GILD, Gilead Sciences, Inc.
Gilead Sciences, Inc. is a biopharmaceutical company that has pursued and achieved breakthroughs in medicine for more than three decades, with the goal of creating a healthier world for all people.
Read top to bottom, the owner's questions in the order an owner asks them: what the business is, whether the record holds, whether it survives and is any good, and what you would be paying. New to the questions? Start with the Method.
The business in brief
read the 10-K →What this business is and what moves its needle, read from the numbers in its filings. The quantitative detail is in the sections below; the verdict is left to you.
- What it is
- A consumer-brand business, where the durable asset is the brand and its hold on the shelf.
- Situation
- Cyclical. margins collapse repeatedly across the cycle, a single year misleads; look at normalized, through-cycle earnings and the balance sheet at the trough.
- What moves the needle
- Volume against price, and shelf position. What decides it: whether it can raise prices without losing the customer, and whether the brand still commands its margin.
- Is it a good business?
- Return on capital has run in the teens (median 14%, above 15% in 5 of 10 years). Owner earnings agree: roughly 34% of revenue reaches owners as cash, consistently. Returns like these are solid but short of clear franchise economics; whether they hold is what the 10-K settles, not the multiple.
Every line here is arithmetic from the company's own filings, not a model's opinion, and each figure appears in full in the sections below.
Where the money comes from
read the 10-K →29% of revenue comes from outside the United States.
- United States71%$20.9B
- Europe17%$5.1B
- Rest of World12%$3.5B
From the segment footnote of the company's own 10-K. Shares are of total revenue; the profit bar shows each segment's share of segment operating profit, before unallocated corporate costs.
The record, 2016–2025
realized figures from each filing, no estimates| 2016’16 | 2017’17 | 2018’18 | 2019’19 | 2020’20 | 2021’21 | 2022’22 | 2023’23 | 2024’24 | 2025’25 | TTMTTMMar 2026 | |
|---|---|---|---|---|---|---|---|---|---|---|---|
| RevenueRevenue | $30.4B | $26.1B | $22.1B | $22.4B | $24.7B | $27.3B | $27.3B | $27.1B | $28.8B | $29.4B | $29.7B |
| Gross marginGross mgn | 86% | 83% | 78% | 79% | 81% | 76% | 79% | 76% | 78% | 79% | 79% |
| Operating marginOp. mgn | 58.0% | 54.1% | 37.1% | 19.1% | 16.5% | 36.3% | 26.9% | 28.0% | 5.8% | 34.0% | 34.9% |
| Net incomeNet inc. | $13.5B | $4.6B | $5.5B | $5.4B | $123M | $6.2B | $4.6B | $5.7B | $480M | $8.5B | $9.2B |
| EPS (diluted)EPS | $9.94 | $3.51 | $4.17 | $4.22 | $0.10 | $4.93 | $3.64 | $4.50 | $0.38 | $6.78 | $7.35 |
| Owner earningsOwner earn. | $16.3B | $11.3B | $7.5B | $8.3B | $7.5B | $10.8B | $8.3B | $7.4B | $10.3B | $9.5B | $10.2B |
| ROICROIC | 38% | 15% | 19% | 12% | 5% | 18% | 14% | 13% | 3% | 18% | 19% |
| Cash & investmentsCash+inv | $32.4B | $36.7B | $31.5B | $25.8B | $7.9B | $7.8B | $7.6B | $2.3B | $0 | $3.0B | $6.4B |
| Net debt / (cash)Net debt | ($6.0B) | ($3.2B) | ($4.2B) | ($1.2B) | $23.5B | $18.9B | $17.6B | $22.6B | $26.7B | $21.9B | $22.6B |
| Dividends / shareDiv/sh | $1.81 | $2.07 | $2.27 | $2.52 | $2.73 | $2.86 | $2.94 | $3.03 | $3.12 | $3.19 | — |
| Book value / shareBVPS | $13.91 | $15.50 | $16.35 | $17.64 | $14.41 | $16.69 | $16.83 | $18.15 | $15.40 | $18.09 | $18.75 |
Owner’s Scorecard
Will it survive?
- ComfortableOperating income $10.0B ÷ interest expense $1.0B
Operating profit covers interest with the kind of margin Graham wanted for a defensive holding. Necessary, not sufficient, it says solvent, not cheap.
- ModerateTotal debt $33.5B ÷ operating income $10.0B
Years of operating profit it would take to repay all debt. A first read, not a credit rating: it's gross debt (not netted against cash) over EBIT (not EBITDA), and a cyclical year distorts it.
