Gilead Sciences (GILD) Q3 2026 earnings review
Gilead raises its drug sales plan, but buyout charges cut profit
Gilead Sciences, the maker of HIV and cancer medicines, posted its fastest core drug sales growth in over a decade while another acquisition charge cut its full-year profit plan. Sales outside its COVID-19 drug grew 16% to $8.2 billion as HIV prevention nearly doubled and breast cancer drug Trodelvy jumped 42%. Chief executive Daniel O’Day raised the full-year core sales outlook by $900 million, though by our math the plan still points to growth slowing to about 7% in the fourth quarter.
| Drug sales excluding Veklury | $8.20B +16.1% from a year ago |
|---|---|
| HIV product sales | $6.25B +18.4% from a year ago |
| Profit per share, excluding one-offs | $2.55 +3.2% (+14.9% clean by our math) |
| Full-year sales outlook (ex-Veklury) | Raised $900M middle of the range: 10.2% growth |
⚖️ Verdict: 🟢 Bullish
The story got better because the new twice-yearly HIV prevention shot Yeztugo scaled without hurting the older daily pill Descovy, while new cancer and liver launches gained speed. Beating what the prior outlook implied for the third quarter shows that plan was cautious, not that policy risks have disappeared. One caution: Gilead signed another pipeline buyout that added about $0.80 per share in upfront research charges, widening its expected full-year loss per share.
The question now is how much of the HIV jump came from lasting patient demand versus temporary price and inventory gains. Either new prevention patients are driving durable volume growth, or favorable channel pricing and stocking inflated the quarter ahead of fourth-quarter normalization. Fourth-quarter HIV sales and inventory commentary will tell.
🐂 Bull Case
HIV Prevention Sales Nearly Doubled on New Shot
Gilead makes most of its money from HIV medicines, and it is expanding fast in drugs that prevent the virus. Chief executive Daniel O’Day said third-quarter sales outside its COVID-19 drug Veklury grew 16% to $8.2 billion, calling it "our strongest year-over-year base business growth in more than a decade". HIV product sales climbed 18.4% to $6.25 billion, led by two prevention medicines and its flagship treatment pill Biktarvy.
- Yeztugo (twice-yearly HIV prevention shot): $305 million, up 31.5% from last quarter by our math
- Descovy (daily HIV prevention and treatment pill): $1.05 billion, up 49.2% from a year ago
- Biktarvy (daily HIV treatment pill): $4.06 billion, up 10.1% from a year ago
This matters because the new twice-yearly shot is adding sales without shrinking revenue from the older daily pill. Yeztugo added $73 million from last quarter, while Descovy topped $1 billion in a quarter for the first time. Still, Gilead credited Descovy's jump to higher realized prices and inventory builds rather than patient demand, so price carried much of the gain.
What to watch: fourth-quarter Yeztugo and Descovy sales. Another $65 million or more of sequential growth for Yeztugo would show that new patient starts and six-month repeat doses are holding their pace.
New Approvals Lift Cancer and Liver Drugs
Gilead wants oncology and liver medicines to reduce its reliance on older HIV pills, and two recent launches accelerated this quarter. Trodelvy, an antibody-drug conjugate that delivers chemotherapy directly to cancer cells, grew 41.7% from a year ago to $506 million. Livdelzi, a pill for an autoimmune liver disease called primary biliary cholangitis, rose 93.3% to $203 million.
Regulators also cleared three milestones since August. The European Commission approved Trodelvy with Merck's Keytruda as a first-line treatment for an aggressive form of breast cancer. In the US, regulators approved Bixlenvo, a once-daily pill combining bictegravir and lenacapavir "for the treatment of HIV in adults who are virologically suppressed on a stable antiretroviral regimen". And in inflammation, Gilead's oral pill emvistegrast succeeded in a mid-stage ulcerative colitis trial, setting up a late-stage study in 2027.
What to watch: the US regulatory decision on anito-cel, Gilead's cell therapy for multiple myeloma, due by December 23, 2026. Approval would give the oncology division a new growth product for 2027.
Third Outlook Raise Still Points to Q4 Slowdown
Gilead tracks its core drug portfolio as product sales excluding Veklury, its COVID-19 treatment. Three months ago, the full-year outlook implied $7.70 billion to $7.85 billion per quarter in the second half by our math. Third-quarter sales reached $8.20 billion, beating that implied midpoint by 5.6%, so management lifted the full-year range by $900 million to $30.7 billion to $31.0 billion.
