Gilead Earnings Beat Expectations. The Stock Is Still Falling.

Shares of Gilead are up 30% this year. (Justin Sullivan/Getty Images)

Gilead Sciences reported third-quarter results that surpassed Wall Street expectations late Thursday, amid a close focus on the launch of the company’s promising new HIV medicine.

Gilead shares are up 30% this year, largely on enthusiasm for Yeztugo, a twice-yearly HIV prevention shot that the FDA approved in June. Yeztugo was 99.9% effective in large clinical trials at keeping participants HIV negative, but it carries a list price of more than $28,000 a year.

Insurers have balked at picking up that tab, and CVS Health said in August it won’t put Yeztugo on the list of drugs that its pharmacy benefit manager covers. That has raised questions about whether the drug’s list price could stifle sales.

Gilead said Thursday that sales of Yeztugo had been $39 million in the third quarter. It said that 75% of U.S. patients now had access to the medicine.

“When we launched the drug, we expected to be at 75% by the end of six months,” Gilead CFO Andrew Dickinson told Barron’s on Thursday. “We’re there now at the end of roughly a quarter.”

In a note earlier this week, J.P. Morgan analyst Chris Schott wrote that he expected Yeztugo sales of $30 million for the third quarter. TD Cowen analyst Tyler Van Buren wrote early Thursday that his own survey suggested that investors were anticipating $79 million in third quarter Yeztugo sales.

The Yeztugo revenue could weigh on Gilead’s stock in the near-term. Shares were down 3.4% in after-hours trading Thursday following the report.

Analysts are counting on Yeztugo to become one of Gilead’s top products. Schott wrote he expected sales to eventually top $5 billion a year.

Outside of Yeztugo, third quarter results for Gilead beat expectations, though they enjoyed a boost from a one-time $400 million royalty recognition. Overall revenue was $7.8 billion, above the $7.4 billion FactSet consensus estimate. Non-GAAP diluted earnings were $2.47 per share for the quarter, ahead of the $2.13 per share consensus estimate.

Product sales, however, were $7.3 billion, slightly below the $7.4 billion consensus estimate, and down 2% from the same quarter last year. Much of the drag was due to a drop in sales of Gilead’s Covid-19 antiviral Veklury, which were $277 million for the quarter, down from $692 million in the same quarter last year. Excluding Veklury, total product sales were up 4% compared to the same quarter last year.

Non-product revenue, a category that includes royalties, came in at $424 million.

Dickinson said that the $400 million royalty recognition had bumped up non-GAAP earnings by roughly 25 cents per share. “Even if you strip that out, which is about a 25 cent impact, we delivered $2.22 of non-GAAP EPS,” Dickinson said, above consensus estimates, and up from $2.02 in the same quarter last year.

Gilead tweaked its guidance for the full year. It now expects non-GAAP diluted earnings of between $8.05 and $8.25 per share, putting the midpoint slightly above a prior guidance range between $7.95 and $8.25.

“I think we’re really well positioned for 2026,” Gilead CEO Daniel O’Day told Barron’s.

Write to Josh Nathan-Kazis at josh.nathan-kazis@barrons.com