Bristol-Myers Squibb(US:BMY)2024-04-25 16:38Part I—FINANCIAL INFORMATION Financial Statements Bristol-Myers Squibb reported Q1 2024 revenues of $11.87 billion, up 5%, but a net loss of $11.91 billion due to a $12.95 billion Acquired IPRD charge Consolidated Statements of Earnings Q1 2024 total revenues increased 5% to $11.87 billion, but a net loss of $11.91 billion resulted from a $12.95 billion Acquired IPRD charge Consolidated Statements of Earnings (Q1 2024 vs Q1 2023) | Financial Metric | Q1 2024 (in millions) | Q1 2023 (in millions) | | :--- | :--- | :--- | | Total Revenues | $11,865 | $11,337 | | Total Expenses | $23,381 | $8,567 | | Acquired IPRD | $12,949 | $75 | | (Loss)/Earnings before income taxes | ($11,516) | $2,770 | | Net (loss)/earnings attributable to BMS | ($11,911) | $2,262 | | Diluted (Loss)/Earnings per share | ($5.89) | $1.07 | Consolidated Balance Sheets Total assets reached $99.03 billion and liabilities $82.48 billion as of March 31, 2024, driven by acquisitions and increased debt, reducing shareholders' equity Consolidated Balance Sheet Highlights | Account | March 31, 2024 (in millions) | December 31, 2023 (in millions) | | :--- | :--- | :--- | | Total Assets | $99,031 | $95,159 | | Goodwill | $21,738 | $21,169 | | Other intangible assets | $32,760 | $27,072 | | Total Liabilities | $82,483 | $65,674 | | Long-term debt | $49,487 | $36,653 | | Total BMS Shareholders' equity | $16,490 | $29,430 | Consolidated Statements of Cash Flows Operating cash flow was $2.83 billion, while investing activities used $19.62 billion for acquisitions, largely funded by $14.64 billion in financing activities Cash Flow Summary (Q1 2024 vs Q1 2023) | Cash Flow Activity | Q1 2024 (in millions) | Q1 2023 (in millions) | | :--- | :--- | :--- | | Net cash provided by operating activities | $2,834 | $2,970 | | Net cash used in investing activities | ($19,618) | ($210) | | Net cash provided by/(used in) financing activities | $14,644 | ($3,050) | | Decrease in cash, cash equivalents and restricted cash | ($2,185) | ($277) | Notes to Consolidated Financial Statements Notes detail BMS's single segment operation, major Q1 2024 acquisitions (Karuna, RayzeBio, Mirati), a SystImmune collaboration, $13.0 billion debt issuance, and ongoing legal proceedings - BMS operates as a single business segment focused on discovering, developing, and selling innovative medicines, with resource allocation managed at a global corporate level by the CEO13 - Acquired Karuna for $14.0 billion, resulting in a $12.1 billion charge to Acquired IPRD, as its lead asset KarXT represented substantially all of the fair value acquired2930 - Acquired RayzeBio for $4.1 billion and Mirati for $4.8 billion, accounted for as business combinations, adding significant intangible assets and goodwill3237 - Entered a strategic collaboration with SystImmune for co-development of BL-B01D1, paying an $800 million upfront fee which was expensed as Acquired IPRD26 - Issued $13.0 billion in senior unsecured notes in February 2024 to partially fund the RayzeBio and Karuna acquisitions80 - Ongoing patent litigation for Eliquis in multiple European countries, with mixed outcomes; the UK patent was found invalid, while French, Norwegian, Swedish, and Swiss courts upheld validity109111117 Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes 5% revenue growth to the Growth Portfolio, while GAAP EPS declined due to IPRD charges from acquisitions, increasing net debt to $45.6 billion Executive Summary BMS completed major acquisitions and collaborations in Q1 2024, secured key product approvals, initiated a $1.5 billion cost-saving plan, and reported 5% revenue growth despite a GAAP EPS loss - Completed three major acquisitions in Q1 2024: Karuna (psychiatric/neurological), RayzeBio (radiopharmaceuticals), and Mirati (targeted oncology)155 - Executing a strategic productivity initiative to generate approximately $1.5 billion in annual cost savings by the end of 2025, reinvesting most of it to fund innovation and growth156 Q1 2024 Financial Highlights | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Total Revenues | $11.87 B | $11.34 B | | GAAP Diluted (loss)/earnings per share | ($5.89) | $1.07 | | Non-GAAP Diluted (loss)/earnings per share | ($4.40) | $2.05 | Results of Operations Total revenues grew 5% to $11.9 billion, driven by the Growth Portfolio, while expenses surged due to a $12.9 billion Acquired IPRD charge and acquisition-related costs Q1 2024 Revenue by Portfolio | Portfolio | Q1 2024 Revenue (in millions) | % Change YoY | | :--- | :--- | :--- | | Growth Portfolio | $4,792 | 8% | | Legacy Portfolio | $7,073 | 2% | | Total Revenues | $11,865 | 5% | Q1 2024 Key Product Revenue Performance | Product | Q1 2024 Revenue (in millions) | % Change YoY | | :--- | :--- | :--- | | Eliquis | $3,720 | 9% | | Opdivo | $2,078 | (6)% | | Revlimid | $1,669 | (5)% | | Reblozyl | $354 | 72% | | Opdualag | $206 | 76% | | Abecma | $82 | (44)% | - Acquired IPRD expense was $12.95 billion, primarily from the $12.1 billion Karuna asset acquisition and an $800 million upfront fee to SystImmune203 - Marketing, selling and administrative expenses increased by $605 million, largely due to $426 million in costs related to recent acquisitions201 - Research and development expenses rose by $374 million, mainly due to $451 million in costs from recent acquisitions202 Financial Position, Liquidity and Capital Resources Net debt increased by $18.5 billion to $45.6 billion due to $20.1 billion in acquisitions, funded by $13.0 billion in new debt, with operating cash flow at $2.8 billion Net Debt Position | Component (in Millions) | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Total cash, cash equivalents and marketable debt securities | $10,037 | $12,644 | | Total Debt (Short-term & Long-term) | ($55,677) | ($39,772) | | Net debt position | ($45,640) | ($27,128) | - Issued $13.0 billion of 2024 Senior Unsecured Notes to partially fund the acquisitions of RayzeBio and Karuna214 - Cash flow from operating activities decreased slightly to $2.83 billion, while cash used in investing activities increased to $19.62 billion due to acquisition payments217218219 Product and Pipeline Developments BMS achieved key regulatory approvals for Abecma, Breyanzi, and Opdivo, advanced its pipeline, but the Zeposia Phase III Crohn's trial did not meet its primary endpoint - Abecma: FDA and EC approvals expanded its use to treat adult patients with relapsed or refractory multiple myeloma after two or more prior lines of therapy222 - Breyanzi: Received accelerated FDA approval for adult patients with relapsed or refractory CLL or SLL after at least two prior lines of therapy224 - Opdivo: FDA approved its use in combination with cisplatin and gemcitabine for first-line treatment of unresectable or metastatic urothelial carcinoma225 - Krazati: The Phase III KRYSTAL-12 study met its primary endpoint of progression-free survival in pretreated KRAS G12C-mutated NSCLC224 - Zeposia: The Phase III YELLOWSTONE trial in moderate-to-severe active Crohn's disease did not meet its primary endpoint of clinical remission at Week 12227 Quantitative and Qualitative Disclosure About Market Risk For market risk disclosures, refer to Item 7A of the company's 2023 Form 10-K, indicating no material changes during the quarter - The report refers to the 2023 Form 10-K for discussion of market risk, indicating no material changes to its exposure to market risks such as interest rate and foreign currency fluctuations during the quarter232 Controls and Procedures Management concluded disclosure controls and procedures were effective as of March 31, 2024, with no material changes to internal control over financial reporting - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of March 31, 2024233 - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, the company's internal controls233 Part II—OTHER INFORMATION Legal Proceedings This section incorporates by reference detailed legal proceedings from Note 18, including ongoing patent litigation for Eliquis and various product liability and antitrust cases - The company incorporates information on legal proceedings by reference from Note 18 to the consolidated financial statements234 Risk Factors No material changes to the risk factors previously disclosed in the company's 2023 Annual Report on Form 10-K were reported - There have been no material changes from the risk factors disclosed in the Company's 2023 Form 10-K235 Unregistered Sales of Equity Securities and Use of Proceeds Approximately 2.42 million shares were surrendered for tax obligations, with no repurchases under the $5.0 billion authorized buyback program in Q1 2024 - No shares were repurchased under the company's publicly announced stock buyback program during the first quarter of 2024238 - The remaining share repurchase capacity under the authorized program was approximately $5.0 billion as of March 31, 2024237238 Other Information No director or officer adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the first quarter of 2024 - No director or officer of the Company adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement" during the quarter239 Exhibits Exhibits include documents for the February 2024 $13 billion senior notes issuance and required CEO and CFO certifications - Exhibits filed include documents related to the $13 billion senior notes issuance in February 2024, such as the supplemental indenture and forms of the notes242 - Standard CEO and CFO certifications (Section 302 and 906) and XBRL data files are also included as exhibits242