Beating the implied pace proves the August outlook was cautious, not that every policy risk is gone. Even after this third raise of the year, the new midpoint leaves $8.24 billion for the fourth quarter by our math, or 7.1% growth from a year ago against 16.1% in the third quarter. Across its last five outlook updates, Gilead's remaining-period sales have beaten the top of the implied range by an average of 4.1%.
What to watch: fourth-quarter drug sales excluding Veklury against the $8.39 billion implied top of the range. Another beat would confirm the slowdown in the plan was caution rather than fading demand.
🐻 Bear Case
Another Deal Charge Cut the Profit Outlook
O’Day praised the company's "disciplined operating model" after raising the sales outlook. Yet Gilead cut its full-year profit outlook again because it agreed to "acquire PepStar’s oral IL-23R inhibitor program", an early-stage inflammation medicine. That deal adds to the buyouts of Arcellx, Tubulis and Ouro Medicines closed earlier this year.
- Full-year acquired research charges: $12.4 billion, or $9.88 per share, up from $9.08 per share in August
- Full-year loss per share outlook, excluding one-offs: $0.85 to $1.20 loss, cut by $0.55
- Nine-month payouts to shareholders: $3.1 billion in dividends and $1.1 billion in buybacks, or 39% of free cash flow by our math
This matters because upfront buyout charges go straight through Gilead's preferred profit measure, turning a year of 16% core sales growth into a full-year per-share loss. The company also recorded a $1.75 billion write-down in the second quarter on an older cancer deal, showing that expensive pipeline acquisitions carry write-off risk. Meanwhile, stock buybacks stayed low at $370 million in the quarter as cash went to deals and debt.
What to watch: 2027 profit outlook in February. Investors will see whether Gilead pauses deal spending so earnings can reflect drug sales growth.
Medicare Set Biktarvy's 2028 Price Cut Date
HIV medicines accounted for 75.4% of Gilead's product sales this quarter by our math, making US government pricing rules a central risk. In October, the Centers for Medicare and Medicaid Services finished "setting the Maximum Fair Price for Biktarvy under Medicare", and Gilead said the lower price will hit Biktarvy revenue starting January 1, 2028. The company also flagged ongoing risks from expiring Affordable Care Act insurance subsidies and a government pricing agreement.
The third quarter masked any insurance pressure because HIV sales jumped 18.4%, helped by "higher average realized price, higher demand in HIV prevention and favorable inventory dynamics". For Descovy, Gilead did not list higher demand among the main drivers of its 49.2% jump, pointing only to realized prices and inventory. Because inventory builds and pricing shifts can reverse from quarter to quarter, the underlying patient volume growth is smaller than the 18.4% headline.
What to watch: fourth-quarter US HIV sales and any disclosure of the 2028 Medicare discount size. A fourth-quarter inventory reversal would test how much of the third-quarter surge came from stocking.
Rivals Pushed Cell Therapy Sales Down 18%
Gilead's Kite unit makes custom cell therapies that train a patient's immune system to fight blood cancer, and its sales are shrinking faster. Cell Therapy revenue fell 17.8% from a year ago to $355 million in the third quarter, worse than the 14.0% drop in the second quarter, due to "ongoing competitive headwinds" from rival cancer treatments. Yescarta dropped 15.8% to $294 million and Tecartus fell 27.7% to $60 million.
Two older franchises also shrank. Hepatitis C drug sales fell 11.3% to $274 million on lower patient demand, and Veklury plunged 69.0% to $86 million on fewer COVID-19 hospitalizations. Together, Cell Therapy, hepatitis C and Veklury lost $303 million of quarterly revenue from a year ago by our math, dragging total oncology growth down to 9.1% despite Trodelvy's jump.
What to watch: fourth-quarter Cell Therapy sales against the prior full-year plan for a mid-teens percentage decline. A drop worse than 18% would show competition is taking share faster before anito-cel arrives.
Risks this quarter didn't answer
Two standing concerns got no new information in the third-quarter earnings release because the company has not yet filed its quarterly report.
- Yeztugo patient counts and repeat-dose rates: the release reported $305 million in sales but gave no patient numbers or six-month persistence update; the conference call or quarterly filing may add detail.
