# How Gilead Sciences makes money

CXProWealth Business Lens · Gilead Sciences (GILD) · Q3 FY2026

Read from the 10-Q for the period 2026-07-01 to 2026-09-30, filed 2026-10-30 with the SEC (accession 0000882095-26-000039): https://www.sec.gov/Archives/edgar/data/882095/000088209526000039/

Business Lens explains how a company earns, spends and keeps its money, from its own filings. It is insight and context, never a view on the shares, a target, or advice. Figures are raw units as filed; percentages are percentage points.

## Headline figures

- Revenue: $8.3B (+6.8% on the year)
- Operating income: $3.5B (operating margin 41.7%)
- Net income: $2.4B (net margin 29.3%)
- Gross margin: 81.1%
- Free cash flow: $4.8B (57.8% of revenue)
- Cash conversion (operating cash flow / net income): 2.07x
- Capital expenditure: 2.9% of revenue

## Where the money goes (Q3 FY2026)

- Biktarvy → Total revenues: $4.1B
- Descovy → Total revenues: $1.0B
- Genvoya → Total revenues: $339.0M
- Odefsey → Total revenues: $286.0M
- Symtuza - Revenue share → Total revenues: $132.0M
- Yeztugo → Total revenues: $305.0M
- Other HIV → Total revenues: $82.0M
- Livdelzi → Total revenues: $203.0M
- Sofosbuvir/Velpatasvir → Total revenues: $274.0M
- Vemlidy → Total revenues: $333.0M
- Other Liver Disease → Total revenues: $117.0M
- Veklury → Total revenues: $86.0M
- Tecartus → Total revenues: $60.0M
- Yescarta → Total revenues: $294.0M
- Trodelvy → Total revenues: $506.0M
- AmBisome → Total revenues: $99.0M
- Other → Total revenues: $68.0M
- Royalty, contract and other revenues → Total revenues: $11.0M
- Total revenues → Total costs and expenses: $4.8B
- Total costs and expenses → Cost of goods sold: $1.6B
- Total costs and expenses → Selling, general and administrative expenses: $1.6B
- Total costs and expenses → Acquired in-process research and development expenses: $18.0M
- Total costs and expenses → Research and development expenses: $1.6B
- Total revenues → Operating income (loss): $3.5B
- Operating income (loss) → Interest expense: $269.0M
- Operating income (loss) → Other (income) expense, net: $130.0M
- Operating income (loss) → Income (loss) before income taxes: $3.1B
- Income (loss) before income taxes → Income tax expense: $634.0M
- Income (loss) before income taxes → Net income (loss): $2.4B

## Where the revenue comes from

### Products and services (REVENUES - Summary of Disaggregation of Revenues (Details))

| Member | Value | Share |
|---|---:|---:|
| Biktarvy | $4.1B | 48.9% |
| Descovy | $1.0B | 12.6% |
| Trodelvy | $506.0M | 6.1% |
| Genvoya | $339.0M | 4.1% |
| Vemlidy | $333.0M | 4.0% |
| Yeztugo | $305.0M | 3.7% |
| Yescarta | $294.0M | 3.5% |
| Odefsey | $286.0M | 3.4% |
| Sofosbuvir/Velpatasvir | $274.0M | 3.3% |
| Livdelzi | $203.0M | 2.4% |
| Symtuza - Revenue share | $132.0M | 1.6% |
| Other Liver Disease | $117.0M | 1.4% |
| AmBisome | $99.0M | 1.2% |
| Veklury | $86.0M | 1.0% |
| Other HIV | $82.0M | 1.0% |
| Other | $68.0M | 0.8% |
| Tecartus | $60.0M | 0.7% |
| Royalty, contract and other revenues | $11.0M | 0.1% |

The members sum to total revenue.

### Regions (REVENUES - Summary of Disaggregation of Revenues (Details))

| Member | Value | Share |
|---|---:|---:|
| Europe | $1.1B | 12.8% |
| Rest of World | $872.0M | 10.5% |

The members do not sum to total revenue.

