Key Highlights

  • Gilead Sciences shares closed up 3.14% at $135.27, despite the company reporting a GAAP net loss of $10.5 billion for the second quarter.
  • Revenue of $7.80 billion topped the $7.40 billion consensus, with the adjusted loss of $6.75 per share narrower than the $7.26 loss analysts had modeled.
  • The large GAAP loss was driven by $11.2 billion in acquired in-process research and development charges tied to the Arcellx, Tubulis, and Ouro Medicines acquisitions.
  • Management raised full-year adjusted EPS and revenue guidance despite the quarterly loss.
  • A California Supreme Court ruling shielding Gilead from 'duty to innovate' liability claims tied to its HIV drugs also supported sentiment.

What Drove the Close

Gilead Sciences (NASDAQ:GILD) shares closed up 3.14% at $135.27, with a day range of $129.54 to $135.50 on volume of 9.50 million shares, despite the company reporting a substantial GAAP net loss for the second quarter. Investors appeared to focus on the fact that the loss was narrower than feared and that underlying revenue growth remained strong.

Total second-quarter revenues increased 10% to $7.8 billion, topping the $7.40 billion consensus, primarily driven by higher sales of HIV products, Trodelvy, and Livdelzi. Diluted loss per share was $8.45, compared with earnings of $1.56 in the prior-year period, while non-GAAP diluted loss per share was $6.75, narrower than the $7.26 loss analysts had modeled. The large loss was driven by a $9.08 per share impact from acquired in-process research and development expenses tied to Gilead's acquisitions of Arcellx, Tubulis, and Ouro Medicines, net of the impact of its collaboration with Lakefront Biotherapeutics.

HIV product sales increased 12% to $5.7 billion, with Biktarvy sales up 7% to $3.8 billion and Descovy sales up 48% to $967 million. The Liver Disease portfolio grew 10% to $877 million, primarily reflecting higher demand for Livdelzi, while Veklury sales declined 81% to $23 million on lower COVID-19-related hospitalization rates. CEO Daniel O'Day highlighted 10% year-over-year revenue growth in the company's base business, driven by its HIV portfolio, Trodelvy, and Livdelzi.

Guidance and Regulatory Tailwind

Despite the quarterly loss, Gilead raised its full-year 2026 guidance, with product sales now expected between $30.1 billion and $30.4 billion, up from a prior range of $30.0 billion to $30.4 billion. Full-year non-GAAP diluted loss per share guidance was set at $0.65 to $0.30, an improvement from the prior range of $1.05 to $0.65 loss, reflecting continued underlying business strength even as acquisition-related charges weigh on GAAP results.

Investors were also encouraged by a California Supreme Court ruling shielding Gilead from 'duty to innovate' liability claims tied to its HIV drugs, removing a legal overhang on the stock. The combination of the favorable ruling, narrower-than-feared losses, and raised guidance appears to have offset a cautious sector tone set by mixed peer earnings from Merck (NYSE:MRK), Pfizer (NYSE:PFE), and Novo Nordisk (NYSE:NVO) this week.

Gilead's market capitalization stood at $167.95 billion, with a dividend yield of 2.38%. The stock's 52-week range spans $108.46 to $157.29.

Conclusion

Gilead's rise despite a headline GAAP loss illustrates how investors can look past large one-time acquisition charges when underlying revenue growth and forward guidance remain solid. With the company's legal overhang eased by the California Supreme Court ruling and full-year guidance raised, the stock's near-term trajectory will likely depend on how quickly its recent acquisitions begin contributing to the pipeline and revenue base.

This article is for informational purposes only and does not constitute investment advice. Readers should conduct their own research before making financial decisions.