Gilead Sciences exhibits a cash‑generative, high‑margin financial profile supported by strong operating cash flow and profitability, but faces concerns over revenue per share momentum and earnings volatility.
Gilead Sciences is a large biopharmaceutical company focused on antivirals and specialty therapies. The company reports a trailing twelve‑month operating cash flow of $10.02B and recent quarterly revenue of $7.92B.
Return metrics have rebounded: ROE at 37.5% and interest coverage at 9.7871 demonstrate robust returns and debt service capacity.
Important indicators include Earnings Quality Analysis and Strategic Capital Allocation focusing on operating cash flow versus net income and free cash flow margin; Revenue & Net Income trends; EPS Diluted & Revenue per Share; Revenue & EPS Growth; Profit Margin Trends; Return on Equity (ROE); and valuation variability notably with the P/E ratio moving back to 18.1x (Price-to-Earnings (PE) Ratio Trend).
The foundation of business quality and long-term value creation
GILEAD SCIENCES, INC.'s revenue has been broadly stable in recent quarters, edging higher through 2025 after mid‑year levels around $7.0B. Revenue rose from $7.08B in 2025 Q2 to $7.77B in Q3 and reached $7.92B in Q4 2025, continuing a pattern of quarterly revenue generally clustered in the high single‑digit billions over the past few years.
Net income shows a marked recovery and acceleration in 2025 following a significant inflection in 2024. A notable inflection point was the $-4.17B net loss in 2024 Q1; since then net income returned to positive territory and climbed from $1.96B in 2025 Q2 to $3.05B in Q3 and $3.50B in Q4 2025. The most recent quarterly revenue was $7.92B. The most recent quarterly net income was $3.50B.
Why Growth Matters
Consistent revenue and earnings growth are the lifeblood of successful long-term investments. Companies that can grow their top line (revenue) and bottom line (net income) over many years demonstrate they have products or services customers value and are willing to pay for repeatedly.
Revenue Growth shows whether the company is expanding its market reach, gaining market share, or successfully launching new products.Net Income Growth demonstrates the company can convert that revenue into actual profits while managing costs effectively.
Look for steady, sustainable growth rather than erratic spikes. The best businesses compound earnings year after year, creating tremendous value for shareholders over time. Companies that can grow earnings faster than revenue are improving their profitability—a sign of operational excellence and competitive strength.
Year-over-year growth rates for revenue and earnings per share
Reading the Growth Rate Chart
This chart converts the absolute per-share figures into year-over-year percentage changes, making it easy to see whether growth is accelerating, decelerating, or reverting to trend — regardless of the company's absolute size.
Revenue per Share Growth (1-year, split-adjusted) measures how quickly the top line is expanding on a per-share basis. Sustained positive growth signals that the company continues to win customers and grow its addressable market.EPS Diluted Growth (1-year, split-adjusted) measures how quickly earnings are compounding for each shareholder. When EPS growth consistently outpaces revenue growth, operating leverage and margin expansion are at work.
Look for consistency, not just magnitude. A company that reliably grows EPS 10–15% per year is far more valuable than one that alternates between 50% spikes and deep contractions. Negative EPS growth during a period of positive revenue growth is a red flag — costs are rising faster than sales. Quarters where both lines converge near zero or go negative deserve close scrutiny.
How revenue converts to net income for the most recent annual period
Over the period Jan 2025 to Dec 2025, Gilead Sciences Inc converts approximately 79¢ of every revenue dollar into gross profit (gross margin: 78.8%).After accounting for operating expenses and taxes and expenses, the company retains 28.9% as net profit margin, resulting in $8.51B in net earnings.