## Income statement, as filed

| Line | Q3 FY2026 | Of revenue |
|---|---:|---:|
| Total revenues | $8.3B | 100% |
|   Product sales | $8.3B | 99.9% |
|   Royalty, contract and other revenues | $11.0M | 0.1% |
| Cost of goods sold | $1.6B | 18.9% |
| Research and development expenses | $1.6B | 19.4% |
| Acquired in-process research and development expenses | $18.0M | 0.2% |
| In-process research and development impairments | $0 | 0.0% |
| Selling, general and administrative expenses | $1.6B | 19.8% |
| **Total costs and expenses** | $4.8B | 58.3% |
| **Operating income (loss)** | $3.5B | 41.7% |
| Interest expense | $269.0M | 3.2% |
| Other (income) expense, net | (-$130.0M) | 1.6% |
| **Income (loss) before income taxes** | $3.1B | 36.9% |
| Income tax expense | $634.0M | 7.6% |
| **Net income (loss)** | $2.4B | 29.3% |
| Basic earnings (loss) per share (in dollars per share) | $2 | 0.0% |
| Diluted earnings (loss) per share (in dollars per share) | $2 | 0.0% |
| Shares used in basic earnings (loss) per share calculation (in shares) | 1,242,000,000 |  |
| Shares used in diluted earnings (loss) per share calculation (in shares) | 1,251,000,000 |  |

## History

| Period | Revenue | Operating income | Net income | Operating cash flow | Capital expenditure | Free cash flow |
|---|---:|---:|---:|---:|---:|---:|
| FY2007 | $4.2B | $2.2B | $1.6B | $1.7B | $78.6M | $1.6B |
| FY2008 | $5.3B | $2.7B | $2.0B | $2.1B | $115.0M | $2.0B |
| FY2009 | $7.0B | $3.5B | $2.6B | $3.1B | $230.1M | $2.8B |
| FY2010 | $7.9B | $4.0B | $2.9B | $2.8B | $61.9M | $2.8B |
| FY2011 | $8.4B | $3.8B | $2.8B | $3.6B | $131.9M | $3.5B |
| FY2012 | $9.7B | $4.0B | $2.6B | $3.2B | $397.0M | $2.8B |
| FY2013 | $11.2B | $4.5B | $3.1B | $3.1B | $190.0M | $2.9B |
| FY2014 | $24.9B | $15.3B | $12.1B | $12.8B | $557.0M | $12.3B |
| FY2015 | $32.6B | $22.2B | $18.1B | $21.3B | $747.0M | $20.5B |
| FY2016 | $30.4B | $17.6B | $13.5B | $17.0B | $748.0M | $16.3B |
| FY2017 | $26.1B | $14.1B | $4.6B | $11.9B | $590.0M | $11.3B |
| FY2018 | $22.1B | $8.2B | $5.5B | $8.4B | $924.0M | $7.5B |
| FY2019 | $22.4B | $4.3B | $5.4B | $9.1B | $825.0M | $8.3B |
| FY2020 | $24.7B | $4.1B | $123.0M | $8.2B | $650.0M | $7.5B |
| FY2021 | $27.3B | $9.9B | $6.2B | $11.4B | $579.0M | $10.8B |
| FY2022 | $27.3B | $7.3B | $4.6B | $9.1B | $728.0M | $8.3B |
| FY2023 | $27.1B | $7.6B | $5.7B | $8.0B | $585.0M | $7.4B |
| FY2024 | $28.8B | $1.7B | $480.0M | $10.8B | $523.0M | $10.3B |
| FY2025 | $29.4B | $10.0B | $8.5B | $10.0B | $563.0M | $9.5B |

Latest trend (the newest full year against the year before; a reading, not a forecast):

- Revenue: +2.4% (year before +6.0%): slowing
- Operating income: +503.0% (year before -78.1%): accelerating
- Net income: +1,672.9% (year before -91.5%): accelerating
- Free cash flow: -8.2% (year before +38.9%): slowing

## Operating figures stated in the filing

- Product sales in foreign currencies: 22.0% (as of 2026-09-30). "Approximat ely 22% and 27% of our product sales were denominated in foreign currencies during the three months ended September 30, 2026 and 2025, respectively." (Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS)
- Product sales in foreign currencies: 27.0% (as of 2025-09-30). "Approximat ely 22% and 27% of our product sales were denominated in foreign currencies during the three months ended September 30, 2026 and 2025, respectively." (Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS)

## Key insights

### Biktarvy alone outsells Gilead's entire operating profit

Biktarvy brought in $4.06B, more than operating income of $3.46B, so the company's results rest heavily on one HIV medicine.

