Amgen Inc (AMGN) Reports Strong Revenue Growth Amidst Horizon Acquisition
Total Revenues: Increased by 7% to $28.2 billion for the full year 2023.
GAAP EPS: Increased by 3% from $12.11 to $12.49 for the full year 2023.
Non-GAAP EPS: Rose by 5% from $17.69 to $18.65 for the full year 2023.
Free Cash Flow: Generated $7.4 billion for the full year 2023, down from $8.8 billion in 2022.
Product Sales: Grew by 9% for the full year, driven by 15% volume growth.
Horizon Acquisition Impact: Contributed $954 million in sales from Oct. 6 to Dec. 31, 2023.
2024 Guidance: Projects total revenues in the range of $32.4 billion to $33.8 billion.
On February 6, 2024, Amgen Inc (NASDAQ:AMGN) released its 8-K filing, detailing the financial results for the fourth quarter and full year of 2023. The biotechnology leader, known for its innovative human therapeutics, reported a 20% increase in total revenues for the fourth quarter, reaching $8.2 billion. This growth was primarily driven by a 23% increase in product sales volume, although partially offset by a 3% lower net selling price.
Company Overview
Amgen, a pioneer in biotechnology, has been at the forefront of developing and delivering innovative therapeutics. With a diverse portfolio that includes red blood cell boosters like Epogen and Aranesp, immune system boosters Neupogen and Neulasta, and treatments for inflammatory diseases such as Enbrel and Otezla, Amgen continues to lead in the biotech space. The company's recent acquisition of Horizon Therapeutics has further expanded its reach into rare disease drugs, including the thyroid eye disease drug Tepezza.
Financial Performance and Challenges
Despite robust revenue growth, Amgen's GAAP earnings per share (EPS) saw a significant decrease of 53% in the fourth quarter, attributed to acquisition-related expenses and incremental operating expenses from the Horizon acquisition. However, for the full year, GAAP EPS increased by 3%, bolstered by net gains on equity investments and higher revenues. Non-GAAP EPS, which excludes certain expenses, showed a more favorable trend with a 15% increase in the fourth quarter and a 5% increase for the full year.
The company's financial achievements, particularly in product sales growth, are critical in an industry where innovation and the ability to bring new drugs to market can significantly impact a company's performance. Amgen's success in growing its product sales, including a 5% increase excluding the Horizon sales, underscores its strong market position and the effectiveness of its product portfolio.
Key Financial Metrics
Amgen's financial health can be further assessed through key metrics such as operating income and margin. GAAP operating income decreased from $2.2 billion to $1.3 billion in the fourth quarter, with a corresponding decrease in GAAP operating margin by 17.8 percentage points to 16.2%. For the full year, GAAP operating income and margin also saw declines. Conversely, non-GAAP operating income and margin presented a mixed picture, with an increase in the fourth quarter but a decrease for the full year.
The company's free cash flow for the full year was $7.4 billion, a decrease from the previous year, primarily due to transaction expenses related to the Horizon acquisition and higher repatriation tax payments. This metric is essential as it indicates the company's ability to generate cash and fund operations, investments, and debt repayments.
Analysis and Outlook
Looking ahead to 2024, Amgen anticipates total revenues to range between $32.4 billion and $33.8 billion. The GAAP EPS is expected to be between $8.42 and $9.87, with a tax rate ranging from 11.5% to 13.0%. On a non-GAAP basis, EPS is projected to be between $18.90 and $20.30, with a tax rate between 16.0% and 17.0%. Capital expenditures are estimated to be approximately $1.1 billion, with share repurchases not exceeding $500 million.
Amgen's performance in 2023, particularly in the context of its Horizon acquisition, demonstrates the company's strategic growth initiatives and its ability to adapt to market challenges. While the acquisition has led to increased operating expenses, it has also provided a significant boost to product sales and expanded Amgen's therapeutic portfolio. The company's ability to maintain a strong product sales growth trajectory, coupled with its pipeline of potential new drugs, positions it well for continued success in the dynamic biotechnology industry.
For more detailed information and financial tables, please refer to the full 8-K filing.
Explore the complete 8-K earnings release (here) from Amgen Inc for further details.
This article first appeared on GuruFocus.
