# Gilead Sciences (GILD) Financial Model

Free Excel 3-statement financial model and company analysis for Gilead Sciences.

- Canonical: https://finamodel.com/companies/gilead-sciences
- Industry: Pharmaceuticals
- Downloadable model: Yes
- Excel download: https://finamodel.com/company-models/GILD.xlsx

## Model Purpose

This model provides a sum-of-the-parts equity valuation and pipeline scenario planning tool to help an equity research analyst determine the fair value of Gilead Sciences by forecasting base business cash flows and probability-weighting future clinical pipeline approvals.

## Company Overview

Gilead Sciences is a research-based biopharmaceutical company that discovers, develops, and commercialises innovative medicines in areas of unmet medical need. The company is historically dominant in virology, specifically HIV and viral hepatitis, but has aggressively expanded into oncology and inflammation through major acquisitions.

Business segments by revenue contribution (approximate based on FY2025):
*   HIV: 65% (Anchored by Biktarvy, Descovy, and the recent launch of Yeztugo/lenacapavir)
*   Oncology: 11% (Trodelvy and Cell Therapy products like Yescarta and Tecartus)
*   Liver Disease: 11% (HCV, HBV, HDV, and PBC treatments including Livdelzi)
*   Veklury (COVID-19): 7% (Highly variable based on hospitalisation rates)
*   Other: 6%

Key geographies: The United States accounts for approximately 70% of total revenues, with Europe contributing roughly 15%, and the rest of the world making up the remainder.

Business model type: Asset-light manufacturing with a heavy reliance on intellectual property, R&D, and strategic M&A. Gilead outsources a significant portion of its active pharmaceutical ingredient (API) manufacturing and relies on a high-margin, patent-protected commercial model.

Competitive position: Gilead holds a dominant market share in the global HIV treatment and prevention market. In oncology, it is a challenger brand but holds a leading position in CAR-T cell therapies. Key competitors include ViiV Healthcare (GSK/Pfizer) in HIV, and AbbVie, Merck, and AstraZeneca in oncology and virology.

Recent major events: The $3.9 billion acquisition of CymaBay Therapeutics in 2024 brought Livdelzi (seladelpar) for primary biliary cholangitis into the Liver Disease portfolio. The company also recorded massive acquired in-process R&D (IPR&D) impairment charges in 2024 related to the 2020 Immunomedics acquisition. In 2025, Gilead successfully launched Yeztugo, the first twice-yearly HIV prevention therapy.

## Revenue Deep Dive



### HIV

*   Segment name: HIV
*   Revenue driver formula: Total Patients on Therapy x Market Share x Net Realised Price per Patient
*   Historical growth rate: 5-7% CAGR [1]
*   Key growth levers and headwinds: Growth is driven by the continued uptake of Biktarvy and the launch of long-acting prevention therapies (Yeztugo). Headwinds include pricing pressure from government payers and the eventual loss of exclusivity for older regimens.
*   Pricing dynamics: Highly regulated and subject to significant gross-to-net deductions (rebates, 340B discounts in the US).
*   Revenue recognition notes: Recognised upon delivery to wholesalers, net of estimated variable consideration (rebates, chargebacks, returns).
*   Seasonality: Q1 is typically the weakest quarter due to US payer dynamics (resetting of deductibles and Medicare Part D donut hole), with Q4 being the strongest.

### Oncology

*   Segment name: Oncology (often split into Trodelvy and Cell Therapy)
*   Revenue driver formula: Eligible Patient Population x Treatment Penetration x Price per Course
*   Historical growth rate: 15-25% CAGR (rapid growth from a smaller base)
*   Key growth levers and headwinds: Label expansions for Trodelvy into new breast cancer and lung cancer indications. Cell therapy growth is constrained by manufacturing capacity and the requirement for specialised treatment centres.
*   Pricing dynamics: Premium pricing for oncology, particularly for one-time CAR-T treatments which can exceed $400,000 per dose.
*   Revenue recognition notes: Cell therapy revenue is recognised when the patient-specific engineered cells are delivered to the treatment centre.
*   Seasonality: Less seasonal than the HIV business, driven more by clinical trial readouts and regulatory approvals.

