Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis is intended to provide material information around events and uncertainties known to management that are relevant to an assessment of the financial condition and results of operations of Gilead and should therefore be read in conjunction with our audited Consolidated Financial Statements and the related notes thereto and other disclosures included as part of our Annual Report on Form 10-K for the year ended December 31, 2025 and our unaudited Condensed Consolidated Financial Statements for the three months ended March 31, 2026 and the related notes thereto and other disclosures (including the disclosures under Part II, Item 1A. Risk Factors) included in this Quarterly Report on Form 10-Q.

Management Overview

Gilead Sciences, Inc. (including its consolidated subsidiaries, referred to as “Gilead,” the “company,” “we,” “our” or “us”) is a biopharmaceutical company that has pursued and achieved breakthroughs in medicine for more than three decades, with the goal of creating a healthier world for all people. We are committed to advancing innovative medicines to prevent and treat life-threatening diseases, including HIV, viral hepatitis, COVID-19 and cancer. We operate in more than 35 countries worldwide, with headquarters in Foster City, California.

Key Business Updates

The following represents a summary of notable business updates and events since the filing of our Annual Report on Form 10-K for the year ended December 31, 2025, including certain items from our press releases, which readers are encouraged to review in full as available on our website at www.gilead.com. The content on the referenced website does not constitute a part of and is not incorporated by reference into this Quarterly Report on Form 10-Q.

Virology

• Announced U.S. Food and Drug Administration (“FDA”) accepted New Drug Application for bictegravir and lenacapavir (“BIC/LEN”) for virologically suppressed people with HIV under priority review, with a Prescription Drug User Fee Act (“PDUFA”) date of August 27, 2026.

• Presented late-breaking Phase 3 results from the ARTISTRY-1 and ARTISTRY-2 trials at the 2026 Conference on Retroviruses and Opportunistic Infections (CROI), evaluating the investigational daily oral single-tablet regimen of BIC/LEN for virologically suppressed people with HIV. BIC/LEN maintained high levels of virologic suppression, demonstrating comparable efficacy to complex regimens and to Biktarvy at Week 48 in people with HIV who switched antiretroviral therapy. These data support global regulatory filings.

Oncology

• Completed the acquisition of Arcellx, Inc. (“Arcellx”) for $115 per share, or an implied equity value of $7.8 billion, and one contingent value right of $5 per share. This acquisition builds on an existing collaboration agreement with Arcellx for the development of anitocabtagene autoleucel (“anito-cel”) in relapsed or refractory (“R/R”) multiple myeloma (“MM”), and also adds Arcellx’s D-Domain BCMA binder that has the potential to strengthen Gilead’s portfolio in oncology and inflammation.

• Announced that the Biologics License Application for anito-cel in 4L+ R/R MM has been accepted by FDA, with a PDUFA target action date of December 23, 2026.

• Announced a definitive agreement to acquire Tubulis GmbH (“Tubulis”) a private clinical-stage biotechnology company developing next-generation antibody-drug conjugates (“ADC”), including lead asset TUB-040, a NaPi2b-directed topoisomerase-I inhibitor ADC currently in Phase 1b/2 development for platinum-resistant ovarian cancer and non-small cell lung cancer. Closing of the transaction is subject to expiration or termination of certain regulatory filings and other customary conditions.

• Received FDA full approval for Tecartus in adult patients with R/R mantle cell lymphoma, following an accelerated approval in this setting in July 2020. Tecartus’ label now includes efficacy, safety and pharmacokinetic data from Cohort 3 of the ZUMA-2 study in patients who are R/R after one or more lines of therapy and who are Bruton tyrosine kinase inhibitor-naïve.