Biktarvy sales were $4.06B this quarter, up 10.1%, and 48.9% of total revenue of $8.3B, a share that rose 1.46 points. Operating income was $3.46B, so Biktarvy's sales on their own exceed it. Descovy, the next largest product, added $1.05B, or 12.6% of revenue. _(from the filing)_
Gilead says it receives "a substantial portion of our revenue" from HIV products. Medicare negotiation has set a Biktarvy price the filing calls "substantially lower than the price we currently charge in Medicare". That price has been set but has not started. _(from the filing)_
Sales are not profit, so this does not mean Biktarvy earns all of the operating income. It shows scale: because each added unit costs little to make, a change in Biktarvy's net price moves the operating result by an amount close to the change in its sales. _(analysis)_

### Product sales grew faster than the headline figure

Revenue rose 6.8%, but product sales climbed to $8.29B from $7.35B; a one-time royalty recognition a year earlier masks the gap.

Total revenues were $8.3B against $7.77B a year earlier, up 6.8%. Product sales were $8.29B against $7.35B. Royalty, contract and other revenues fell 97.4% to $11M from $424M: the prior-year quarter included a recognition of "previously constrained revenues from the sale of certain intellectual property". _(from the filing)_
A year earlier the royalty, contract and other line was 5.5% of revenue; this quarter it was 0.13%. Product sales are now 99.9% of revenue. _(from the filing)_
The year-on-year comparison of total revenue carries a one-time item in its base, so product sales alone give the cleaner view of the business. Even that view needs a caveat: the filing credits part of the quarter's HIV growth to favorable inventory dynamics, not only to patient demand. _(analysis)_

### Operating profit rose while net income fell 20.4%

Operating income rose 4.1% to $3.46B, but investment losses and a higher tax rate cut net income to $2.43B from $3.05B.

Net income was 70.2% of operating income this quarter, against 91.7% a year earlier. Other items were a net expense of $130M, against net other income of $569M a year earlier, as the company's equity holdings swung from gains to losses. Interest expense was $269M against $256M. _(from the filing)_
Income tax expense was $634M on pre-tax income of $3.06B, a rate of 20.7%, against $589M on $3.64B, or 16.2%, in a prior-year quarter helped by a tax settlement. Diluted earnings per share fell to $1.94 from $2.43. _(from the filing)_
The business of selling medicines earned more than a year ago. The fall in net income came from investment marks and tax, items outside operations that can move in either direction from one quarter to the next. _(analysis)_

### Cash generation ran at twice reported profit

Operating cash flow of $5.04B was 2.07 times net income, and a quarter earlier a $10.39B operating loss came with $3.43B of free cash flow.

Operating cash flow was $5.04B this quarter against net income of $2.43B. Free cash flow was $4.8B, 57.8% of revenue, with capital spending at 2.9% of revenue. _(from the filing)_
In the quarter before, when the Arcellx, Tubulis and Ouro Medicines acquisitions closed, Gilead reported an operating loss of $10.39B on revenue of $7.8B, and free cash flow of $3.43B. Annual figures swing the same way: operating income of $1.66B the year before last and $10.0B last year, while free cash flow was $10.3B and $9.46B. _(from the filing)_
Gilead treats clinical-stage purchases as asset acquisitions and expenses the price as acquired research, so reported profit drops in the quarter a deal closes while cash from existing medicines keeps arriving. The caveat: the purchase price is still paid in cash, outside operating cash flow, so free cash flow on this measure does not show it. _(analysis)_

### Competitive edge

- **An 81.1% gross margin funds research and selling** Cost of goods sold was flat at $1.57B while revenue rose 6.8%, leaving room to spend 19.4% of revenue on research and 19.8% on selling.
- **Gilead replaces its own HIV regimens first** Biktarvy rose 10.1% while the older Genvoya fell 10.1%; the filing credits Biktarvy's growth partly to patients switching from Gilead's own regimens.
- **Prevention opens HIV sales to people who are not sick** Yeztugo reached $305M, up 682%, and Descovy rose 49.2% to $1.05B, with the filing naming higher demand in HIV prevention as a driver.