### Liver Disease

*   Segment name: Liver Disease
*   Revenue driver formula: Treated Patients x Duration of Therapy x Net Price
*   Historical growth rate: Flat to low single-digit growth
*   Key growth levers and headwinds: The HCV business is a cure market, meaning the patient pool shrinks over time. Growth is now reliant on the PBC market (Livdelzi) and HDV treatments.
*   Pricing dynamics: Heavy discounting in the HCV space due to intense competition and government procurement models.
*   Revenue recognition notes: Standard gross-to-net pharmaceutical accounting.
*   Seasonality: Minimal seasonality.

### Veklury (COVID-19)

*   Segment name: Veklury
*   Revenue driver formula: COVID-19 Hospitalisations x Treatment Rate x Price per Vial
*   Historical growth rate: Highly volatile (declining significantly from pandemic peaks)
*   Key growth levers and headwinds: Entirely dependent on seasonal COVID-19 waves and hospitalisation severity.
*   Pricing dynamics: Fixed government and commercial pricing per vial.
*   Revenue recognition notes: Standard delivery to hospitals/wholesalers.
*   Seasonality: Strongest in Q4 and Q1 corresponding with winter respiratory virus seasons.

## Cost Structure



### Variable Costs / COGS

*   Line-by-line breakdown: API manufacturing costs, third-party contract manufacturing fees, royalties paid to partners, and amortisation of acquired intangible assets.
*   Gross margin range: 77-79% on a GAAP basis; 85-87% on a Non-GAAP basis (excluding amortisation of acquired intangibles) [1].
*   Key input costs and commodity exposures: Specialised biological materials for cell therapy; standard chemical precursors for small molecules.
*   How COGS scales with revenue: Small molecule COGS (HIV, HCV) scales linearly with very high margins. Cell therapy COGS is much higher and scales with step-functions due to the need for dedicated manufacturing facilities.

### Operating Expenses

*   R&D: Typically 18-22% of revenue. Covers clinical trial costs, personnel, and upfront/milestone payments for licensing deals. Gilead does not capitalise internal R&D until regulatory approval is achieved.
*   SG&A: Typically 15-18% of revenue. Driven by the commercial sales force, direct-to-consumer advertising (especially for HIV), and corporate overhead.
*   Acquired IPR&D: A highly volatile line item for Gilead. Represents upfront payments for acquisitions and licensing deals where the asset has not yet received regulatory approval.
*   Depreciation & Amortisation: Amortisation of intangible assets is a massive non-cash expense due to historical acquisitions (Pharmasset, Kite, Immunomedics, CymaBay).
*   Stock-Based Compensation: Typically 2-3% of revenue.

### Margin Profile

*   Gross margin: ~78% GAAP, ~86% Non-GAAP [1].
*   Operating margin: 30-40% Non-GAAP, but GAAP operating margin fluctuates wildly based on IPR&D impairment charges.
*   Net margin: 20-30% Non-GAAP.
*   Margin trend: Stable base business margins, but overall margins are heavily influenced by the mix of high-margin HIV drugs versus lower-margin cell therapies and the declining Veklury business.

## Balance Sheet Structure

*   Total assets: Approximately $60-65 billion.
*   Key asset categories: Intangible assets and goodwill make up a massive portion of the balance sheet due to the company's acquisitive history. Cash and marketable securities are also highly material.
*   Goodwill & intangibles as % of total assets: Typically 50-60%.
*   Working capital profile:
    *   Days Sales Outstanding (DSO): 45-60 days.
    *   Days Inventory Outstanding (DIO): 80-100 days (high due to the need to maintain strategic reserves of API).
    *   Days Payable Outstanding (DPO): 40-50 days.
    *   Net working capital as % of revenue: Positive, typically 15-20%.
*   PP&E: Relatively small compared to total assets (5-10%), consisting of corporate headquarters, research facilities, and specialised cell therapy manufacturing plants.
*   Right-of-use assets / operating leases: Material but not a dominant balance sheet item.

## Capital Expenditure & Investment

*   Capex as % of revenue: 2-4% (historically $700M - $1.0B annually).
*   Maintenance capex vs. growth capex: Approximately 40% maintenance, 60% growth (expanding cell therapy manufacturing and new lab space).
*   Major capex programmes: Expansion of Kite Pharma's viral vector and cell therapy manufacturing facilities.
*   Capitalised software / development costs: Minimal relative to total capex.
*   M&A pattern: Transformational acquisitions every 3-5 years (Kite, Immunomedics, CymaBay) supplemented by frequent bolt-on licensing deals and partnerships.
*   Typical acquisition multiple paid: Highly variable, often based on peak sales multiples of unapproved pipeline assets rather than trailing EBITDA.

