Item 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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Item 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

GILEAD SCIENCES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)


(in millions, except per share amounts)	March 31, 2024		December 31, 2023
Assets
Current assets:
Cash and cash equivalents	$	4,718	$	6,085
Short-term marketable debt securities	—		1,179
Accounts receivable, net	4,669		4,660
Inventories	1,853		1,787
Prepaid and other current assets	2,800		2,374
Total current assets	14,041		16,085
Property, plant and equipment, net	5,321		5,317
Long-term marketable debt securities	—		1,163
Intangible assets, net	23,428		26,454
Goodwill	8,314		8,314
Other long-term assets	5,188		4,792
Total assets	$	56,292	$	62,125
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	622	$	550
Accrued rebates	4,263		3,802
Other current liabilities	4,464		5,130
Current portion of long-term debt and other obligations, net	3,667		1,798
Total current liabilities	13,015		11,280
Long-term debt, net	21,527		23,189
Long-term income taxes payable	1,967		2,039
Deferred tax liability	933		1,588
Other long-term obligations	1,395		1,280
Commitments and contingencies (Note 10)
Stockholders’ equity:
Preferred stock, par value $0.001 per share; 5 shares authorized; none outstanding	—		—
Common stock, par value $0.001 per share; 5,600 shares authorized; 1,246 shares issued and outstanding	1		1
Additional paid-in capital	6,813		6,500
Accumulated other comprehensive income	69		28
Retained earnings	10,656		16,304
Total Gilead stockholders’ equity	17,539		22,833
Noncontrolling interest	(84)		(84)
Total stockholders’ equity	17,455		22,749
Total liabilities and stockholders’ equity	$	56,292	$	62,125

See accompanying notes.

GILEAD SCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)


	Three Months Ended
	March 31,
(in millions, except per share amounts)	2024		2023
Revenues:
Product sales	$	6,647	$	6,306
Royalty, contract and other revenues	39		46
Total revenues	6,686		6,352
Costs and expenses:
Cost of goods sold	1,552		1,401
Research and development expenses	1,520		1,447
Acquired in-process research and development expenses	4,131		481
In-process research and development impairment	2,430		—
Selling, general and administrative expenses	1,375		1,319
Total costs and expenses	11,008		4,647
Operating (loss) income	(4,322)		1,705
Interest expense	254		230
Other (income) expense, net	(91)		174
(Loss) income before income taxes	(4,486)		1,300
Income tax (benefit) expense	(315)		316
Net (loss) income	(4,170)		985
Net loss attributable to noncontrolling interest	—		(26)
Net (loss) income attributable to Gilead	$	(4,170)	$	1,010
Basic (loss) earnings per share attributable to Gilead	$	(3.34)	$	0.81
Shares used in basic (loss) earnings per share attributable to Gilead calculation	1,247		1,248
Diluted (loss) earnings per share attributable to Gilead	$	(3.34)	$	0.80
Shares used in diluted (loss) earnings per share attributable to Gilead calculation	1,247		1,261

See accompanying notes.

GILEAD SCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(unaudited)


	Three Months Ended
	March 31,
(in millions)	2024		2023
Net (loss) income	$	(4,170)	$	985
Other comprehensive income (loss), net:
Net foreign currency translation loss	(17)		(5)
Available-for-sale debt securities:
Net unrealized gain, net of tax impact of $0 and $0, respectively	—		8
Reclassifications to net (loss) income, net of tax impact of $0 and $0, respectively	5		1
Net change	5		9
Cash flow hedges:
Net unrealized gain (loss), net of tax impact of $8 and $(1), respectively	53		(6)
Reclassifications to net (loss) income, net of tax impact of $0 and $3, respectively	—		(21)
Net change	53		(26)
Other comprehensive income (loss), net	41		(22)
Comprehensive (loss) income, net	(4,130)		962
Comprehensive loss attributable to noncontrolling interest, net	—		(26)
Comprehensive (loss) income attributable to Gilead, net	$	(4,130)	$	988

See accompanying notes.

GILEAD SCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(unaudited)


		Three Months Ended March 31, 2024
(in millions, except per share amounts)		Gilead Stockholders’ Equity													Noncontrolling Interest		Total Stockholders’ Equity
	Common Stock					Additional Paid-In Capital			Accumulated Other Comprehensive Income			Retained Earnings
	Shares		Amount
Balance as of December 31, 2023		1,246		$	1		$	6,500		$	28		$	16,304	$	(84)	$	22,749
Net loss		—		—			—			—			(4,170)		—		(4,170)
Other comprehensive income, net		—		—			—			41			—		—		41
Issuances under employee stock purchase plan		1		—			80			—			—		—		80
Issuances under equity incentive plans		6		—			65			—			—		—		65
Stock-based compensation		—		—			188			—			—		—		188
Repurchases of common stock under repurchase programs ($76.88 average price per share)		(5)		—			(20)			—			(380)		—		(400)
Repurchases of common stock for employee tax withholding under equity incentive plans and other		(2)		—			—			—			(116)		—		(116)
Dividends declared ($0.77 per share)		—		—			—			—			(980)		—		(980)
Balance as of March 31, 2024		1,246		$	1		$	6,813		$	69		$	10,656	$	(84)	$	17,455


		Three Months Ended March 31, 2023
(in millions, except per share amounts)		Gilead Stockholders’ Equity													Noncontrolling Interest		Total Stockholders’ Equity
	Common Stock					Additional Paid-In Capital			Accumulated Other Comprehensive Income (Loss)			Retained Earnings
	Shares		Amount
Balance as of December 31, 2022		1,247		$	1		$	5,550		$	2		$	15,687	$	(31)	$	21,209
Net income (loss)		—		—			—			—			1,010		(26)		985
Other comprehensive loss, net		—		—			—			(22)			—		—		(22)
Issuances under employee stock purchase plan		1		—			67			—			—		—		67
Issuances under equity incentive plans		6		—			27			—			—		—		27
Stock-based compensation		—		—			165			—			—		—		165
Repurchases of common stock under repurchase programs ($82.29 average price per share)		(5)		—			(17)			—			(383)		—		(400)
Repurchases of common stock for employee tax withholding under equity incentive plans		(2)		—			—			—			(135)		—		(135)
Dividends declared ($0.75 per share)		—		—			—			—			(957)		—		(957)
Balance as of March 31, 2023		1,248		$	1		$	5,793		$	(20)		$	15,223	$	(58)	$	20,939

See accompanying notes.

