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GSK's Beats on Q4 Earnings & Sales, Issues Upbeat 2023 Outlook
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GSK plc (GSK - Free Report) reported fourth-quarter 2022 adjusted earnings of 61 cents per American depositary share (“ADS”), beating the Zacks Consensus Estimate of 59 cents. Adjusted earnings improved 10% year over year on a reported basis but declined 6% at a constant exchange rate (CER).
Quarterly revenues increased 4% on a reported basis but declined 3% at CER to $8.7 billion (£7.4 billion), beating both the Zacks Consensus Estimate and our model estimates of $8.3 billion and $7.7 billion, respectively. The upside can be attributed to a rise in sales across all business segments, offsetting the declining sales of its COVID-19 antibody drug, Xevudy.
In the trailing 12 months, GSK’s shares have lost 38.3% compared with the industry’s 10.8% fall.
Image Source: Zacks Investment Research
Last July, GSK completed the spin-off of its consumer healthcare segment into a new standalone company called Haleon. Following the demerger, GSK’s commercial operations now constitute only the BioPharma business. Management reports financial figures under three segments — Specialty Medicines, Vaccines and General Medicines.Specialty Medicines, Vaccines and General Medicines are clubbed as commercial operations.
Segment Discussion
Sales of the Specialty Medicines segment fell 11% at CER due to the declining sales of Xevudy. Revenues from the Specialty Medicines segment were up 21% at CER, excluding Xevudy sales. Sales growth of HIV, oncology and respiratory drugs was also strong.
Xevudy generated sales of £125 million in the fourth quarter, compared with £411 million in the third quarter. The majority of the drug’s sales were generated from International markets. GSK markets Xevudy in collaboration with Vir Biotechnology (VIR - Free Report) .
Last April, the FDA withdrew the emergency use authorization (EUA) granted to GSK/Vir Biotechnology’s Xevudy. The withdrawal decision for the Vir Biotechnology-partnered antibody therapy was based on data that showed that it was unlikely for the Xevudy dose to be effective against the Omicron variant.
HIV sales increased 21% at CER, driven by sales growth of new HIV drugs — Juluca, Dovato, Cabenuva, Rukobia and Apretude — and a favorable pricing mix in the United States. Management also witnessed growth of three-drug regimen HIV drugs — Tivicay and Triumeq — whose combined sales were up 15% at CER. It is worth mentioning that GSK markets Juluca in collaboration with J&J (JNJ - Free Report) .
GSK generates the majority of its HIV sales from its dolutegravir franchise, comprising three-drug regimens — Triumeq and Tivicay — and two-drug regimens — Dovato and J&J-partnered Juluca. The launch of the two-drug regimens has been eroding sales and market share of the three-drug regimens following their launch. During the fourth quarter, GSK and J&J’s Juluca and Dovato generated nearly 37.5% of total HIV sales, up from 35% in third-quarter 2022.
Sales of the dolutegravir franchise were up 16% at CER in the U.S. market and 3% in Europe. In International markets, sales were down 21% at CER.
Sales of Triumeq declined 8% at CER, while Tivicay sales were up 5% at CER. The combined sales of Dovato, J&J-partnered Juluca, Rukobia, Cabenuva and Apretude gained 70% at CER.
Sales of the immuno-inflammation drug, Benlysta, were up 20% in the quarter, reflecting growth across all regions.
Sales of the respiratory drug, Nucala, were up 18% at CER during the quarter, driven by growth in all markets.
Oncology sales were up 11% year over year, mainly driven by Zejula. Sales of Zejula rose 8% in the quarter. Sales of the drug, Blenrep, gained 14% during the quarter. The recently-launched Jemperli added £5 million to the top line in the fourth quarter.
Sales of General Medicines were in line with the year-ago quarter. Loss of sales from established drugs due to generic competition was offset by the strong sales growth of respiratory drugs Trelegy Ellipta and Flixotide/Flovent and the post-pandemic recovery of Augmentin sales. A few established drugs like Avamys and Ventolin also demonstrated sales growth.
Trelegy Ellipta sales surged 19% year over year, driven by strong growth in all regions. Sales of Anoro Ellipta were up 5% at CER during the fourth quarter. Key established drugs Advair/Seretide sales declined 6% year over year due to generic competition in all markets. Sales on Revlar/Breo Ellipta were down 15% at CER year over year.
