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GSK plc (GSK - Free Report) reported core earnings of $1.09 per American depositary share (ADS) in second-quarter 2024, beating the Zacks Consensus Estimate of $1.00. Core earnings rose 12% year over year on a reported basis and 13% at a constant exchange rate (CER).
Quarterly revenues increased 10% on a reported basis and 13% at CER to $9.95 billion (£7.88 billion), beating the Zacks Consensus Estimate of $9.49 billion. The upside can be attributed to rising HIV and respiratory product sales, partially offset by the declining COVID-19 product sales.
GSK reports financial figures under three segments — Specialty Medicines, Vaccines and General Medicines.
All growth rates mentioned below are on a year-over-year basis and at CER.
Segment Discussion
Sales in the Specialty Medicines segment rose 22%, driven by sales growth of HIV, oncology and respiratory drugs.
HIV sales rose 13%, driven by sales of new HIV drugs — Juluca, Dovato, Cabenuva and Apretude.
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 (JNJ - Free Report) -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 second quarter, GSK and J&J’s Juluca and Dovato contributed around 41% to total HIV sales.
While sales of the dolutegravir franchise were up 6% in the United States and Europe, they rose 13% in International markets.
Sales of Triumeq declined 10%, while Tivicay sales fell 6% during the quarter.
Sales of the immuno-inflammation drug Benlysta were up 20% in the quarter, reflecting growth across all regions, especially in the U.S. market.
Sales of the respiratory drug Nucala were up 17% during the quarter, driven by growth across the markets.
Oncology sales more than doubled during the quarter, driven by strong patient growth for Zejula, Jemperli and Ojjaara sales. The upside was partially offset by Blenrep for which the company recorded a negative figure of £2 million during the quarter.
Sales of Zejula rose 44% in the quarter. Jemperli added £108 million to the top line in the second quarter compared with £80 million in first-quarter 2024. The uptick was driven by new patient starts in the United States.
New blood cancer drug Ojjaara/Omjjara generated £85 million in product sales during the quarter compared with £52 million in first-quarter 2024. While the drug was approved by the FDA last year in September, it received approval in the European Union in January
GSK did not generate any sales from Vir Biotechnology (VIR - Free Report) -partnered Xevudy during the quarter compared with £1 million in first-quarter 2024.
General Medicines sales were up 12% during the quarter. The upside was driven by solid sales growth of asthma inhaler Trelegy Ellipta across all regions and the increased demand for antibiotics in the International market. The upside was offset by a decline across the Established Respiratory portfolio following the adverse impact of removing the Average Manufacturer Price (AMP) cap on Medicaid drug prices in the United States.
Trelegy Ellipta sales surged 41% during the quarter, owing to strong growth in all regions. Sales of Anoro Ellipta rose 17%. Key established drug Advair/Seretide sales were down 5%, while sales on Revlar/Breo Ellipta were up 1%. Ventolin sales rose 13%.
Vaccine Sales
GSK’s second-quarter vaccine sales rose 1%, driven by increased demand for Meningitis vaccines and uptake of Arexvy in the U.S. During the quarter, GSK did not record any sales from the COVID-19 booster vaccine co-developed in partnership with Sanofi (SNY - Free Report) .
The first approved RSV vaccine for older adults, Arexvy, generated £62 million during the quarter. Per management, Arexvy maintained around two-thirds of the share of retail vaccinations in the quarter. Though sales fell significantly compared with first-quarter 2024 sales of £182 million, the downside was in line with anticipated seasonality patterns.
Shingrix sales fell 4% during the quarter, as the U.S. sales of the vaccine were affected by a new Medicare rule that changed how pharmacies process reimbursements from payers. This was partially offset by rising sales in the International markets.
In Meningitis vaccines, Bexsero sales rose 23%, while sales of Menveo rose 30%. Sales of the influenza vaccine, Fluarix, were down 65%. Sales of Established vaccines were down 2%.
Operating Expenses
Core selling, general and administration (SG&A) costs rose 6% to £2.22 billion, driven by continued investments by the company to support global market expansion of its marketed drugs.
Core research and development (R&D) expenses rose 9% to £1.42 billion, driven by continued investment by management for pipeline advancement.
2024 Guidance
GSK raised its guidance for 2024. The company expects sales to increase 7-9% at CER for the full year compared with the previously-issued guidance of an increase toward the upper end of 5-7%. The uptick in guidance can be attributed to the strong growth momentum observed in sales in the Specialty and General Medicines segment in first-half 2024.
The new guidance also revises expectations for all business segments. Sales of Specialty Medicines are expected to increase in mid-to-high teens percentage at CER in 2024, compared with previously-expected low double-digit growth. Management expects low-to-mid single-digit percentage growth at CER in the General Medicines segment’s turnover, which was previously expected to fall by a mid-single-digit percentage.
For the remainder of the year, management expects lower sales growth in the Vaccines segment. GSK expects sales to grow in the low-to-mid single-digit percentage at CER compared with the previously-issued guidance of high single-digit to low double-digit percentage growth at CER.
Shares were down nearly 2% in pre-market trading on Jul 31, likely due to the curtailed Vaccines guidance. The stock has gained 7.3% year to date compared with the industry’s 0.1% rise.
Image Source: Zacks Investment Research
Management expects growth in second-half 2024 to be impacted by the annualization of product launches and stocking impacts compared with the year-ago period’s levels, particularly for the company’s Vaccines and oncology products.
GSK expects core operating profit to grow between 11% and 13% at CER, up from the previously-issued guidance of 9% to 11%.
Management also raised the guidance of the company’s core EPS to grow in the range of 10-12% compared with the previous guidance of 8-10%.