GILEAD SCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)


	Three Months Ended
	March 31,
(in millions)	2024		2023
Operating Activities:
Net (loss) income	$	(4,170)	$	985
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation expense	94		94
Amortization expense	596		546
Stock-based compensation expense	187		165
Deferred income taxes	(723)		(303)
Net loss from equity securities	14		256
Acquired in-process research and development expenses	4,131		481
In-process research and development impairment	2,430		—
Other	119		63
Changes in operating assets and liabilities:
Accounts receivable, net	(66)		635
Inventories	(45)		(227)
Prepaid expenses and other	(37)		26
Accounts payable	72		(272)
Income tax assets and liabilities, net	(208)		(161)
Accrued and other liabilities	(175)		(543)
Net cash provided by operating activities	2,219		1,744
Investing Activities:
Purchases of marketable debt securities	(244)		(527)
Proceeds from sales of marketable debt securities	2,265		167
Proceeds from maturities of marketable debt securities	327		324
Acquisitions, including in-process research and development, net of cash acquired	(4,043)		(551)
Purchases of equity securities	(410)		(125)
Capital expenditures	(105)		(109)
Other	5		(5)
Net cash used in investing activities	(2,207)		(826)
Financing Activities:
Proceeds from issuances of common stock	146		97
Repurchases of common stock under repurchase programs	(400)		(400)
Payments of dividends	(990)		(969)
Other	(116)		(135)
Net cash used in financing activities	(1,361)		(1,406)
Effect of exchange rate changes on cash and cash equivalents	(18)		13
Net change in cash and cash equivalents	(1,367)		(476)
Cash and cash equivalents at beginning of period	6,085		5,412
Cash and cash equivalents at end of period	$	4,718	$	4,936

See accompanying notes.

GILEAD SCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accompanying Condensed Consolidated Financial Statements and related Notes to Condensed Consolidated Financial Statements of Gilead Sciences, Inc. (“Gilead,” “we,” “our” or “us”) should be read in conjunction with the audited Consolidated Financial Statements and the related notes thereto for the year ended December 31, 2023, included in our Annual Report on Form 10-K filed with U.S. Securities and Exchange Commission. There have been no material changes to our organization or summary of significant accounting policies as disclosed in that filing.

These interim financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and include all adjustments consisting of normal recurring adjustments that the management of Gilead believes are necessary for a fair presentation of the periods presented and are not necessarily indicative of results expected for the full fiscal year or for any subsequent interim period.

Certain amounts and percentages in these Condensed Consolidated Financial Statements and accompanying notes may not sum or recalculate due to rounding.

2. REVENUES

Disaggregation of Revenues

The following table summarizes our Total revenues:


	Three Months Ended March 31, 2024								Three Months Ended March 31, 2023
(in millions)	U.S.		Europe		Rest of World		Total		U.S.		Europe		Rest of World		Total
Product sales:
HIV
Biktarvy	$	2,315	$	365	$	265	$	2,946	$	2,161	$	304	$	212	$	2,677
Descovy	371		26		29		426		395		25		29		449
Genvoya	332		49		21		403		417		55		29		501
Odefsey	223		76		11		310		230		76		11		317
Symtuza - Revenue share(1)	104		33		3		141		98		36		4		138
Other HIV(2)	60		45		12		117		62		32		13		108
Total HIV	3,405		596		342		4,342		3,364		528		298		4,190

Liver Disease
Sofosbuvir/Velpatasvir(3)	248		79		78		405		204		90		90		385
Vemlidy	95		11		119		225		87		9		103		199
Other Liver Disease(4)	42		47		19		107		27		41		23		91
Total Liver Disease	385		137		215		737		318		140		217		675

Veklury	315		70		169		555		252		111		209		573

Oncology
Cell Therapy
Tecartus	55		36		8		100		59		27		3		89
Yescarta	170		158		52		380		210		121		28		359
Total Cell Therapy	225		195		60		480		269		148		31		448

Trodelvy	206		68		36		309		162		54		6		222
Total Oncology	431		262		96		789		431		202		37		670

Other
AmBisome	14		70		60		144		6		60		49		116
Other(5)	59		9		12		80		62		12		9		83
Total Other	73		79		71		224		69		72		58		199
Total product sales	4,609		1,144		894		6,647		4,434		1,053		819		6,306
Royalty, contract and other revenues	23		15		1		39		18		26		2		46
Total revenues	$	4,633	$	1,159	$	894	$	6,686	$	4,452	$	1,079	$	821	$	6,352

(1) Represents our revenue from cobicistat (“C”), emtricitabine (“FTC”) and tenofovir alafenamide (“TAF”) in Symtuza (darunavir/C/FTC/TAF), a fixed dose combination product commercialized by Janssen Sciences Ireland Unlimited Company (“Janssen”).

(2) Includes Atripla, Complera/Eviplera, Emtriva, Sunlenca, Stribild, Truvada and Tybost.

(3) Includes Epclusa and the authorized generic version of Epclusa sold by Gilead’s separate subsidiary, Asegua Therapeutics LLC (“Asegua”).

(4) Includes ledipasvir/sofosbuvir (Harvoni and the authorized generic version of Harvoni sold by Asegua), Hepcludex, Hepsera, Sovaldi, Viread and Vosevi.

(5) Includes Cayston, Jyseleca, Letairis, Ranexa and Zydelig.

Revenues Recognized from Performance Obligations Satisfied in Prior Years

The following table summarizes revenues recognized from performance obligations satisfied in prior years:


	Three Months Ended
	March 31,
(in millions)	2024		2023
Revenue share with Janssen and royalties for licenses of intellectual property	$	171	$	192
Changes in estimates	$	160	$	160

Contract Balances

The following table summarizes our contract balances:


(in millions)	March 31, 2024		December 31, 2023
Contract assets(1)	$	144	$	117
Contract liabilities(2)	$	84	$	109

(1) Consists of unbilled amounts primarily from arrangements where the licensing of intellectual property is the only or predominant performance obligation.

(2) Generally results from receipt of advance payment before our performance under the contract.

3. FAIR VALUE MEASUREMENTS

The following table summarizes the types of assets and liabilities measured at fair value on a recurring basis by level within the fair value hierarchy:


	March 31, 2024								December 31, 2023
(in millions)	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets:
Available-for-sale debt securities(1):
U.S. treasury securities	$	—	$	—	$	—	$	—	$	426	$	—	$	—	$	426
U.S. government agencies securities	—		—		—		—		—		127		—		127
Non-U.S. government securities	—		—		—		—		—		10		—		10
Certificates of deposit	—		—		—		—		—		45		—		45
Corporate debt securities	—		—		—		—		—		1,451		—		1,451
Residential mortgage and asset-backed securities	—		—		—		—		—		367		—		367
Equity securities:
Money market funds	1,550		—		—		1,550		4,465		—		—		4,465
Publicly traded equity securities(2)	1,808		—		—		1,808		1,458		—		—		1,458
Deferred compensation plan	318		—		—		318		284		—		—		284
Foreign currency derivative contracts	—		39		—		39		—		7		—		7
Total	$	3,676	$	39	$	—	$	3,715	$	6,633	$	2,007	$	—	$	8,639
Liabilities:
Liability for MYR GmbH (“MYR”) contingent consideration	$	—	$	—	$	222	$	222	$	—	$	—	$	228	$	228
Deferred compensation plan	318		—		—		318		283		—		—		283
Foreign currency derivative contracts	—		10		—		10		—		59		—		59
Total	$	318	$	10	$	222	$	549	$	283	$	59	$	228	$	570

(1) During the three months ended March 31, 2024, we sold all of our available-for-sale debt securities and used the proceeds to partially fund our acquisition of CymaBay Therapeutics, Inc. (“CymaBay”) discussed in Note 6. Acquisitions, Collaborations and Other Arrangements.