## Debt & Capital Structure

*   Total debt: Approximately $24-26 billion.
*   Debt/EBITDA ratio: 1.5x - 2.5x depending on recent M&A activity.
*   Credit rating: Investment grade (typically A- or BBB+ equivalent).
*   Key debt instruments: Senior unsecured notes with staggered maturities.
*   Maturity profile: Well-laddered, with $1-3 billion maturing annually over the near term.
*   Interest rate profile: Predominantly fixed-rate bonds.
*   Covenants: Standard investment-grade covenants; no restrictive financial maintenance covenants that pose near-term risk.
*   Share repurchase programme: Active. The company regularly repurchases shares to offset dilution and return capital (e.g., $230 million in Q4 2025) [1].
*   Dividend policy: Strong commitment to the dividend. Payout ratio is typically 40-50% of Non-GAAP net income. The company paid $1.0 billion in dividends in Q4 2025 alone [1].

## Cash Flow Characteristics

*   Operating cash flow conversion: Very strong. OCF is frequently 110-130% of GAAP Net Income due to massive non-cash amortisation and IPR&D impairment add-backs.
*   Free cash flow margin: 25-35% of revenue.
*   Major non-cash items: Amortisation of acquired intangibles, IPR&D impairments, stock-based compensation, and deferred taxes.
*   Working capital cash flow impact: Generally a modest use of cash as the business grows, but receivables can fluctuate based on government purchasing timing.
*   Capex intensity: Low (asset-light model).
*   Cash tax rate vs. GAAP effective tax rate: Cash taxes are often lower than GAAP taxes due to the timing of deductions related to acquired intangibles and R&D credits.

## Sheet Structure

1.  **Control Panel & Scenarios**: Toggles for pipeline approval probabilities, drug pricing scenarios, and macroeconomic inputs.
2.  **Assumptions**: Hardcoded historical data and future drivers for market share, pricing, and margins.
3.  **Revenue Build - HIV**: Patient population models for Biktarvy, Descovy, Yeztugo, and legacy products.
4.  **Revenue Build - Oncology**: Patient models for Trodelvy and Cell Therapy (Yescarta, Tecartus).
5.  **Revenue Build - Liver & Other**: Forecasts for HCV, HBV, HDV, PBC (Livdelzi), and Veklury.
6.  **Consolidated Income Statement**: Revenue aggregation, COGS, R&D, SG&A, Acquired IPR&D, and EPS calculations (GAAP and Non-GAAP).
7.  **Balance Sheet**: Assets, liabilities, and shareholders' equity.
8.  **Cash Flow Statement**: Operating, investing, and financing cash flows.
9.  **Debt & Interest Schedule**: Tranche-by-tranche bond maturity schedule and interest expense calculation.
10. **Working Capital Schedule**: Receivables, inventory, and payables forecasting.
11. **Intangibles & Amortisation**: Waterfall schedule for the amortisation of historical acquisitions.
12. **DCF & Valuation**: WACC calculation, terminal value, and sum-of-the-parts pipeline valuation.

## Key Financial Relationships

1.  `Total Product Sales = HIV Revenue + Oncology Revenue + Liver Disease Revenue + Veklury Revenue + Other Revenue`
2.  `HIV Revenue = Biktarvy Sales + Descovy Sales + Yeztugo Sales + Legacy HIV Sales`
3.  `Biktarvy Sales = US Biktarvy Sales + Europe Biktarvy Sales + ROW Biktarvy Sales`
4.  `US Biktarvy Sales = Total US HIV Treated Patients x Biktarvy Market Share x Annual Net Price`
5.  `Non-GAAP Product Gross Profit = Total Product Sales - (Total COGS - Amortisation of Acquired Intangibles - Inventory Step-Up Charges)`
6.  `Non-GAAP R&D Expense = GAAP R&D Expense - Stock-Based Compensation - Restructuring Costs`
7.  `GAAP Operating Income = Total Revenues - Total COGS - R&D - SG&A - Acquired IPR&D - IPR&D Impairments`
8.  `Effective Tax Rate = Provision for Income Taxes / Pre-Tax Income`
9.  `Free Cash Flow = Cash from Operations - Capital Expenditures`
10. `Ending Cash Balance = Beginning Cash + Free Cash Flow - Dividends Paid - Share Repurchases + Net Debt Issuance/Repayment`