Period Information
Report Type: Annual (10-K)
Period: Jan 2025 to Dec 2025
Revenue composition by disclosure category for the latest period
We own or have rights to various trademarks, copyrights and trade names used in our business, including the following product and brand names explicitly listed in the filing: GILEAD, GILEAD SCIENCES, KITE, AMBISOME, ATRIPLA, BIKTARVY, CAYSTON, COMPLERA, DESCOVY, DESCOVY FOR PREP, EMTRIVA, EPCLUSA, EVIPLERA, GENVOYA, HARVONI, HEPCLUDEX, HEPSERA, JYSELECA, LETAIRIS, LIVDELZI/LYVDELZI, ODEFSEY, SOVALDI, STRIBILD, SUNLENCA, TECARTUS, TRODELVY, TRUVADA, TRUVADA FOR PREP, TYBOST, VEKLURY, VEMLIDY, VIREAD, VOSEVI, YESCARTA, YEZTUGO/YEYTUO, and ZYDELIG. The filing explicitly states these trademarks, copyrights and trade names are used in the company’s business.
Analyzing long-term margin stability and competitive positioning
GILEAD SCIENCES, INC.'s margins have remained high and relatively stable, with gross margin holding in the mid-to-high 70s and edging slightly higher in the most recent quarter (78.8% vs. 78.7% in the prior quarter). Operating margin has trended upward through 2024–2025 after a dip, moving from about 57.1% at 2024-12-31 to 59.2% at 2025-12-31. Net profit margin is the most volatile series: it was around 20% in much of 2022–2023, fell into single digits across several 2024 quarters, and then rose sharply to 28.9% in the latest quarter.
Notable inflection points include the sharp decline in net margin across 2024 (for example, 0.4% on 2024-09-30 and 1.7% on 2024-12-31) and a trough in operating margin around 53.4% on 2024-03-31, followed by a steady rebound through 2025. Gross margin has shown limited volatility over the period, ranging roughly 75%–81% and finishing near the top of that band. The most recent gross margin was 78.8%, the most recent operating margin was 59.2%, and the most recent net profit margin was 28.9%.
Understanding Profit Margins
Between Jan 2025 and Dec 2025, Gilead Sciences Inc converts every dollar of revenue through the following stages:
Sustainable competitive advantages reveal themselves through consistently superior profit margins over extended periods. Companies with durable economic moats maintain pricing power and operational efficiency that competitors struggle to match.
A sign of durable competitive advantage is earning sustained higher margins than competitors.Look for margins that remain stable or improve over time, especially during economic downturns. Declining margins may signal increasing competition, pricing pressure, or deteriorating business fundamentals.
Comparing reported earnings to actual cash generation
For GILEAD SCIENCES, INC., trailing twelve‑month operating cash flow has been relatively steady in a roughly $9–$11 billion band over the past few years. In the most recent sequence it eased from $10.83B at 2024-12-31 to a mid‑2025 trough near $9.67B, then recovered to $10.02B by 2025-12-31. Net income (TTM) has shown much greater volatility over the same span, falling into the low hundreds of millions across several 2024 quarter‑end readings before rising sharply in subsequent periods.
The gap between operating cash flow and net income has narrowed most recently because net income increased markedly while cash flow remained near its multi‑year range; operating cash flow has generally exceeded reported net income through much of the history shown. The most recent trailing twelve‑month operating cash flow was $10.02B and the most recent trailing twelve‑month net income was $8.51B.
The Earnings vs. Cash Flow Gap
Reported earnings (Net Income) doesn't always reflect actual cash generation. Companies use accrual accounting, which recognizes revenue when earned and expenses when incurred—not when cash actually changes hands. This creates timing differences and opportunities for accounting discretion that can mask underlying business health.
Net Income (the "earnings" number) can be influenced by non-cash items like depreciation, stock-based compensation, and changes in accounting estimates.Operating Cash Flow, however, shows the actual cash the business generates from its core operations—a harder number to manipulate.
Trailing Twelve Months
What to Look For
Key Insight: Companies with durable competitive advantages typically show operating cash flow that meets or exceeds net income over time, demonstrating they convert accounting profits into actual cash that can be returned to shareholders or reinvested in the business.