(2) Publicly traded equity securities include investments in Galapagos NV (“Galapagos”) of $535 million and Arcellx, Inc. (“Arcellx”) of $467 million as of March 31, 2024, which are subject to contractual sale restrictions until August 2024 and June 2025, respectively.

Level 2 Inputs

Available-for-Sale Debt Securities

For our available-for-sale debt securities, we estimate the fair values by reviewing trading activity and pricing as of the measurement date and by taking into consideration valuations obtained from third-party pricing services. The pricing services utilize industry standard valuation models, including both income-based and market-based approaches, for which all significant inputs are observable, either directly or indirectly, to estimate the fair value. These inputs include reported trades of and broker/dealer quotes on the same or similar securities, issuer credit spreads, benchmark securities, prepayment/default projections based on historical data and other observable inputs.

Foreign Currency Derivative Contracts

Our foreign currency derivative contracts have maturities of 18 months or less and all are with counterparties that have a minimum credit rating of A- or equivalent by S&P Global Ratings, Moody’s Investors Service, Inc. or Fitch Ratings, Inc. We estimate the fair values of these contracts by utilizing an income-based industry standard valuation model for which all significant inputs are observable, either directly or indirectly. These inputs include foreign currency exchange rates, Secured Overnight Financing Rate (“SOFR”) and swap rates. These inputs, where applicable, are observable at commonly quoted intervals.

Senior Unsecured Notes

The following table summarizes the total estimated fair value and carrying value of our senior unsecured notes, determined using Level 2 inputs based on their quoted market values:


(in millions)	March 31, 2024		December 31, 2023
Fair value	$	21,930	$	22,567
Carrying value	$	23,838	$	23,834

Level 3 Inputs

Contingent Consideration Liability

In connection with our first quarter 2021 acquisition of MYR, we are subject to a potential contingent consideration payment of up to €300 million, subject to customary adjustments, which is revalued each reporting period using probability-weighted scenarios for U.S. Food and Drug Administration (“FDA”) approval of Hepcludex until the related contingency is resolved.

The following table summarizes the change in fair value of our contingent consideration liability:


	Three Months Ended
	March 31,
(in millions)	2024		2023
Beginning balance	$	228	$	275
Changes in valuation assumptions(1)	—		(3)
Effect of foreign exchange remeasurement(2)	(6)		5
Ending balance(3)	$	222	$	277

(1) Included in Research and development expenses on our Condensed Consolidated Statements of Operations. The change in 2023 primarily related to an update in expected payment dates.

(2) Included in Other (income) expense, net on our Condensed Consolidated Statements of Operations.

(3) Included in Other long-term obligations on our Condensed Consolidated Balance Sheets.

Liability Related to Future Royalties

We recorded a liability related to future royalties as part of our fourth quarter 2020 acquisition of Immunomedics, Inc. (“Immunomedics”), which is subsequently amortized using the effective interest method over the remaining estimated life. The fair value of the liability related to future royalties was approximately $1.2 billion as of March 31, 2024 and December 31, 2023, and the carrying value was $1.2 billion as of March 31, 2024 and December 31, 2023.

Liability Related to Assumed Financing Arrangement

As part of the CymaBay acquisition, we assumed a liability for a financing arrangement (see Note 6. Acquisitions, Collaborations and Other Arrangements). The fair value of the liability approximates its carrying value of $199 million.

Nonrecurring Fair Value Measurements

During the three months ended March 31, 2024, we recorded a partial impairment charge of $2.4 billion related to certain acquired in-process research and development (“IPR&D”) assets. See Note 7. Intangible Assets for additional information.

Fair Value Level Transfers

There were no transfers between Level 1, Level 2 and Level 3 in the periods presented.

4. AVAILABLE-FOR-SALE DEBT SECURITIES AND EQUITY SECURITIES

Available-for-Sale Debt Securities

During the three months ended March 31, 2024, we sold all of our available-for-sale debt securities and used the proceeds to partially fund our acquisition of CymaBay discussed in Note 6. Acquisitions, Collaborations and Other Arrangements. As such, the following tables only show balances for the period prior to this liquidation.

The following table summarizes our available-for-sale debt securities:


	December 31, 2023
(in millions)		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
U.S. treasury securities		$	427	$	—	$	(1)	$	426
U.S. government agencies securities		127		—		—		127
Non-U.S. government securities		10		—		—		10
Certificates of deposit		45		—		—		45
Corporate debt securities		1,455		4		(8)		1,451
Residential mortgage and asset-backed securities		366		1		—		367
Total		$	2,430	$	5	$	(10)	$	2,426

The following table summarizes information related to available-for-sale debt securities that have been in a continuous unrealized loss position, classified by length of time:


	December 31, 2023
	Less Than 12 Months				12 Months or Longer				Total
(in millions)	Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value
U.S. treasury securities	$	—	$	161	$	(1)	$	48	$	(1)	$	209
U.S. government agencies securities	—		106		—		2		—		108
Non-U.S. government securities	—		5		—		5		—		10
Corporate debt securities	(1)		333		(7)		546		(8)		878
Residential mortgage and asset-backed securities	—		123		—		24		—		147
Total	$	(2)	$	727	$	(8)	$	624	$	(10)	$	1,351

The following table summarizes the classification of our available-for-sale debt securities in our Condensed Consolidated Balance Sheets:


(in millions)	December 31, 2023
Cash and cash equivalents	$	83
Short-term marketable debt securities	1,179
Long-term marketable debt securities	1,163
Total	$	2,426

Equity Securities

The following table summarizes the classification of our equity securities on our Condensed Consolidated Balance Sheets:


(in millions)	March 31, 2024		December 31, 2023
Equity securities measured at fair value:
Cash and cash equivalents	$	1,550	$	4,465
Prepaid and other current assets	1,341		1,086
Other long-term assets	785		656
Equity method investments and other equity investments without readily determinable fair values:
Other long-term assets	359		$	340
Total	$	4,036	$	6,547

For our equity method investments in Galapagos and Arcus Biosciences, Inc. (“Arcus”), we elected and applied the fair value option as we believe it best reflects the underlying economics of these investments. Our investment in Galapagos is subject to certain lock-up provisions until August 2024 and was classified in Prepaid and other current assets as of March 31, 2024 and December 31, 2023 at $535 million and $686 million, respectively. Our investment in Arcus was classified in Prepaid and other current assets as of March 31, 2024 and December 31, 2023 at $568 million and $283 million, respectively.