Inflammation

• Announced a definitive agreement to acquire Ouro Medicines, LLC (“Ouro”), a private clinical-stage biotechnology company developing T cell engager (“TCE”) therapies for autoimmune diseases. This acquisition adds Ouro’s lead asset, OM336 (gamgertamig), a BCMAxCD3 TCE, to Gilead’s portfolio. Closing of the transaction is subject to expiration or termination of certain regulatory filings and other customary conditions. Gilead has entered into a framework agreement with Galapagos NV in relation to this acquisition, which includes equally splitting the $1.675 billion upfront payment and up to $500 million in milestone payments, among other terms.

Key Financial Results

The following table summarizes our key financial results for the period and period-over-period changes:

						Three Months Ended
						March 31,
(in millions, except percentages and per share amounts)						2026						2025						Change
Total revenues						$	6,960					$	6,667					4		%
Net income						$	2,021					$	1,315					54		%
Diluted earnings per share						$	1.61					$	1.04					54		%

Total revenues increased 4% to $7.0 billion for the three months ended March 31, 2026, compared to the same period in 2025, primarily due to higher sales of HIV products, Trodelvy and Livdelzi, partially offset by lower sales of Veklury, as well as chronic hepatitis C virus (“HCV”) and Cell Therapy products.

Net income was $2.0 billion and diluted earnings per share was $1.61 for the three months ended March 31, 2026, compared to net income of $1.3 billion and diluted earnings per share of $1.04 for the same period in 2025. The increase was primarily due to:

• Net unrealized gains from equity securities compared to net unrealized losses in 2025;

• Higher product sales; and

• Lower acquired in-process research and development (“IPR&D”) expenses; partially offset by

• Higher income tax expense; and

• Higher selling, general and administrative expenses.

Please refer to “Results of Operations” below for further information on results for the three months ended March 31, 2026.

Outlook Update

As a result of the recent acquisitions completed or announced above, we expect to record related charges of approximately $11.5 billion to Acquired in-process research and development expenses in the second quarter of 2026, which we expect to result in a net loss for the second quarter and full year 2026.

Results of Operations

Revenues

The following table summarizes our Total revenues and period-over-period changes:

						Three Months Ended March 31, 2026																								Three Months Ended March 31, 2025
(in millions, except percentages)						U.S.						Europe						Rest of World						Total						U.S.						Europe						Rest of World						Total						Change
Product sales:
HIV
Biktarvy						$	2,573					$	437					$	352					$	3,361					$	2,474					$	375					$	301					$	3,150					7		%
Descovy						761						23						23						807						538						21						27						586						38		%
Genvoya						215						33						16						264						305						40						19						364						(28)		%
Odefsey						153						59						9						221						215						57						10						281						(21)		%
Symtuza - Revenue share(1)						107						28						3						138						82						29						3						114						21		%
Yeztugo						158						—						7						166						—						—						—						—						NM
Other HIV(2)						36						27						9						73						50						31						10						91						(20)		%
Total HIV						4,004						607						419						5,030						3,664						553						370						4,587						10		%
Liver Disease
Livdelzi						115						18						—						133						40						—						—						40						NM
Sofosbuvir/Velpatasvir(3)						141						60						82						283						166						80						99						346						(18)		%
Vemlidy						91						13						132						237						100						12						140						252						(6)		%
Other Liver Disease(4)						15						78						21						114						28						76						17						121						(6)		%
Total Liver Disease						362						170						235						767						335						168						256						758						1		%
Veklury						112						14						18						144						199						22						82						302						(52)		%
Oncology
Cell Therapy
Tecartus						30						37						8						75						40						31						8						78						(4)		%
Yescarta						120						146						67						332						160						149						77						386						(14)		%
Total Cell Therapy						150						183						74						407						200						180						84						464						(12)		%
Trodelvy						253						95						54						402						181						75						37						293						37		%
Total Oncology						403						278						129						810						381						255						121						757						7		%
Other
AmBisome						7						59						72						138						5						67						66						139						(1)		%
Other(5)						39						8						11						58						47						9						14						70						(17)		%
Total Other						46						67						83						196						52						76						81						209						(6)		%
Total product sales						4,926						1,137						883						6,946						4,631						1,073						909						6,613						5		%
Royalty, contract and other revenues						—						8						6						14						37						11						6						54						(75)		%
Total revenues						$	4,926					$	1,144					$	889					$	6,960					$	4,668					$	1,084					$	915					$	6,667					4		%

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NM - Not Meaningful

(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.

