
753 $
674
Adjustments to other income
(c) - (68)
Non-GAAP interest and other
income, net $
236 $
155 $
753 $
606
GAAP income before income
taxes $
1,983 $
2,185 $
9,138 $
9,545
Adjustments to operating
expenses 573 335 1,483 1,594
Adjustments to other income
(c) - (68)
Non-GAAP income before income
taxes $
2,556 $
2,520 $
10,621 $
11,071
GAAP provision for income
taxes $
280 $
257 $
1,296 $
1,151
Adjustments to provision for income taxes:
Income tax effect of the above
adjustments (d) 99 77 329 362
Other income tax adjustments
(e) 3 (32) (15)
Total adjustments to provision
for income taxes 102 77 297 347
Non-GAAP provision for income
taxes $
382 $
334 $
1,593 $
1,498
GAAP tax as a percentage of 14.1 11.8 14.2 12.1
income before taxes % % % %
Adjustments to provision for income taxes:
Income tax effect of the above
adjustments (d) 0.7 1.5 1.1 1.6
Other income tax adjustments
(e) 0.1 0.0 -0.3 -0.2
Total adjustments to provision
for income taxes 0.8 1.5 0.8 1.4
Non-GAAP tax as a percentage 14.9 13.3 15.0 13.5
of income before taxes % % % %
===
GAAP net income $
1,703 $
1,928 $
7,842 $
8,394
Adjustments to net income:
Adjustments to income before
income taxes, net of the
income tax effect 474 258 1,154 1,164
Other income tax adjustments
(e) (3) 32 15
Total adjustments to net
income 471 258 1,186 1,179
Non-GAAP net income $
2,174 $
2,186 $
9,028 $
9,573
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
December 31, 2019 December 31, 2018
GAAP Non-GAAP GAAP Non-GAAP
---
Net income $
1,703 $
2,174 $
1,928 $
2,186
Weighted-
average
shares for
diluted EPS 598 598 640 640
Diluted EPS $
2.85 $
3.64 $
3.01 $
3.42
Year ended Year ended
December 31, 2019 December 31, 2018
GAAP Non-GAAP GAAP Non-GAAP
---
Net income $
7,842 $
9,028 $
8,394 $
9,573
Weighted-
average
shares for
diluted EPS 609 609 665 665
Diluted EPS $
12.88 $
14.82 $
12.62 $
14.40
(a) The adjustments related primarily
to noncash amortization of
intangible assets acquired in
business combinations.
(b) For the year ended December 31,
2018, the adjustment related
primarily to an impairment charge
associated with a nonkey in-
process research and development
asset.
(c) For the year ended December 31,
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
initiatives, 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 and year ended
December 31, 2019, were 17.3% and
22.2%, compared with 23.0% and
23.7% 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
Years ended
December 31, December 31,
2019 2018 2019 2018
Net cash provided
by operating
activities $
2,514 $
3,194 $
9,150 $
11,296
Net cash (used
in) provided by
investing
activities (5,963) (4,637) 5,709 14,339
Net cash used in
financing
activities (1,929) (3,568) (15,767) (22,490)
(Decrease)
increase in cash
and cash
equivalents (5,378) (5,011) (908) 3,145
Cash and cash
equivalents at
beginning of
period 11,415 11,956 6,945 3,800
Cash and cash
equivalents at
end of period $
6,037 $
6,945 $
6,037 $
6,945
Three months ended
Years ended
December 31, December 31,
2019 2018 2019 2018
---
Net cash provided
by operating
activities $
2,514 $
3,194 $
9,150 $
11,296
Capital
expenditures (188) (225) (618) (738)
Free cash flow $
2,326 $
2,969 $
8,532 $
10,558
Amgen Inc.
Reconciliation of GAAP EPS Guidance to Non-GAAP
EPS Guidance for the Year Ending December 31, 2020
(Unaudited)
GAAP diluted EPS guidance $10.85 $11.65
Known adjustments to arrive at non-
GAAP*:
Acquisition-related expenses (a) 3.95 4.00
Non-GAAP diluted EPS guidance $14.85 $15.60
* The known adjustments are
presented net of their related tax
impact, which amount to
approximately $1.10 to $1.11 per
share.
(a) The adjustments relate
primarily to noncash amortization
of intangible assets acquired in
business combinations.
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, 2020
(Unaudited)
GAAP tax rate guidance 10.5% 11.5%
Tax rate of known adjustments
discussed above 3%
Non-GAAP diluted EPS guidance 13.5% 14.5%
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SOURCE Amgen