Unrealized Gains and Losses

The following table summarizes net unrealized gains and losses on equity securities still held as of the respective balance sheet dates, included in Other (income) expense, net on our Condensed Consolidated Statements of Operations:


	Three Months Ended
	March 31,
(in millions)	2024		2023
Net unrealized losses on equity securities still held	$	15	$	187

5. DERIVATIVE FINANCIAL INSTRUMENTS

Our operations in foreign countries expose us to market risk associated with foreign currency exchange rate fluctuations between the U.S. dollar and various foreign currencies, primarily the Euro. To manage this risk, we hedge a portion of our foreign currency exposures related to outstanding monetary assets and liabilities as well as forecasted product sales using foreign currency exchange forward contracts. In general, the market risk related to these contracts is offset by corresponding gains and losses on the hedged transactions. The credit risk associated with these contracts is driven by changes in interest and currency exchange rates and, as a result, varies over time. By working only with major banks and closely monitoring current market conditions, we seek to limit the risk that counterparties to these contracts may be unable to perform. We also seek to limit our risk of loss by entering into contracts that permit net settlement at maturity. Therefore, our overall risk of loss in the event of a counterparty default is limited to the amount of any unrealized gains on outstanding contracts (i.e., those contracts that have a positive fair value) at the date of default. We do not enter into derivative contracts for trading purposes.

The derivative instruments we use to hedge our exposures for certain monetary assets and liabilities that are denominated in a non-functional currency are not designated as hedges. The derivative instruments we use to hedge our exposures for forecasted product sales are designated as cash flow hedges and have maturities of 18 months or less.

We held foreign currency exchange contracts with outstanding notional amounts of $2.0 billion and $2.5 billion as of March 31, 2024 and December 31, 2023, respectively.

While all our derivative contracts allow us the right to offset assets and liabilities, we have presented amounts in our Condensed Consolidated Balance Sheets on a gross basis. The following table summarizes the classification and fair values of derivative instruments, including the potential effect of offsetting:


	March 31, 2024
(in millions)	Prepaid and other current assets		Other long-term assets		Total Derivative Assets		Other current liabilities		Other long-term obligations		Total Derivative Liabilities
Foreign currency exchange contracts designated as hedges	$	28	$	2	$	30	$	5	$	1	$	6
Foreign currency exchange contracts not designated as hedges	9		—		9		4		—		4
Total derivatives presented gross on the Condensed Consolidated Balance Sheets					$	39					$	10

Gross amounts not offset on the Condensed Consolidated Balance Sheets:
Derivative financial instruments					$	(8)					$	(8)
Cash collateral received / pledged					—						—
Net amount (legal offset)					$	31					$	1


	December 31, 2023
(in millions)	Prepaid and other current assets		Other long-term assets		Total Derivative Assets		Other current liabilities		Other long-term obligations		Total Derivative Liabilities
Foreign currency exchange contracts designated as hedges	$	6	$	—	$	6	$	38	$	7	$	45
Foreign currency exchange contracts not designated as hedges	1		—		1		15		—		15
Total derivatives presented gross on the Condensed Consolidated Balance Sheets					$	7					$	59

Gross amounts not offset on the Condensed Consolidated Balance Sheets:
Derivative financial instruments					$	(7)					$	(7)
Cash collateral received / pledged					—						—
Net amount (legal offset)					$	—					$	52

The following table summarizes the effect of our derivative contracts on our Condensed Consolidated Financial Statements:


	Three Months Ended
	March 31,
(in millions)	2024		2023
Derivatives designated as hedges:
Net gain (loss) recognized in Accumulated other comprehensive income	$	61	$	(6)
Net gain reclassified from Accumulated other comprehensive income into Product sales	$	—	$	24
Derivatives not designated as hedges:
Net gain (loss) recognized in Other income (expense), net	$	23	$	(3)

The majority of gains and losses related to the hedged forecasted transactions reported in Accumulated other comprehensive income as of March 31, 2024 are expected to be reclassified to Product sales within 12 months. There were no discontinuances of cash flow hedges for the three months ended March 31, 2024 and 2023.

The cash flow effects of our derivative contracts for the three months ended March 31, 2024 and 2023 were included within Net cash provided by operating activities on our Condensed Consolidated Statements of Cash Flows.

6. ACQUISITIONS, COLLABORATIONS AND OTHER ARRANGEMENTS

We enter into acquisitions, licensing and strategic collaborations and other similar arrangements with third parties for the research, development and commercialization of certain products and product candidates. The collaborations and other arrangements may involve two or more parties who are active participants in the operating activities of the collaboration and are exposed to significant risks and rewards depending on the commercial success of the activities. The financial terms of these arrangements may include non-refundable upfront payments, expense reimbursements or payments by us for options to acquire certain rights, contingent obligations by us for potential development and regulatory milestone payments and/or sales-based milestone payments, royalty payments, revenue or profit-sharing arrangements, cost-sharing arrangements and equity investments.

Acquisitions

CymaBay

In March 2024, we completed the acquisition of CymaBay Therapeutics, Inc. (“CymaBay”) for total consideration of $3.9 billion, net of cash acquired. Upon closing, CymaBay became our wholly-owned subsidiary. CymaBay’s lead program, seladelpar, is an investigational, oral, selective peroxisome proliferator-activated receptor delta agonist, shown to regulate critical metabolic and liver disease pathways. Based on data evaluating the efficacy and tolerability profile of seladelpar in more than 500 participants across Phase 2 and Phase 3 studies, a new drug application for seladelpar was submitted to FDA in December 2023.

We accounted for this transaction as an asset acquisition since the lead asset, seladelpar, represents substantially all of the fair value of the gross assets acquired. During the three months ended March 31, 2024, we recorded a $3.9 billion charge, representing an acquired IPR&D asset with no alternative future use, to Acquired in-process research and development expenses on our Condensed Consolidated Statements of Operations. In connection with this acquisition, we recorded $263 million of assets acquired, primarily consisting of deferred tax assets, and $228 million of liabilities assumed, primarily related to an assumed financing arrangement which would be repaid partially upon a change of control and partially upon an approval-based fixed milestone and future sales-based milestones related to seladelpar (see Note 9. Debt and Credit Facilities). During the three months ended March 31, 2024, we also recorded share-based compensation expense of $133 million related to the cash settlement of unvested CymaBay employee stock awards attributable to post-acquisition services, with $67 million being recorded in Research and development expenses and $67 million in Selling, general and administrative expenses on our Condensed Consolidated Statements of Operations.

