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GSK Beats on Q4 Earnings & Sales, Stock Up on Raised Long-Term Outlook
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GSK plc (GSK - Free Report) reported fourth-quarter 2024 core earnings of 59 cents per American depositary share (ADS), which beat the Zacks Consensus Estimate of 53 cents. Core earnings declined 20% year over year on a reported basis and 10% at a constant exchange rate (CER) due to increased operating expenses during the quarter.
Quarterly revenues rose 1% on a reported basis and 4% at CER to $10.4 billion (£8.12 billion). The top line outpaced the Zacks Consensus Estimate of $10.00 billion. The upside can be attributed to rising sales of its HIV and oncology products, partially offset by the declining vaccine sales.
All growth rates mentioned below are on a year-over-year basis and at CER.
GSK’s Segmental Discussion
GSK reports under three segments — General Medicines, Specialty Medicines and Vaccines. Sales in the Specialty Medicines and General Medicines segments rose 17% and 6%, respectively. Vaccine sales declined 12%.
GSK’s Specialty Medicines Drive Top Line
HIV sales rose 14% during the quarter, driven by strong patient demand for the company’s two-drug regimens — Dovato and J&J (JNJ - Free Report) -partnered Juluca — and long-acting medications, Apretude and Cabenuva. The combined revenues from these four drugs contributed more than 60% to the total HIV sales during the quarter.
Sales of Dovato rose 27%, while those of the J&J-partnered Juluca increased 10%. Since their commercial launch, both these medications have been eroding the sales and market share of the company’s three-drug regimens — Triumeq and Tivicay. While Triumeq sales declined 11%, sales of Tivicay rose 1% during the quarter.
Sales of Apretude and Cabenuva rose 65% and 43%, respectively.
Sales of the respiratory drug Nucala were up 7% during the quarter, driven by strong performance in ex-U.S. territories.
Sales of the immuno-inflammation drug Benlysta were up 12% in the quarter, reflecting strong product demand across all regions.
Oncology sales rose 72%, driven by strong patient demand for Jemperli and Ojjaara. Jemperli added £149 million to GSK’s top line compared with £130 million in third-quarter 2024, driven by new patient starts across all regions.
New blood cancer drug Ojjaara/Omjjara generated £118 million in product sales compared with £98 million in third-quarter 2024. While the drug was approved by the FDA in September 2023, it received approval in the EU in January 2024.
Zejula sales fell 3% in the quarter. Though the drug’s U.S. sales were adversely impacted due to favorable price impacts in the year-ago period, continued growth in ex-U.S. territories partially offset the same.
GSK added £11 million from the sales of its Vir Biotechnology (VIR - Free Report) -partnered Xevudy during the quarter.
Sales Performance of GSK’s General Medicines
In this segment, the upside was primarily driven by solid sales growth of asthma inhaler Trelegy Ellipta across all regions. This was partially offset by the removal of the Average Manufacturer Price cap on Medicaid drug prices in the United States, adversely impacting sales of some established drugs.
Sales of Trelegy Ellipta and Flixotide/Flovent surged 17% and 47%, respectively. Sales of Advair/Seretide and Anoro Ellipta fell 2% each. Revlar/Breo Ellipta sales declined 5%.
GSK’s Vaccine Sales Decline
The decline in vaccine sales was primarily due to lower sales of its RSV vaccine Arexvy. The figure dropped 69% during the quarter. This downtick can be attributed to the restrictive recommendation issued by the U.S. Centers for Disease Control and Prevention last year for individuals in the 60-74 age bracket.
Sales of the company’s shingles vaccine, Shingrix, fell 4% during the quarter due to lower demand in the U.S. and International markets. This was partially offset by rising sales in Europe.
In Meningitis vaccines, sales of Bexsero rose 39%, while Menveo sales declined 41%. Sales of the influenza vaccine, Fluarix, rose 14%. Sales of Established vaccines improved 8%.
During the quarter, GSK did not record any sales from the COVID-19 booster vaccine, which was co-developed with Sanofi (SNY - Free Report) .
Operating Expenses
Core selling, general and administration (SG&A) costs rose 6% to £2.70 billion. This was due to continued investments by management to support the global market expansion of its marketed drugs.
Core research and development expenses rose 4% to £1.82 billion, by management's continued investment in pipeline advancement.