Image: Bigstock
GSK Beats Q2 Earnings & Sales Estimates, Ups 2024 Guidance
GSK plc (GSK - Free Report) reported core earnings of $1.09 per American depositary share (ADS) in second-quarter 2024, beating the Zacks Consensus Estimate of $1.00. Core earnings rose 12% year over year on a reported basis and 13% at a constant exchange rate (CER).
Quarterly revenues increased 10% on a reported basis and 13% at CER to $9.95 billion (£7.88 billion), beating the Zacks Consensus Estimate of $9.49 billion. The upside can be attributed to rising HIV and respiratory product sales, partially offset by the declining COVID-19 product sales.
GSK reports financial figures under three segments — Specialty Medicines, Vaccines and General Medicines.
All growth rates mentioned below are on a year-over-year basis and at CER.
Segment Discussion
Sales in the Specialty Medicines segment rose 22%, driven by sales growth of HIV, oncology and respiratory drugs.
HIV sales rose 13%, driven by sales of new HIV drugs — Juluca, Dovato, Cabenuva and Apretude.
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 (JNJ - Free Report) -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 second quarter, GSK and J&J’s Juluca and Dovato contributed around 41% to total HIV sales.
While sales of the dolutegravir franchise were up 6% in the United States and Europe, they rose 13% in International markets.
Sales of Triumeq declined 10%, while Tivicay sales fell 6% during the quarter.
Sales of the immuno-inflammation drug Benlysta were up 20% in the quarter, reflecting growth across all regions, especially in the U.S. market.
Sales of the respiratory drug Nucala were up 17% during the quarter, driven by growth across the markets.
Oncology sales more than doubled during the quarter, driven by strong patient growth for Zejula, Jemperli and Ojjaara sales. The upside was partially offset by Blenrep for which the company recorded a negative figure of £2 million during the quarter.
Sales of Zejula rose 44% in the quarter. Jemperli added £108 million to the top line in the second quarter compared with £80 million in first-quarter 2024. The uptick was driven by new patient starts in the United States.
New blood cancer drug Ojjaara/Omjjara generated £85 million in product sales during the quarter compared with £52 million in first-quarter 2024. While the drug was approved by the FDA last year in September, it received approval in the European Union in January
GSK did not generate any sales from Vir Biotechnology (VIR - Free Report) -partnered Xevudy during the quarter compared with £1 million in first-quarter 2024.
General Medicines sales were up 12% during the quarter. The upside was driven by solid sales growth of asthma inhaler Trelegy Ellipta across all regions and the increased demand for antibiotics in the International market. The upside was offset by a decline across the Established Respiratory portfolio following the adverse impact of removing the Average Manufacturer Price (AMP) cap on Medicaid drug prices in the United States.
Trelegy Ellipta sales surged 41% during the quarter, owing to strong growth in all regions. Sales of Anoro Ellipta rose 17%. Key established drug Advair/Seretide sales were down 5%, while sales on Revlar/Breo Ellipta were up 1%. Ventolin sales rose 13%.
Vaccine Sales
GSK’s second-quarter vaccine sales rose 1%, driven by increased demand for Meningitis vaccines and uptake of Arexvy in the U.S. During the quarter, GSK did not record any sales from the COVID-19 booster vaccine co-developed in partnership with Sanofi (SNY - Free Report) .
The first approved RSV vaccine for older adults, Arexvy, generated £62 million during the quarter. Per management, Arexvy maintained around two-thirds of the share of retail vaccinations in the quarter. Though sales fell significantly compared with first-quarter 2024 sales of £182 million, the downside was in line with anticipated seasonality patterns.
Shingrix sales fell 4% during the quarter, as the U.S. sales of the vaccine were affected by a new Medicare rule that changed how pharmacies process reimbursements from payers. This was partially offset by rising sales in the International markets.
In Meningitis vaccines, Bexsero sales rose 23%, while sales of Menveo rose 30%. Sales of the influenza vaccine, Fluarix, were down 65%. Sales of Established vaccines were down 2%.
Operating Expenses
Core selling, general and administration (SG&A) costs rose 6% to £2.22 billion, driven by continued investments by the company to support global market expansion of its marketed drugs.
Core research and development (R&D) expenses rose 9% to £1.42 billion, driven by continued investment by management for pipeline advancement.
2024 Guidance
GSK raised its guidance for 2024. The company expects sales to increase 7-9% at CER for the full year compared with the previously-issued guidance of an increase toward the upper end of 5-7%. The uptick in guidance can be attributed to the strong growth momentum observed in sales in the Specialty and General Medicines segment in first-half 2024.
The new guidance also revises expectations for all business segments. Sales of Specialty Medicines are expected to increase in mid-to-high teens percentage at CER in 2024, compared with previously-expected low double-digit growth. Management expects low-to-mid single-digit percentage growth at CER in the General Medicines segment’s turnover, which was previously expected to fall by a mid-single-digit percentage.
For the remainder of the year, management expects lower sales growth in the Vaccines segment. GSK expects sales to grow in the low-to-mid single-digit percentage at CER compared with the previously-issued guidance of high single-digit to low double-digit percentage growth at CER.
Shares were down nearly 2% in pre-market trading on Jul 31, likely due to the curtailed Vaccines guidance. The stock has gained 7.3% year to date compared with the industry’s 0.1% rise.
Image Source: Zacks Investment Research
Management expects growth in second-half 2024 to be impacted by the annualization of product launches and stocking impacts compared with the year-ago period’s levels, particularly for the company’s Vaccines and oncology products.
GSK expects core operating profit to grow between 11% and 13% at CER, up from the previously-issued guidance of 9% to 11%.
Management also raised the guidance of the company’s core EPS to grow in the range of 10-12% compared with the previous guidance of 8-10%.
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Zacks Rank
GSK currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.