Tmunity

In February 2023, we closed an agreement to acquire Tmunity Therapeutics, Inc. (“Tmunity”), a clinical-stage, private biotechnology company focused on next-generation chimeric antigen receptor (“CAR”) T-therapies and technologies. Under the terms of the agreement, we acquired all outstanding shares of Tmunity other than those already owned by Gilead for approximately $300 million in cash consideration. As a result, Tmunity became our wholly-owned subsidiary.

We accounted for the transaction as an asset acquisition and recorded a $244 million charge to Acquired in-process research and development expenses on our Condensed Consolidated Statements of Operations during the three months ended March 31, 2023. The remaining purchase price relates to various other assets acquired and liabilities assumed, consisting primarily of deferred tax assets. Under the agreement, the former shareholders of Tmunity and the University of Pennsylvania are eligible to receive a mix of up to approximately $1.0 billion in potential future payments upon achievement of certain development, regulatory and sales-based milestones, as well as royalty payments on sales, with $25 million of that having been charged to Acquired in-process research and development expenses in 2023 and paid in January 2024.

Collaborations and Other Arrangements

Arcus

In January 2024, we amended our collaboration agreement with Arcus whereby we acquired approximately 15.2 million additional shares of Arcus common stock at a premium for $320 million, increasing our ownership to 30.1 million shares, or 33% of the issued and outstanding voting stock of Arcus immediately following the closing of the transaction. We recorded $233 million for the fair value of the equity investment in Prepaid and other current assets on our Condensed Consolidated Balance Sheets and $87 million for the premium in Other (income) expense, net on our Condensed Consolidated Statements of Operations. We also recorded a charge for the $100 million fourth anniversary option continuation fee under the amended agreement to Acquired in-process research and development expenses on our Condensed Consolidated Statements of Operations, which has been accrued as of March 31, 2024 with payment expected to be made by the third quarter of 2024. At that time, this payment will be included within Net cash used in investing activities on our Condensed Consolidated Statements of Cash Flows. Our number of designees on Arcus’ board of directors was also increased to three.

7. INTANGIBLE ASSETS

The following table summarizes our Intangible assets, net:


	March 31, 2024								December 31, 2023
(in millions)	Gross Carrying Amount		Accumulated Amortization		Foreign Currency Translation Adjustment		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Foreign Currency Translation Adjustment		Net Carrying Amount
Finite-lived assets:
Intangible asset – sofosbuvir	$	10,720	$	(7,224)	$	—	$	3,496	$	10,720	$	(7,050)	$	—	$	3,670
Intangible asset – axicabtagene ciloleucel	7,110		(2,416)		—		4,694		7,110		(2,314)		—		4,796
Intangible asset – Trodelvy	11,730		(2,272)		—		9,458		11,730		(2,002)		—		9,728
Intangible asset – Hepcludex	845		(265)		—		580		845		(243)		—		602
Other	1,414		(855)		1		560		1,414		(827)		1		588
Total finite-lived assets	31,819		(13,032)		1		18,788		31,819		(12,436)		1		19,384
Indefinite-lived assets – IPR&D(1)	4,640		—		—		4,640		7,070		—		—		7,070
Total intangible assets	$	36,459	$	(13,032)	$	1	$	23,428	$	38,889	$	(12,436)	$	1	$	26,454

(1) The Indefinite-lived assets – IPR&D balance as of December 31, 2023 was comprised of $5.9 billion related to sacituzumab govitecan-hziy (“SG”) for non-small cell lung cancer (“NSCLC”) and $1.1 billion related to bulveritide. See “2024 IPR&D Impairment” below for 2024 activity.

Impairment Assessments

No intangible asset-related indicators of impairment were noted for the three months ended March 31, 2024 and 2023, except as described under “2024 IPR&D Impairment” below.

2024 IPR&D Impairment

In January 2024, we received data from our Phase 3 EVOKE-01 study of Trodelvy evaluating SG indicating that the study did not meet its primary endpoint of overall survival in previously treated metastatic NSCLC, thus triggering a review for potential impairment of the NSCLC IPR&D intangible asset.

Based on our evaluation of the study results and all other data currently available, and in connection with the preparation of the financial statements for the first quarter, we performed an interim impairment test and determined that the revised estimated fair value of the NSCLC IPR&D intangible asset was below its carrying value. As a result, we recognized a partial impairment charge of $2.4 billion in In-process research and development impairment on our Condensed Consolidated Statements of Operations for the three months ended March 31, 2024.

To arrive at the revised estimated fair value, we used a probability-weighted income approach that discounts expected future cash flows to present value, which requires the use of Level 3 fair value measurements and inputs, and requires the use of critical estimated inputs, including: revenues and operating profits related to the planned utilization of SG in NSCLC, which includes inputs such as addressable patient population, projected market share, treatment duration, and the life of the potential commercialized product; the probability of technical and regulatory success; the time and resources needed to complete the development and approval of SG in NSCLC; an appropriate discount rate based on the estimated weighted-average cost of capital for companies with profiles similar to our profile; and risks related to the viability of and potential alternative treatments in any future target markets. We used a discount rate of 7.00% which is based on the estimated weighted-average cost of capital for companies with profiles similar to ours. The revised estimated fair value of the NSCLC IPR&D intangible asset was $3.5 billion as of March 31, 2024.

8. OTHER FINANCIAL INFORMATION

Accounts Receivable, Net

The following table summarizes our Accounts receivable, net:


(in millions)	March 31, 2024		December 31, 2023
Accounts receivable	$	5,518	$	5,495
Less: allowances for chargebacks	693		679
Less: allowances for cash discounts and other	96		101
Less: allowances for credit losses	59		56
Accounts receivable, net	$	4,669	$	4,660

The majority of our trade accounts receivable arises from product sales in the U.S. and Europe.

Inventories

The following table summarizes our Inventories:


(in millions)	March 31, 2024		December 31, 2023
Raw materials	$	1,237	$	1,246
Work in process	778		847
Finished goods	1,348		1,272
Total	$	3,363	$	3,366
Reported as:
Inventories	$	1,853	$	1,787
Other long-term assets(1)	1,510		1,578
Total	$	3,363	$	3,366

(1) Amounts primarily consist of raw materials.

