Announcing its first dividend, annual revenue that doubled the
prior year's performance and a $15 billion buyback plan wasn't enough to
buoy Gilead Sciences'
shares when it dropped a bomb during its fourth-quarter earnings
conference call: Discounts on the company's hepatitis C drugs this year
will be 46 percent, way more than investors and analysts expected.
"That really escalated quickly," Brian Skorney, an
analyst with Robert W. Baird, wrote in a note to clients Wednesday. The
discount "is meaningfully worse than expectations" in the 25 to 30
percent range, and as a result, Skorney lowered his estimate for
Gilead's hepatitis C revenue by 20 percent to $12.9 billion.
Gilead said part of its adjustment reflects a shift toward more patients
who are covered by Medicaid and the Veterans Administration receiving
the drugs at rebates of more than 50 percent.
Labels: Gilead, price wars