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

HIV

HIV product sales increased 10% to $5.0 billion for the three months ended March 31, 2026, compared to the same period in 2025, primarily due to higher demand and average realized price, partially offset by unfavorable inventory dynamics. In particular:

• Biktarvy sales increased 7% primarily due to higher demand, including patients switching from Genvoya and other Gilead HIV products, and average realized price, partially offset by unfavorable inventory dynamics; and

• Descovy sales increased 38% primarily due to higher average realized price and demand.

Liver Disease

Liver Disease product sales increased 1% to $767 million for the three months ended March 31, 2026, compared to the same period in 2025, primarily due to higher demand for Livdelzi, partially offset by unfavorable inventory dynamics and lower sales for HCV products.

Veklury

Veklury product sales decreased 52% to $144 million for the three months ended March 31, 2026, compared to the same period in 2025, primarily due to lower rates of COVID-19-related hospitalizations.

Oncology

Cell Therapy

Cell Therapy product sales decreased 12% to $407 million for the three months ended March 31, 2026, compared to the same period in 2025, primarily due to lower demand reflecting ongoing competitive headwinds.

Trodelvy

Trodelvy product sales increased 37% to $402 million for the three months ended March 31, 2026, compared to the same period in 2025, primarily due to higher demand, favorable inventory dynamics and higher average realized price.

Foreign Currency Exchange Impact

We generally face exposure to movements in foreign currency exchange rates, primarily in the Euro. We use foreign currency exchange contracts to hedge a portion of our foreign currency exposures.

Approximately 27% and 28% of our product sales were denominated in foreign currencies during the three months ended March 31, 2026 and 2025, respectively. Foreign currency exchange, net of hedges, had a favorable impact on our total product sales of $112 million for the three months ended March 31, 2026, based on a comparison using foreign currency exchange rates from the three months ended March 31, 2025.

Costs and Expenses

The following table summarizes our costs and expenses and period-over-period changes:

						Three Months Ended
						March 31,
(in millions, except percentages)						2026						2025						Change
Cost of goods sold						$	1,445					$	1,540					(6)		%
Product gross margin						79.2		%				76.7		%				249 bps
Research and development expenses						$	1,372					$	1,379					(1)		%
Acquired in-process research and development expenses						$	107					$	253					(58)		%
Selling, general and administrative expenses						$	1,451					$	1,258					15		%

Product Gross Margin

Product gross margin increased to 79.2% for the three months ended March 31, 2026, compared to the same period in 2025, primarily driven by the expiration of a royalty-related obligation and product mix.

Research and Development Expenses

Research and development expenses consist primarily of personnel costs, including salaries, benefits and stock-based compensation expense, infrastructure, materials and supplies and other support costs, research and clinical studies performed by contract research organizations and our collaboration partners and other outside services.

We manage these expenses by identifying the research and development (“R&D”) activities we expect to be performed during a given period and then prioritizing efforts based on scientific data, probability of successful technical development and regulatory approval, market potential, available human and capital resources and other considerations. We regularly review our R&D activities based on unmet medical need and, as necessary, reallocate resources among our internal R&D portfolio and external opportunities that we believe will best support the long-term growth of our business. We do not track total R&D expenses by product candidate, therapeutic area or development phase.

The following table summarizes our Research and development expenses and period-over-period changes:

						Three Months Ended
						March 31,
(in millions, except percentages)						2026						2025						Change
Personnel, infrastructure and other support costs						$	861					$	854					1		%
Clinical studies and other costs						510						524						(3)		%
Research and development expenses						$	1,372					$	1,379					(1)		%

Research and development expenses remained relatively flat at $1.4 billion for the three months ended March 31, 2026, compared to the same period in 2025. Personnel, infrastructure and other support costs remained relatively flat with higher compensation largely offset by lower restructuring costs. Clinical studies and other costs decreased slightly primarily due to lower oncology clinical study activity, partially offset by higher investment in virology clinical manufacturing.