Other Current Liabilities

The following table summarizes the components of Other current liabilities:


(in millions)	March 31, 2024		December 31, 2023
Compensation and employee benefits	$	755	$	1,201
Income taxes payable	1,198		1,208
Allowance for sales returns	376		387
Other	2,135		2,334
Other current liabilities	$	4,464	$	5,130

Accumulated Other Comprehensive Income (Loss)

The following tables summarize the changes in Accumulated other comprehensive income by component, net of tax:


(in millions)	Foreign Currency Translation		Unrealized Gains and Losses on Available-for-Sale Debt Securities, Net of Tax		Unrealized Gains and Losses on Cash Flow Hedges, Net of Tax		Total
Balance as of December 31, 2023	$	62	$	(5)	$	(29)	$	28
Net unrealized (loss) gain	(17)		—		53		36
Reclassifications to net income	—		5		—		5
Net current period other comprehensive (loss) income	(17)		5		53		41
Balance as of March 31, 2024	$	45	$	—	$	24	$	69


(in millions)	Foreign Currency Translation		Unrealized Gains and Losses on Available-for-Sale Debt Securities, Net of Tax		Unrealized Gains and Losses on Cash Flow Hedges, Net of Tax		Total
Balance as of December 31, 2022	$	2	$	(33)	$	33	$	2
Net unrealized gain (loss)	(5)		8		(6)		(2)
Reclassifications to net income	—		1		(21)		(20)
Net current period other comprehensive (loss) income	(5)		9		(26)		(22)
Balance as of March 31, 2023	$	(3)	$	(24)	$	7	$	(20)

Restructuring

During the three months ended March 31, 2024, we incurred restructuring charges of $63 million primarily related to the initiation of reductions in our commercial and research and development workforce. We recorded $50 million of these charges in Research and development expenses and $13 million of these charges in Selling, general and administrative expenses on our Condensed Consolidated Statements of Operations.

9. DEBT AND CREDIT FACILITIES

The following table summarizes the carrying amount of our borrowings under various financing arrangements:


(in millions)				Carrying Amount
Type of Borrowing	Issue Date	Maturity Date	Interest Rate	March 31, 2024		December 31, 2023
Senior Unsecured	March 2014	April 2024	3.70%	$	1,750	$	1,750
Senior Unsecured	November 2014	February 2025	3.50%	1,749		1,749
Senior Unsecured	September 2015	March 2026	3.65%	2,745		2,744
Senior Unsecured	September 2016	March 2027	2.95%	1,248		1,248
Senior Unsecured	September 2020	October 2027	1.20%	748		747
Senior Unsecured	September 2020	October 2030	1.65%	995		994
Senior Unsecured	September 2023	October 2033	5.25%	992		992
Senior Unsecured	September 2015	September 2035	4.60%	993		993
Senior Unsecured	September 2016	September 2036	4.00%	743		743
Senior Unsecured	September 2020	October 2040	2.60%	988		988
Senior Unsecured	December 2011	December 2041	5.65%	996		996
Senior Unsecured	March 2014	April 2044	4.80%	1,737		1,737
Senior Unsecured	November 2014	February 2045	4.50%	1,734		1,734
Senior Unsecured	September 2015	March 2046	4.75%	2,223		2,222
Senior Unsecured	September 2016	March 2047	4.15%	1,729		1,729
Senior Unsecured	September 2020	October 2050	2.80%	1,478		1,478
Senior Unsecured	September 2023	October 2053	5.55%	988		988
Total senior unsecured notes				23,838		23,834
Liability related to future royalties				1,157		1,153
Liability related to assumed financing arrangement				199		—
Total debt, net				25,193		24,987
Less: Current portion of long-term debt and other obligations, net				3,667		1,798
Total Long-term debt, net				$	21,527	$	23,189

Senior Unsecured Notes

We are required to comply with certain covenants under our note indentures governing our senior unsecured notes. As of March 31, 2024, we were not in violation of any covenants. In April 2024, we repaid $1.75 billion of senior unsecured notes due at maturity.

Revolving Credit Facility

As of March 31, 2024 and December 31, 2023, there were no amounts outstanding under our $2.5 billion revolving credit facility maturing in June 2025, and we were in compliance with all covenants.

10. COMMITMENTS AND CONTINGENCIES

Legal Proceedings

We are a party to various legal actions. Certain significant matters are described below. We recognize accruals for such actions to the extent that we conclude that a loss is both probable and reasonably estimable. We accrue for the best estimate of a loss within a range; however, if no estimate in the range is better than any other, then we accrue the minimum amount in the range. If we determine that a material loss is reasonably possible and the loss or range of loss can be estimated, we disclose the possible loss. Unless otherwise noted, the outcome of these matters either is not expected to be material or is not possible to determine such that we cannot reasonably estimate the maximum potential exposure or the range of possible loss. We did not have any material accruals for the matters described below on our Condensed Consolidated Balance Sheets as of March 31, 2024 and December 31, 2023.

Litigation Relating to Pre-Exposure Prophylaxis

In August 2019, we filed petitions requesting inter partes review of U.S. Patent Nos. 9,044,509, 9,579,333, 9,937,191 and 10,335,423 (collectively, “HHS Patents”) by the Patent Trial and Appeal Board (“PTAB”). The HHS Patents are assigned to the U.S. Department of Health and Human Services (“HHS”) and purport to claim a process of protecting a primate host from infection by an immunodeficiency retrovirus by administering a combination of FTC and tenofovir disoproxil fumarate (“TDF”) or TAF prior to exposure of the host to the immunodeficiency retrovirus, a process commonly known as pre-exposure prophylaxis (“PrEP”). In November 2019, the U.S. Department of Justice filed a lawsuit against us in the U.S. District Court of Delaware, alleging that the sale of Truvada and Descovy for use as PrEP infringes the HHS Patents. In February 2020, PTAB declined to institute our petitions for inter partes review of the HHS Patents. In April 2020, we filed a lawsuit against the U.S. federal government in the U.S. Court of Federal Claims (“CFC”), alleging breach of three material transfer agreements (“MTAs”) related to the research underlying the HHS Patents and two clinical trial agreements (“CTAs”) by the U.S. Centers for Disease Control and Prevention related to PrEP research. A trial for the bifurcated portion of the lawsuit in the CFC was held in June 2022, and in November 2022, the CFC determined that the government breached the MTAs. In January 2024, the CFC found the government liable for breach of both CTAs. A separate trial at the CFC to determine the damages we are owed based on the government’s breaches has been scheduled for December 2024. In May 2023, the District Court held a trial regarding the government’s patent infringement claims, and the jury rendered a full defense verdict in favor of Gilead, finding that the asserted claims of the HHS Patents are invalid and the HHS patents are not infringed. In March 2024, the District Court upheld the jury’s verdict that the government’s patents are invalid, denied the government’s request for a new trial and then entered final judgment. Although we cannot predict with certainty the ultimate outcome of each of these litigation matters, we believe that the U.S. federal government breached its contracts with Gilead, that Truvada and Descovy do not infringe the HHS Patents and that the HHS Patents are invalid over prior art descriptions of Truvada’s use for PrEP and post-exposure prophylaxis because physicians and patients were using the claimed methods years before HHS filed the applications for the patents.

