Gilead Sciences Inc. (NASDAQ:GILD)

The data reveals several notable trends in the company's financial performance over the analyzed five-year period.

Gross Profit and Cost of Goods Sold

The gross profit as a percentage of product sales experienced fluctuations, with a decline from 81.23% in 2020 to a low of 75.56% in 2021, followed by some recovery to 78.15% in 2024. Correspondingly, the cost of goods sold percentage increased notably in 2021 to 24.44% from 18.77% in 2020, before declining again toward 21.85% in 2024. This indicates variability in production or procurement costs relative to sales, affecting overall profitability.

Revenue Composition

Royalty, contract, and other revenues as a percentage of product sales showed a consistent decline from 1.37% in 2020 to 0.5% in 2024, suggesting a diminishing contribution from these revenue streams.

Research and Development Expenses

Research and development (R&D) expenses fluctuated moderately around the 20% mark of product sales, decreasing slightly from 20.69% in 2020 to 18.45% in 2022, then rising again to 20.65% in 2024. Acquired in-process R&D expenses showed a large drop from an unusually high 24.04% in 2020 to less than 5% in the subsequent years, except for a sharp increase to 16.3% in 2024. The in-process R&D impairment figures reveal significant impairment charges in 2022 (-10.01%) and 2024 (-14.61%), which indicates challenges or reevaluations in development projects during these years.

Selling, General, and Administrative Expenses

SG&A expenses remained relatively stable, fluctuating between 19.42% and 22.61% of product sales over the period, suggesting steady operational expenses in this category without extreme volatility.

Operating Income

Operating income as a percentage of product sales showed considerable variability, increasing substantially from 16.72% in 2020 to a peak of 36.72% in 2021, then declining to 5.81% by 2024. This trend reflects a significant drop in operational profitability in the most recent year after strong performance in earlier years.

Interest and Other Income/Expense

Interest expense remained relatively consistent, slightly decreasing from 4.04% in 2020 to 3.41% in 2024. Interest income appeared from 2022 onwards and showed an increase peaking at 1.4% in 2023 before declining in 2024. Loss from equity securities was recorded in 2022 through 2024, albeit at relatively low levels. Other net items transitioned from a negative impact in earlier years towards neutrality or slight positive impact in 2023 and 2024, improving from -5.82% in 2020 to nearly 0% in 2024.

Income Before Taxes and Net Income

Income before income taxes saw a rise from 6.85% in 2020 to a high of 30.65% in 2021, followed by a gradual decrease to 2.41% in 2024. Income tax expense as a percentage of product sales declined over time, particularly dropping sharply to -0.73% in 2024, which may reflect changes in tax strategy or benefits. Net income attributable to the company peaked notably at 23.05% in 2021, then declined steadily to 1.68% in 2024, mirroring the earlier trends in operating and pre-tax income.

Overall Observations

The data illustrates a peak in profitability and operational efficiency around 2021, accompanied by a subsequent decline through 2024. Increased impairments and fluctuations in R&D expenses in the later years suggest challenges in product development. Despite relatively stable SG&A and interest expenses, the downward trend in operating income and net income points to rising costs or reduced margins in other areas. The diminishing contribution of royalty and other revenues also signals a shift in revenue composition. Tax expenses have decreased, but this has not offset the overall decline in profitability by 2024.