Bristol Myers Squibb — Q1 2022 Form 10-Q
Reporting period: Three months ended March 31, 2022; filed April 29, 2022. BMS is a global biopharmaceutical company reporting as one operating segment.
Financial performance
| Metric | Q1 2022 | Q1 2021 | Change |
|---|---|---|---|
| Total revenue | $11.648 billion | $11.073 billion | +5% |
| Net earnings attributable to BMS | $1.278 billion | $2.021 billion | -37% |
| Diluted GAAP EPS | $0.59 | $0.89 | -$0.30 |
| Diluted non-GAAP EPS | $1.96 | $1.74 | +$0.22 |
| Operating cash flow | $3.812 billion | $3.824 billion | Nearly unchanged |
GAAP net margin was approximately 11.0%, compared with 18.2% a year earlier. Revenue growth was led by Eliquis (+11%) and Opdivo (+12%), alongside newer products. U.S. revenue rose 10%; non-U.S. revenue fell 3%, including a 2% adverse foreign-exchange effect on total revenue. Revlimid revenue declined 5% overall and Abraxane declined 32%.
GAAP earnings were pressured principally by equity investment losses of $644 million versus gains of $601 million in the prior-year quarter, and the absence of the prior-year $510 million contingent-consideration gain. Q1 2022 also included $333 million of acquired IPRD expense and a $275 million debt-redemption loss. Non-GAAP results exclude specified items; BMS reported $2.968 billion of after-tax specified-item adjustments to attributable earnings.
Cash, debt and liquidity
- Cash and cash equivalents were $12.369 billion and current marketable debt securities were $2.599 billion at March 31, 2022. Current assets were $30.121 billion versus current liabilities of $22.821 billion.
- Short-term debt was $7.522 billion and long-term debt was $37.450 billion. BMS reported net debt of $30.004 billion, up from $27.587 billion at year-end 2021.
- Financing cash outflow was $5.653 billion, including $5.0 billion of share repurchases and $1.185 billion of dividends. Investing cash flow was positive $95 million. Cash, cash equivalents and restricted cash decreased $1.737 billion during the quarter.
- BMS issued $6.0 billion of long-term notes and repurchased $5.2 billion principal amount of debt for approximately $5.8 billion. It reported no outstanding commercial-paper or revolving-credit-facility borrowings at quarter-end and established a new $5.0 billion revolving facility.
Changes, outlook and management commentary
- Management attributed 5% revenue growth to in-line products, especially Eliquis and Opdivo, and the new-product portfolio, partly offset by Revlimid, Abraxane and currency effects. Management said COVID-19 continued to affect new patient starts and visits, but had not significantly affected results to date.
- Management expects 2022 global Revlimid revenue of approximately $9.0–$9.5 billion as generic entry expands. Abraxane revenue is expected to decline approximately 25%–30% in 2022; U.S. generic entry was anticipated in Q2. The filing provides no overall full-year revenue or EPS guidance.
- Capital expenditures are expected to be approximately $1.2 billion in both 2022 and 2023. BMS estimated U.S. income tax payments could rise nearly $2.0 billion versus 2021 because of required tax amortization of R&D costs, absent a change in law.
- Q1 approvals included Opdualag for melanoma and additional Opdivo indications; the filing also describes Abecma and Breyanzi approvals in other markets. Camzyos received FDA approval in April 2022. In April, BMS and Nektar decided to discontinue the bempegaldesleukin/Opdivo development program following clinical-study analyses.
- Other notable items: a $5.0 billion accelerated share-repurchase agreement, a $211 million gain on sale of mature-product rights, and a $40 million impairment of an acquired IPRD asset. BMS said it remained on track to realize approximately $3.0 billion of annualized pre-tax Celgene synergies through 2022.
Risks and contingencies
- Patent challenges and potential generic competition are important risks, notably after an April 2022 UK ruling found the Eliquis composition patent and related certificate invalid; BMS said it planned to appeal. Generic erosion is already affecting Revlimid and Abraxane.
- CVR-related litigation alleges BMS failed to use diligent efforts to secure timely FDA approval of Breyanzi and seeks damages tied to a potential $6.4 billion milestone; BMS disputes the allegations. The filing does not provide a clear estimate of possible loss.
- BMS reported an $89 million estimated share of future CERCLA environmental costs. It also disclosed ongoing tax audits and that unrecognized tax benefits could decrease by approximately $450–$500 million over the next 12 months, with possible tax payments, deferred-tax adjustments or benefits.
- Management cited uncertainty from drug-pricing proposals, foreign-exchange movements, COVID-19, and the Russia-Ukraine conflict. The region represented less than 1% of revenue, net assets and workforce, but trial-enrollment and operating disruptions could affect timelines.
Most important facts for investors to verify
- Whether growth in Eliquis, Opdivo and newer products can offset Revlimid erosion, Abraxane competition and foreign-exchange pressure.
- The timing and impact of generic entry for Revlimid, Abraxane and Eliquis, including developments in European patent litigation.
- How much reported and future earnings are affected by equity-investment fair-value changes, acquired IPRD, debt transactions and other excluded non-GAAP items.
- Whether operating cash generation and liquidity remain adequate alongside debt maturities, dividends, buybacks, capital spending and potentially higher U.S. tax payments.
- Material developments in CVR, product-liability, pricing, antitrust and tax matters; several outcomes and potential losses are not quantifiable from the filing.