Litigation with Generic Manufacturers

As part of the approval process for some of our products, FDA granted us a New Chemical Entity (“NCE”) exclusivity period during which other manufacturers’ applications for approval of generic versions of our products will not be approved. Generic manufacturers may challenge the patents protecting products that have been granted NCE exclusivity one year prior to the end of the NCE exclusivity period. Generic manufacturers have sought and may continue to seek FDA approval for a similar or identical drug through an abbreviated new drug application (“ANDA”), the application form typically used by manufacturers seeking approval of a generic drug. The sale of generic versions of our products prior to their patent expiration would have a significant negative effect on our revenues and results of operations. To seek approval for a generic version of a product having NCE status, a generic company may submit its ANDA to FDA four years after the branded product’s approval.

In October 2021, we received a letter from Lupin Ltd. (“Lupin”) indicating that it has submitted an ANDA to FDA requesting permission to market and manufacture a generic version of Symtuza, a product commercialized by Janssen and for which Gilead shares in revenues. In November 2021, we, along with Janssen and Janssen Products, L.P., filed a patent infringement lawsuit against Lupin as co-plaintiffs in the U.S. District Court of Delaware. In September 2022, we received a letter from Apotex Inc. and Apotex Corp. (“Apotex”) stating that they have submitted an ANDA for a generic version of Symtuza. In October 2022, we, along with Janssen and Janssen Products, L.P., filed a patent infringement lawsuit against Apotex as co-plaintiffs in the U.S. District Court of Delaware. The cases against Lupin and Apotex have been consolidated into a single trial scheduled for February 2025.

Starting in March 2022, we received letters from Lupin, Laurus Labs (“Laurus”) and Cipla Ltd. (“Cipla”), indicating that they have submitted ANDAs to FDA requesting permission to market and manufacture generic versions of the adult dosage strength of Biktarvy. Lupin, Laurus, and Cipla have challenged the validity of four of the six patents listed in the Orange Book as associated with Biktarvy. We filed a lawsuit against Lupin, Laurus and Cipla in May 2022 in the U.S. District Court of Delaware, and intend to enforce and defend our intellectual property. Additionally, in November 2023, we received a letter from Cipla indicating that it has submitted an ANDA to FDA requesting permission to market and manufacture a generic version of the pediatric dosage strength of Biktarvy. Cipla challenged the validity of two of the patents listed in the Orange Book as associated with Biktarvy. We filed a separate lawsuit against Cipla in December 2023 in the U.S. District Court of Delaware. This lawsuit has been consolidated with the first lawsuit, with a single trial scheduled for October 2025.

In June 2023, we received a letter from Apotex indicating that it has submitted an ANDA to FDA requesting permission to market and manufacture a generic version of Genvoya. In July 2023, we filed a patent infringement lawsuit against Apotex in the U.S. District Court of Delaware, and intend to enforce and defend our intellectual property. This case has been consolidated with the Symtuza matters discussed above, and a trial has been scheduled for February 2025.

Antitrust and Consumer Protection

We, along with Bristol-Myers Squibb Company (“BMS”), Johnson & Johnson, Inc. (“Johnson & Johnson”), and Teva Pharmaceutical Industries Ltd. (“Teva”) have been named as defendants in class action lawsuits filed in 2019 and 2020 related to various drugs used to treat HIV, including drugs used in combination antiretroviral therapy. Plaintiffs allege that we (and the other defendants) engaged in various conduct to restrain competition in violation of federal and state antitrust laws and state consumer protection laws. The lawsuits, which have been consolidated, are pending in the U.S. District Court for the Northern District of California. The lawsuits seek to bring claims on behalf of direct purchasers consisting largely of wholesalers and indirect or end-payor purchasers, including health insurers and individual patients. Plaintiffs seek damages, permanent injunctive relief and other relief. In the second half of 2021 and first half of 2022, several plaintiffs consisting of retail pharmacies, individual health plans and United Healthcare, filed separate lawsuits effectively opting out of the class action cases, asserting claims that are substantively the same as the classes. These cases have been coordinated with the class actions. In March 2023, the District Court granted our motion to hold separate trials as to (i) the allegations against us and Teva seeking monetary damages relating to Truvada and Atripla (“Phase I”) and (ii) the allegations against us and, in part, Johnson & Johnson, seeking monetary damages and injunctive relief relating to Complera (“Phase II”). In May 2023, we settled claims with the direct purchaser class and the retailer opt-out plaintiffs for $525 million, which we paid in the second half of 2023. The settlement agreements are not an admission of liability or fault by us. In June 2023, the jury returned a complete verdict in Gilead’s favor on the remaining plaintiffs’ Phase I allegations. In November 2023, the court denied plaintiffs’ motion to set aside the verdict, and in February 2024, the court entered final judgment on the Phase I verdict and certain summary judgment rulings. In March 2024, plaintiffs filed notices of appeal of the Phase I verdict and those summary judgment rulings as to which the court entered final judgment. Trial on the Phase II claims has not yet been scheduled, and plaintiffs and the Phase I defendants have requested that the court stay Phase II pending any appeal of Phase I. While we intend to vigorously oppose the appeal and defend against the Phase II claims, we cannot predict the ultimate outcome. If plaintiffs are successful in their appeal or Phase II claims, we could be required to pay monetary damages or could be subject to permanent injunctive relief in favor of plaintiffs.

In January 2022, we, along with BMS and Janssen Products, L.P., were named as defendants in a lawsuit filed in the Superior Court of the State of California, County of San Mateo, by Aetna, Inc. on behalf of itself and its affiliates and subsidiaries that effectively opts the Aetna plaintiffs out of the above class actions. The allegations are substantively the same as those in the class actions. The Aetna plaintiffs seek damages, permanent injunctive relief and other relief. In September 2023, we filed a motion for judgment on the pleadings to preclude Aetna from re-litigating claims that were dismissed at summary judgment in the above class action cases. The court denied the motion, and we intend to file a writ of appeal with the California Court of Appeals. In March 2024, we filed a motion to bifurcate the case to adjudicate the issue of preclusion before litigating the merits of the case, which the court granted in April 2024.

In September 2020, we, along with generic manufacturers Cipla and Cipla USA Inc. (together, “Cipla Defendants”), were named as defendants in a class action lawsuit filed in the U.S. District Court for the Northern District of California by Jacksonville Police Officers and Fire Fighters Health Insurance Trust (“Jacksonville Trust”) on behalf of end-payor purchasers. Jacksonville Trust claims that the 2014 settlement agreement between us and the Cipla Defendants, which settled a patent dispute relating to patents covering our Emtriva, Truvada and Atripla products and permitted generic entry prior to patent expiry, violates certain federal and state antitrust and consumer protection laws. Plaintiffs sought damages, permanent injunctive relief and other relief. The lawsuit was resolved in January 2024 on confidential terms, and the case was dismissed in March 2024.