Acquired In-Process Research and Development Expenses

Acquired in-process research and development expenses are recorded when incurred and reflect costs of externally-developed IPR&D projects, acquired directly in a transaction other than a business combination, that do not have an alternative future use, including upfront and pre-commercialization milestone payments related to various collaborations and the costs of rights to IPR&D projects.

Acquired in-process research and development expenses were $107 million for the three months ended March 31, 2026, primarily related to $80 million associated with the Suzhou Genhouse Bio Co., Ltd. collaboration upfront payment.

Acquired in-process research and development expenses were $253 million for the three months ended March 31, 2025, primarily related to $250 million associated with the LEO Pharma A/S collaboration upfront payment.

See Note 6. Acquisitions, Collaborations and Other Arrangements of the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information. Also, refer to the “Outlook Update” section above regarding significant Acquired in-process research and development expenses expected for the second quarter of 2026.

Selling, General and Administrative Expenses

Selling, general and administrative expenses are recorded when incurred and consist primarily of personnel costs, facilities and overhead costs, and selling, marketing and advertising expenses, as well as other general and administrative costs related to finance, human resources, legal and other administrative activities.

The following table summarizes our Selling, general and administrative expenses and period-over-period changes:

						Three Months Ended
						March 31,
(in millions, except percentages)						2026						2025						Change
Selling and marketing expenses						$	898					$	753					19		%
General and administrative expenses						553						505						9		%
Selling, general and administrative expenses						$	1,451					$	1,258					15		%

Selling, general and administrative expenses increased 15% to $1.5 billion for the three months ended March 31, 2026, compared to the same period in 2025. Selling and marketing expenses increased primarily due to higher HIV promotional expenses. General and administrative expenses increased primarily due to donations of equity securities made to the Gilead Foundation.

Interest Expense and Other (Income) Expense, Net

The following table summarizes our Interest expense and Other (income) expense, net and period-over-period changes:

						Three Months Ended
						March 31,
(in millions, except percentages)						2026						2025						Change
Interest expense						$	240					$	260					(8)		%
Other (income) expense, net						$	(235)					$	328					NM
(Gain) loss from equity securities, net						$	(142)					$	426					NM
Interest income						$	(95)					$	(94)					1		%
Other, net						$	2					$	(4)					NM

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NM - Not Meaningful

Interest expense decreased 8% to $240 million for the three months ended March 31, 2026, compared to the same period in 2025, primarily due to lower debt balances.

Favorable movements in Other (income) expense, net for the three months ended March 31, 2026, compared to the same period in 2025, primarily related to net unrealized gains from equity securities compared to net unrealized losses in 2025.

Income Taxes

The following table summarizes our Income tax expense and period-over-period changes:

						Three Months Ended
						March 31,
(in millions, except percentages)						2026						2025						Change
Income before income taxes						$	2,580					$	1,649					56		%
Income tax expense						$	559					$	334					67		%
Effective tax rate						21.7		%				20.2		%				141 bps

Our effective tax rate increased for the three months ended March 31, 2026, compared to the same period in 2025, primarily due to provision to return adjustments that occurred in the three months ended March 31, 2025.

The Organisation for Economic Co-operation and Development (“OECD”) has developed a framework to implement a global minimum corporate tax of 15% for companies with global revenues and profits above certain thresholds (referred to as “Pillar Two”), with certain aspects effective January 1, 2024 and other aspects effective January 1, 2025. Certain countries in which we operate have enacted Pillar Two legislation, and other countries are in the process of introducing legislation to implement Pillar Two. In January 2026, the OECD announced additional administrative guidance, including a “side-by-side” framework intended to coordinate the application of Pillar Two with existing minimum tax regimes in certain jurisdictions. We do not expect Pillar Two, including the side-by-side framework, to have a material impact on our results of operations, liquidity or capital resources.