Vaccine Sales Rise
GSK’s fourth-quarter vaccine sales gained 7% at CER, driven by the recovery in Shingrix sales.
Shingrix sales rose 18% at CER during the quarter due to strong demand in Europe and International markets.
In Meningitis vaccines, Bexsero sales were up 13%, while sales of Menveo rose 50%. Sales of the influenza vaccine, Fluarix, were up 2% at CER. Sales of Established vaccines were up 4% year over year.
Operating Expenses
Adjusted selling, general and administration (SG&A) costs increased 13% year over year at CER to £2.44 billion. The increase in SG&A costs was due to the launch of products in the Specialty Medicines and Vaccines segments.
Research and development (R&D) expenses rose 1% year over year at CER to reach £1.52 billion due to continued investment by management for pipeline advancement and the recently acquired Affinivax.
2023 Guidance
GSK issued its guidance for 2023. The company expects sales to increase 6% to 8% in 2023.
Management expects sales of specialty medicines to increase mid to high single-digit percentage at CER in 2023, while vaccine sales are expected to grow in the mid-teens percentage at CER. However, management expects a slight decline in turnover for the General Medicines segment due to increased generic erosion of respiratory drugs.
The company expects adjusted operating profit growth to increase between 10% to 12% at CER. GSK also provided guidance for its adjusted EPS, which is anticipated to grow in the range of 12% and 15%.
The above guidance excludes any revenues from its COVID-related products. If management were to add COVID sales, it expects a reduction of approximately 9% in turnover growth as well as decline in adjusted operating profit growth by 6% to 7%. Management does not expect significant COVID-19 related sales in 2023.
The company also expects to record slightly lower turnover and adjusted operating profit growth in first-half 2023.
Estimates for Sanofi’s 2022 bottom line have increased from $4.16 to $4.32 in the past 30 days. Earnings estimates for 2023 have increased from $4.31 to $4.41 during the same period.Shares of Sanofi have declined 4.8% in the past year.
The earnings of Sanofi beat estimates in each of the last four quarters, with the average surprise being 9.50%. In the last reported quarter, SNY delivered an earnings surprise of 9.85%.
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GSK's Beats on Q4 Earnings & Sales, Issues Upbeat 2023 Outlook
GSK plc (GSK - Free Report) reported fourth-quarter 2022 adjusted earnings of 61 cents per American depositary share (“ADS”), beating the Zacks Consensus Estimate of 59 cents. Adjusted earnings improved 10% year over year on a reported basis but declined 6% at a constant exchange rate (CER).
Quarterly revenues increased 4% on a reported basis but declined 3% at CER to $8.7 billion (£7.4 billion), beating both the Zacks Consensus Estimate and our model estimates of $8.3 billion and $7.7 billion, respectively. The upside can be attributed to a rise in sales across all business segments, offsetting the declining sales of its COVID-19 antibody drug, Xevudy.
In the trailing 12 months, GSK’s shares have lost 38.3% compared with the industry’s 10.8% fall.
Image Source: Zacks Investment Research
Last July, GSK completed the spin-off of its consumer healthcare segment into a new standalone company called Haleon. Following the demerger, GSK’s commercial operations now constitute only the BioPharma business. Management reports financial figures under three segments — Specialty Medicines, Vaccines and General Medicines.Specialty Medicines, Vaccines and General Medicines are clubbed as commercial operations.
Segment Discussion
Sales of the Specialty Medicines segment fell 11% at CER due to the declining sales of Xevudy. Revenues from the Specialty Medicines segment were up 21% at CER, excluding Xevudy sales. Sales growth of HIV, oncology and respiratory drugs was also strong.
Xevudy generated sales of £125 million in the fourth quarter, compared with £411 million in the third quarter. The majority of the drug’s sales were generated from International markets. GSK markets Xevudy in collaboration with Vir Biotechnology (VIR - Free Report) .
Last April, the FDA withdrew the emergency use authorization (EUA) granted to GSK/Vir Biotechnology’s Xevudy. The withdrawal decision for the Vir Biotechnology-partnered antibody therapy was based on data that showed that it was unlikely for the Xevudy dose to be effective against the Omicron variant.
HIV sales increased 21% at CER, driven by sales growth of new HIV drugs — Juluca, Dovato, Cabenuva, Rukobia and Apretude — and a favorable pricing mix in the United States. Management also witnessed growth of three-drug regimen HIV drugs — Tivicay and Triumeq — whose combined sales were up 15% at CER. It is worth mentioning that GSK markets Juluca in collaboration with J&J (JNJ - Free Report) .