### What to watch

- **A lower Medicare price is set for Biktarvy** Medicare negotiation set a Biktarvy price the filing calls substantially lower than today's, on a medicine that brings in 48.9% of revenue.
- **Generic filers challenge patents on Descovy, Odefsey and Vemlidy** Cipla and Zydus have challenged patents on Descovy, 12.6% of revenue, and on Odefsey and Vemlidy; Gilead has sued both to defend them.
- **Spending grows faster than revenue before acquired assets sell** R&D rose 19.5% and SG&A 20.9% against revenue up 6.8%, carrying three acquisitions whose programs have not yet reached the market.

## Investor view

**Biktarvy alone brought in 48.9% of Gilead's revenue this quarter, as Medicare sets a lower price for it**

### How it makes money

Gilead sells patented medicines. Product sales were $8.29B of $8.3B in total revenue this quarter, or 99.9%. HIV is the core: Biktarvy, its main HIV treatment, brought in $4.06B on its own, 48.9% of revenue, and Descovy added $1.05B, or 12.6%. Royalty, contract and other revenues were $11M, almost nothing beside the product line. _(from the filing)_
The medicines cost little to make relative to what they sell for. Cost of goods sold was $1.57B, 18.9% of revenue, leaving a gross margin of 81.1%. The gross profit goes back into two things in near-equal measure: research and development at $1.61B, 19.4% of revenue, and selling, general and administrative costs at $1.64B, 19.8%. What remains is operating income of $3.46B, an operating margin of 41.7%. _(from the filing)_
Outside HIV, Gilead sells liver disease medicines (Vemlidy at $333M, Livdelzi at $203M, the hepatitis C combination sofosbuvir/velpatasvir at $274M), cancer medicines (Trodelvy at $506M and the cell therapy Yescarta at $294M) and the COVID antiviral Veklury at $86M. Most sales are in the U.S.: Europe brought in $1.07B, 12.8% of revenue, and the rest of the world $872M, 10.5%. _(from the filing)_
Gilead does not sell to U.S. patients or pharmacies directly. It sells and distributes most of its U.S. products "exclusively through the wholesaler/distributor channel", and three wholesalers, Cardinal Health, Cencora and McKesson, take most of its U.S. gross sales. Net prices come after rebates and discounts to Medicaid, Medicare and other payers, which the company estimates each quarter from claims that arrive one to three quarters later. _(from the filing)_
The model throws off cash. Operating cash flow was $5.04B this quarter and free cash flow $4.8B, 57.8% of revenue, with capital spending at 2.9% of revenue. The filing lists where the cash goes, in order: the business and its research pipeline, "continuing select partnerships and business development transactions", a dividend it aims to grow, and share repurchases to offset dilution. _(from the filing)_

### What shifted

Total revenue rose 6.8% to $8.3B from $7.77B a year earlier, while product sales rose faster, to $8.29B from $7.35B. The gap is the royalty, contract and other line, which fell 97.4% to $11M from $424M: a year earlier it carried a one-time recognition of "previously constrained revenues from the sale of certain intellectual property". The product business grew faster than the headline figure shows. _(from the filing)_
HIV drove the quarter. Descovy rose 49.2% to $1.05B and gained 3.58 points of revenue share. Yeztugo, the newest HIV prevention medicine, reached $305M, up 682%. Biktarvy rose 10.1%. The filing attributes HIV growth to "higher average realized price, higher demand in HIV prevention and favorable inventory dynamics". For Descovy it names price and inventory, not demand. _(from the filing)_
Cost of goods sold was flat, up 0.1%, so gross margin widened to 81.1%; the filing credits "the expiration of a royalty-related obligation". Operating costs moved the other way: R&D rose 19.5% and SG&A 20.9%, against revenue growth of 6.8%, on integration costs from the Arcellx, Ouro Medicines and Tubulis acquisitions, legal matters, employee costs and HIV promotion. Operating margin slipped 1.11 points to 41.7%. _(from the filing)_
Below operating income, the comparison turned. Other items were a net expense of $130M, against net other income of $569M a year earlier, as the company's equity holdings swung from gains to losses. The tax rate was 20.7%, against 16.2% in a prior-year quarter helped by a tax settlement. Net income fell 20.4% to $2.43B and diluted earnings per share to $1.94 from $2.43, even as operating income rose 4.1%. _(from the filing)_
Outside HIV the picture split. Trodelvy rose 41.7% to $506M and Livdelzi 93.3% to $203M, both on higher demand. Cell therapy shrank: Yescarta fell 15.8% and Tecartus 27.7%, which the filing puts down to "ongoing competitive headwinds". Veklury fell 69.0% to $86M as COVID hospitalization rates came down. _(from the filing)_