- Debt, net of cash $28.1BMeaningful net debtCash $5.4B + ST investments $68M − debt $33.5B
Netting $5.5B of cash and short-term investments against $33.5B of debt leaves $28.1B owed, about 2.8× a year's operating profit, versus the gross figure above. It also holds $3.0B in longer-dated marketable securities; counting those, it sits at $25.1B of net debt. Net debt is the leverage figure that matters; the gross ratio above ignores the cash already set against it. Strategic or illiquid investments aren't counted here.
- Capital-hungryDSO 61 + DIO 104 − DPO 42 days
Days cash is tied up between paying suppliers and collecting from customers. Lower is better; a long cycle means growth itself eats cash.
Is it a good business?
- HighNOPAT $8.7B ÷ invested capital $50.8B (debt + equity − cash)
The rate the business earns on the money tied up in it, Buffett's north star, because over time a stock tracks the ROIC beneath it. Above ~15% sustained hints at a moat; below ~8% the company may destroy value as it grows. Asset-light businesses (R&D expensed, little capital) read artificially high, pair this with Owner Earnings.
- Cash machineOwner Earnings $9.5B = operating cash $10.0B − capex $563M
What an owner could take out without starving the business. That's 32% of revenue. Treating stock comp as the real expense it is (less $894M of SBC) leaves $8.6B. Honest caveat: capex here blends maintenance and growth, so steady-state Owner Earnings may run higher (see capex vs. depreciation).
- Cash-backedCash from ops $10.0B ÷ net income $8.5B
How much of reported profit showed up as operating cash. Above 1× is reassuring; well below suggests earnings lean on accruals. One year is noisy, growth and working-capital swings distort it, and this is operating cash, not free cash. Watch the multi-year trend.
How is the cash used?
- Returns about halfDividends + buybacks $5.9B ÷ Owner Earnings $9.5B
Of $9.5B Owner Earnings, $5.9B (63%) went back to shareholders, $4.0B dividends, $1.9B buybacks. Net of $894M stock comp, the real buyback was about $1.0B. Returning most of it signals a mature cash machine; reinvesting most could mean a long runway, or empire-building. The split doesn't say which; the return earned on it (see ROIC) does.
- Investing or harvesting? —Not enough data
The filing data didn't include the inputs for this check.
Durability & moat, 2016–2025
A moat is a high return that doesn’t fade, reinvested at high returns. Here is what the record says, judgments, not another chart of the numbers.
- Profitable years 10 of 10
Never lost money over the record, the earnings stability Graham insisted on.
- Return on capital ≥ 15% 5 of 10 yrs
A moat shows up as a high return on invested capital that holds year after year, not one good vintage.
- Operating margin 58% (FY2016) → 34% (FY2025)
Margins slipped over the record, competition or costs are biting in.
- Reinvestment, incremental ROIC −39%
Reinvested capital earned a negative return, the business spent money to shrink its own economics.
- Owner earnings growth −4%/yr
Free cash to owners shrank about 4% a year over the record.
- Worst year 2024 · 5.8% op. margin
Stayed profitable even in its hardest year, the resilience that survives recessions.
- Share count −0.9%/yr
The share count is shrinking, buybacks are quietly growing your slice of the business.
- Dividend record rising
Paid and raised the dividend across the record, the continuity Graham prized.
Solvent is not the same as cheap; growing is not the same as good. These are vital signs, not a verdict, the judgment is yours, and the filing is one click away.
How the cash was used, 2016–2025
Over the record, the business generated $104.0B of operating cash, and how management split it is, as Buffett insists, the job that matters most. Here it reads as a balanced allocator, splitting cash between the business, owners, and the balance sheet.
- Reinvested$6.7B · 6%
- Dividends$33.9B · 33%
- Buybacks$24.2B · 23%
- Retained (debt / cash)$39.2B · 38%
It reinvested $6.7B (6%) back into the business and returned $58.1B (56%) to owners, $33.9B in dividends, $24.2B in buybacks. Total debt rose $2.7B across the span.
Buybacks are gross of stock issued to employees; net of that, the real return to owners is lower (see Management & pay). And the mix alone doesn't grade management, what matters is the return earned on the dollars reinvested (see incremental ROIC in the durability report).
Management & pay
Two questions Buffett actually asks about pay: is stock compensation, a real expense, whatever the income statement pretends, quietly large, and is the top wildly out of line with the floor. He's no populist about it; he just wants pay that's rational and earned, and comp committees that aren't lapdogs.
- Stock-based compensation$894M
The slice of the business handed to employees in shares this year, 3% of revenue, equal to 9% of operating profit. Buffett's oldest accounting fight: this is compensation, compensation is an expense, real whether or not the headline earnings admit it. And note the trap, the cash-flow statement adds SBC back, so the operating cash, and the owner earnings drawn from it, are flattered by exactly this amount; counted as the cost it is, what an owner keeps is lower.