GSK generates the majority of its HIV sales from its dolutegravir franchise, comprising three-drug regimens — Triumeq and Tivicay — and two-drug regimens — Dovato and J&J-partnered Juluca. The launch of the two-drug regimens has been eroding sales and market share of the three-drug regimens following their launch. During the fourth quarter, GSK and J&J’s Juluca and Dovato generated nearly 37.5% of total HIV sales, up from 35% in third-quarter 2022.
Sales of the dolutegravir franchise were up 16% at CER in the U.S. market and 3% in Europe. In International markets, sales were down 21% at CER.
Sales of Triumeq declined 8% at CER, while Tivicay sales were up 5% at CER. The combined sales of Dovato, J&J-partnered Juluca, Rukobia, Cabenuva and Apretude gained 70% at CER.
Sales of the immuno-inflammation drug, Benlysta, were up 20% in the quarter, reflecting growth across all regions.
Sales of the respiratory drug, Nucala, were up 18% at CER during the quarter, driven by growth in all markets.
Oncology sales were up 11% year over year, mainly driven by Zejula. Sales of Zejula rose 8% in the quarter. Sales of the drug, Blenrep, gained 14% during the quarter. The recently-launched Jemperli added £5 million to the top line in the fourth quarter.
Sales of General Medicines were in line with the year-ago quarter. Loss of sales from established drugs due to generic competition was offset by the strong sales growth of respiratory drugs Trelegy Ellipta and Flixotide/Flovent and the post-pandemic recovery of Augmentin sales. A few established drugs like Avamys and Ventolin also demonstrated sales growth.
Trelegy Ellipta sales surged 19% year over year, driven by strong growth in all regions. Sales of Anoro Ellipta were up 5% at CER during the fourth quarter. Key established drugs Advair/Seretide sales declined 6% year over year due to generic competition in all markets. Sales on Revlar/Breo Ellipta were down 15% at CER year over year.
Vaccine Sales Rise
GSK’s fourth-quarter vaccine sales gained 7% at CER, driven by the recovery in Shingrix sales.
Shingrix sales rose 18% at CER during the quarter due to strong demand in Europe and International markets.
In Meningitis vaccines, Bexsero sales were up 13%, while sales of Menveo rose 50%. Sales of the influenza vaccine, Fluarix, were up 2% at CER. Sales of Established vaccines were up 4% year over year.
Operating Expenses
Adjusted selling, general and administration (SG&A) costs increased 13% year over year at CER to £2.44 billion. The increase in SG&A costs was due to the launch of products in the Specialty Medicines and Vaccines segments.
Research and development (R&D) expenses rose 1% year over year at CER to reach £1.52 billion due to continued investment by management for pipeline advancement and the recently acquired Affinivax.
2023 Guidance
GSK issued its guidance for 2023. The company expects sales to increase 6% to 8% in 2023.
Management expects sales of specialty medicines to increase mid to high single-digit percentage at CER in 2023, while vaccine sales are expected to grow in the mid-teens percentage at CER. However, management expects a slight decline in turnover for the General Medicines segment due to increased generic erosion of respiratory drugs.
The company expects adjusted operating profit growth to increase between 10% to 12% at CER. GSK also provided guidance for its adjusted EPS, which is anticipated to grow in the range of 12% and 15%.
The above guidance excludes any revenues from its COVID-related products. If management were to add COVID sales, it expects a reduction of approximately 9% in turnover growth as well as decline in adjusted operating profit growth by 6% to 7%. Management does not expect significant COVID-19 related sales in 2023.
The company also expects to record slightly lower turnover and adjusted operating profit growth in first-half 2023.
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Zacks Rank & Key Picks
GSK currently has a Zacks Rank #3 (Hold). A better-ranked stock in the overall healthcare sector is Sanofi (SNY - Free Report) , which carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Estimates for Sanofi’s 2022 bottom line have increased from $4.16 to $4.32 in the past 30 days. Earnings estimates for 2023 have increased from $4.31 to $4.41 during the same period.Shares of Sanofi have declined 4.8% in the past year.
The earnings of Sanofi beat estimates in each of the last four quarters, with the average surprise being 9.50%. In the last reported quarter, SNY delivered an earnings surprise of 9.85%.