Gilead Sciences (GILD.US), the American biopharmaceutical giant, released its third-quarter 2026 earnings report on Thursday, October 29. Driven by double-digit growth in its flagship HIV drug portfolio, the company's quarterly product sales rose 13% year-over-year to $8.3 billion, surpassing market expectations. Excluding the COVID-19 drug Veklury (remdesivir), "base business" sales grew 16% year-over-year to $8.2 billion, marking the fastest year-over-year base business growth in more than a decade. Based on these strong results, the company once again raised its full-year sales guidance.
Results Broadly Beat Wall Street Expectations, After-Hours Stock Continues to Climb
Earnings data showed that Gilead's third-quarter adjusted earnings per share (Non-GAAP EPS) came in at $2.55, significantly exceeding the analyst average estimate of $2.19. Revenue of $8.3 billion also topped the expected $7.8 billion. Following the earnings release, the company's stock rose 4% during regular trading hours and gained another 2.2% after hours to reach $169.25, bringing its year-to-date gain to 36%.
On a GAAP basis, the company reported third-quarter net income of $2.43 billion ($1.94 per share), down from $3.05 billion ($2.43 per share) in the same period last year. The profit decline was primarily due to a net loss on equity investments during the period (versus net gains in the prior-year period), higher operating expenses and income tax expenses, and the absence of royalty revenue from an intellectual property sale that occurred in the same period last year.
On the cash flow front, Gilead generated $5 billion in operating cash flow during the third quarter. As of September 30, cash and marketable debt securities totaled $6.4 billion, down from $10.6 billion at the end of 2025, mainly reflecting $11.3 billion spent on mergers and acquisitions, $2.8 billion on debt repayment, $3.1 billion on dividends, and $1.1 billion on share buybacks during the year.
HIV Business Leads the Way, Oncology and Liver Disease Deliver Broad Gains
In the third quarter, HIV product sales, which account for the bulk of the company's revenue, grew 18% year-over-year to $6.2 billion, driven primarily by higher average realized prices, growing demand for HIV prevention drugs, and favorable inventory dynamics. HIV prevention drug sales nearly doubled. Sales of the flagship combination drug Biktarvy grew 10% year-over-year to $4.1 billion, beating the market expectation of $3.86 billion.
Non-HIV businesses also performed well. Sales of the cancer drug Trodelvy surged 42% year-over-year to $506 million on strong demand. The liver disease portfolio grew 13% to $927 million, with new liver drug Livdelzi sales rising from $105 million in the prior-year period to $203 million.
On the drag side, the cell therapy business saw sales decline 18% year-over-year to $355 million due to continued competitive pressure. Sales of the COVID-19 treatment Veklury shrank significantly amid declining hospitalization rates.
Hidden Concern: Medicare Price Cut Looms Over Biktarvy
During the earnings call, Chief Financial Officer Andrew Dickinson disclosed that under the third round of annual drug price negotiations mandated by the Inflation Reduction Act (IRA), the Centers for Medicare & Medicaid Services (CMS) will cut the price Medicare pays for Biktarvy for people aged 65 and older by 38%, to a "maximum fair price" of $2,600 per 30-day supply, effective January 1, 2028. This is expected to reduce Gilead's Biktarvy sales by approximately $1.5 billion in 2028, though the company still expects overall HIV business revenue to grow compared with 2027.
RBC Capital Markets analyst Brian Abrahams noted in a research report that Gilead's quarterly results "met or exceeded continually rising market expectations," but cautioned that after the stock's sharp rally, "given potential brand/generic competition and IRA pricing impacts, the market may begin to question the long-term sustainability of its HIV portfolio revenue growth."
Full-Year Guidance Raised, but Loss Forecast Widened by M&A Costs
Based on the strong performance, Gilead raised its full-year 2026 product sales guidance to $31.0 billion to $31.3 billion (previously $30.1 billion to $30.4 billion), part of a cumulative $1.6 billion increase in guidance since the start of the year. Chairman and CEO Daniel O'Day said: "Gilead delivered an outstanding third-quarter performance, achieving the strongest year-over-year base business growth in more than a decade... The company has multiple investigational and potential new products in HIV and oncology, and has made important progress in inflammation. We are confident in our business growth and patient impact."
However, due to approximately $12.4 billion in transaction-related expenses from a series of M&A deals during the year (including the acquisitions of Arcellx, Tubulis, and Ouro Medicines), the company widened its full-year 2026 Non-GAAP loss per share forecast to $0.85 to $1.20 (previously a loss of $0.30 to $0.65).
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