In February 2021, we, along with BMS and Teva, were named as defendants in a lawsuit filed in the First Judicial District Court for the State of New Mexico, County of Santa Fe by the New Mexico Attorney General. The New Mexico Attorney General alleges that we (and the other defendants) restrained competition in violation of New Mexico antitrust and consumer protection laws. The New Mexico Attorney General seeks damages, permanent injunctive relief and other relief. We moved to dismiss the case based on lack of personal jurisdiction and, in July 2023, the New Mexico Supreme Court remanded the case back to the trial court for limited jurisdictional discovery.

We intend to vigorously defend ourselves in these actions, however, we cannot predict the ultimate outcome. If plaintiffs are successful in their claims, we could be required to pay significant monetary damages or could be subject to permanent injunctive relief awarded in favor of plaintiffs, which may result in a material, adverse effect on our results of operations and financial condition, including in a particular reporting period in which any such outcome becomes probable and estimable.

Product Liability

We have been named as a defendant in one class action lawsuit and various product liability lawsuits related to Viread, Truvada, Atripla, Complera and Stribild. Plaintiffs allege that Viread, Truvada, Atripla, Complera and/or Stribild caused them to experience kidney, bone and/or tooth injuries. The lawsuits, which are pending in state or federal court in California and Missouri, involve approximately 25,000 active plaintiffs. Plaintiffs in these cases seek damages and other relief on various grounds for alleged personal injury and economic loss. The first bellwether trial in California state court was scheduled to begin in October 2022, but is currently stayed pending the conclusion of appellate proceedings in the California Supreme Court. The first bellwether trial in California federal court is scheduled to begin in November 2024. We intend to vigorously defend ourselves in these actions, however, we cannot predict the ultimate outcome. If plaintiffs are successful in their claims, we could be required to pay significant monetary damages, which may result in a material, adverse effect on our results of operations and financial condition, including in a particular reporting period in which any such outcome becomes probable and estimable.

Government Investigation

In 2017, we received a subpoena from the U.S. Attorney’s Office for the Southern District of New York requesting documents related to our promotional speaker programs for HIV. We are cooperating with this inquiry.

Qui Tam Litigation

A former sales employee filed a qui tam lawsuit against Gilead in March 2017 in U.S. District Court for the Eastern District of Pennsylvania. Following the government’s decision not to intervene in the suit, the case was unsealed in December 2020. The lawsuit alleges that certain of Gilead’s HCV sales and marketing activities violated the federal False Claims Act and various state false claims acts. The lawsuit seeks all available relief under these statutes.

Health Choice Advocates, LLC (“Health Choice”) filed a qui tam lawsuit against Gilead in April 2020 in New Jersey state court. Following the New Jersey Attorney General’s Office’s decision not to intervene in the suit, Health Choice served us with their original complaint in August 2020. The lawsuit alleges that Gilead violated the New Jersey False Claims Act through our clinical educator programs for Sovaldi and Harvoni and our HCV and HIV patient access programs. The lawsuit seeks all available relief under the New Jersey False Claims Act. In April 2021, the trial court granted our motion to dismiss with prejudice. Health Choice appealed, and in March 2024, the New Jersey Appellate Division affirmed the trial court dismissal.

Health Choice filed another qui tam lawsuit against Gilead in May 2020 making similar allegations in Texas state court. The lawsuit alleged that Gilead violated the Texas Medicare Fraud Prevention Act (“TMFPA”) through our clinical educator programs for Sovaldi and Harvoni and our HCV and HIV patient access programs. The lawsuit sought all available relief under the TMFPA. Health Choice voluntarily dismissed the case without prejudice in August 2023, and commenced a new action in October 2023, asserting largely identical allegations and claims. In the newly filed action, the Texas Attorney General has intervened as a plaintiff.

We intend to vigorously defend ourselves in these actions, however, we cannot predict the ultimate outcomes. If any of these plaintiffs are successful in their claims, we could be required to pay significant monetary damages, which may result in a material, adverse effect on our results of operations and financial condition, including in a particular reporting period in which any such outcome becomes probable and estimable.

Other Matters

We are a party to various legal actions that arose in the ordinary course of our business. We do not believe that it is probable or reasonably possible that these other legal actions will have a material adverse impact on our consolidated financial position, results of operations or cash flows.

11. EARNINGS (LOSS) PER SHARE

The following table shows the calculation of basic and diluted (loss) earnings per share attributable to Gilead:


	Three Months Ended
	March 31,
(in millions, except per share amounts)	2024		2023
Net (loss) income attributable to Gilead	$	(4,170)	$	1,010
Shares used in basic (loss) earnings per share attributable to Gilead calculation	1,247		1,248
Dilutive effect of stock options and equivalents	—		13
Shares used in diluted (loss) earnings per share attributable to Gilead calculation	1,247		1,261

Basic (loss) earnings per share attributable to Gilead	$	(3.34)	$	0.81
Diluted (loss) earnings per share attributable to Gilead	$	(3.34)	$	0.80

Potential shares of common stock excluded from the computation of diluted (loss) earnings per share attributable to Gilead because their effect would have been antidilutive were 13 million and 3 million for the three months ended March 31, 2024, and 2023, respectively.

12. INCOME TAXES

The following table summarizes our Income tax (benefit) expense:


	Three Months Ended
	March 31,
(in millions, except percentages)	2024			2023
(Loss) income before income taxes	$	(4,486)		$	1,300
Income tax (benefit) expense	$	(315)		$	316
Effective tax rate	7.0		%	24.3		%

Our effective income tax rate of 7.0% for the three months ended March 31, 2024 differed from the U.S. federal statutory rate of 21% primarily due to $3.9 billion of non-deductible acquired IPR&D expense recorded in connection with our acquisition of CymaBay, partially offset by a decrease in state deferred tax liabilities associated with the $2.4 billion NSCLC IPR&D intangible asset impairment charge and settlements with tax authorities.

Our effective income tax rate of 24.3% for the three months ended March 31, 2023 differed from the U.S. federal statutory rate of 21% primarily due to $244 million of non-deductible acquired IPR&D expense recorded in connection with our acquisition of Tmunity.

Our income tax returns are subject to audit by federal, state and foreign tax authorities. We are currently under examination by the Internal Revenue Service for our 2019 to 2021 tax years. There are differing interpretations of tax laws and regulations, and as a result, significant disputes may arise with these tax authorities involving issues on the timing and amount of deductions and allocations of income among various tax jurisdictions. We periodically evaluate our exposures associated with our tax filing positions.

During the three months ended March 31, 2024, our unrecognized tax benefits balance as of December 31, 2023 decreased by approximately $400 million. This reduction was due to the conclusion of a tax audit.

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