## Cross-Sheet Dependencies

*   The **Revenue Build** sheets (HIV, Oncology, Liver) feed directly into the top line of the **Consolidated Income Statement**.
*   The **Intangibles & Amortisation** sheet feeds the Amortisation expense line in the **Consolidated Income Statement** (which sits within COGS and Operating Expenses) and reduces the Intangible Assets line on the **Balance Sheet**.
*   The **Debt & Interest Schedule** uses the cash flow generation from the **Cash Flow Statement** to determine if debt needs to be drawn or can be repaid, which in turn calculates Interest Expense for the **Consolidated Income Statement**. This creates a circular reference that must be managed with an interest circuit breaker toggle.
*   Net Income from the **Consolidated Income Statement** is the starting point for the **Cash Flow Statement**.
*   Ending balances from the **Cash Flow Statement** and **Working Capital Schedule** form the current assets and liabilities on the **Balance Sheet**.

## Sign Convention

*   Revenues, asset balances, and equity balances are entered and displayed as positive numbers.
*   Expenses (COGS, R&D, SG&A, Interest Expense) are entered as positive numbers in the assumptions but subtracted in the Income Statement formulas.
*   On the Cash Flow Statement, cash inflows are positive and cash outflows (capex, dividends, share repurchases, debt repayment) are negative.
*   Contra-assets (Accumulated Depreciation) are represented as positive numbers and subtracted from gross assets to yield net assets.

## Things Most Likely to Go Wrong

1.  **IPR&D Volatility**: Gilead frequently records massive, unpredictable IPR&D charges (e.g., $4.2 billion in 2024 for Immunomedics). The model must separate base R&D from acquired IPR&D, or operating margins will look artificially depressed in historical periods.
2.  **GAAP vs. Non-GAAP Gross Margin**: The builder must explicitly separate amortisation of acquired intangibles from cash COGS. Failing to do so will result in a gross margin forecast of ~78% instead of the true cash gross margin of ~86%.
3.  **Veklury Forecasting**: Veklury sales distort total revenue growth rates. The model must evaluate "Product Sales Excluding Veklury" as a distinct KPI, mirroring how management reports performance.
4.  **Patent Cliffs**: Biktarvy loses exclusivity in the early 2030s. The model's terminal value calculation must account for this cliff rather than assuming perpetual growth on peak sales.
5.  **Gross-to-Net Deductions**: US pharmaceutical pricing is subject to severe rebates. The model must forecast net realised price, not list price, otherwise revenue will be overstated by 40-50%.
6.  **Cell Therapy Capacity Constraints**: Yescarta and Tecartus cannot scale infinitely like pills. Revenue builds must cap growth based on manufacturing slot capacity.
7.  **Deferred Tax Assets/Liabilities**: M&A creates significant deferred tax liabilities related to acquired intangibles. The amortisation of these intangibles creates a non-cash tax benefit that must be modelled correctly in the cash flow bridge.
8.  **Share Count Creep**: Despite buybacks, stock-based compensation causes share count dilution. The model must link the share repurchase dollar amount to an assumed stock price to calculate the net change in outstanding shares.

## Validation Checks

1.  "Non-GAAP Product Gross Margin should be in the 85-87% range; flag if outside this band."
2.  "R&D as a % of revenue (excluding acquired IPR&D) should run between 18-22%."
3.  "Total Revenue growth excluding Veklury should be in the 4-8% range based on recent historical performance."
4.  "Operating Cash Flow should consistently exceed GAAP Net Income due to high amortisation add-backs."
5.  "Dividend payout ratio should remain between 40-50% of Non-GAAP Net Income."
6.  "Balance sheet must balance: Total Assets = Total Liabilities + Equity in every forecasted period."
7.  "Capex as a % of revenue should not exceed 5% without triggering a warning flag."
8.  "Effective tax rate should be modelled between 16-19% based on recent historical settlements and corporate structure."