GSK’s Encouraging 2025 Guidance
GSK issued fresh guidance for 2025. It expects sales to increase 3-5% during the year.
Management expects sales of specialty medicines to increase by a low double-digit percentage at CER in 2025, while sales in the General Medicines segment are expected to be broadly stable at CER. However, management expects vaccine sales to witness a low-single-digit decline. GSK does not expect any further COVID-19-related sales in 2025.
GSK expects both core operating profit and core EPS to grow in the range of 6-8%.
Our Take on GSK’s Results
GSK’s fourth-quarter results were impressive, with both earnings and sales beating estimates. This was driven by sales growth in the Specialty Medicines segment. The company’s oncology portfolio, which had been facing a steep decline due to lower Blenrep sales in recent quarters, registered impressive growth on the back of rising Jemperli sales and the newly launched Ojjaara.
The encouraging results were further fueled by GSK’s strong optimism around its drug pipeline and future commercial launches, based on which management hiked its sales outlook for 2031. It now expects to generate sales of more than £40 billion, an increase from its previous projection of more than £38 billion.
Management’s attempts to enhance shareholder returns also seem encouraging. Apart from the quarterly results, GSK also announced plans for a share buyback program worth £2 billion, which will be implemented over the next 18 months.
Shares of GSK rose nearly 6% in pre-market trading today, likely due to the encouraging long-term outlook and the buyback program. In the past year, the stock has lost 16% compared with the industry’s 10% decline.
Image Source: Zacks Investment Research
This increase in long-term outlook is mainly driven by the company’s prioritized focus on HIV, immunology/respiratory and oncology therapeutic areas. It has 71 assets in clinical development, which include 19 candidates that are either in late-stage development or under regulatory review.
This year, GSK expects to launch five new products/line extensions, including Blenrep (relaunch in multiple myeloma), depemokimab (for severe asthma and chronic rhinosinusitis with nasal polyps) and Nucala (for COPD). The FDA is currently reviewing regulatory filings for gepotidacin (for uncomplicated urinary tract infection) and a pentavalent MenABCWY meningococcal vaccine, with final decisions expected in the first quarter of 2025.
Image: Bigstock
GSK Beats on Q4 Earnings & Sales, Stock Up on Raised Long-Term Outlook
GSK plc (GSK - Free Report) reported fourth-quarter 2024 core earnings of 59 cents per American depositary share (ADS), which beat the Zacks Consensus Estimate of 53 cents. Core earnings declined 20% year over year on a reported basis and 10% at a constant exchange rate (CER) due to increased operating expenses during the quarter.
See the Zacks Earnings Calendar to stay ahead of market-making news.
Quarterly revenues rose 1% on a reported basis and 4% at CER to $10.4 billion (£8.12 billion). The top line outpaced the Zacks Consensus Estimate of $10.00 billion. The upside can be attributed to rising sales of its HIV and oncology products, partially offset by the declining vaccine sales.
All growth rates mentioned below are on a year-over-year basis and at CER.
GSK’s Segmental Discussion
GSK reports under three segments — General Medicines, Specialty Medicines and Vaccines. Sales in the Specialty Medicines and General Medicines segments rose 17% and 6%, respectively. Vaccine sales declined 12%.
GSK’s Specialty Medicines Drive Top Line
HIV sales rose 14% during the quarter, driven by strong patient demand for the company’s two-drug regimens — Dovato and J&J (JNJ - Free Report) -partnered Juluca — and long-acting medications, Apretude and Cabenuva. The combined revenues from these four drugs contributed more than 60% to the total HIV sales during the quarter.
Sales of Dovato rose 27%, while those of the J&J-partnered Juluca increased 10%. Since their commercial launch, both these medications have been eroding the sales and market share of the company’s three-drug regimens — Triumeq and Tivicay. While Triumeq sales declined 11%, sales of Tivicay rose 1% during the quarter.
Sales of Apretude and Cabenuva rose 65% and 43%, respectively.
Sales of the respiratory drug Nucala were up 7% during the quarter, driven by strong performance in ex-U.S. territories.
Sales of the immuno-inflammation drug Benlysta were up 12% in the quarter, reflecting strong product demand across all regions.
Oncology sales rose 72%, driven by strong patient demand for Jemperli and Ojjaara. Jemperli added £149 million to GSK’s top line compared with £130 million in third-quarter 2024, driven by new patient starts across all regions.