Measuring management's efficiency at generating profits from shareholder capital
GILEAD SCIENCES, INC.'s ROE shows marked volatility in the most recent quarters. After a sequence of mid-2023 readings around the mid-20% range ( 26.6% on 2023-03-31 through 24.8% on 2023-12-31), ROE fell sharply across 2024 to low single digits and sub-1% levels ( 2.8% on 2024-03-31, 5.8% on 2024-06-30, 0.7% on 2024-09-30, 2.5% on 2024-12-31) before rising to 37.5% in the latest 2025-12-31 period. The most recent movement represents a substantial uptick relative to the immediate prior year.
Historically, ROE for GILEAD SCIENCES, INC. was substantially higher in the mid-2010s, peaking at 129.4% on 2016-03-31 and remaining elevated through 2017, followed by a multi-year decline into the high single- to low double-digits and a pronounced trough around 2020–2021 ( 0.7% on 2020-12-31 and 1.6% on 2021-03-31) before the partial recovery in 2021–2023. The most recent Return on Equity (ROE) was 37.5%.
The Gold Standard of Profitability
Return on Equity (ROE) is a powerful measure of how effectively a company's management is using the money shareholders have invested. Calculated by dividing Net Income by Shareholders' Equity, it reveals how much profit is generated for every dollar of equity capital.
A consistently high ROE (typically above 15-20%) is often the signature of a "quality" business with a durable competitive advantage. It indicates that the company can generate high returns on its own capital, which it can then reinvest at these high rates to compound value over time.
What to Look For:
How the company generates and deploys its cash
GILEAD SCIENCES, INC.'s operating cash flow on a trailing twelve-month basis has been broadly stable around the $9.5–11.0 billion range over the last several periods. After a high of $10.83B at 2024-12-31 the TTM operating cash flow dipped into the mid‑$9B range through mid‑2025 and returned to $10.02B most recently, showing only modest quarter-to-quarter variation around that multi-quarter average.
Investing cash flow on a TTM basis has been negative throughout the series and widened to a larger outflow in the most recent period: the TTM investing outflow increased to -$4.79B at 2025-12-31 versus prior TTM values such as -$1.66B (2025-03-31) and -$3.45B (2024-12-31). Financing cash flow has also been a net outflow for many periods and intensified in the latest TTM, moving to -$7.75B at 2025-12-31 after several quarters around the -$4B to -$6B range. The most recent trailing twelve-month values are: Operating Cash Flow TTM $10.02B, Investing Cash Flow TTM -$4.79B, Financing Cash Flow TTM -$7.75B.
Understanding Company Strategy
Capital allocation refers to how management decides to spend and invest the company's cash. Analyzing the three primary categories of cash flow reveals a company's true operational strategy:
What to look for: Is the company bootstrapping (funding growth solely from operating cash)? Are they borrowing to fund aggressive expansion or dividends? Or are they capital raising by issuing new shares, potentially diluting your ownership? A healthy, mature company typically generates strong operating cash, moderately invests in growth, and returns the surplus to shareholders through financing activities.
Trailing Twelve Months
Net assets attributable to each share — the accounting floor of intrinsic value
Why Book Value per Share Matters
Book value per share is the net worth of the company — total assets minus total liabilities — divided by shares outstanding (split-adjusted). It represents the theoretical liquidation value per share if every asset were sold and every liability repaid at balance-sheet carrying values. It is the accounting foundation upon which much of equity valuation is built.
A steadily rising book value per share is one of the most reliable signals of compounding wealth creation. It means the company is retaining earnings and building net worth faster than it is returning capital or eroding it. Warren Buffett famously tracked Berkshire Hathaway's book value per share for decades as his primary measure of intrinsic value growth.
Context is essential. Asset-heavy businesses (banks, manufacturers, utilities) should be judged by book value more directly than asset-light businesses (software, consumer brands), where intangible assets like intellectual property and customer loyalty may far exceed their balance-sheet carrying values. A company trading at a large premium to book value is not necessarily overvalued — it may simply possess competitive advantages that accounting rules do not capture. Conversely, a declining book value per share — especially over multiple years — is a serious warning sign of capital destruction.