Graham’s defensive-investor test
3 of 6 metGraham gave the defensive investor seven numerical criteria in The Intelligent Investor. Here they are, run mechanically on the filings, his framework, not our verdict. Meeting them is a floor of safety, not a reason to buy; missing one is no veto, since many fine modern businesses fail his strictest liquidity tests by design. The worth is in seeing exactly where a company stands against the canon, every number sourced.
- Adequate size PassRevenue ≥ $2B · $29.4B
Big enough to weather a storm. Graham's 1972 floor was ~$100M of sales (≈ $700M today); we use a $2B revenue line as a conservative modern stand-in.
- Strong liquidity NearCurrent ratio ≥ 2× · 1.55×
Current assets at least twice current liabilities, near-term bills covered without touching the business. Strict by design: many cash-rich modern firms run leaner and miss it, holding their cushion in longer-dated securities.
- Conservative debt MissDebt ≤ working capital · $33.5B vs $6.5B WC
Graham's rule that borrowings not exceed net current assets. Capital-heavy and buyback-heavy firms routinely fail it, read it next to interest coverage, not alone.
- Earnings stability PassA profit every year (10-yr record) · no losses
Graham wanted earnings in each of the past ten years, the stability a defensive owner leans on.
- Dividend record PassUninterrupted dividends · paid every year (10)
An unbroken dividend was Graham's mark of durability. He wanted twenty years; the filings show about ten, and a single suspension breaks the streak. Non-payers, many fine modern compounders, fall outside his defensive net by design.
- Earnings growth MissEarnings +33% over the record · −38%
At least a third more earnings than a decade ago, averaging three years at each end. Net income (not per-share), so stock splits don't distort it, buybacks and dilution show up in the share-count line instead.
- Moderate price —P/E ≤ 15 and P/E × P/B ≤ 22.5 · decided by the price
Graham's valuation gate, the wall he kept between a sound business and a sound investment. Earnings are $6.78/share and book value $18.09/share. Enter a price in “What the price implies” just below for the P/E, P/B, and whether it clears. But this is the rule Buffett outgrew: there's no hard P/E law, and a wonderful business can deserve a far richer multiple if the thesis holds, treat it as the bargain-hunter's floor, not a verdict on the price.
Graham would be the first to say a checklist is a starting point, not an answer. These are his defensive, bargain-hunter's tests, the cigar-butt lens. Buffett and Munger grew past it, paying fair prices for wonderful businesses; that lens lives in the moat and owner-earnings work above, and both still matter. Clearing Graham’s tests earns a closer look; failing them earns harder questions, not a dismissal.
What the price implies
reverse-DCFA price is the one input we don't pull, you bring it. Type today's close (read it off any broker or quote site) and see the owner-earnings growth you'd have to believe to justify it, set beside what Gilead Sciences, Inc. has actually delivered. Nothing is stored; the number stays in your browser.
Enter a price above to run it.
Graham capped the multiple at 15×; Buffett and Munger let that rule go, a wonderful business can deserve 50× if the thesis holds. Read it as the bargain-hunter's floor, not a ceiling on good sense.
The discount rate is your interest rate, what a dollar years from now is worth today, anchored to the long-term Treasury yield (~4–5% today, plus whatever premium you want for risk). Drag it toward the risk-free rate and watch how much growth the price suddenly “needs”: interest rates are gravity on valuations.
Owner earnings $10.2B on 1254M diluted shares; net debt $22.6B. This is a lens, not a price target, it says what you'd have to believe, not what the company is worth, and it runs on one year of (noisy) owner earnings at assumptions you can see and change.
What the filing emphasizes, FY2025
read the 10-K →Each year a 10-K must name what could go wrong, in the company's own words. Here are the ones Graham and Buffett would stop on, each set against the figure from the same filings that bears on it, anchored to a period you can find in the record above. We point; the judgment is yours.
- Customer concentrationRisk Factors
Who the revenue leans on. When one buyer is a large slice of sales, that buyer holds the pricing power, and its troubles become the company's.
“Revenues from Major Customers The following table summarizes the revenues from each of our customers who individually accounted for 10% or more of our total gross product sales: Year Ended December 31, (as a percentage of total gross product sales) 2025 2024 2023 Cardinal Health, Inc.”
From the recordRevenue exposed (TTM)$29.7B - Pricing power & competitionMD&A
Whether the company sets its price or takes it. Durable pricing power is the surest mark of a moat; price competition is the surest mark there isn't one.
“These initiatives and such other legislation may cause added pricing pressures on our products, and the resulting impact on our business is uncertain at this time.”