### Risks in the filing

Concentration. Gilead says it receives "a substantial portion of our revenue" from HIV products. If competitors, including generics, take share or it cannot introduce new HIV medicines, it says it may need to scale back operations, including research and development spending. _(from the filing)_
Price. Medicare negotiation under the Inflation Reduction Act has set a Biktarvy price the filing calls "substantially lower than the price we currently charge in Medicare", which will also raise Medicaid rebates and lower other discounted prices. Gilead has also agreed with the administration to most-favored-nation prices in Medicaid for select products and for future launches, and it reports that Medicaid and insurance exchange changes have reduced coverage for some patients. _(from the filing)_
Trade and supply. The U.S. imposed tariffs on patented pharmaceutical imports that began to take effect this summer. Gilead's agreement with the administration excludes its branded products for three years provided it invests further in U.S. manufacturing, but the filing says there is no assurance tariffs will not apply later. Many raw materials and intermediates come from suppliers outside the U.S., and some products rely on a single supplier or facility. _(from the filing)_
Patents and pipeline. Cipla and Zydus have filed applications challenging patents on Descovy, Odefsey and Vemlidy, and Gilead has sued both. The filing also reminds readers that drug development failure "can occur at any point in the process", citing the stopped late-stage lung cancer study of Trodelvy and the impairment charge it caused. _(from the filing)_
Two of these risks already show in the results. Competition shows in cell therapy, where both Yescarta and Tecartus sales fell year on year. Channel timing shows in HIV, where the filing credits part of the quarter's growth to inventory. The largest pricing risk does not show yet: the Biktarvy Medicare price has been set but has not started. _(analysis)_

## Founder view: mechanisms

### Replace your own product first

Gilead sells successive generations of HIV regimens and moves patients from the older ones to newer ones it also owns. Genvoya patients switch to Biktarvy; Bixlenvo was just approved for patients switching from complex regimens; a once-weekly Yeztugo pill is under FDA review. Each generation restarts patent protection and keeps the patient, the prescriber and the payer contract inside the company rather than handing them to a generic or a rival. _(analysis)_

### Gross margin pays for discovery and selling

Once a medicine is approved and protected, each additional unit costs little to make compared with its price. That gap is the budget for everything else: the research that produces the next product and the selling that reaches prescribers. Gilead spends on research and on selling at roughly equal weight and still keeps a large operating profit. _(analysis)_

### Buy pipeline, expense it at once

Gilead fills its pipeline partly by buying clinical-stage companies whose value is mostly one unapproved asset. It accounts for these as asset acquisitions and expenses the price at once as acquired research, so reported profit falls sharply in the quarter a deal closes while the cash from selling existing medicines keeps coming. Reported earnings and cash generation tell different stories from quarter to quarter. _(analysis)_

### Prevention sells to people who are not sick

Treatment sells to people already diagnosed. Prevention sells to healthy people at risk, a far larger group with no symptoms to prompt a purchase. Gilead is moving its HIV franchise toward prevention and toward less frequent dosing, which lowers the burden of staying on the medicine and makes the habit easier to keep. _(analysis)_

## Member research

Signed-in members read, on the page: what Gilead Sciences's numbers depend on from here, and the playbook behind each mechanism (what needs scale, what transfers, how to test it, the metric that would show it).

## Sources

- Gilead Sciences 10-Q for the period to 2026-09-30: https://www.sec.gov/Archives/edgar/data/882095/000088209526000039/ (2026-10-30)

Methodology business-lens-1.0 · schema 1.2.0 · run business-lens-2026-11-02 · as of 2026-11-02