- Upcoming legal trials: the release gave no update on the December 2026 Texas trial or the January 2027 HIV antitrust trial; the legal footnote in the quarterly filing will show any schedule changes.
👓 Other Themes
Prior-Year Patent Payment Skewed Total Revenue
Total revenue rose 6.8% to $8.30 billion, less than half the 16.1% growth in core drug sales. That gap happened because royalty, contract and other revenue dropped from $424 million a year ago to $11 million this quarter. The prior-year period included a one-time $400 million accounting adjustment from an older patent sale ($0.25 per share); without that item, total revenue grew 12.6% and profit per share excluding one-offs rose 14.9% by our math.
💲 Other KPIs
Product gross margin excluding one-offs — the share of drug sales left after manufacturing and royalty costs — rose 1.65 percentage points from a year ago to 88.1%. Reported product gross margin climbed 2.4 points to 81.0%. Gilead said the gain came from an expired royalty obligation, putting nine-month margin at 87.5%, ahead of the 87.0% full-year plan.
Free cash flow — operating cash left after buying property and equipment — rose 21.1% from a year ago to $4.80 billion, or 57.8% of revenue by our math. That cash inflow rebuilt Gilead's cash and marketable debt securities to $6.44 billion, up $3.26 billion from June after second-quarter buyouts had drained the balance to $3.18 billion.
Spending on research and overhead grew faster than total revenue. Research and development expenses excluding one-offs rose 19.3% from a year ago to $1.59 billion (up 2.0 percentage points of revenue to 19.2%) on clinical trial materials and staff costs. Selling and administrative costs excluding one-offs rose 13.9% to $1.54 billion (up 1.15 points to 18.5%) on HIV marketing and legal expenses.
🔮 Guidance
Raised. The drugmaker lifted its total product sales plan by $900 million at both ends, pointing to 7.7% growth at the middle of the range. By our math, that leaves $8.29 billion for the fourth quarter, or 4.9% growth from a year ago against 12.9% in the third quarter, as higher HIV and oncology targets flow through.
Raised. The middle of the core drug sales plan moved up $900 million to 10.2% full-year growth. By our math, that leaves $8.24 billion for the fourth quarter, or 7.1% growth from a year ago. It is the third raise this year (+$400M, +$350M, +$900M), and if Gilead beats the implied fourth-quarter top by its five-vintage average of 4.1%, full-year sales would reach $31.35 billion by our math.
Unchanged. Gilead kept its COVID-19 drug forecast at about $300 million after cutting it in half in August. With $253 million recorded in the first nine months, the plan leaves about $47 million for the fourth quarter by our math, down 77.8% from $212 million a year ago.
Cut. The expected reported loss widened by $0.65 per share across the range. With $4.87 per share of losses recorded through nine months, the middle of the plan leaves $0.65 per share of profit for the fourth quarter by our math. The cut reflects $0.80 per share of additional upfront research charges from the PepStar deal and $0.10 per share of other adjustments.
Cut. The full-year loss per share excluding one-offs widened by $0.55 because Gilead includes upfront buyout charges in this measure, and the PepStar deal raised those charges to $9.88 per share for the year. By our math, the middle of the range leaves $1.12 per share of profit in the fourth quarter, down from $2.55 in the third quarter.
❓ Key Questions
How much did price and inventory add to HIV growth?
Gilead attributed 18.4% HIV sales growth and 49.2% Descovy growth to higher realized prices and inventory builds alongside prevention demand. Without the split between patient volume, channel pricing and stocking, investors cannot tell how much of the third-quarter jump will repeat.
What is the 2028 Medicare price cut for Biktarvy?
Medicare finished setting the Maximum Fair Price for Biktarvy in October, taking effect January 1, 2028. Biktarvy is Gilead's largest product at $4.06 billion a quarter, yet the release did not disclose the negotiated discount or the share of sales exposed.
How many patients are on Yeztugo and returning at month six?
Yeztugo sales reached $305 million, up $73 million from last quarter, but the release gave no patient counts or update on the 70% six-month repeat-injection rate shared in August. Knowing new starts versus repeat doses is essential to model 2027 sales.
Why does the PepStar buyout cost ~$1 billion in research charges?
The full-year acquired research charge rose from $11.5 billion in August to $12.4 billion ($9.88 per share) after adding the Phase 1 PepStar deal. Management has not disclosed the exact upfront cash payment or why a Phase 1 asset carried that price.