From the recordOperating margin34.9% now (TTM), off a 58.0% peak (FY2016) - Supplier & input dependenceMD&A
A choke point upstream. A sole or limited supplier can dictate terms, and a single shortage can stop the line.
“Some of our products and the materials that we utilize in our operations are manufactured and/or tested by only one supplier or at only one facility, which we may not be able to replace in a timely manner and on commercially reasonable terms, or at all.”
From the recordGross-margin cushion (TTM)79% - Concentrated dependenceMD&A
What the whole business leans on, a product, a platform, a partner. Concentration cuts both ways, and the filing is where management has to admit it.
“A significant portion of our sales of the majority of our products are subject to substantial discounts from their list prices, including rebates to Medicare and Medicaid agencies or discounts to covered entities under Section 340B of the Public Health Service Act ("340B").”
From the recordOwner-earnings margin at stake (TTM)34% - Debt terms & refinancingRisk Factors
The fine print behind the debt. Covenants and near-term maturities decide who is really in control when a year goes badly.
“We are required to comply with certain covenants under our note indentures governing our senior unsecured notes.”
From the recordBalance sheet (TTM)$28.1B meaningful net debt · interest covered 9.8× - Litigation & contingenciesMD&A
Claims an owner inherits. Most disclosure is boilerplate; this fires only on an actual matter, a named suit, a settlement, a contingency, a number.
“For example, in the second quarter of 2023, we recorded an accrual of $525 million in Other current liabilities on our Consolidated Balance Sheets for settlements with certain plaintiffs in the HIV antitrust litigation, which we paid in the second half of 2023.”
A judgment, not a number, weigh it against the filing yourself. - Regulation & policyMD&A
Rules that can rewrite the economics, tariffs, antitrust, data, export controls.
“Presidential administration announced plans to impose up to 100% tariffs on imported branded or patented pharmaceuticals, subject to certain exceptions.”
A judgment, not a number, weigh it against the filing yourself.
What changed, FY2025 vs FY2024
read the 10-K →Most of a 10-K is boilerplate carried over verbatim; the signal is in what's new. These lines appear this year and weren't there last, figure updates filtered out, so only the language shift remains.
- “In 2025, we also received regulatory approvals or authorizations from FDA and European Commission for new products and expanded indications of our products, including: Product Regulatory Approval or Authorization Yeztugo/Yeytuo FDA granted approval for Yeztugo for PrEP to reduce the risk of sexually…”
- “The following table summarizes our Research and development expenses and period-over-period changes: Year Ended December 31, (in millions, except percentages) 2025 2024 Change Personnel, infrastructure and other support costs $ 3,427 $ 3,555 (4) % Clinical studies and other costs 2,372 2,352 1 % Res…”
- “While the full impact of the IRA on our business and the pharmaceutical industry remains uncertain at this time, we anticipate that the IRA will increase our payment obligations under the redesigned Part D discount program, limit the prices we can charge for our products, and increase the rebates we…”
- “Our existing products are subject to pricing and reimbursement pressures from government agencies and other third parties, including required discounts and rebates." Drug Development Regulation A country's regulatory agency, such as FDA in the U.S. and EMA and EC in the EU, as well as the national a…”
- “The following table summarizes our Research and development expenses and period-over-period changes: Year Ended December 31, (in millions, except percentages) 2025 2024 Change Personnel, infrastructure and other support costs $ 3,427 $ 3,555 (4) % Clinical studies and other costs 2,372 2,352 1 % Res…”
Classic text analysis over the filing itself, no model wrote a word of this, and every quote is the company's own.
Peers, Pharma
The same industry, side by side on owner economics, compare, don't rank by a single number.● marks best in the group.
| Company | Revenue | Gross margin | Op. margin | ROIC | Owner earn. margin |
|---|---|---|---|---|---|
| BMYBristol-myers Squibb Company | $48.2B | 71% | 19.4% | 13% | 27% |
| ABTAbbott Laboratories | $44.3B | 56% | 18.2% | 11% | 17% |
| AMGNAmgen Inc. | $36.8B | 67% | 24.7% | 14% | 22% |
| GILDGilead Sciences, Inc. | $29.4B | 79% | 34.0% | 17% | 32% |
| REGNRegeneron Pharmaceuticals, Inc. | $14.3B | 97% | 24.9% | 10% | 28% |
| VRTXVertex Pharmaceuticals Inc / MA | $12.0B | 86% | 34.8% | 26% | 27% |
| BIIBBiogen Inc. | $9.9B | 76% | 28.7% | 11% | 21% |
| ZTSZoetis Inc. | $9.5B | 72% | 37.8% | 26% | 24% |