New blood cancer drug Ojjaara/Omjjara generated £118 million in product sales compared with £98 million in third-quarter 2024. While the drug was approved by the FDA in September 2023, it received approval in the EU in January 2024.
Zejula sales fell 3% in the quarter. Though the drug’s U.S. sales were adversely impacted due to favorable price impacts in the year-ago period, continued growth in ex-U.S. territories partially offset the same.
GSK added £11 million from the sales of its Vir Biotechnology (VIR - Free Report) -partnered Xevudy during the quarter.
Sales Performance of GSK’s General Medicines
In this segment, the upside was primarily driven by solid sales growth of asthma inhaler Trelegy Ellipta across all regions. This was partially offset by the removal of the Average Manufacturer Price cap on Medicaid drug prices in the United States, adversely impacting sales of some established drugs.
Sales of Trelegy Ellipta and Flixotide/Flovent surged 17% and 47%, respectively. Sales of Advair/Seretide and Anoro Ellipta fell 2% each. Revlar/Breo Ellipta sales declined 5%.
GSK’s Vaccine Sales Decline
The decline in vaccine sales was primarily due to lower sales of its RSV vaccine Arexvy. The figure dropped 69% during the quarter. This downtick can be attributed to the restrictive recommendation issued by the U.S. Centers for Disease Control and Prevention last year for individuals in the 60-74 age bracket.
Sales of the company’s shingles vaccine, Shingrix, fell 4% during the quarter due to lower demand in the U.S. and International markets. This was partially offset by rising sales in Europe.
In Meningitis vaccines, sales of Bexsero rose 39%, while Menveo sales declined 41%. Sales of the influenza vaccine, Fluarix, rose 14%. Sales of Established vaccines improved 8%.
During the quarter, GSK did not record any sales from the COVID-19 booster vaccine, which was co-developed with Sanofi (SNY - Free Report) .
Operating Expenses
Core selling, general and administration (SG&A) costs rose 6% to £2.70 billion. This was due to continued investments by management to support the global market expansion of its marketed drugs.
Core research and development expenses rose 4% to £1.82 billion, by management's continued investment in pipeline advancement.
GSK’s Encouraging 2025 Guidance
GSK issued fresh guidance for 2025. It expects sales to increase 3-5% during the year.
Management expects sales of specialty medicines to increase by a low double-digit percentage at CER in 2025, while sales in the General Medicines segment are expected to be broadly stable at CER. However, management expects vaccine sales to witness a low-single-digit decline. GSK does not expect any further COVID-19-related sales in 2025.
GSK expects both core operating profit and core EPS to grow in the range of 6-8%.
Our Take on GSK’s Results
GSK’s fourth-quarter results were impressive, with both earnings and sales beating estimates. This was driven by sales growth in the Specialty Medicines segment. The company’s oncology portfolio, which had been facing a steep decline due to lower Blenrep sales in recent quarters, registered impressive growth on the back of rising Jemperli sales and the newly launched Ojjaara.
The encouraging results were further fueled by GSK’s strong optimism around its drug pipeline and future commercial launches, based on which management hiked its sales outlook for 2031. It now expects to generate sales of more than £40 billion, an increase from its previous projection of more than £38 billion.
Management’s attempts to enhance shareholder returns also seem encouraging. Apart from the quarterly results, GSK also announced plans for a share buyback program worth £2 billion, which will be implemented over the next 18 months.
Shares of GSK rose nearly 6% in pre-market trading today, likely due to the encouraging long-term outlook and the buyback program. In the past year, the stock has lost 16% compared with the industry’s 10% decline.
Image Source: Zacks Investment Research
This increase in long-term outlook is mainly driven by the company’s prioritized focus on HIV, immunology/respiratory and oncology therapeutic areas. It has 71 assets in clinical development, which include 19 candidates that are either in late-stage development or under regulatory review.
This year, GSK expects to launch five new products/line extensions, including Blenrep (relaunch in multiple myeloma), depemokimab (for severe asthma and chronic rhinosinusitis with nasal polyps) and Nucala (for COPD). The FDA is currently reviewing regulatory filings for gepotidacin (for uncomplicated urinary tract infection) and a pentavalent MenABCWY meningococcal vaccine, with final decisions expected in the first quarter of 2025.
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GSK’s Zacks Rank
GSK currently has a Zacks Rank #5 (Strong Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.