Liquidity and Capital Resources

We regularly analyze our ability to generate and obtain adequate amounts of cash to meet our short-term and long-term requirements and plans. Our capital priorities include: (i) investing in our business and R&D pipeline, (ii) continuing select partnerships and business development transactions, (iii) growing our dividend over time and (iv) repurchasing shares to offset dilution and opportunistically reduce share count. Based on our evaluation of our current position of liquidity, available capital resources and our material cash requirements, we believe that we can satisfy our capital needs for the next 12 months and the foreseeable future.

Liquidity

Cash and cash equivalents were $7.6 billion and marketable debt securities were $997 million as of March 31, 2026. The table below summarizes our cash flow activities, followed by our analysis of changes and trends:

						Three Months Ended
						March 31,
(in millions, except percentages)						2026						2025						Change
Net cash provided by (used in):
Operating activities						$	2,544					$	1,757					45		%
Investing activities						1,770						(415)						NM
Financing activities						(4,239)						(3,426)						24		%
Effect of exchange rate changes on cash and cash equivalents						(11)						19						NM
Net change in cash and cash equivalents						$	65					$	(2,065)					NM

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NM - Not Meaningful

Operating Activities

Net cash provided by operating activities is our primary source of funds, driven mainly by collections on product sales, partially offset by operating spend. Changes in working capital balances, generally associated with the timing of collections and payments, as well as unanticipated payments related to litigation, taxes or other matters, may create some variation in any given year. Net cash provided by operating activities increased for the three months ended March 31, 2026, compared to the same period in 2025, primarily due to lower income tax payments and lower inventory spend.

Investing Activities

The change in Net cash provided by (used in) investing activities for the three months ended March 31, 2026, compared to the same period in 2025, was primarily due to a partial liquidation of our marketable securities portfolio in 2026. Net cash provided by (used in) investing activities may vary in any given year depending on the favorability of strategic opportunities for the business.

Financing Activities

The change in Net cash used in financing activities for the three months ended March 31, 2026, compared to the same period in 2025, was primarily due to higher debt repayments, partially offset by lower common stock repurchases. Net cash used in financing activities may vary in any given year depending primarily on the timing of debt repayments and proceeds from debt offerings and the amount of common stock repurchases.

In April 2026, we received cash of $1.1 billion related to a borrowing under a term loan facility credit agreement with a group of institutional lenders. See Note 9. Debt and Credit Facilities of the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information.

In May 2026, we announced that our Board of Directors declared a quarterly dividend of $0.82 per share of our common stock, with a payment date of June 29, 2026 to all stockholders of record as of the close of business on June 15, 2026. Future dividends are subject to declaration by our Board of Directors.

Capital Resources

A summary of our capital resources and material cash requirements is presented in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2025. Other than as disclosed in the Liquidity section above and in Notes 4. Investments, 6. Acquisitions, Collaborations and Other Arrangements, 9. Debt and Credit Facilities, 10. Commitments and Contingencies and 12. Income Taxes of the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q, there were no material changes to our capital resources and material cash requirements during the three months ended March 31, 2026.

Critical Accounting Estimates

A summary of our critical accounting estimates is presented in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2025. Other than as disclosed in Notes 2. Revenues, 7. Intangible Assets, 10. Commitments and Contingencies and 12. Income Taxes of the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q, there were no material changes to our critical accounting estimates during the three months ended March 31, 2026.

Information Available on Our Website

Our company website is www.gilead.com. We routinely post important information for investors in the “Investors” section of our website, https://investors.gilead.com. Among other things, an estimate of Acquired IPR&D expenses is expected to be made available on the Quarterly Results page within the first ten days after the end of each quarter. The content on the referenced websites does not constitute a part of and is not incorporated by reference into this Quarterly Report on Form 10-Q.