AMGN Stock Down 1% After Hours, Amgen Q2 Earnings Beat Estimates with Revenue Rising 6%

UTC by Teuta Franjkovic · 3 min read
AMGN Stock Down 1% After Hours, Amgen Q2 Earnings Beat Estimates with Revenue Rising 6%
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Amgen reported Q2 earnings that beat Wall Street estimates, but AMGN stock fell over 1% in after-hours trading. The company reported non-GAAP earnings per share of $4.25 for the second quarter.

American multinational biopharmaceutical company Amgen Inc (NASDAQ: AMGN) reported its earnings for Q2 2020. According to the Q2 report from Amgen, even though the impact of the coronavirus pandemic was meaningful, total revenues increased 6% to $6.2 billion in comparison to the second quarter of 2019, mostly boosted by higher unit demand, offset partially by lower net selling prices.

Amgen stock fell by 1.48% after earnings report to $251.50 in after-hours trading.

Product sales, therefore, rose by 6% on the global level and were bolstered by a 13% volume rise across a number of newer products. GAAP earnings per share (EPS) slipped 15% to $3.05 mostly because of the amortization of costs connected with the company’s November 2019 acquisition of Otezla, offset partially by increased revenues. Also, the company stressed that this is its first period to include its share of BeiGene’s net loss under the equity method of accounting.

GAAP operating income went down by 13% to $2.3 billion and GAAP operating margin plunged 8.7 percentage points to 39.3%, driven primarily by the amortization of intangible assets from Otezla acquisition.

Amgen: $2.7B of Free Cash Flow in Q2

Amgen generated $2.7 billion of free cash flow in Q2 compared to $1.3 billion in the same period 2019, an increase was driven primarily by the timing of tax payments.

2020 total revenues guidance continued at $25.0-$25.6 billion while EPS guidance was revised to $10.73-$11.43 on a GAAP basis and to $15.10-$15.75 on a non-GAAP basis. Total product sales grew by 6% for the second quarter of 2020 compared to the second quarter of 2019 driven by 13% volume growth.

Total Operating Expenses rose by 22% primarily driven by Otezla-related expenses, including the amortization of intangible assets, offset partially by the reduction in certain expenses as a result of COVID-19.

Expected Total Revenues Unchanged From previous Guidance

Amgen Q2 2020 dividend of $1.60 per share was declared on March 4, 2020, and was paid on June 8, 2020, to all stockholders of record as of May 18, 2020, representing a 10% increase from 2019.

During the second quarter, Amgen repurchased 2.6 million shares of common stock at a total cost of $591 million. At the end of the second quarter, the company had $4.9 billion remaining under its stock repurchase authorization. Cash and investments totaled $11.4 billion as of June 30, 2020, that represents a fall of $10.3 billion from the quarter ended June 30, 2019.

Also, the company issued $4 billion of long-term debt in May for general corporate purposes, including enhancing the working capital position, given favorable market conditions.

For the full year 2020, the company now expects total revenues in the range of $25.0 billion to $25.6 billion, unchanged from previous guidance. On a GAAP basis, EPS is expected to stand at $10.73 to $11.43 and a tax rate in the range of 10.5% to 11.5%.

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