How much of the company is financed by debt versus shareholders' equity
Reading the Debt-to-Equity Ratio
The debt-to-equity (D/E) ratio compares total financial debt to shareholders' equity. A ratio of 1.0 means the company has borrowed one dollar for every dollar of equity; a ratio of 2.0 means it has borrowed twice as much as it owns. Financial leverage amplifies both returns and risk: in good times, debt turbocharges equity returns; in bad times, it accelerates losses and can threaten solvency.
Trends matter more than a single number. A rising D/E ratio can mean the company is taking on debt to fund growth — potentially value-creating if returns exceed the cost of capital. But it can also mean equity is being eroded through losses or that the business is borrowing simply to sustain operations. A falling D/E ratio generally reflects strengthening financial health: earnings are being retained, debt maturities are being paid down, or both.
Industry norms vary enormously. Capital-intensive sectors (utilities, real estate, financials) routinely carry high D/E ratios that would be alarming in, say, a technology company. Always compare against sector peers. As a rough rule of thumb, a D/E above 2× in a cyclical business warrants careful scrutiny of interest coverage and refinancing risk.
Short-term liquidity — can the company cover its near-term obligations?
Liquidity: Can the Business Pay Its Bills?
The current ratio is calculated as current assets divided by current liabilities. A ratio of 1.5 means the company has $1.50 of short-term assets — cash, receivables, inventory — for every $1.00 of obligations due within the next twelve months. It is the most direct measure of near-term financial resilience: can the business meet its obligations without needing to raise new capital or sell long-term assets at a discount?
A ratio above 1.0 is generally healthy, meaning current assets exceed current liabilities. A ratio consistently above 2.0 may indicate the company is holding excess cash or inventory that could be deployed more productively. A ratio below 1.0 is a warning sign — the company is relying on future cash generation or external financing to cover its near-term obligations, which is manageable in normal conditions but dangerous during a downturn.
Trends and context matter.A declining current ratio isn't always alarming — highly efficient businesses (e.g., large retailers with reliable daily cash flows) often run leaner balance sheets intentionally. Conversely, a rapidly rising current ratio can signal slowing sales causing inventory to build, or customers taking longer to pay. Always compare the trend against industry peers and cross-reference with the cash flow statement to assess whether the business is genuinely liquid or just holding non-cash current assets.
How much the market is paying for each dollar of company earnings
GILEAD SCIENCES, INC.'s trailing twelve-month P/E has spent most of the multi-year record in the mid-single digits to low-20s, with extended periods around 6—20x through 2019–2023. That baseline is punctuated by occasional extreme spikes: notable outsized readings occurred at 594.8x (2020-12-31), 269.6x (2021-03-31), and a dramatic run in 2024 that peaked at 829.0x on 2024-09-30.
In the most recent sequence, the P/E swung sharply higher through 2024 (188.7x on 2024-03-31, 81.8x on 2024-06-30, 829.0x on 2024-09-30, 241.7x on 2024-12-31) before contracting back toward historical levels, reaching 18.1x at the latest quarter. The most recent Price-to-Earnings (P/E) ratio for GILEAD SCIENCES, INC. was 18.1x.
What Is the PE Ratio?
The Price-to-Earnings (PE) ratio is one of the most widely used valuation metrics in investing. It divides the current stock price by the company's earnings per share (EPS), revealing how much investors are willing to pay for each dollar of earnings. A high PE can signal that the market expects strong future growth, while a low PE may suggest undervaluation—or reflect genuine concerns about the company's prospects.
Context matters:PE ratios vary significantly across industries. High-growth technology companies routinely trade at PE ratios above 30x or 40x, while mature, low-growth sectors like utilities or financials often trade closer to 10–15x. Always compare a company's PE to its own history and its industry peers, not just an absolute number.
What to Look For:
Key Insight:The PE ratio is a snapshot of market sentiment and expectations. Tracking it over time alongside earnings trends reveals whether the market's valuation has expanded or contracted—and whether that change is justified by fundamentals.