Gilead Q1 EPS $2.03 beats; raised guidance overshadowed by $11.5bn deal charge

Gilead Sciences beat Wall Street estimates on both lines for the first quarter. Adjusted earnings came in at $2.03 a share against a $1.89 consensus. Revenue was $6.96 billion versus the $6.91 billion analysts had penciled in, per MarketBeat’s results breakdown. The Foster City biopharma group raised its full-year product-sales guidance by $400 million. Shares fell 1.6 per cent to $134.06 in Thursday’s regular trade, and traded as low as $130.51 in extended hours, after a $11.5 billion in-process research and development charge tied to three pending acquisitions sent reported full-year earnings guidance into a loss range.

The print read as a clean operational beat papered over by a one-off accounting hit. Adjusted EPS landed 12.2 per cent above the prior-year quarter’s $1.81. Revenue grew 4.4 per cent year on year. The base business excluding Veklury, Gilead’s pandemic-era antiviral, posted $6.8 billion in sales, up 8 per cent. Adjusted operating margin reached 46.9 per cent, 3.6 percentage points higher than a year earlier.

Chief Executive Daniel O’Day told analysts on the post-earnings call that the quarter reflected what he called a “consistent track record of commercial, clinical, and financial execution.” He pointed to “a busy 2026 slate of regulatory decisions and clinical readouts” ahead.

What the print showed

The HIV franchise, still the engine of the business, generated $5.0 billion in sales, up 10 per cent year on year. Biktarvy posted $3.4 billion, a 7 per cent gain. Chief Commercial Officer Johanna Mercier told analysts the drug retained “once again more than 52%” U.S. market share in HIV treatment, the position it has held for several quarters.

Descovy, the company’s pre-exposure prophylaxis (PrEP) franchise pillar, jumped 38 per cent to $807 million. Yeztugo, the twice-yearly long-acting injectable PrEP launched last year, reached $166 million in Q1, a 72 per cent sequential gain. Gilead set 2026 Yeztugo sales guidance at roughly $1 billion. The drug is now reimbursed by health plans covering about 95 per cent of U.S. commercial lives.

Outside HIV, Trodelvy, the antibody-drug conjugate for triple-negative breast cancer, posted $402 million in Q1 revenue, up 37 per cent. Livdelzi, the cholestatic liver disease drug acquired with Cymabay in 2024, more than tripled year on year to $133 million.

The acquisition charge

The headline drag on reported guidance is the $11.5 billion IPR&D charge Gilead is recording against three pending biotech acquisitions. Arcellx closed in the quarter and brings the company an in-house D-Domain CAR-T binder portfolio anchored by anito-cel, the multiple-myeloma asset with a December 2026 PDUFA date. Tubulis, an antibody-drug conjugate platform whose lead asset TUB-040 targets ovarian and lung cancer, is expected to close in Q2. Ouro, which adds gamgertamig (a BCMAxCD3 bispecific antibody), is also expected to close in Q2. The deal flow lines up with the broader pharma M&A boom running well ahead of last year’s pace.

CFO Andrew Dickinson framed the Tubulis deal as a strategic widening of the oncology pipeline. He told analysts that “the ovarian opportunity alone is very large.” Dickinson also indicated additional sizable M&A this year was “less likely,” a signal investors had been waiting for after a busy six months of deal flow.

The guidance

Gilead raised 2026 total product sales guidance to $30.0 billion to $30.4 billion, from a prior $29.4 billion to $29.8 billion. HIV growth guidance moved up to roughly 8 per cent for the year, from a prior 6 per cent.

The complication sits on the EPS line. Excluding the IPR&D and related transaction costs, Gilead now expects 2026 non-GAAP earnings of $8.45 to $8.85 per share. Including those charges, GAAP guidance is a loss of 65 cents to $1.05 per share. The effective tax rate, distorted by the same charge mix, lands between 140 per cent and 190 per cent for the year.

That accounting structure is what the equity desks reacted to. The headline beat was real. Guidance was raised. But the Q4-to-Q1 EPS optic flipped sign, and the market’s first instinct was to re-rate.

How analysts read it

The sell-side liked the print. The 28-analyst consensus rating sits at Moderate Buy, with 24 buys and 4 holds. Average 12-month price target is $157.35, around 17 per cent above where the stock closed Thursday. Morgan Stanley moved its target to $175.00 from $158.00 and stayed Overweight. Citigroup went to $165.00 from $148.00, kept the Buy.

Volume tells the same story as the tape. 8.89 million GILD shares changed hands against a 5.55 million daily average. That is a 60 per cent ramp. Sellers wanted out on the EPS optic. Net margin of 28.9 per cent and ROE of 49.5 per cent put Gilead near the top of large-cap biopharma profitability tables, a structural story the deal charge does not dent.

What’s next

Three regulatory dates matter for the back half. The bictegravir-lenacapavir once-daily HIV combination has FDA priority review with a target action date in August. Trodelvy decisions on first-line metastatic triple-negative breast cancer come in the second half. Anito-cel, the asset Gilead bought with Arcellx, has a December PDUFA. First revenue from anito-cel is not in 2026 numbers and is not expected until early 2027.

The bigger question for shareholders Thursday was the shape of EPS, not the size of it. Was this one quarter of acquisition optics, or the first leg of a broader dilution cycle? Mercier said Yeztugo persistency would be “the highest in the HIV prevention category.” That call has to hold for the $1 billion product-sales target to land. Insiders gave no obvious signal either way. O’Day sold 10,000 shares on April 28 at $129.16. Dickinson sold 3,000 on February 17 at $154.43. Total insider sales over 90 days totaled 63,000 shares for $9.24 million. Institutions hold 83.7 per cent.

Q2 numbers come in early August. The BIC/LEN approval, or rejection, lands in the same window. Either way, the August print will say more about underlying earnings power than the April-quarter accounting just did.