Amgen's Q1 Better Than Expected Sales, Profit Overshadowed By Tax Disclosure

  • Amgen Inc AMGN has recently received a notice of deficiency from the Internal Revenue Service centered on 2013 to 2015. 
  • The agency seeks to increase Amgen's taxable income for the period by an amount that would result in an additional federal tax of approximately $5.1 billion, plus interest. 
  • In addition, the notice proposes penalties of roughly $2 billion.
  • The notice is similar to the adjustments Amgen received from the IRS for the 2010 to 2012 period. 
  • Amgen believes that the adjustments proposed by the IRS for the 2010-2015 period and the penalties proposed for the 2013-2015 period are without merit.
  • Earnings: Q1 revenues increased 6% Y/Y to $6.24 billion, slightly beating the consensus of $6.11 billion. 
  • The increase resulted from a 2% growth in global product sales and increased other revenue from the COVID-19 manufacturing collaboration.
  • Unit volumes grew 9%, offset by a 7% lower net selling price.
  • Adjusted EPS increased 15% to $4.25, ahead of the consensus of $4.15.
  • Enbrel sales declined 7% to $862 million. Otezla sales compressed 5% to $451 million.
  • Sales of newer cancer drug Lumakras totaled $62 million for Q1.
  • Among Amgen's bigger products, sales of osteoporosis treatment Prolia rose 12% to $852 million, and revenue from cholesterol treatment Repatha inched 15% ahead to $329 million.
  • Aimovig, its migraine prevention drug, brought in $101 million, up 53% Y/Y. Sales of bone marrow-stimulating drug Neulasta tumbled by 28%. Sales from cancer drugs Mvasi and Kanjinti decreased 17% and 40%, respectively, due to increased competition and price erosion.
  • Guidance: Amgen expects FY22 sales of $25.4 billion - $26.5 billion, with adjusted EPS of $17.00 - $18.00, compared to the consensus of $26.14 billion and $17.63, respectively.
  • Price Action: AMGN shares closed 5.95% lower at $233.98 during after-hours trading on Wednesday.
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