## Key Assumptions (Default Values)

| Assumption | Default Value | Unit | Rationale |
|---|---|---|---|
| Base Business Revenue Growth (ex-Veklury) | 4.0 | % | Aligns with FY2025 reported growth of 4% YoY [1]. |
| Veklury Annual Revenue Decline | -15.0 | % | Reflects the ongoing transition to endemic COVID-19 and lower hospitalisation severity. |
| Non-GAAP Product Gross Margin | 86.4 | % | Actual reported Non-GAAP product gross margin for FY2025 [1]. |
| R&D Expense (Base, ex-IPR&D) | 5.7 | $ Billions | Actual reported Non-GAAP R&D expense for FY2025 [1]. |
| SG&A Expense as % of Revenue | 16.0 | % | Historical average required to support commercial launches like Yeztugo. |
| Effective Tax Rate (Non-GAAP) | 18.0 | % | Blended rate based on US and international tax jurisdictions. |
| Days Sales Outstanding (DSO) | 55 | Days | Calculated from historical accounts receivable and revenue. |
| Days Inventory Outstanding (DIO) | 90 | Days | High inventory requirement for API and biological materials. |
| Days Payable Outstanding (DPO) | 45 | Days | Standard payment terms with contract manufacturers. |
| Capex as % of Revenue | 3.0 | % | Asset-light model requires minimal physical infrastructure investment. |
| Annual Dividend per Share | 3.20 | $ | Based on Q4 2025 run-rate ($1.0B total dividend on ~1.24B shares) [1]. |
| Share Repurchases | 1.0 | $ Billions | Estimated annual run-rate based on recent quarterly activity to offset dilution. |
| Weighted Average Cost of Capital (WACC) | 7.5 | % | Standard biopharma discount rate reflecting low beta but pipeline risk. |
| Terminal Growth Rate | -2.0 | % | Negative terminal rate reflects the eventual loss of exclusivity for key patents (Biktarvy) without assuming unapproved pipeline replacement. |

## Data Sources & Benchmarks

*   **Filings**: SEC EDGAR database for Gilead Sciences (GILD) 10-K, 10-Q, and 8-K filings. Gilead Investor Relations website for earnings presentations and clinical pipeline updates.
*   **Key Peers**: AbbVie (ABBV), Merck (MRK), GSK (GSK), Bristol-Myers Squibb (BMY), and Amgen (AMGN).
*   **Industry Data**: IQVIA for prescription volume data and gross-to-net pricing trends in the US market.
*   **Consensus Estimates**: Bloomberg or FactSet for consensus revenue estimates by product (crucial for benchmarking Biktarvy and Trodelvy expectations).
*   **Clinical Data**: ClinicalTrials.gov for tracking the progress and estimated completion dates of Gilead's Phase 2 and Phase 3 pipeline assets.

## Sources

*   [1] Gilead Sciences Announces Fourth Quarter and Full Year 2025 Financial Results (February 10, 2026). Available at: https://www.gilead.com
*   Gilead Sciences 2024 Form 10-K Annual Report (February 28, 2025). Available at: https://www.sec.gov
*   Gilead Sciences Announces Third Quarter 2025 Financial Results (October 30, 2025). Available at: https://www.sec.gov

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## Frequently asked questions

### What is Gilead Sciences' primary business focus and key segments?

Gilead Sciences is a research-based biopharmaceutical company dedicated to discovering, developing, and commercializing innovative medicines for unmet medical needs. Historically dominant in virology, particularly HIV and viral hepatitis, the company has strategically expanded into oncology and inflammation through major acquisitions.

### What are the main revenue drivers for Gilead Sciences?

Gilead's revenue is primarily driven by its HIV segment, anchored by products like Biktarvy and Descovy, which accounts for approximately 65% of total revenues. Oncology and Liver Disease segments also contribute significantly, alongside the variable Veklury (COVID-19) sales.

### What is the assumed revenue growth rate for Gilead Sciences in the financial model?

The financial model for Gilead Sciences assumes a revenue growth rate of approximately 4.84%. This assumption is a key input for forecasting the company's future cash flows over the FY2026–FY2030 forecast horizon.

### How do intangible assets and goodwill impact Gilead Sciences' balance sheet?

Intangible assets and goodwill constitute a massive portion of Gilead Sciences' balance sheet, typically making up 50-60% of total assets. This significant allocation is a direct result of the company's acquisitive history, which includes major transformational acquisitions.

### What is Gilead Sciences' typical capital expenditure as a percentage of revenue?

Gilead Sciences typically incurs capital expenditures between 2-4% of its total revenue, amounting to approximately $700M - $1.0B annually. This spending supports both maintenance and growth initiatives, particularly expanding cell therapy manufacturing and new lab space.

### Can I download a financial model for Gilead Sciences to analyze its valuation?

Yes, a downloadable Excel model is available for Gilead Sciences, providing a sum-of-the-parts equity valuation and pipeline scenario planning tool. This model helps equity research analysts determine the fair value by forecasting base business cash flows and probability-weighting future clinical pipeline approvals.

[Interactive forecast calculator](https://finamodel.com/companies/gilead-sciences/forecast)